The relatively slow growth of employment has

Transcription

1 NationalEconomicTrends August Please go to researchstlouisfedorg/publications/net for important information about your subscription Labor s Share The relatively slow growth of employment has been a prominent feature of the current economic expansion Now that employment is showing signs of picking up, however, attention has shifted to the growth of wages Recent data from the Bureau of Labor Statistics show that real (inflation adjusted) hourly earnings have been declining for the past several months: From June through June of this year, earnings of production or nonsupervisory workers on private nonfarm payrolls have risen 17 percent in nominal terms; but, after adjusting for inflation, earnings have declined percent And yet, the economy has been exhibiting rapid growth, with real gross domestic product expanding at a of more than percent in the past year Do these recent observations portend a change in the allocation of income in the US economy? Some might speculate that this is so, but it is difficult to evaluate such a proposition based on only a few months of data Considering the issue from a broader and longer-run perspective provides a more informative view of this economic landscape The allocation of national income between workers and the owners of capital is considered 7 one of the more remarkably stable relationships in the US 7 economy As a general rule of thumb, economists often cite labor s share of income to be about two-thirds of national income although the exact figure is sensitive to the specific data used to calculate the ratio Over time, this ratio has shown no clear tendency to rise or fall The figure provides a perspective on this issue The dashed line Shares of National Income shows wage and salary income as a fraction of national income This measure clearly shows a declining trend in recent decades Having reached a peak of percent in 197, wages and salaries have declined to only percent of national income in However, if we consider total compensation including employer social insurance contributions and benefits labor s share has shown very little variation 1 By this measure, labor s share of national income has averaged 7 percent over the past years and has remained within a narrow range of that average Only time will tell if a significant shift in income allocations is underway However, a long-run perspective suggests that it would indeed be unusual for labor s share to deviate far from its historic value Michael R Pakko 1 One complicating factor is the allocation of proprietors income, which includes both labor and capital components In the data for the figure, proprietors income is assumed to be allocated in the same proportions as in the rest of the economy Total Compensation Wages and Salaries Views expressed do not necessarily reflect official positions of the Federal Reserve System

2 Contents Page Economy at a Glance Output and Growth 7 Interest Rates Inflation and Prices 1 Labor Markets 1 Consumer Spending 1 Investment Spending 1 Government Revenues, Spending, and Debt 1 International Trade Productivity and Profits Quick Reference Tables 7 Notes and Sources Conventions used in this publication: 1 Shaded areas indicate recessions, as determined by the National Bureau of Economic Research refers to simple percent changes from year refers to the percent change from the same month or quarter during the previous year Compounded annual of change shows what the growth would be over an entire year if the same simple percent change continued for four quarters or twelve months The compounded annual of change of x between the previous quarter t 1 and the current quarter t is: [(x t /x t 1 ) 1] 1 For monthly data replace with 1 All data with significant seasonal patterns are adjusted accordingly, unless labeled NSA We welcome your comments addressed to: Editor, National Economic Trends PO Box St Louis, MO 1- or to: stlsfred@stlsfrborg National Economic Trends is published by the of the Visit the s website at researchstlouisfedorg/publications/net to download the current version of this publication or register for notification updates For more information on data in this publication, please visit researchstlouisfedorg/fred or call (1) -7

3 updated through // National Economic Trends Real GDP Growth Compounded annual s of change 1 Consumer Price Industrial Production Interest Rates Percent Treasury - 1 -Month Treasury Change in Nonfarm Payrolls Thousands Unemployment Rate Percent of labor force

4 National Economic Trends updated through // Real Gross Domestic Product from year Industrial Production and Institute for Supply Management (ISM) es from year 1 1 Industrial Production ISM Aggregate Private Nonfarm Hours from year Real Change in Private Inventories Percent of GDP

5 updated through // Real Final Sales and GDP Compounded annual s of change 1 GDP (bar) Final Sales Real GDP Revisions Compounded annual s of change National Economic Trends Advance Preliminary Final Revision : : : :1 : Industrial Production and ISM 1 1 Industrial Production (bar) Nominal Gross Domestic Product Compounded annual s of change ISM Aggregate Private Nonfarm Hours Average Weekly Private Nonfarm Hours Hours Real Change in Private Inventories Billions of dollars Inventory-Sales Ratio Manufacturing and trade

6 National Economic Trends updated through 7// Contribution of Components to Real GDP Growth Percentage points at compounded annual s Q Q Q1 Q Q Q Q1 Q Consumption Exports Government Imports Inventories Investment Contributions to Real GDP Growth Rate rd th 1st nd rd th 1st nd Final Sales Consumption Fixed Investment Nonresidential Residential Federal Government State and Local Imports Change in Inventory Exports Net Exports Residual Real GDP Growth

