Compiled on 2023-11-01 by E. Anthon Eff
Jones College of Business, Middle Tennessee State University

1 Labor Markets

1.1 Labor Force Participation Rate

The labor force participation rate (LFPR) equals labor force divided by population. Female LFPR grew steadily after WWII, then plateaued in the aughts. Male LFPR mostly declined, due to an increasing number of males in retirement. Especially teenagers experienced a reduction in LFPR during the 21st century. Note the conspicuous reduction in LFPR during and following the Great Recession. Much of this is due to retirement of Baby Boomers; some portion is due to discouraged job-seekers dropping out of the labor force. Note also the intense shock inflicted by the COVID crisis, and the failure of adult LFPR to recover fully.

1.2 Unemployment Rate

The unemployment rate for adult men and women are of similar magnitude, while teenagers have a much higher rate. Note that the unemployment rate lags, in that it peaks at the end or even after a recession (the pink bars). This is because job-seekers flood into the market as the economy improves, so that more people are looking for work, but not yet working. The COVID crisis triggered an extraordinarily high adult unemployment rate, though it did not reach the peak of 25 percent attained during the Great Depression.

1.3 Natural rate of unemployment

The natural rate of unemployment is the unemployment rate net of cyclical unemployment (i.e., it considers only seasonal, frictional, and structural unemployment). The natural rate indicates the threshold for which inflation would ignite, should the actual unemployment rate fall below that level. Note the curious fact that the actual unemployment rate dips below the natural rate immediately preceding each of the recessionary periods in the chart.

1.4 Unutilized capacity rate

The capacity utilization rate measures how intensively we are using our stock of structures and equipment. A factory operating with one fully manned eight-hour shift is counted as operating at 100 percent of capacity. The chart compares the unutilized capacity rate with the unemployment rate for prime-age workers (ages 25 through 54).

1.5 Federal non-farm minimum wage

The minimum wage was first established in 1938. Its real value (adjusted for consumer prices) has changed a great deal over the years. Note that the real minimum wage has often been higher than it is today.

1.6 Output and Labor in US Manufacturing

Note that up until about 2010, each year we produced more manufacturing goods,using fewer workers. Since then, increases in output have been accompanied by corresponding increases in employment.

1.7 Productivity and wages in US Manufacturing

As manufacturing output grows, and manufacturing labor shrinks, we see increasing labor productivity: $(Q\uparrow,L\downarrow)\rightarrow\frac{Q}{L}\uparrow$. The usual narrative is that wages rise as productivity rises, since workers can now produce more value per hour. That appears to be the case up to about 2010, though productivity grew much faster than wages. After 2010 both productivity and wages plateaued.

2 Prices

2.1 CPI & PPI

The most popular way to measure inflation in consumer goods prices is based on the Consumer Price Index. The Producer Price Index provides a measure of inflation for producer goods. Note that producer prices are by far the most volatile, and that they tend to fall sharply during and after recessions (the pink bars). They also appear to lead consumer prices.

2.2 Oil

Oil prices surged prior to and into the 2008 recession. During the aughts, demand for petroleum from newly industrializing countries (most notably China) drove up prices. At those higher prices, it became profitable to extract petroleum from more difficult sources, such as shale (fracking), leading to a much greater supply, which in turn pushed down prices. Note the bizzare fall of West Texas oil prices on April 20, 2020 to -$36.98! Demand fell so much that suppliers had to pay to have their inventory removed.

2.3 Gasoline

Gasoline prices track oil prices. Note the post-Katrina spike in gasoline prices (September 2005) due to the hurricane smashing Gulf coast refineries.

2.4 Milk and eggs

Outbreaks of avian flu were especially severe in 2015 and 2022, leading to sharp spikes in egg prices. Milk prices are less volatile than egg prices, but there are occasional price surges, as seen in 2014, due to high demand in the cheese export market, and in 2022, due to high costs of cattle feed and energy.

2.5 Grains

High food prices often lead to political turmoil, especially in the developing world. Grains are the main source of calories for most people worldwide. The number of calories per person per day in 2013 was: rice (541); wheat (527); maize (147); and soybeans (96). But both maize and soybeans are primarily used for other purposes, such as food for livestock or pets, the raw material for products such as cosmetics, or fuel.
Note that these price indices tend to move together, an indication that these products are substitutes in consumption or production.

2.6 Coffee

The two main types of coffee are robusta and arabica. The latter is more expensive. The top three coffee-producing countries are Brazil, Vietnam, and Colombia.
Recently, coffee prices have risen due to a frost in Brazil and COVID-19 disrupting the harvest and transport of coffee in Vietnam.

3 Interest Rates

3.1 Default Risk

Here one can see how yields are higher on riskier bonds (Baa is riskier than Aaa). Interest rates spiked sharply in the early 1980s, due to high inflation and the Feds (successful) efforts to reduce that inflation.

