Wednesday , June 19 2019
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The Federal Reserve Bank of St. Louis is the center of the Eighth District of the Federal Reserve System. This District includes Arkansas, eastern Missouri, southern Illinois and Indiana, western Kentucky and Tennessee, and northern Mississippi.

Articles by FRED Blog

One rate does not rule them all : Unemployment is uneven across U.S. counties

2 days ago

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The graph above shows the annual civilian unemployment rate from 1948 to 2018, and here are some highlights: Ten years ago, after the Great Recession, the U.S. unemployment rate peaked at 9.6%. (The only higher unemployment rate in this series was 9.7%, in 1982.) It gradually came down to 3.9% in 2018, the lowest in fifty years. (The rate in 1969 was 3.5%.)
But these national unemployment numbers mask the variation that exists across different regions in the U.S. Fortunately, we have GeoFRED to paint a clearer picture: The map below shows the unemployment rate for 2018 for 3,133 U.S. counties. The counties are split into two equally sized groups according to their unemployment rates: Those with lower unemployment are in blue, and those with higher unemployment are

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Fixing the “Textbook Lag” with FRED (Part II) : Monetary policy in a world of ample reserves

6 days ago

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Your economics textbook may still say the Federal Reserve uses open market operations to influence the federal funds rate. But in today’s economy, the Fed uses different policy tools.
In simple terms, this is how monetary policy currently works: The FOMC sets a target range for the federal funds rate (FFR) and uses interest on excess reserves (IOER) and the overnight reverse repurchase agreement (ON RRP) facility to keep the FFR rate in the target range. (See our previous post for an introduction to this topic.)
The Fed pays IOER to banks holding reserves at the Fed, which offers those banks a safe, risk-free investment option. Arbitrage ensures that the FFR doesn’t drift too far from the IOER rate. If the FFR drifts much below the IOER rate, banks then have an

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Fixing the “Textbook Lag” with FRED (Part I) : Monetary policy in a world of ample reserves

9 days ago

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Your economics textbook may still say the Federal Reserve uses open market operations to influence the federal funds rate. But in today’s economy, the Fed uses different policy tools.
Before September 2008, when reserves were scarce, the Federal Reserve bought and sold relatively small quantities of Treasury securities to adjust the level of bank reserves and influence the federal funds rate (FFR). But we now live in an environment of ample reserves. As such, the Federal Reserve can no longer effectively influence the FFR by making small changes in the supply of those reserves. Instead, the Fed uses its newer tools—paying interest on excess reserves (IOER) and the overnight reverse repurchase agreement (ON RRP) facility—to influence the FFR.
Since December 16,

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Comovements in monetary policy : Revealing international correlations with FRED

13 days ago

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Reporters and Fed watchers in the U.S. usually think about monetary policy in a domestic framework. But because business conditions, including commodity prices, are correlated internationally, central banks tend to move their policy rates up and down together and their inflation and interest rates tend to be correlated. FRED makes it easy to see these international comovements of macro and policy variables.
The first graph shows comovement in inflation rates from 1970 to the present for four economies: the U.S., Japan, the U.K., and the euro area. Inflation rose in the 1970s as central banks failed to combat the effects of commodity price increases on the general price level and inflation expectations became established.
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Before the Financial

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Oil prices and breakeven inflation rates revisited

16 days ago

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In an earlier FRED Blog post, we highlighted the simultaneous decline in the 5-year breakeven inflation rate and the price of oil in 2014. (The 5-year breakeven inflation rates are obtained from 5-year Treasury inflation-indexed constant maturity securities and are thought to represent the market’s expectation of CPI at a 5-year horizon.) At that time, we argued that markets might have believed that the drop in oil prices reflected a slowing in global demand that might result in a persistent decline in consumer prices. In this post, we make a longer comparison—from 2011 to 2019—between the same two series shown in the original graph.
The graph above shows that the correlation between the breakeven inflation rate and oil prices is not limited to the steep decline

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What’s normal for financial data? : “Norming” indicators such as the St. Louis Fed Financial Stress Index

