WORKING WITH MACROECONOMIC DATA
For data to use in these exercises, go to the Federal Reserve Bank of St. Louis FRED database at fred.stlouisfed.org.
1. a. Calculate the total percentage growth in average labor productivity in the U.S.
economy for the 1950s, 1960s, 1970s, 1980s, 1990s, 2000s, and 2010s. To do this, calculate average labor productivity in the last year of each decade beginning in 1949 as real gross domestic product in the last quarter of the year divided by non-farm payroll employment in the last month of the year. In which decades did average labor productivity grow the most quickly overall? The most slowly? Express the growth rates for each decade in annualized terms by using the formula
where g is the annual growth rate, expressed as a decimal (for example, 0.05 for 5%), and G is the 4 growth rate for the decade (the change in productivity during the decade divided by the initial productivity level). For each of the seven decades, use your calculated values for G and the formula above to solve for g.
b. Calculate annual labor productivity growth rates 5. for each year since 2020 for which data are available. (Define average labor productivity for each year as real gross domestic product in the last quarter of the year divided by non-farm payroll employment in the last month of the year.) How do the recent growth rates compare with those of the seven previous decades?
2. Graph the behavior of the civilian unemployment rate from 1961 until the present using monthly data. Vertical gray bars in FRED indicate periods of recession. In terms of the unemployment rate, how does the severity of the recession of 2020 compare with the recessions of 1969-1970, 1973-1975, 1980, 1981-1982, 1990-1991, 2001, and 2007-2009? How does the behavior of the unemployment rate over the 2000s and 2010s compare to its behavior in the 1960s, 1970s, 1980s, and 1990s?
3.
Using monthly data on the consumer price index (CPI) for all urban consumers, calculate and graph the U.S. inflation rate as the percentage change in the price index from one year ago for each year since 1948. In which periods within the postwar era did the United States experience the highest inflation rates? In which periods was the inflation rate the most stable (that is, roughly constant from one year to the next)?In FRED, find data for GDP for the United States, Japan, and Mexico. Calculate the annual average growth rate of GDP for the last five years for which the data are available. How do the growth rates compare to each other? Which country grew the fastest over the past five years? Which country grew the slowest?
Plot the FRED data on gross federal debt held by the public as a percent of GDP for the United States. In which periods within the postwar era did the United States experience prolonged declines in the ratio of federal debt relative to GDP? In which periods did the ratio of federal debt to GDP rise rapidly? Can you explain the main causes of the increases in the ratio of federal debt to GDP?