Factbox - Fed staff forecasts from FOMC minutes
The following are the Federal Reserve's staff forecasts as contained in the minutes of recent Federal Open Market Committee meetings:
For a full text, see here
MARCH 14-15 FOMC: Minutes released on April 5:
"In the U.S. economic projection prepared by the staff for the March FOMC meeting, the near-term forecast for real GDP growth was a little weaker, on net, than in the previous projection. Real GDP was expected to expand at a slower rate in the first quarter than in the fourth quarter, reflecting some data for January that were judged to be transitorily weak, but growth was projected to move back up in the second quarter. The staff maintained its assumption - provisionally included starting with the December 2016 forecast -— of a more expansionary fiscal policy in the coming years, but it pushed
back the timing of when those policy changes were anticipated to take effect. The negative effect of this timing change on projected real GDP growth through 2019 was offset by a higher assumed path for equity prices and by a lower assumed path for the exchange value of the dollar.
All told, the staff’s forecast for the level of real GDP at the end of 2019 was essentially unrevised from the previous forecast, and the staff continued to project that real GDP would expand at a modestly faster pace than potential output in 2017 through 2019. The unemployment rate was forecast to edge down gradually through the end of 2019 and to run below the staff’s estimate of
its longer-run natural rate; the path for the unemployment rate was little changed from the previous projection.
"The staff’s forecast for consumer price inflation, as measured by changes in the PCE price index, was unchanged for 2017 as a whole and over the next couple of years. The staff continued to project that inflation would increase gradually over this period, as food and energy prices, along with the prices of non-energy imports, were expected to begin steadily rising this year.
However, inflation was projected to be slightly below the Committee’s longer-run objective of 2 percent in 2019.
"The staff viewed the uncertainty around its projections for real GDP growth, the unemployment rate, and inflation as similar to the average of the past 20 years. The risks to the forecast for real GDP were seen as tilted to the downside, primarily reflecting the staff’s assessment that monetary policy appeared to be better positioned to respond to large positive shocks to the economic outlook than substantial adverse ones.
However, the staff viewed the risks to the forecast as less pronounced than in the recent past, reflecting both somewhat diminished risks to the foreign outlook and an increase in U.S. consumer and business confidence over recent months.
Consistent with the downside risks to aggregate demand, the staff viewed the risks to its outlook for the unemployment rate as tilted to the upside. The risks to the projection for inflation were seen as roughly balanced.
The downside risks from the possibility that longer-term inflation expectations may have edged down or that the dollar could appreciate substantially further were seen as roughly counterbalanced by the upside risk that inflation could increase more than expected in an economy that was projected to continue operating above its longer-run potential."
JAN. 31-FEB. 1 FOMC: Minutes released on Feb. 22:
"In the U.S. economic projection prepared by the staff for this FOMC meeting, the near-term forecast was little changed from the December meeting. Real GDP
growth in the fourth quarter of last year was estimated to have been a little faster than the staff had expected in December, and the pace of economic growth in the first half of this year was projected to be essentially the same
as in the fourth quarter. The staff’s forecast for real GDP growth over the next several years was little changed. The staff continued to project that real GDP would expand at a modestly faster pace than potential output in 2017 through 2019. The unemployment rate was forecast to edge down gradually through the end of 2019 and to run below the staff’s estimate of its longer-run natural rate; the path for the unemployment rate was little changed from the previous projection.
"The staff’s forecast for consumer price inflation was unchanged on balance. The staff continued to project that inflation would increase over the next several years, as food and energy prices, along with the prices of non-energy
imports, were expected to begin steadily rising either this year or next. However, inflation was projected to be marginally below the Committee’s longer-run objective of 2 percent in 2019.
"The staff viewed the uncertainty around its projections for real GDP growth, the unemployment rate, and inflation as similar to the average of the past 20 years. The risks to the forecast for real GDP were seen as tilted to
the downside, primarily reflecting the staff’s assessment that monetary policy appeared to be better positioned to offset large positive shocks than substantial adverse ones. However, the staff viewed the risks to the forecast
from developments abroad as less pronounced than in the recent past. Consistent with the downside risks to aggregate demand, the staff viewed the risks to its outlook for the unemployment rate as tilted to the upside.
The risks to the projection for inflation were seen as roughly balanced. The downside risks from the possibility that longer-term inflation expectations may have edged down or that the dollar could appreciate substantially
further were seen as roughly counterbalanced by the upside risk that inflation could increase more than expected in an economy that was projected to continue
operating above its longer-run potential."