20 days ago

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Financial data are useful for many reasons. One (perhaps subtle) reason is that they are never revised. Markets determine the prices and quantities of assets at the time of the transaction and that’s that. As such, once you observe the value of a particular financial variable at a particular point in time, you know it will remain at that value forever.
One might assume, then, that the St. Louis Fed Financial Stress Index, which includes 18 series of financial data to measure stress in the markets, would also remain the same forever. Well, the graph shows us something different: It plots 10 distinct vintages of the index starting with the first, from March 2010, and then one from every year since then. Despite the fact that this index is composed entirely of

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The booms, blips, and dips of dot-com, telecom, and cultural transmissions : Employment in the information sector

27 days ago

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Some call the past few decades a new industrial revolution, given the dynamic emergence of the information economy. The graph above shows employment in information services, and, indeed, there’s strong growth in the sector, especially up to the dot-com crash in 2000. But since then, the sector doesn’t seem to have expanded its payrolls much. In fact, once you take out the boom, current data seem to follow the previous trend.
Now, the employment classification for information services includes more than just jobs related to the internet. NAICS code 51 encompasses anything related to the diffusion of information. So, it’s also phone companies, movie makers, broadcasting, newspapers, and software. Clearly, some of these sub-sectors have suffered from the rise of the

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Where in the world are banks profitable? : World Bank data on ROA for 173 economies

May 20, 2019

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There are many indicators to help us evaluate the U.S. economy, but international data are a little more limited. Which is why FRED is fortunate to have World Bank data to compare economic conditions across countries. Today, we look at how well banks are doing—according to their return on assets—all over the world. Measuring banks’ ROA is relatively simple: Aggregate the net income of all commercial banks in a country and divide this sum by their total assets.
The graph above shows three countries with contrasting fortunes. The most dramatic is Greece, whose banks have been struggling with bad debt. Then there’s Kenya, whose banks are doing surprisingly well, at least under this dimension. Finally, the United States is in the middle, with a noticeable dip during

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Uneven fortunes in U.S. industry : Tracking types of industrial production

May 16, 2019

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This FRED graph shows three very different stories for three different types of goods production in the U.S. The clothing sector dominated the other two for about 60 of the 70 years shown in this sample, only to collapse in the first decade of the millennium and slowly decline thereafter. This shift is a direct consequence of cheaper manufacturing opportunities abroad. The automotive products sector has been steadily increasing its output, except for some hard times during the financial crisis, when car manufacturers were struggling. Occasionally, short dips occurred during strikes in the car industry. Finally, the electronics sector comes out of nowhere in the 1990s to establish itself as a core component of American industry.
How this graph was created: Search

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Jealous of the Aleutian commute? : Census data show average U.S. commutes range from 5 to 45 minutes

May 13, 2019

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FRED has all sorts of socioeconomic data beyond the traditional macroeconomic fare, and today we highlight data on commuting time provided by the U.S. Census Bureau. These data are available at the county level, which makes it possible to compare various areas of the country. In the graph above, we can see that commuting times on the coasts (New York and Los Angeles) are longer and have increased more rapidly than the commuting times in St. Louis. This should surprise no one, but we thought we’d highlight a perk for those living in FRED’s hometown.
We can get a bigger (and much less anecdotal) picture by looking at the relevant GeoFRED map below. Non-urban commuting times tend to be shorter, but you’ll have a hard time finding the county with the shortest commuting

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500 for the FRED Blog : Recognizing the FRED team and its partners

May 9, 2019

This is the 500thh post for the FRED Blog, which is a great opportunity to acknowledge all those who make FRED the wonderful data tool that it is.

First, there’s the FRED team itself. These dedicated data specialists and web developers sustain and expand FRED’s structure and service. Of course, the fuel behind FRED is data and FRED’s mission is to disseminate the data. So, it’s the work of 87 data-producing institutions and agencies that allow FRED to do this—by collecting and producing data with integrity and usefulness. See the list of data producers below, but also indulge us for a moment as we acknowledge one especially effective partnership.

The U.S. Census Bureau is one of FRED’s most prolific data producers, and their data team in the Economic Indicators Division has

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The U.S. trades with Cuba? : Some exceptions to the embargo

May 6, 2019

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Yes, there is U.S. trade with Cuba despite the embargo, as the graph above shows. The vast majority of the trade is U.S. exports to Cuba, especially since 2002, mainly in the form of agricultural goods and medication. The U.S. government relaxed the embargo for humanitarian purposes in 2000, but Cuba started to take advantage of this only in November 2001, after Hurricane Michelle. If you look closely along the black horizontal line, you’ll see there is also a little trade from Cuba to the U.S. Although it’s zero in almost every month, a few months do show Cuban exports: from a low of $2,060 (July 2009) to a high of $775,000 (August 2018). And we feel we can depend on the precision of these statistics, especially because this trade is subject to official U.S.