7 updated through // National Economic Trends Interest Rates Percent Treasury -Month Treasury Treasury Yield Curve Percent Week Ending: 7// Jul Jul 7 m 1y y y 7y 1y Standard and Poor's with Reinvested Dividends from year

8 National Economic Trends updated through 7// NIPA Chain Price es from year 1 1 GDP Gross Domestic Purchases Consumer Price from year 1 9 Excl Food and Energy All Items Producer Price, Finished Goods from year 1 - Excl Food and Energy PPI Employment Cost and Compensation per Hour from year 1 9 Comp per Hour ECI

9 updated through // NIPA Chain Price es Compounded annual s of change 1 Gross Domestic Purchases GDP (bar) Consumer Price Compounded annual s of change 1 Compounded annual s of change National Economic Trends Oil & Natural Gas Prices: Spot & Futures Dollars per barrel Spot Oil Consumption Chain Price Dollars per million btu Oil Futures 1 Spot Gas Gas Futures Note: Futures prices as of // Excl Food & Energy CPI (bar) PCE (bar) Excl Food & Energy Producer Price, Finished Goods Compounded annual s of change Unit Labor Cost Compounded annual s of change 1 7 PPI (bar) Manufacturing (bar) -7 - Excl Food & Energy - Nonfarm Employment Cost from year Compensation per Hour Compounded annual s of change Benefits Wages and Salaries Compensation

10 National Economic Trends updated through // Employment from year Payroll Survey Household Survey See the Notes section at the end of this publication for the Feb 7,, revisions to the Household Survey, and the June,, revisions to the Establishment Survey Unemployment, Labor Force Participation, and Employment Rates Percent of labor force 1 9 Labor Force/Population Employment/Population Percent of population Unemployment Rate Duration of Unemployment Percent of labor force Weeks 1 7 Unemployed < Weeks Unemployed > Weeks Median

11 updated through // National Economic Trends Change in Nonfarm Payrolls Thousands Change in Manufacturing Payrolls Thousands Change in Household Employment Thousands Labor Force and Population from year 7 9% Confidence Pop 1 - Labor Force Available Labor Supply and Components Percent of labor force Available Labor Supply 7 Unemployed Want to Work Unemployment Rate & Help-Wanted Percent 7 7 Help-Wanted Unemployment Rate % Confidence

12 National Economic Trends updated through 7// Real Disposable Personal Income from year, quarterly data Real Consumption from year, quarterly data 1 from year, quarterly data Durables 1 Total Retail and Food Services Sales from year, quarterly average *Data from Jan 199 to the present are on a NAICS basis; data prior to Jan 199 are on an SIC basis and are not strictly comparable (see End Note) Debt Service Payments and Household Debt Outstanding from year, quarterly data 1 Percent of disposable personal income 1 Debt Service Payments Household Debt Outstanding

13 updated through // Real Disposable Personal Income Personal Saving Rate Percent National Economic Trends Real Consumption Compounded annual s of change Real Consumption Retail & Food Services Real Durables Consumption & Vehicle Sales Millions of vehicles, annual 9 1 Ex Autos Durables (bar) Total (bar) Autos and Light Trucks Consumer Sentiment (U of Michigan) 1 Real Durables Consumption Compounded annual s of change

14 National Economic Trends updated through 7// Investment Percent of nominal GDP Total Private Private Fixed Investment from year 1 Nominal 1 Real Real Nonresidential Fixed and Equipment & Software Investment from year Equipment & Software Nonresidential Real Residential Fixed Investment from year

15 updated through // National Economic Trends Gross Saving Rates and Balance on Current Account (NIPA) Percent of GDP Gross Private Saving 1 - Gross Govt Saving BOCA Real Private Fixed Investment Compounded annual s of change Nondefense Capital Goods Orders from year, excluding aircraft Equipment & Software Investment Orders Real Equipment & Software Investment Compounded annual s of change Real Nonresidential Fixed Investment Compounded annual s of change Real Residential Fixed Investment Compounded annual s of change Housing Starts and New Home Sales Millions, annual New Home Sales Millions, annual 17 9 Housing Starts

16 National Economic Trends updated through 7// Govt Consumption and Investment Billions of dollars 1 Total State & Local 1 Federal Govt Current Receipts and Expenditures Percent of GDP Total Expenditures Total Receipts Fed Expenditures Fed Receipts Government Budgets Billions of dollars National Income Accounts Calendar s Unified Budget Fiscal s Receipts State and Local Federal Federal Expenditures Surplus or Deficit (-) Receipts Expenditures Surplus or Deficit (-) Receipts Outlays Surplus or Deficit (-) Q Q Q Q Q Q Q Q Q Q Q Q

