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Comparing the Speed of Interest Rate Hikes (1988-2023)

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Line chart showing the speed and severity of interest rate hikes from 1988-2023. The 2022-2023 cycle is the fastest and the most severe.

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Comparing the Speed of U.S. Interest Rate Hikes

After the latest rate hike on May 3rd, U.S. interest rates have reached levels not seen since 2007. The Federal Reserve has been aggressive with its interest rate hikes as it tries to combat sticky inflation. In fact, rates have risen nearly five percentage points (p.p.) in just 14 months.

In this graphic—inspired by a chart from Chartr—we compare both the speed and severity of current interest rate hikes to other periods of monetary tightening over the past 35 years.

Measuring Periods of Interest Rate Hikes

We measured rate hike cycles with the effective federal funds rate (EFFR), which calculates the weighted average of the rates that banks use to lend to each other overnight. It is determined by the market but influenced by the Fed’s target range. We considered the starting point for each cycle to be the EFFR during the month when the first rate hike took place.

Here is the duration and severity of each interest rate hike cycle since 1988.

Time PeriodDuration 
(Months)
Total Change in EFFR
(Percentage Points)
Mar 1988 - May 198914 +3.23
Feb 1994 - Feb 199512+2.67
Jun 1999 - May 200011+1.51
Jun 2004 - Jun 200624+3.96
Dec 2015 - Dec 201836+2.03
Mar 2022 - May 2023*14+4.88

*We considered a rate hike cycle to be any time period when the Federal Reserve raised rates at two or more consecutive meetings. The 2022-2023 rate hike cycle is ongoing, with the latest hike made on May 4, 2023.

When we last compared the speed of interest rate hikes in September 2022, the current cycle was the fastest but not the most severe. In the months since, the total rate change of 4.88 p.p. has surpassed that of the ‘04-‘06 rate hike cycle. During the ‘04-‘06 cycle, the Federal Reserve eventually decided to pause hikes due to moderate economic growth and contained inflation expectations.

On the other end of the scale, the slowest rate hike cycle occurred in ‘15-‘18 after the Global Financial Crisis. Inflation, as measured by the Personal Consumption Expenditures (PCE) Index, was a mere 0.30% when the first hike occurred. Meeting transcripts reveal that Federal Reserve officials were concerned they may be raising rates too early. However, they agreed to the small quarter percentage point increase to show unity with Fed Chair Janet Yellen, who believed rising oil prices would eventually lead to higher inflation.

End of a Cycle?

The Federal Reserve’s small quarter-point rate hike on May 3 was influenced by a variety of factors. Below is a look at how select indicators have shifted since the first hike occurred in March 2022.

March 2022March 2023
Year-Over-Year Inflation6.8%4.2%
Annual Growth in Labor Costs 4.5%4.8% 
Inflation-Adjusted Growth in Labor Costs-3.7%-0.2%
Annualized GDP Growth7.0%1.1%
Unemployment Rate3.6%3.5%
Over-the-Month Change in Employment
(Revised data post-rate hike decision in brackets)
+414,000+236,000
(+165,000)

Source: Bureau of Labor Statistics, Bureau of Economic Analysis. Inflation is measured by the Personal Consumption Expenditures (PCE) Index. GDP growth for March 2022 is for Q4 2021, which is the data the Fed would have had access to when making its first rate hike decision. Employment has since grown by 253,000 in April 2023.

The unemployment rate remains low and job growth remains positive. Labor costs, in terms of wages and benefits, continue to grow. However, they are essentially flat on an inflation-adjusted basis. Inflation is still above the Federal Reserve’s 2% target, but it has slowed over the past year.

There are also reasons to be cautious. Economic growth has slowed considerably, and the Federal Reserve predicted in March of this year that a “mild recession” would begin later in 2023. Turbulence in the banking sector is also cause for concern, as tighter credit conditions will likely weigh on economic activity.

For now, it seems the Fed may have pressed pause on future interest rate hikes. Its latest statement said it would “determine the extent to which additional policy firming may be appropriate” rather than previous statements which anticipated future hikes.

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Charted: Who Has Savings in This Economy?

Older, better-educated adults are winning the savings game, reveals a January survey by the National Opinion Research Center at the University of Chicago.

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A cropped chart visualizing the percentage of respondents to the statement “I have money leftover at the end of the month” categorized by sentiment, age, and education qualifications.

Who Has Savings in This Economy?

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

Two full years of inflation have taken their toll on American households. In 2023, the country’s collective credit card debt crossed $1 trillion for the first time. So who is managing to save money in the current economic environment?

We visualize the percentage of respondents to the statement “I have money leftover at the end of the month” categorized by age and education qualifications. Data is sourced from a National Endowment for Financial Education (NEFE) report, published last month.

The survey for NEFE was conducted from January 12-14, 2024, by the National Opinion Research Center at the University of Chicago. It involved 1,222 adults aged 18+ and aimed to be representative of the U.S. population.

Older Americans Save More Than Their Younger Counterparts

General trends from this dataset indicate that as respondents get older, a higher percentage of them are able to save.

AgeAlways/OftenSometimesRarely/Never
18–2929%33%38%
30–4436%27%37%
45–5939%23%38%
Above 6049%28%23%
All Adults39%33%27%

Note: Percentages are rounded and may not sum to 100.

Perhaps not surprisingly, those aged 60+ are the age group with the highest percentage saying they have leftover money at the end of the month. This age group spent the most time making peak earnings in their careers, are more likely to have investments, and are more likely to have paid off major expenses like a mortgage or raising a family.

The Impact of Higher Education on Earnings and Savings

Based on this survey, higher education dramatically improves one’s ability to save. Shown in the table below, those with a bachelor’s degree or higher are three times more likely to have leftover money than those without a high school diploma.

EducationAlways/OftenSometimesRarely/Never
No HS Diploma18%26%56%
HS Diploma28%33%39%
Associate Degree33%31%36%
Bachelor/Higher Degree59%21%20%
All Adults39%33%27%

Note: Percentages are rounded and may not sum to 100.

As the Bureau of Labor Statistics notes, earnings improve with every level of education completed.

For example, those with a high school diploma made 25% more than those without in 2022. And as the qualifications increase, the effects keep stacking.

Meanwhile, a Federal Reserve study also found that those with more education tended to make financial decisions that contributed to building wealth, of which the first step is to save.

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