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Just the facts, ma’am : Embracing seasonality in national accounts data

May 2, 2019

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Usually, if you have the choice, you want to look at macroeconomic data that have been seasonally adjusted. This adjustment lets you compare periods within any year without being misled by the various fluctuations that occur every year. Ice cream production, tourism, and toy purchases, for example, all have predictable seasonal factors, and usually we’re interested in what happens beyond these seasonal effects.
The same logic applies to aggregate measures such as gross domestic product (GDP). But, occasionally, we just want the raw data. All three GDP components shown in the graph above consistently dip in the first quarter. In most of the country, the winter months hinder activities such as residential construction and local government infrastructure projects. As

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The return of swap rates : Tracking interest rate risk in FRED

April 29, 2019

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First, some background on swaps: Let’s say you’re borrowing at an adjustable interest rate that fluctuates along with the LIBOR (London Inter-Bank Offered Rate). Let’s also say you’re not so comfortable with the LIBOR’s fluctuations. You can engage in a swap and get someone else to pay that fluctuating interest rate for you, while you pay them a constant interest rate. The constant rate you pay is the swap rate. Now the swap rate stays constant during the lifetime of each individual contract, but the swap rate you can expect to pay for a new contract changes all the time; in fact, many swap rate series in FRED are updated daily at various times.
So what’s interesting about all this? The graph shows the 12-month swap rate, which combines the old (red line) and new

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Hidden figures in homeownership : New homeownership rates by race and region

April 25, 2019

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FRED recently added U.S. Census Bureau data on homeownership rates by race. The rates for each group, shown in the top graph, basically reflect the groups’ positions in the wealth distribution.
Changes in the homeownership rate are driven by small seasonal factors and longer trends. There was a decrease for all groups after 2006, which could reasonably be attributed to the Financial Crisis. Rates rebounded soon after for all groups except African Americans, whose rate has trended down pretty steadily since then.
This last fact could be due to regional differences: That is, homeownership rates could be decreasing in certain geographical areas where more African Americans live. The graph below shows very large sections of the country (Census regions), but doesn’t

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A closer look at labor in the U.S. : BLS state-level labor force participation rates

April 22, 2019

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The U.S. Bureau of Labor Statistics collects all kinds of data on the labor force, employed persons, unemployed persons, and unemployment rates. FRED now offers the BLS’s labor force participation rates for the individual 50 states and the District of Columbia. With this new addition to FRED, we can easily track a state’s labor force participation rate over time and compare performance across states.
By the way, the labor force participation rate is the number of all employed and unemployed workers as a percentage of the total population. By “unemployed,” we mean those actively seeking employment; and by “total population,” we mean the civilian noninstitutional population 16 years and older.
The first graph shows labor force participation rates for each state of

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U.S. Labor Before FRED Was Born : A happy-birthday backward glance at 1991

April 18, 2019

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Today, FRED celebrates its 28th birthday. On this happy occasion, the whole family (FRED, ALFRED, GeoFRED, and the little one, FREDcast) are gathering to read the 2018 Annual Report of the Federal Reserve Bank of St. Louis, much of which is dedicated to FRED.
Let’s look back at the U.S. economy before the birth of FRED (on April 18, 1991) and compare it with the economy of today. The graph above shows the unemployed according to the length of their unemployment spell: We can see there are many more long-term unemployed today. The second graph, which uses a dataset first released right after FRED was born, shows that the U.S. labor force has also become more educated.
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We can’t offer our readers any cake, but we do have pie…charts. The two charts

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Is the rent too high? : Way more than 525,600 minutes of rent data

April 15, 2019

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If you’re a renter and have been complaining that your rent keeps rising, the statistics seem to back you up. In the graph, the purple line shows the evolution of rents in the U.S. as a whole, while the light blue line shows the general price level (CPI). Clearly, rents are increasing faster than prices overall. Of course, location matters for anything related to housing, and there are large regional differences: Rents in the New York and San Francisco areas have clearly appreciated more than average. Rents in the Detroit area have increased but well below the average rate; still, they’re keeping up with general inflation.
Note, however, that the graph shows the evolution of rents, but not their level. It shouldn’t be too surprising that rents in 1984 (the

