Three and a half years ago, we published a blog post about the Beveridge curve featuring the graph above, which shows how job vacancies and unemployment relate to each other. Each dot represents their values at a particular date. Beveridge’s theory is that these two measures don’t form a kinked line along the axes in a scatter plot, but rather a banana shape. This shape occurs because of delays and frictions in the job market: Vacancies and job seekers take time to intersect, as there may be mismatches in terms of job location and qualifications, for example. The graph above doesn’t show the expected full banana because the available sample period just wasn’t long enough. So, we revisit this idea by updating the graph, shown below. The banana, although not very smooth, is now complete.

How this graph was created: Search for “job openings” and add the series to the graph. From the “Edit Graph” section, add the second series by searching for and adding “civilian unemployment.” From the “Format” tab, choose “Scatter” for graph type. To connect the dots, choose a non-zero line width in the settings of the first series, which is where you can also adjust the size of the dots.

Suggested by Charley Kyd and Christian Zimmermann.

What’s new in FRED? Beyond the pie charts we saw on the blog a week ago, FRED also features scatter plots, like the one shown here. The classic scatter plot used in economic analysis is the Beveridge curve, which describes the dynamics of the labor market through the business cycles, with the unemployment rate on the horizontal axis and the job openings rate on the vertical axis. Thus, every point corresponds to the values of those two rates on a particular date, with the dates connected by a line.

As one would expect, when the unemployment rate is high, the job openings rate is low (and vice versa). If markets were perfectly fluid with perfectly adjustable wages, both rates would be zero. But there are all sorts of frictions, from rigidities in wages to spatial, sectoral, and competency mismatches between demand and supply of labor. These frictions typically generate a scatter plot that looks like a banana, as the markets react sluggishly to changing conditions. Because the current business cycle has been so long and continues even now, the line around the banana is not yet complete.

How this graph was created: Select the two series, the maximum time range, then choose “scatter” for the graph type. To connect the dots, choose a non-zero line width in the settings of the first series. That’s where you can also adjust the size of the dots.

Suggested by Christian Zimmermann