Federal Reserve Economic Projections
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Economic projections are collected from each member of the Board of Governors and each Federal Reserve Bank president. [1]
Projections of change in real gross domestic product (GDP) and projections for both measures of inflation are percent changes from the fourth quarter of the previous year to the fourth quarter of the year indicated. Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.
Longer-run projections represent each participant's assessment of the rate to which each variable would be expected to converge under appropriate monetary policy and in the absence of further shocks to the economy.
The projections for the federal funds rate are the value of the midpoint of the projected appropriate target range for the federal funds rate or the projected appropriate target level for the federal funds rate at the end of the specified calendar year or over the longer-run.
Schedule:
The Summary of Economic Projections are release on a quaterly basis, in connection with the Federal Open Market Committee's (FOMC's) meetings in March, June, September, and December.
| 2023 Schedule[2] |
| March 22, 2023 |
| June 14, 2023 |
| September 20, 2023 |
| December 13, 2023 |
Latest Projections
Federal Reserve:Meetings/2023 June 14
| Variable | 2023 | 2024 | 2025 | Longer Run[3] |
| Change in real GDP | 1 | 1.1 | 1.8 | 1.8 |
| Unemployment rate | 4.1 | 4.5 | 4.5 | 4 |
| PCE inflation | 3.2 | 2.5 | 2.1 | 2 |
| Core PCE inflation | 3.9 | 2.6 | 2.2 | |
| Federal funds rate | 5.6 | 4.6 | 3.4 | 2.5 |
Projections accuracy
According to a 2018 Kansas City Fed research, the projections from the SEP shows how Committee members’ outlook for growth, inflation, and unemployment led to overly optimistic projections that policy would lift off from the effective lower bound between 2007-2018.[4]
- Projections of real GDP growth, for example, have been too optimistic since the beginning of the SEP in 2007. For most of the period, the midpoints of the central tendencies projected faster real GDP growth than actually occurred. As an example, the Committee participants missed the onset of the recession in 2007, underestimated its severity, and overestimated the speed of recovery.
- Projections of unemployment were also too optimistic throughout the recession and early stages of recovery. In contrast, as the recovery gained momentum, Committee participants’ projections of unemployment became too pessimistic
- Projections of inflation have also consistently missed the mark, most likely due to unexpected fluctuations in energy prices.
- Since they were first reported in the SEP in 2012, the Committee’s projections of the target federal funds rate appear to have reflected participants’ projections of real GDP growth, inflation, and unemployment.
Although the projections in the SEP have proved to be consistently wrong, they do provide information about the FOMC’s implicit reaction function. Taking into account not only projection errors for inflation and unemployment but also the SEP reaction function’s estimate of the Committee’s systematic response to inflation and unemployment, it is clear that the Committee’s anticipated response to projected increases in inflation was the primary factor responsible for the missed projections.
References
- ↑ https://www.federalreserve.gov/monetarypolicy/guide-to-the-summary-of-economic-projections.htm
- ↑ https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm
- ↑ https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20230614.pdf
- ↑ https://www.kansascityfed.org/ER-Archive/documents/506/Monetary_Policy_at_the_Zero_Lower_Bound_Revelations_form_the_FOMCs_Summary_of_Economic.pdf