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Two trillion dollars in U.S. federal taxes : A breakdown of personal, corporate, and foreign sources of revenue

April 11, 2019

[embedded content]The deadline for filing personal income taxes is approaching fast, which you probably know. But how much do you know about the big picture for taxes? This FRED graph helps shed some light on the issue by showing the total amounts of federal taxes paid over the past 5 years, separated by the sources of those taxes. As of the fourth quarter of 2018, federal taxes amounted to over $2 trillion. Clearly, personal income taxes are far and away the largest contributor. Production taxes and import tariffs are now in second place, only recently surpassing corporate income taxes, which have decreased recently. In fourth place are taxes from the rest of the world.

Also, in the sample shown here, the recent tax reform is clearly visible, with dips in all sources of taxes

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The absence of return on short-term Treasuries : Cash vs. 1-month Treasury bills

April 8, 2019

[embedded content]Is it worth it to buy 1-month Treasury bills? The above FRED graph shows their returns in recent years: While they often get very close to zero, at least they’re positive.* But “positive” may not count for much since we have to account for inflation. So let’s redo the graph by subtracting inflation from the return.

This exercise isn’t as simple as it might appear: First, we must factor-in inflation over the life of the bill, which is shorter than the period in which inflation is typically reported. Second, the Treasury return that’s reported in the data is annualized, meaning the monthly return is compounded to an annual return.

So here’s what we need to do to the CPI:

Take the percent change from the previous month, to match the maturity of the (1-month)

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The big February employment miss

April 4, 2019

[embedded content]The Bureau of Labor Statistics (BLS) released its most recent employment report on March 8: In February of this year, the nonfarm economy, on net, created only 25,000 private-sector jobs and 20,000 jobs overall. One part of this report is the establishment survey, which contributed some of the weakest numbers since the past recession.

Forecasters failed to predict these anemic jobs numbers. In fact, before the report’s release, consensus market expectations foresaw 180,000 jobs being created in February. Thus, consensus expectations “missed” the February payroll number by 160,000 persons on the downside. The household survey component of the report was stronger, with the unemployment rate declining by 0.2%. According to the BLS, this decline in unemployment

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The most constant economic series ever

April 1, 2019

[embedded content]Here at the FRED Blog, we often represent economic measures such as consumption or investment as a share of GDP. (For example, a recent post looked at the trade balance as a share of GDP.) We do this to account for general growth and inflation: Most macroeconomic measures grow over time because (1) the overall economy grows and (2) prices tend to increase. For many economic questions, what really matters is how economic measures relate to other measures, such as GDP. Now, when you add up all the components of GDP, you get GDP. This is exactly what we represent in the graph above, the share of GDP in GDP. This is an extremely important series to watch: If it deviates from its current trend, we know that something has gone terribly terribly wrong.

How this graph

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Is gold a good hedge against inflation?

March 28, 2019

[embedded content]According to conventional wisdom, holding gold is a good way to protect oneself against inflation. But let’s try to understand this wisdom a little better with the help of some FRED graphs. The graph above simply shows the monthly general inflation rate (from the CPI) and the monthly gold inflation rate. But this line graph doesn’t offer a very clear picture: The fluctuations in the price of gold are much larger than those for prices in general. So, instead, let’s try a scatter plot, shown below, where every point corresponds to a particular month and its pair of inflation rates. But, again, there’s not much to see here.

[embedded content]Now you may be asking, isn’t it true that, if the general price level is rising, so is the price of gold? To really measure

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Is the financial sector becoming more productive?

March 25, 2019

[embedded content]The Great Recession adversely affected employment across all industries. Since the recovery began in 2010, employment has rebounded and the unemployment rate started declining. But this recovery in employment has not been uniform across industries.

