Two of the largest financial assets for US households are pensions and direct holdings of stocks.

Pension funds, such as IRAs and 401(k)s, tend to be less liquid, as they generally have restrictions on converting the assets to cash. Of course, they often include tax benefits and contributions from employers.

More direct participation in the stock market (either through direct holdings of corporate equity or through mutual funds) provides more liquidity, since the assets are easier to sell and convert quickly to cash.

In the FRED graph above, the blue line shows US households’ pension entitlements (including IRA and 401(k) holdings) as a share of their net worth; the red line shows their holdings of stocks (corporate equity plus mutual fund shares) as a share of their net worth.^*

• In the 1950s and 1960s, stock holdings exceeded pensions.
• In the 1970s, this relationship reversed and stock holdings remained consistently below pensions for most of the time.
• In the 1990s, stock holdings began steadily increasing and have exceeded pensions since about 2018.

This trend may be related to the rise of mutual funds and the decline in trading commissions, which would lower the transaction costs in holding stocks. More recently, financial technology such as app-based electronic trading platforms and micro-investing have made it even easier for households to participate in the stock market, which likely has also been contributing to the rise of stock holdings over pensions as households’ preferred financial asset.

^*The data also include the holdings of nonprofit organizations, but this is a small fraction relative to the household sector.

How this graph was created: Search FRED for and select “Households and Nonprofit Organizations; Pension Entitlements; Asset, Level, Millions of Dollars, Not Seasonally Adjusted (HNOPFAQ027S).” From the “Edit Graph” panel, use the “Add Line” tab to search for and select “Households and Nonprofit Organizations; Net Worth, Level, Billions of Dollars, Not Seasonally Adjusted (TNWBSHNO).” In the “Formula” field, type: (a/1000)/b and select “Apply” in order to adjust the units of the first series, which was in millions. Next, use the “Add Line” tab again to search for and select “Households and Nonprofit Organizations; Corporate Equities; Asset, Market Value Levels, Billions of Dollars, Not Seasonally Adjusted (HNOCEA).” From the “Edit Graph” panel, use the “Add Line” tab to search for and again select “Households and Nonprofit Organizations; Net Worth, Level, Billions of Dollars, Not Seasonally Adjusted (TNWBSHNO).” Then, also add “Households and Nonprofit Organizations; Mutual Fund Shares; Asset, Market Value Levels, Billions of Dollars, Not Seasonally Adjusted (HNOMFSA).” In the “Formula” field, type: (a c)/b and select “Apply” Finally, adjust the time series to be from 1951-12-30 to 2024-01-01.

Suggested by Yu-Ting Chiang and Mick Dueholm.

The FRED Blog has discussed how patents for new processes, machines, products, designs, and even plants grant intellectual property rights to their inventors. They also generate income to the patent holders and reflect the scope of international innovation efforts. Today, we examine a related question: How much innovation is embodied in a new patent?

The FRED graph above shows the annual number of patents granted by the U.S. Patent and Trademark Office between 1992 and 2020. There are four types:

1. Utility patents (blue area): invention, discovery, or any new and useful improvement of a process, machine, manufactured article, or substance.
2. Design patents (red area): invention of a new, original ornamental design for an article of manufacture.
3. Plant patents (green area): invention or discovery and asexually reproduction of any distinct and new variety of plant.
4. Reissue patents (purple area): replacement of an original patent that was defective and couldn’t be corrected.

The graph plots those numbers as stacked areas to compare how frequently each type of patent is issued and to show their growth over time. Utility and design patents are the most frequently issued types of patents and make the numbers of plant and reissue patents very difficult to see.

Recent research by Aakash Kalyani at the St. Louis Fed examines the potential relationship between the number of patents issued and overall economic productivity gains in the US between 1930 and 2010. His analysis shows that the number of newly issued patents grew rapidly after 1980, but productivity did not grow rapidly. An earlier post highlighted this slowdown in recorded productivity growth.

