Another Visit to FRED to Find Primary Data

"I keep saying that the sexy job in the next ten years will be statistician. And I'm not kidding."
-Hal Varian, Chief Economist, Google (to the New York Times)

Working with graphs and data can be intimidating to high school students. In fact, even as recently as when many teachers were in college, finding data and creating graphs were, indeed, time-consuming and cumbersome tasks. But things are different today. In our October 31 issue of Extra Credit, we drew your attention to FRED (short for Federal Reserve Economic Data), the startlingly user-friendly treasure trove of economic data maintained by the St. Louis Fed. In this article, we introduce some more of the possibilities that FRED offers.

As we said in October, your friend FRED can give you massive amounts of data that you can easily manipulate for your classroom needs, and you can get it for free, right in your classroom. FRED is an online database maintained by the St. Louis Fed that includes 61,000 economic data time series from 46 national, international, and private sources.

With their data superhero FRED at their disposal, your students can put multiple series on one chart. They can change units and frequencies. You can ask them to show the data in absolute terms, absolute change, percent change, year-over-year change, compound annual rate of change, or many other measures. In short, a small investment of your time in learning your way around FRED can give you a powerful new teaching tool.

In October, we illustrated how you can use FRED to build some inflation charts. This month, let's assume that you want students to use primary data to look at the effects of recent monetary policy efforts on interest rates.

  1. Go to, then click the FRED tab.
  2. At the top of the page, click on Data Tools , then Create Your own Graph.

A search window pops up.

  1. Type "fed funds" into the search window, then select the first series, Effective Federal Funds Rate (weekly).

You will get a line chart that should look like this:

With this chart, you and your students can really see and discuss how monetary policy during the 2008–09 financial crisis hit the "zero bound." The effective fed funds rate could not go any lower.

Because economic growth did not recover quickly after the Fed took this action (you can have students type in "GDP" (for gross domestic product) or "employment" in the search window to get primary data on that), the Fed turned to nontraditional tools to try to spur economic growth and employment. You can show your students how some interest rates did not respond to the Fed's action:

  1. Type "Treasury bonds" in the search window.
  2. Select the first choice, 10 Year Treasury Constant Maturity Rate, then Weekly for the frequency.

This chart appears:

The chart shows that despite the fed funds rate sitting at zero, the 10-year Treasury was still at or near 4 percent well into the recession.

The Fed responded to this state of affairs by launching its program of large-scale asset purchases, sometimes called quantitative easing. This program involved the Fed purchasing longer-term securities in the open market—principally Treasury securities and mortgage-backed securities. As Chairman Bernanke said in a speech on October 1, 2012, "The Fed's purchases reduce the amount of longer-term securities held by investors and put downward pressure on the interest rates of those securities. That downward pressure transmits to a wide range of interest rates that individuals and businesses pay."

A possible project you can undertake with your class would be to ask your students to search for evidence that these nontraditional tools had the intended effect. Ask them first to check mortgage rates:

  1. Type "mortgage rates" in the search window.
  2. Then select the first option, 30-Year Conventional Mortgage Rate on a monthly basis.

The chart they produce should look like this:

The chart illustrates what Chairman Bernanke said in his speech: "When the Fed first announced purchases of mortgage-backed securities in late 2008, 30-year mortgages averaged a little above 6 percent; today they average about 3 ½ percent."

Finally, ask the students to put all three series on the same graph:

  1. Click the Additional Data Series box.
  2. Adjust the Observation Range box to start at 1990 so they can zoom in on the more recent period.

This next chart appears:

This chart suggests that even though the fed funds rate was at the zero bound, the Fed's nontraditional monetary policy tools had some success in bringing further reductions in longer-term rates, including mortgage rates.

Students can also create charts of home prices, GDP, and employment to see how these key indicators have responded so far.

The suggestions in this article are just tiny examples of the vast array of possibilities for classroom applications that FRED offers. For more ideas, click About on the FRED home page to see helpful short articles, including "What is FRED?", "Fresh Fred," and "Working with Data—Chapter One, Question One."

By Gary Tapp, director of economic education, Federal Reserve Bank of Atlanta, and editorial director, Extra Credit