Federal Reserve Economic Data

Summer is ending. As the new school year gears up, some areas of economic activity will get seasonal boosts—such as increases in retail sales of office supplies as incoming students and their families buy what they need for the classroom. Female employment also picks up at this time of year. Recent research on labor markets finds that the childcare services provided by formal schooling drive this increase in employment.

The FRED graph above replicates Figure 1 in a related piece of research: the NBER Working Paper, “The Summer Drop in Female Employment,” by Brendan Price and Melanie Wasserman. The graph shows the non-seasonally-adjusted labor force participation rates among males (orange line with triangles) and females (blue line with dots) between 25 and 54 years of age. (The values are normalized to zero in December 2019.*) A close examination of this graph shows that, every summer, women’s labor force participation drops sharply, whereas men’s participation remains comparatively stable.

Why? During the summer, women reduce the amount of time they work outside the home; they are more likely than men to step in and provide some of the childcare services required while school is out for the summer. Vacations, summer school, and camps—supplemented by informal childcare by relatives, for example—do not add up to the six hours per weekday that children spend in school most of the year.

The research by Price and Wasserman helps answer the seasonal puzzle that the FRED Blog described last year, which helps tell the bigger story behind the numbers.

* The data in the NBER paper are two series from the Bureau of Labor Statistics available in FRED through the Organization for Economic Co-operation and Development’s Main Economic Indicators Release. Borrowing from Geoffrey Chaucer: All roads lead the data user to FRED.

How this graph was created: In FRED, search for “Activity Rate: Aged 25-54: Males for the United States.” From the “Edit Graph” panel, use the “Add Line” tab to search for and select “Activity Rate: Aged 25-54: Females for the United States.” Use the “Edit Line 1” tab to customize the units by selecting “Index (Scale value to 100 for chosen date)” and enter “2009-12-01” in the date box. Click on “Copy to all” to apply the unit transformation to both series.

Suggested by Diego Mendez-Carbajo and Mary Clare Peate.

It’s common to hear talk of one currency being “stronger” or “weaker” than another. This comparison helps determine how much of each currency is required to make purchases. A currency that’s stronger than another means it requires less of that currency to purchase the same good or service. The opposite is true for weaker currencies.

The graph above compares two currencies with the US dollar (USD) over the past 3 years: the Swiss franc (CHF) and the Canadian dollar (CAD). As we can see, the USD/CHF exchange rate is almost always below 1, while the USD/CAD rate is always above 1 (always above 1.2, in fact). This means, in general, that a Swiss franc is stronger than a US dollar and a Canadian dollar is weaker than a US dollar.

Example: If a cup of coffee in the US costs 3 USD, it would require only 2.61 CHF but 4.02 CAD to purchase that cup of coffee.

Most USD currency exchange rates in FRED appear with the USD as the “base currency” (or numerator in the ratio) and the foreign currency is the “quote currency” (or denominator). This formula answers the following question: For each USD, how much of the foreign currency would it take to achieve the same value? However, there are a few exceptions where the USD is the quote currency—most notably, when comparing it with the British pound sterling (GBP) and the euro (EUR).

The second graph compares the USD with the GBP and EUR. Currently (i.e., at the end of August 2023), the USD is weaker than both those currencies, as the exchange rates are both greater than 1. So, it takes more than 1 USD to match the value of 1 GBP or 1 EUR.

As both graphs show, exchange rates fluctuate daily. There are many factors that can cause an exchange rate to change. One key reason is differences in a country’s inflation rate. Countries with higher inflation tend to have higher interest rates (to help curb inflation) compared with countries with lower inflation rates. For more on these topics, look to these blog posts from Ana Maria Santacreu and YiLi Chien.

Other factors include the amount of public debt. If national debt gets too high relative to national income, it raises the chance a country will create more currency to pay its bills. This can cause a currency to weaken, as the supply of currency increases and/or the demand falls as people sell their own currency for other nations’ currencies.

Finally, overall economic strength plays a role, as countries with robust and stable economies will be more attractive to investors, which increases demand for its currency as more business is conducted within its borders.

How these graphs were created: For the first graph, search FRED for “Swiss Franc to US Dollar” and click on Swiss Francs to US Dollar Spot Exchange Rate. Then click “Add Line” in the “Edit Graph” section, search for “Canadian Dollar to US Dollar Spot Exchange,” and click “Add data series.” Then adjust the time frame to the past 3 years. For the second graph, search for “US Dollars to Euro Spot Exchange Rate” and click on the first option. Then click “Add Line” in the “Edit Graph” section, search for “US Dollars to UK Pound Sterling Spot Exchange Rate,” and click “Add Series.” Then adjust the time frame to the past 3 years.

Suggested by Charles Gascon and Jack Fuller.

The COVID-19 pandemic greatly reduced employment in the leisure and hospitality industry, at both the state level and nationally. The recovery in leisure and hospitality was uneven at the regional level; and, at the time of this writing, it hasn’t matched the bounce-back in overall employment. At the same time, wage growth in leisure and hospitality has surpassed overall wage growth.

The FRED graph above shows data on monthly median wage growth, averaged over the preceding 12 months, reported by the Atlanta Fed. The dashed black line applies to all types of economic activities, and the solid red line applies to the leisure and hospitality industry alone. Between December 1997 (when data are first available) and July 2021, labor earnings growth in leisure and hospitality occupations was almost always lower than the all-occupations benchmark. Since then, workers providing arts, entertainment, recreation, accommodation, and food services have recorded higher wage growth than the average worker.

Is a shortage of leisure and hospitality workers driving up those wages? Perhaps, although evidence from other sectors contradicts that straightforward explanation. For example, employment in trade, transportation, and utilities services fully recovered from the past recession ahead of overall employment; and labor earnings growth for those workers is also above average. Manufacturing employment and wage growth data tell a similar story. In short, other factors might be at play here.

To learn more about the labor market landscape in the leisure and hospitality industry, read this March 2023 “Macro Minute” by John O’Trakoun at the Richmond Fed. Notice that you could replicate all the graphs shown in that publication using data in FRED.

How this graph was created: Search FRED for and select “12-Month Moving Average of Unweighted Median Hourly Wage Growth: Overall.” Next, click on the “Edit Graph” button and use the “Add Line” tab to search for and add “12-Month Moving Average of Unweighted Median Hourly Wage Growth: Industry: Leisure and Hospitality and Other Services.” Last, use the “Format” tab to customize the color and style of the graph lines.

Suggested by Sean McQuade and Diego Mendez-Carbajo.