---
title: Overview
description: Core concepts of the FRED MCP Server
icon: 'book'
---
# Core Concepts
Understanding the fundamental concepts behind the FRED MCP Server will help you use it effectively.
## What is FRED?
**FRED (Federal Reserve Economic Data)** is a comprehensive database maintained by the Federal Reserve Bank of St. Louis containing over 800,000 economic time series from 100+ sources.
### Key Features
<CardGroup cols={2}>
<Card title="Comprehensive Coverage" icon="globe">
Data from U.S. government agencies, international organizations, and academic sources
</Card>
<Card title="Historical Depth" icon="clock-rotate-left">
Some series dating back to the 1800s, providing long-term economic perspective
</Card>
<Card title="Real-Time Updates" icon="arrows-rotate">
Data updated as soon as released by source agencies
</Card>
<Card title="Free Access" icon="unlock">
All data freely available with API key registration
</Card>
</CardGroup>
## What is MCP?
**Model Context Protocol (MCP)** is an open standard for connecting AI assistants to external data sources and tools.
### MCP Benefits
- **Standardized Interface**: Consistent way to access external tools
- **Security**: Controlled access to resources
- **Flexibility**: Works with any MCP-compatible client
- **Extensibility**: Easy to add new capabilities
## How FRED MCP Server Works
```mermaid
graph LR
A[AI Assistant] -->|MCP Protocol| B[FRED MCP Server]
B -->|API Requests| C[FRED API]
C -->|Economic Data| B
B -->|Structured Response| A
A -->|Analysis| D[User]
```
### Architecture Components
1. **MCP Client** (e.g., Claude Desktop)
- Sends tool requests
- Receives structured data
- Presents results to user
2. **FRED MCP Server**
- Translates MCP requests to FRED API calls
- Handles authentication
- Processes and formats responses
- Manages rate limiting
3. **FRED API**
- Official Federal Reserve data source
- RESTful API endpoints
- JSON/XML responses
## Data Organization
### Series Structure
Each FRED series has:
<ParamField path="Series ID" type="string">
Unique identifier (e.g., "GDP", "UNRATE")
</ParamField>
<ParamField path="Title" type="string">
Descriptive name
</ParamField>
<ParamField path="Frequency" type="string">
Data interval (daily, weekly, monthly, quarterly, annual)
</ParamField>
<ParamField path="Units" type="string">
Measurement units (percent, billions of dollars, index)
</ParamField>
<ParamField path="Seasonal Adjustment" type="string">
Whether data is seasonally adjusted
</ParamField>
<ParamField path="Observations" type="array">
Time series data points with dates and values
</ParamField>
### Category Hierarchy
FRED organizes data in a hierarchical category structure:
```
Root Categories
├── Money, Banking & Finance
│ ├── Interest Rates
│ ├── Exchange Rates
│ └── Banking
├── Population, Employment & Labor Markets
│ ├── Unemployment Rate
│ ├── Employment
│ └── Labor Force
└── Production & Business Activity
├── GDP
├── Industrial Production
└── Business Surveys
```
### Data Sources
Major data providers include:
- **U.S. Government Agencies**
- Bureau of Labor Statistics (BLS)
- Bureau of Economic Analysis (BEA)
- Census Bureau
- Federal Reserve Board
- **International Organizations**
- World Bank
- OECD
- IMF
- Bank for International Settlements
- **Academic Institutions**
- University research centers
- Economic research organizations
## Time Series Concepts
### Frequency
Data collection intervals:
| Frequency | Code | Example Series |
|-----------|------|----------------|
| Daily | d | DFF (Fed Funds Rate) |
| Weekly | w | ICSA (Initial Claims) |
| Monthly | m | UNRATE (Unemployment) |
| Quarterly | q | GDP (Gross Domestic Product) |
| Annual | a | POPTHM (Population) |
### Seasonal Adjustment
Many economic series show seasonal patterns:
- **SA (Seasonally Adjusted)**: Seasonal effects removed
- **NSA (Not Seasonally Adjusted)**: Raw data with seasonal patterns
- **SAAR (Seasonally Adjusted Annual Rate)**: Adjusted and annualized
### Transformations
Mathematical operations on data:
| Transform | Code | Description | Use Case |