DEC. 13-14 FOMC: Minutes released on Jan. 4:
"In the U.S. economic projection prepared by the staff for the December FOMC meeting, the near-term forecast was little changed from the projection prepared for the November meeting. Real GDP growth in the second half of 2016 was still expected to be faster than in the first half. The staff’s forecast for real GDP growth over the next several years was slightly higher, on balance, largely reflecting the effects of the staff’s provisional assumption that fiscal policy would be more expansionary in the coming years. These effects were substantially counterbalanced by the restraint from the higher assumed paths for longer-term interest rates and the foreign exchange value of the dollar. The staff projected that real GDP would expand at a modestly faster pace than potential output in 2017 through 2019.
The unemployment rate was forecast to edge down gradually, on net, and to continue to run below the staff’s estimate of its longer-run natural rate through the end of 2019; the path for the unemployment rate was a little lower
than in the previous projection. "The near-term forecast for consumer price inflation was somewhat higher than in the previous projection, reflecting
recent increases in energy prices. Beyond the near term, the inflation forecast was little revised. The staff continued to project that inflation would edge up over the next several years, as food and energy prices along with the prices of non-energy imports were expected to begin steadily rising in 2017. However, inflation was projected to be marginally below the Committee’s longer-run objective of 2 percent in 2019.
"The staff viewed the uncertainty around its projections for real GDP growth, the unemployment rate, and inflation as similar to the average of the past 20 years. The risks to the forecast for real GDP were seen as tilted to the downside, reflecting the staff’s assessment that monetary policy appeared to be better positioned to offset large positive shocks than substantial adverse ones. In addition, the staff continued to see the risks to the forecast from developments abroad as skewed to the downside.
Consistent with the downside risks to aggregate demand, the staff viewed the risks to its outlook for the unemployment rate as tilted to the upside. The risks to the projection for inflation were seen as roughly balanced.
The downside risks from the possibility that longer-term inflation expectations may have edged lower or that the dollar could appreciate more than anticipated were seen as roughly counterbalanced by the upside risk that inflation could increase more than expected in an economy that was projected to continue operating above its long-run potential."
NOV. 1-2 FOMC: Minutes released on Nov. 23:
"In the U.S. economic projection prepared by the staff for the November FOMC meeting, the pace of real GDP growth was forecast to be faster over the second
half of this year than in the first half, as business investment was anticipated to turn up and the drag from inventory investment was expected to end. However, the forecast for the second half was lower than in the September
projection, primarily reflecting softer-than-expected data on consumer spending. The staff’s forecast for real GDP growth over the next couple of years was also slightly lower than in the previous projection, primarily
reflecting the effects of higher assumed paths for the dollar and for crude oil prices. Nonetheless, the staff projected that real GDP would expand at a modestly faster pace than potential output in 2017 and 2018, supported by solid gains in consumer spending and, to a lesser degree, by pickups in both residential and business investment; in 2019, GDP was projected to expand at
the same rate as its potential. The unemployment rate was forecast to edge down gradually through the end of 2018 and then flatten out in 2019; the path for the unemployment rate was a little higher than in the previous projection but was still projected to run below the staff’s estimate of its longer-run natural rate.
"The near-term forecast for consumer price inflation was somewhat higher than in the previous projection, reflecting incoming data on core prices and energy prices.
Beyond the near term, the inflation forecast was generally little revised. The staff continued to project that inflation would increase over the next several years, as food and energy prices along with the prices of non-energy imports were expected to begin rising steadily this year. However, inflation was projected to be marginally below the Committee’s longer-run objective of 2 percent in 2019.
"The staff viewed the uncertainty around its projections for real GDP growth, the unemployment rate, and inflation as similar to the average of the past 20 years. The risks to the forecast for real GDP were seen as tilted to the downside, reflecting the staff’s assessment that both monetary and fiscal policy appeared to be better positioned to offset large positive shocks than adverse ones.
In addition, the staff continued to see the risks to the forecast from developments abroad as skewed to the downside. Consistent with the downside risks to aggregate demand, the staff viewed the risks to its outlook for
the unemployment rate as tilted to the upside. The risks to the projection for inflation were seen as roughly balanced.
The possibility that longer-term inflation expectations may have edged down was roughly counterbalanced by the risks that somewhat firmer inflation this
year could be more persistent than expected, particularly in an economy that was projected to continue operating above its long-run potential."