17 updated through 7// Federal Debt Percent of GDP 7 Total Percent of GDP National Economic Trends Federal Surplus (+) / Deficit (-) Held by Public NIPA Unified Budget Change in Federal Debt Percent of GDP NIPA: Net government saving Federal Surplus (+) / Deficit (-), Unified Basis Billions of dollars, fiscal years 7 Total Excl interest payments Total Held by Public Federal Government Debt Billions of dollars, end of month or fiscal year Excludes Agency-issued debt Total Public Debt Held by Agencies and Trusts Held by Public Federal Total Reserve Banks Held by Private Investors Foreign and Total International March June September December March June September December March June September December March

18 National Economic Trends updated through // Current Account, Trade and Investment Income Balances Billions of dollars, quarterly Percent of GDP Investment Income Current Account Goods and Services Exchange Rates, March 197 = 1 1 Yen/US$ 1 x (Ecu or Euro/US$) Yen Major Currency Ecu Euro Goods Export Shares, Goods Import Shares, UK 7% Mexico 1% UK 9% Mexico 19% China 19% All Other 9% China 9% Japan 79% All Other % Japan 9% France 9% Germany % Germany % Other OECD 177% Canada % France % Other OECD % Canada 17% 1

19 updated through 7/1/ Trade Balance Billions of dollars Goods and Services Goods Goods Trade National Economic Trends from year Imports 1 Exports Current Account Balance Billions of dollars Services Trade from year Imports Exports Real GDP Growth of Major Trading Partners Compounded annual s of change United Kingdom Germany - - Canada France Japan Mexico

20 National Economic Trends updated through 7// Output per Hour and Capacity Utilization, Manufacturing from year 1 Utilization Rate (level) Percent 9 7 Output/Hour *Data from 197 to the present are on a NAICS basis; data prior to 197 are on an SIC basis and are not strictly comparable (see End Note) Nonfarm Compensation per Hour from year 1 Nominal Real Output per Hour, Nonfarm Business and Nonfinancial Corporations from year 9 Nonfinancial Corporations Nonfarm Business Sector

21 updated through 7// National Economic Trends Nonfarm Output per Hour Compounded annual s of change 1 Manufacturing Output per Hour Compounded annual s of change Selected Component Shares of National Income Percent Percent Corpo Profits Proprietors' Income Compensation Corpo Profits Percent of GDP 1 Profits (Before Tax) 1 Profits (After Tax)

22 National Economic Trends updated through 7// Billions of $ Nominal GDP Billions of $ Real GDP Billions of $ Final Sales Change in Private Inventories Billions of $ Last qtr / Billions of $ Consumption Durables Consumption Billions of $ Private Fixed Investment Billions of $ Nonresidential Fixed Investment Billions of $

23 updated through 7// National Economic Trends GDP Chain Price Employment Cost ECI: Wages ECI: Benefits Billions of $ Exports Billions of $ Imports Nonfarm Output per Hour Nonfarm Compensation per Hour

24 National Economic Trends updated through // Household Survey Employment Thousands Change Nonfarm Payroll Employment Thousands Change Nonfarm Aggregate Hours Monthly Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul

25 updated through // National Economic Trends Unempl Rate Retail and Food Services Sales Billions of dollars Monthly/ quarterly Industrial Production Monthly/ quarterly Treasury Yields (Percent) -mo 1-yr Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul 1

26 National Economic Trends Consumer Price Monthly/ quarterly to date Consumer Price less Food and Energy Monthly/ quarterly to date updated through 7/1/ Producer Price Finished Goods Monthly/ quarterly Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

