Federal Reserve Economic Data

The FRED Blog has discussed the large differences in wealth between the richest 0.1% and the poorest 50% in the U.S. Today, we try to answer a related question by exploring a different data set from the Distributional Financial Accounts (DFA): What does it take for households to move up on the wealth ladder?

The FRED graph above shows the minimum dollar values of wealth that households must have to be classified in each DFA wealth category. As of 2019,

• to be in the top 0.1% (blue diamonds), a household needs at least $38 million
• for the next 0.9% (red diamonds), the threshold is a little over $10 million
• for the next 9% (green diamonds), the threshold is almost $1.8 million
• for the next 40% (purple diamonds), the threshold is $165,382
• and, obviously, the minimum for the bottom 50% is $0

These minimum wealth cutoff values are reported once every three years and increase in value due to inflation and changes in the distribution of wealth. To make that last point clearer, we created a second FRED graph showing the distance between the wealth brackets (i.e., ratios of wealth cutoff values). To make our references clearer, let’s label the brackets as follows: 1st bracket (top 0.1%), 2nd bracket (99% to 99.9%), 3rd bracket (90% to 99%), and 4th bracket (50% to 90%).

Again, the latest data at the time of this writing are for 2019. The blue circles show the distance between the 1st and 2nd brackets: 1st bracket households need at least four times more wealth than the households at the bottom of the 2nd bracket. The green circles show the distance between the 3rd and 4th brackets: 3rd bracket households need nearly 11 times more wealth than the households at the bottom of the 4th bracket.

Some takeaways: It’s harder, relatively speaking, to move from the bottom 50% into the top 10% than it is to move from the top 10% into the top 1% or even the top 0.1%. Perhaps that’s expected. But it also may be useful to know the threshold to get into the wealthiest 10% has risen noticeably faster than the thresholds for the other brackets. That is, the gap between the very wealthy and the middle-of-the-road wealthy is growing over time: Climbing that next rung of the wealth ladder is becoming gradually harder.

How these graphs were created: For the first graph, search FRED for “Minimum Wealth Cutoff for the Top 0.1% (99.9th to 100th Wealth Percentiles).” Next, click “Edit Graph” at the top right corner and navigate to the “Add Line” tab. Search for the homonymous data series for the 99th to 99.9th wealth percentiles and click on “Add data series.” Repeat the last step to add data for the remaining two wealth groups. For the second graph, start with a graph of the “Minimum Wealth Cutoff for the Top 0.1% (99.9th to 100th Wealth Percentiles)” data series. Next, click “Edit Graph” and customize the data in Line 1 by searching for “Minimum Wealth Cutoff for the 99th to 99.9th Wealth Percentiles” and clicking on “Add.” Next, type the formula a/b and click on “Apply.” Repeat the last two steps to calculate the ratios between minimum wealth cutoffs for the remaining two wealth groups.

Suggested by Diego Mendez-Carbajo.

During the COVID-19 pandemic, supply chains and shipping costs were major concerns for policymakers and the general public. Both maritime and air freight suffered: Backlogs at ports made unloading cargo more costly and less efficient, and the slowdown of passenger air travel reduced the number of planes with available cargo space. The price of shipping goods increased, but which method became relatively more expensive?

The FRED graph above tracks two producer price indexes, one for deep sea freight and one for air transportation, as reported by the Bureau of Labor Statistics. These two price indexes are both graphed so that January 2020, right before the pandemic, is equal to 100. We also deflate the price indexes using the personal consumption expenditures chain-type price index so that the graph displays the growth in the real (inflation-adjusted) price of shipping, relative to January 2020.

Once the pandemic hit in March 2020, both indexes fell sharply. In the beginning of 2021, both indexes began to climb, with deep sea freight rising above air transportation. While the price of air freight has returned to pre-pandemic levels, the price of sea freight remains elevated.

How this graph was created: Search for “Air Transportation” in FRED and select “Producer Price Index by Industry: Air Transportation.” From the orange “Edit Graph” panel on the right, use the “Add Line” tab to search for “Deep Sea” and select “Producer Price Index by Industry: Deep Sea Freight Transportation” and select the data series. Under the “Edit Line 2” tab, change the unit to “Index (Scale value to 100 for chosen date)” using “2020-01-01” as the date that equals 100. Then select “Copy to all” to copy these units to all lines. In the “Customize data” section, add the Personal Consumption Expenditures: Chain-type Price Index by searching for PCE. In the formula bar in the “Customize data” section, the formula is (a/b)*100. Repeat the customize data steps for line 1 as well. Finally, change the beginning date of the graph to 2000-01-01.

Suggested by Maggie Isaacson and Hannah Rubinton.

Inflation is a concern for many these days, so the FRED Blog looks at what we know and can show about this economic phenomenon. Inflation has complex roots and is treated with policies that have effects with notoriously long and variable lags. The complexity lies in the fact that inflation can have many different causes. This current bout of inflation has been attributed to excess aggregate demand due to pandemic payouts to households, low interest rates, increasing public deficits, supply chain issues, the invasion of Ukraine, and more.

None of these causes is unique to a particular country, and all seem to apply to a wide range of industrialized countries. So, it should be no surprise that the FRED graph above depicts a similar pattern for inflation across the 7 industrialized countries selected. (We cheated a little by excluding Japan, which has had very low inflation, if not deflation, for much of the period.)

This similarity makes monetary policy a bit more difficult: If there is so much co-movement, is it because all economies face the same inflationary shocks or is it because inflation is being imported and exported across countries?

We can answer such questions only in hindsight, but we can look with more detail at the past five years and how inflation has risen. Our second FRED graph shows that the U.S. was clearly the first to experience higher inflation and also has been the first to see it abating a bit. Does this mean that inflation started in the U.S. and then was exported elsewhere? That certainly cannot be the whole story, because inflation did not happen ex nihilo: As mentioned above, there are many common reasons for rising inflation. And inflation clearly doesn’t have only a monetary origin: Note the stark differences within the euro area, which all falls under the monetary policy of the ECB: Yet, France runs at least 2% below the others and more than 4% below Spain. There is simply no simple story to inflation.

How these graphs were created: Search FRED for US CPI, specifically the OECD series in growth rates, as we want to use the same source for all series. Click “Edit Graph,” open the “Add Line” tab, and successively add the other series. You have the first graph. For the second, take the first and restrict the sample period to the past five years.

Suggested by Christian Zimmermann.