3.2 Maturity Risk

The difference between the yield on a 10 year Treasury and the yield on a 1 year Treasury is an indication of maturity risk. However, it changes over time, and analysts have noted that a narrowing of that difference often signals an imminent recession.

3.3 Mortgage Rates

Until recently, mortgage rates were at historic lows. Note the maturity risk premium built into the 30 year mortgage versus the 15 year.

3.4 Real Interest Rates

This graph compares the nominal and real rates on the 10-year US Treasury bond. The real rate is calculated as the nominal rate minus the CPI inflation rate. The real interest rate is currently deeper into negative territory than it has been at any time during my life.

4 National Income

4.1 Real per capita income

By historical standards, we are incredibly rich. The average American today has nearly five times as much stuff as the average American in 1955, the year I was born.

4.2 GDP Growth

As can be seen by the five-year rolling average, the annual percent change in GDP is declining. Note how the Great Recession was unusually severe, with an unusually weak recovery.

4.3 Potential GDP growth

Potential GDP grows as labor increases, and as labor productivity increases. Currently potential GDP growth is just under 2%, considerably below the level of previous decades. The low growth is due to both declining labor productivity growth rates and diminishing population growth rates.

4.3.1 Population growth rate

The chart shows the annual growth rate of the civilian noninstitutional population 16 years of age and older. The total growth rate is partitioned into the native-born and immigrant growth rates; the sum of the components is equal to the total growth rate. Note that immigration accounts for most of the growth rate of population.

Population growth rate

4.3.2 Labor productivity and potential GDP growth rates

The chart shows the growth rates of labor productivity and potential GDP. Labor productivity is volatile, though the two series clearly track each other.

Labor productivity and potential GDP growth rates

5 Foreign Exchange

5.1 Exchange rates

Price of the US dollar measured in foreign currency (exchange rates). High values mean that our dollar is more expensive (stronger). Note that the Chinese Yuan does not fluctuate nearly as much as the other two currencies in the earlier years, due to the fact that it was repeatedly pegged to the dollar. However, around 2015 the Yuan begins to behave like a flexible exchange rate, following the movements of the two Scandinavian currencies.

5.2 Dollar index

The dollar index is the price of the dollar weighted by value of goods and services exchanged with trading partners. High values mean that our dollar is more expensive (stronger).

5.3 CHF/USD

Switzerland / U.S. Foreign Exchange Rate. High values mean that our dollar is more expensive (stronger). Note the steady weakening of the dollar.

5.4 LKR/USD

Sri Lanka / U.S. Foreign Exchange Rate. High values mean that our dollar is more expensive (stronger). Note the steady strengthening of the dollar.

6 Government impact on the economy

6.1 Government expenditure decomposed

Government spending is shown here as a share of GDP. It includes federal defense and non-defense, as well as state and local expenditures.

6.2 Total government expenditures

Government spending is shown here as a share of GDP. Note the extraordinary peak during the COVID crisis.

6.4 Currency Component of M1 Plus Demand Deposits

Much of the response to the COVID-19 economic crisis has taken the form of the Fed creating new dollars. The narrowest measure of money, called M1, consists of three categories: currency (coins and bills) plus demand deposits (checking accounts) plus other very liquid deposits. The definition of this last category (very liquid deposits) was reformulated in May 2020, making it difficult to compare M1 before and after May 2020, so the graph simply shows the sum of the first two categories.
Note the unprecedented growth of M1 in response to the COVID-19 crisis.

6.5 Federal Debt as Percent of Gross Domestic Product

Congress responded to the COVID-19 economic crisis with deficit spending, which is financed by borrowing. The chart shows government debt as a percent of GDP. Currently, our Federal government owes an amount greater than the entire production of goods and services in the U.S. economy in one year.

6.6 Federal personal income tax rates

The Federal Income Tax was introduced following the ratification of the 16th amendment to the Constitution, in 1913. It is remarkable how much the rates have changed over time, and how extraordinarily high the highest bracket was during the mid-20th century. (Thanks to Bronwyn Graves for bringing this series to my attention).

6.7 Marginal tax rates

The threshold income level for the application of the highest tax rate has also changed considerably. The periods of the highest marginal rates were also ones of very high boundaries to the highest bracket.

7 Other

7.1 Changes in Wealth

The major stock indices measure the market valuation of a subset of publicly traded stocks: the DJIA is based on 30 stocks, and the S&P500 is based on 500 stocks. Here we show an index calculated by the OECD, for all stocks in the US. Home equity is a major form of wealth for US households. Note how the decline in home equity led the decline in stock values, as the recession began in 2008.

7.2 Student loan debt

Federally guaranteed student loans are a giant pile of debt.

7.3 Personal health care expenditures

Health care expenditures make up an increasing share of GDP. Like everything in the economy, there are multiple reasons for this: an aging population; advances in medical science; higher incomes.

7.4 Ice Cream Production

Hmmmmm. What is the message conveyed by this chart?

Macroeconomic data