Further analysis of patent information suggests that most patents did not embody the kind of substantial innovation that could boost productivity growth. In other words, the number of patents by itself does not tell the full story of innovation and its economic benefits.

For more about this and other research, visit the website of the Research Division of the Federal Reserve Bank of St Louis, which offers an array of economic analysis and expertise provided by our staff.

How this graph wase created: Search FRED for and select “U.S. Granted Patents: Utility Patents Originating in the United States.” In the “Edit Graph” panel, use the “Add Line” tab to search for and add “U.S. Granted Patents: Design Patents Originating in the United States.” Repeat this last step to add two more series: “U.S. Granted Patents: Plant Patents Originating in the United States” and “U.S. Granted Patents: Reissue Patents Originating in the United States.” Last, use the “Format” tab to select “Graph type: Area” and “Stacking: Normal.”

Suggested by Diego Mendez-Carbajo.

Suggested by Diego Mendez-Carbajo.

As part of its overall accounting of expenditures, the Bureau of Economic Analysis (BEA) collects data specifically on government spending, which can be broken down further into finer categories. FRED has time series of these data to help users explore the evolution of government spending. That evolution can be hard to interpret, so today we take a closer look at one of these series.

The FRED graph above tracks real federal energy expenditures from 1960 to 2022 using an index, which provides annual values relative to the level in 1976. Most of these expenditures come from activities by the Department of Energy (DOE).

During the 1960s and early 1970s, energy expenditures were much lower, ranging from around 10% to 40% of their 1976 level. Starting around 1974, energy expenditures climbed sharply, which coincided with the 1973 oil crisis and subsequent founding of the DOE in 1977.

Since the 1980s, energy expenditures have roughly kept pace with inflation but have varied widely year to year: Expenditures peaked at around twice their 1976 level in the early 1980s and again in 2010. By 2021,  real energy expenditures were back to about the same level as they were in 1976.

In 2022, energy expenditures actually become negative for the first time since reporting began in 1959. The FRED graph below zooms in on that time period and shows the year-over-year percent change in real energy expenditures since 2012. In a typical year, energy expenditures change by as much as 20%. But in 2022, energy expenditures declined by 115%. Why?

Just like the jump in spending during the 1970s, the drop in 2022 can be explained by policy responses related to events in global oil and gas markets.

The US stores a constant back-up supply of crude oil called the Strategic Petroleum Reserve (SPR). Within a typical year, very little of this store is released, but the US president can authorize drawdowns from the SPR during emergencies or shortages. For example, then-President Obama authorized a large release of oil from the SPR in response to the war in Libya in 2011. After Russia’s 2022 invasion of Ukraine disrupted oil markets, President Biden authorized a large “emergency drawdown” of the SPR in coordination with the International Energy Agency’s International Energy Program.

Over the course of 2022, this drawdown added around 180 million barrels. For context, the last two emergency drawdowns in 2011 and 2005 were around 30 and 20 million barrels, respectively. (For more discussion of petroleum reserves, check this May 2024 FRED Blog post.)

When the government releases oil from the SPR, it does so through competitive sales, which are accounted for in current expenditures as net outlays and are negative values. In 2022, SPR-related outlays were large enough to dwarf other energy-related spending, resulting in negative total expenditures.

How these graphs were created: First graph: Search FRED for series “G160551A027NBEA.” Using the date selector above the graph, set the date range to 1960-01-01 to 2022-01-01. From the “Edit Graph” panel under the “Edit Line 1” tab, use the “Customize Data” section to search for and select the series “CPIAUCSL” to add to the graph. Apply the formula a/b. Under “units” at the bottom, convert your new combined series to an index and set 1976-01-01 as the custom date. Second graph: Switch the final units of the first graph from an index to percent change from a year ago. Use the date selector to change the date range to 2012-01-01 to 2022-01-01.

Suggested by Bill Dupor and Marie Hogan.