Federal Reserve Economic Data

Federal Reserve Chair Jerome Powell stated in November 2022 that “job openings exceed available workers by about 4 million.” That number currently stands at 4.7 million after continued strengthening of the labor market.

This mismatch between available jobs and workers to fill them has generated ongoing discussion, and the FRED graph above measures that mismatch in labor supply and demand: The civilian labor force, the amount of people working or looking for a job, is shown in red; the current employment level plus the number of job openings is shown in blue.

If the civilian labor force is greater than employment plus job openings, the economy has immediate capacity to fill open positions. Currently, the employment level plus job openings is at 170.5 million while the total civilian labor force is at 165.8 million. This is the gap of 4.7 million referred to above: that is, there are 4.7 million more jobs available than there are people available to fill them.

The pandemic has been emphasized as a cause of this acute labor shortage, but the trends in labor demand and labor supply in the graph above indicate that demand was already outpacing supply before the pandemic by about 1 million workers.

How this graph was created: Search FRED for “Job Openings” and select the right series. Click “Edit Graph,” search for “Employment levels,” then apply the formula a+b. Next, use the “Add Line” tab to search for and select “Civilian Labor Force Level.”

Suggested by Jack Fuller and Charles Gascon.

The Board of Governors reports the consolidated balance sheet of the 12 Federal Reserve Banks in its H.4.1 “Factors Affecting Reserve Balances” release. Table 5 of that release includes the sum of all assets, liabilities, and capital.

Changes in the composition of the Fed’s balance sheet reflect the operations of the Federal Reserve as it conducts monetary policy. The FRED graph above shows two series from that release as well as an indicator of the Fed’s monetary policy:

• The blue line is the weekly dollar value, as of Wednesday, of the repurchase agreement operations conducted by the Fed. These are assets to the Fed created when it temporarily purchases Treasury securities held by banks.
• The red line is the weekly dollar value, also as of Wednesday, of the reverse repurchase agreement operations conducted by the Fed. These are liabilities created when it accepts overnight deposits from financial institutions, with a security held as collateral.
• The third line, in green, is the effective federal funds rate, as reported by the Federal Reserve Bank of New York; the units are percent, which are plotted on the right axis.

The graph shows that the value of the overnight reverse repurchase agreements started to increase almost exactly 1 year before the Federal Open Market Committee (FOMC) started to raise its target range for the federal funds rate on March 17, 2022. That is, financial institutions gradually changed the composition of their own balance sheets by trading increasingly larger amounts of Treasury securities in exchange for earning the overnight reverse repurchase agreements award rate paid by the Fed. Those financial transactions effectively reduced the liquidity of lenders and, by doing so, contributed to higher interest rates for borrowers.

How this graph was created: Search FRED for “Assets: Other: Repurchase Agreements: Wednesday Level.” Click the “Edit Graph” button and use the “Add Line” tab to add the other two series: “Liabilities and Capital: Liabilities: Reverse Repurchase Agreements: Wednesday Level” and “Effective Federal Funds Rate.” Use the “Format” tab to change the Y-axis position of Line 3 from left to right.

Suggested by Diego Mendez-Carbajo.

As the US began to emerge from the pandemic, many different news sources provided many different explanations for the labor shortage: from childcare disruptions and fear of illness keeping minimum wage workers out of the labor force to a new wave of retirements from older workers.

A previous post looked at the labor force overall, but today we look at changes in the labor force participation rate (LFPR) for specific age groups: 20 to 24 years old, 25 to 54 years old, and 55+ years old. We subtract the LFPR from January 2020 to show the percentage-point change in labor force participation relative to the month right before the pandemic.

When the pandemic hit, the sharpest decline in the LFPR was for workers between the ages of 20 and 24. Their LFPR decreased from 73% to 64.4% in 4 months before increasing again. However, at the end of 2022, the LFPR for 20- to 24-year-olds still hadn’t fully recovered and remained 1.7 percentage points below its January 2020 value.

This overall pattern is similar but less extreme for the other age groups. Although no age group fully recovered by the end of 2022, the 25-54 group was closest, at 0.7 percentage points below its January 2002 level. There’s been much discussion of older workers retiring early (and permanently) during the pandemic, and the 55+ group remained 1.4 percentage points below its January 2020 level as of December 2022, with no sign of further recovery.

How this graph was created: Search FRED for “Labor Force Participation 20-24” and select “Labor Force Participation Rate- 20-24 Yrs.” Click the orange “Edit Graph” button on the right: From the “Add Line” section, add the 25-54 age group by searching for and selecting “Labor Force Participation Rate, 25-54 Yrs.” Repeat this process for the “55 plus” series. All three series should have “Percent” as the units. You must customize each series by subtracting the value for the series in January 2020: From the “Edit Line” section for each age group, use the customize data section at the bottom add the following formulas in the formula bar and hit “Apply”: For 20-24 Yrs, insert a-73.0; for 25-54 Yrs, insert a-83.1; for 55+ Yrs, insert a-40.2. Finally, change the beginning date of the graph to 2018-01-01.

Suggested by Maggie Isaacson and Hannah Rubinton.