|-----------|------|-------------|----------|
| Levels | lin | Raw values | Actual amounts |
| Change | chg | Difference from previous | Absolute changes |
| Percent Change | pch | % change from previous | Growth rates |
| Year-over-Year | pc1 | % change from year ago | Annual comparisons |
| Log | log | Natural logarithm | Statistical analysis |
## Data Quality
### Vintage Data
FRED maintains historical versions of data:
- **Real-time data**: Current values
- **Vintage data**: Values as they existed on specific dates
- **Revisions**: Updates to previously released data
### Data Updates
Update patterns vary by series:
- **High-frequency**: Updated daily or weekly
- **Monthly indicators**: Released on schedule (e.g., first Friday)
- **Quarterly data**: Released with lag (e.g., GDP one month after quarter end)
- **Annual series**: Updated yearly
### Missing Data
Handling gaps in series:
- Some series have incomplete histories
- Holidays and weekends create gaps in daily data
- Series may be discontinued or replaced
## API Concepts
### Rate Limiting
FRED API has usage limits:
- **120 requests/minute**: General limit
- **40 requests/minute**: For series observations
- **Daily limit**: Varies by API key tier
The MCP server handles this automatically with:
- Request queuing
- Exponential backoff
- Retry logic
### Pagination
Large result sets use pagination:
```json
{
"limit": 100, // Items per page
"offset": 200, // Skip first 200 items
"total": 1500 // Total available items
}
```
### Error Handling
Common error types:
| Code | Meaning | Resolution |
|------|---------|------------|
| 400 | Bad Request | Check parameters |
| 401 | Unauthorized | Verify API key |
| 404 | Not Found | Check series ID |
| 429 | Rate Limited | Wait and retry |
| 500 | Server Error | Retry later |
## Search and Discovery
### Search Methods
1. **Text Search**: Find series by keywords
2. **Tag Search**: Filter by categories and attributes
3. **Browse**: Navigate category hierarchy
4. **Release-based**: Find series by data release
### Tag System
Tags categorize and describe series:
- **Geographic**: usa, state, county, msa
- **Frequency**: daily, weekly, monthly
- **Topic**: gdp, inflation, employment
- **Source**: bls, bea, federal reserve
### Popularity Ranking
FRED tracks series popularity:
- Based on access frequency
- Helps identify commonly-used indicators
- Range from 1-100
## Best Practices
### Efficient Queries
<Steps>
<Step title="Use Specific IDs">
When you know the series ID, use it directly
</Step>
<Step title="Limit Date Ranges">
Request only the time period you need
</Step>
<Step title="Plan Queries Carefully">
Think through data needs to avoid redundant requests
</Step>
<Step title="Batch Related Requests">
Group similar queries to minimize API calls
</Step>
</Steps>
### Data Interpretation
<Warning>
**Important considerations:**
- Check units and scaling (millions vs billions)
- Verify seasonal adjustment status
- Note data frequency and aggregation
- Consider revision history for critical analysis
</Warning>
## Common Patterns
### Economic Analysis Pattern
1. **Discover** relevant series using search/browse
2. **Retrieve** data with appropriate transformations
3. **Compare** across time periods or series
4. **Analyze** trends and relationships
### Monitoring Pattern
1. **Identify** key indicators to track
2. **Schedule** regular data retrieval
3. **Alert** on significant changes
4. **Report** findings
### Research Pattern
1. **Browse** categories for comprehensive coverage
2. **Search** for specific relationships
3. **Retrieve** long historical periods
4. **Transform** for statistical analysis
## Next Steps
<CardGroup cols={2}>
<Card
title="MCP Protocol"
icon="plug"
href="/core-concepts/mcp-protocol"
>
Learn about MCP architecture
</Card>
<Card
title="FRED Data"
icon="database"
href="/core-concepts/fred-data"
>
Explore FRED data structure
</Card>
<Card
title="Authentication"
icon="key"
href="/core-concepts/authentication"
>
API key and security
</Card>
<Card
title="API Reference"
icon="code"
href="/api-reference/overview"
>
Tool documentation
</Card>
</CardGroup>