Employment in the financial sector has steadily declined as a share of total employment since the onset of the Great Recession. The financial sector averaged around 6.2% of total employment in the ten years preceding the Great Recession, from 1997 to 2007; in the recovery period, from 2010 to 2018, it averaged around 5.7%. It’s also interesting, but perhaps not very surprising, to note that the employment share in financial activities increased through the previous two recessions—in 1991 and in the early 2000s—but

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New data on burgeoning businesses : Business applications from the U.S. Census Bureau

March 21, 2019

View on GeoFRED®

New businesses are typically very small, so they’re not necessarily a strong factor in overall job creation. But they are a first step in the important process of “creative destruction”—the replacement of old, unproductive businesses by new businesses with new ideas, technologies, and processes. Eventually some of these new businesses will grow and become important factors in the economy, and a healthy economy makes it easy for these new businesses to be created. FRED now has data that allow us to compare this process across U.S. states.

The Census Bureau tracks the quarter and the U.S. state in which business applications are made. Then it tracks the quarter in which the new business appears on payroll data. This quarter-to-quarter measurement is obviously

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Sugar spikes : Fluctuations in the price of sugar

March 18, 2019

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We watch oil prices fluctuate all the time. Of course, oil gets a lot of attention because it has visible and sometimes significant consequences for the rest of the economy. Other commodities may not enjoy the same status, but they often suffer the same fate of volatile prices. The FRED graph above tells the recent story of sugar. It’s remarkable that the price of a commodity produced and used across the globe can almost double for a while and then return to its original level. In fact, as the graph below shows for an earlier period, this volatility can be even more extreme.
What does it take to generate price spikes like these?
Supply issues, such as a world war
Poor harvests in the major producing regions
Political issues (For example, Cuba is a major producer of

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Of religion and recreation : Tracking construction for churches and theme parks

March 14, 2019

[embedded content]Construction activity fluctuates with the weather and overall economic activity. In fact, it fluctuates much more than the economy in general, as many episodes of economic overheating and collapse have shown us. But construction has many facets that aren’t visible unless we look closely at the details by sector. The graph shows two types of construction that have changed quite dramatically over the past few decades: The building of religious edifices has nearly come to a stop and is now about a third of what it was 15 years ago. And the graph doesn’t even account for the impact of inflation. Contrast this with the rise in construction for amusement and recreation, which was about equal to religious edifices back in the early 1990s and is now five times as large.

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Negative nominal interest rates for real? : A true story in Switzerland

March 11, 2019

[embedded content]Real negative interest rates are easy to imagine when inflation is higher than the interest rate. But nominal negative interest rates have long been thought of as either inconceivable or unsustainable. Yet, in recent years, several European countries and Japan have made negative nominal interest rates a reality. The most extreme case seems to be Switzerland, which is featured in the top graph: The spot rate, the 3-month LIBOR, and even the 10-year government bond rate are all negative now and have been for several years. How is this possible?

This isn’t a case of an economy that needs major stimulus through low interest rates. Rather, it’s an export-focused economy whose currency has a strong tendency to appreciate; in fact, the Swiss franc is considered a

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Guidance on inflation : The Fed’s inflation mandate coincides with stable prices

March 7, 2019

[embedded content]The Fed has a dual mandate, written into law, from Congress: maintain stable prices and achieve maximum employment. The graph above shows the track record for the first part of the mandate, which is what we focus on here. Now, the interpretation of what “stable prices” means has changed over time, but the Fed’s current inflation target is about 2%. And, indeed, it looks like the Fed has done a pretty good job since the 1980s compared with previous periods. What about before that?

First, the Fed didn’t exist until 1913; and the pre-Fed period had wild swings in the inflation rate, as well as long periods of deflation, which some consider very problematic. Between the world wars, inflation was quite erratic, too, with some bouts of deflation. But Fed policy wasn’t

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The Story of Storage’s Success? : A look at the rise of the warehousing and storage industry

March 4, 2019

[embedded content]Some industries change for understandable reasons, at least in hindsight. For example, the horse buggy sector collapsed when the automobile became widespread, and the electronics industry has grown tremendously in recent decades because of innovation and high demand for its products. For some sectors, though, expansion is a little more puzzling. The graph shows some statistics about the warehousing and storage sector. What’s noticeable here is that this sector was unaffected by the previous recession and has grown quite a bit: In about 20 years, its personnel, compensation, and output all doubled. Over the same time span, real GDP grew by less than 60%. So what’s going on? Maybe the economy has shifted away from just-in-time production to processes that require

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