27 National Economic Trends Notes Pages, : Final Sales is gross domestic product (GDP) minus change in private inventories Advance, Preliminary, and Final GDP Growth Rates are released during the first, second, and third months of the following quarter Changes result from incorporation of more complete information Real GDP is measured in dollars The ISM (formerly Purchasing Managers ) is a weighted average of diffusion indexes for new orders, production, supplier deliveries, inventories, and employment Aggregate and Average Weekly Hours are paid hours of production and nonsupervisory employees The Inventory-Sales Ratio uses nominal (current-dollar) inventory and sales data Page : For information on how to calculate the Contribution of a component to the overall GDP growth, see the October 1999 issue of the Survey of Current Business, p 1 The sign is changed for Imports Page 7: Ten-year Treasury Yields are adjusted to constant maturity; threemonth yields are secondary market averages All s used in the yield curves are adjusted to constant maturity The -year constant maturity series was discontinued by the Treasury Department as of Feb 1, Standard and Poor s with Reinvested Dividends shows the total return: capital gains plus dividends Pages, 9: Oil (West Texas intermediate) and Natural Gas (Henry Hub) spot and futures prices are listed in the Wall Street Journal Spot prices are monthly averages of daily prices; futures prices are usually taken from the last trading day of the month Consumer Price is for all urban consumers The Consumption Chain Price is the index associated with the personal consumption expenditures component of GDP The Employment Cost (ECI) covers private nonfarm employers ECI Compensation refers to a fixed sample of jobs, while Compensation per Hour covers all workers in the nonfarm business sector in a given quarter In both cases, compensation is wages and salaries plus benefits Pages 1, 11: Effective with the May Employment Situation, the establishment survey data for employment, hours, and earnings have been converted from the 197 SIC system to the NAICS system All published NAICS-based labor series have been revised back to at least 199 For more information see Nonfarm Payroll Employment is counted in a survey of about, establishments (Current Employment Survey) It excludes self-employed individuals and workers in private households, but double-counts individuals with more than one job The Household Survey (Current Population Survey) of about, households provides estimates of civilian employment, unemployment, labor force participation, and employment-population ratio Population is civilian, noninstitutional, 1 years and over The 9 percent confidence intervals for the unemployment (± percentage points) and change in household survey employment (± 9,) measure uncertainty due to sample size Because the household survey was changed in January 199, data prior to this date are not strictly comparable The Bureau of Labor Statistics announced several revisions to the Household Survey on Feb 7,, with the release of the January data For more information, see <wwwblsgov/cps/> Page 1: The Michigan Consumer Sentiment shows changes in a summary measure of consumers answers to five questions about their current and expected financial situation, expectations about future economic conditions, and attitudes about making large purchases The survey is based on a representative sample of US households Page : Gross Private Saving is the sum of personal saving, undistributed corpo profits with IVA and CCAdj (see notes for pp 1-19), and private wage accruals less disbursements Gross Government Saving is net government saving (surplus/deficit) plus consumption of fixed capital Balance on Current Account (NIPA) is net capital transfer payments to the rest of the world plus net lending or net borrowing (international trade and income flows) Pages 1, 17: Government Consumption and Investment is current expenditures on goods and services, including capital consumption (depreciation) and gross investment, as reported in the NIPAs The Unified Federal Budget Surplus/Deficit differs from NIPA Basis in four main ways: (1) NIPA excludes transactions involving existing assets; () NIPA outlays exclude government investment and include consumption of government capital, while unified budget outlays do the reverse; () NIPA accounts exclude Puerto Rico and US territories; and () various timing issues are handled differently Outlays and Receipts are from the NIPAs, except as noted Since 1977, the federal Fiscal starts on October 1 Excluded agency debt was percent of federal debt at the end of fiscal 1997 Federal Debt Held by the Public includes holdings of the Federal Reserve System and excludes holdings of the social security and other federal trust funds Federal grants in aid to state and local governments appear in both state and local receipts and federal outlays Pages 1, 19: The Trade Balance (shown on a balance of payments basis) is the difference between exports and imports of goods (merchandise) and services It is nearly identical in concept to the Net Exports component of GDP, but differs slightly in accounting details The Investment Income Balance equals income received from US-owned assets in other countries minus income paid on foreign-owned assets in the US The investment income balance is nearly identical in concept to the difference between gross national product and gross domestic product, but differs in accounting details The Current Account Balance is the trade balance plus the balance on investment income plus net unilateral transfers to the US from other countries Pages, 1: Output per Hour (Y/H), Unit Labor Cost (C/Y), and Compensation per Hour (C/H) are indexes which approximately obey the following relationship: %(Y/H) + %(C/Y) = %(C/H) with %() meaning percent changes Unit labor cost is shown on page 9 Real Compensation per Hour uses the CPI to adjust for the effects of inflation Nonfarm business accounted for about 7 percent of the value of GDP in 199, while nonfinancial corporations accounted for about percent Inventory Valuation Adjustments (IVA) remove the effect of changes in the value of existing inventories from corpo profits and proprietors income (This change in value does not correspond to current production and therefore is not part of GDP) Capital Consumption Adjustments (CCAdj) increase profits and proprietors income by the difference between estimates of economic depreciation and depreciation allowed by the tax code Components of national income not shown are rental income of persons and net interest NOTE: Most measures of economic activity are now based on the North American Industry Classification System (NAICS), which replaces the 197 Standard Industry Classification (SIC) system Sources Bureau of Economic Analysis (BEA), US Dept of Commerce National income and product accounts, international trade and investment data (except by country), auto and light truck sales Census Bureau, US Dept of Commerce Inventory-sales ratios, retail sales, capital goods orders, housing starts, exports and imports by country Bureau of Labor Statistics (BLS), US Dept of Labor All employment-related data, employment cost index, consumer and producer price indexes, unit labor cost, output per hour, compensation per hour, multifactor productivity United States Department of Treasury Unified budget receipts, outlays, deficit, debt Federal Reserve Board of industrial production, treasury yields, exchange s, capacity utilization, household debt The Survey Research Center, The University of Michigan Consumer sentiment index The Conference Board Help-wanted advertising index Organization for Economic Cooperation and Development (OECD) GDP for major trading partners (not available on FRED) 7