Factbox: Fed staff forecasts from FOMC minutes
(Reuters) - The following are the Federal Reserve's staff forecasts as contained in the minutes of recent Federal Open Market Committee meetings:
SEPT 16-17 FOMC: Minutes released on Oct. 8:
"The U.S. economic forecast prepared by the staff for the
September FOMC meeting was a little weaker, on balance,
than the one prepared for the July FOMC meeting.
Recent information on real U.S. economic activity was
generally stronger than expected, but equity prices declined,
the foreign exchange value of the dollar appreciated
further, and indicators of foreign economic growth
were generally weak. The staff left its forecast for real
GDP growth over the second half of the year little
changed but lowered its projection for economic growth
over the next several years. The staff also further
trimmed its assumptions for the rates of increase in
productivity and potential output over the medium term.
On net, the level of GDP was anticipated to rise above
its potential next year, and that gap was projected to
widen gradually over the medium term. The unemployment
rate was projected to run a little below the staff’s
estimate of its longer-run natural rate over this period.
"The staff projected that consumer price inflation would
move down over the near term by more than in the previous
projection. Crude oil prices declined further over
the intermeeting period and were expected to result in
lower consumer energy prices, and the effects of recent
dollar appreciation and lower commodity prices were
anticipated to push down non-oil import prices. With
energy prices and non-oil import prices expected to
begin to increase steadily next year, the staff projected
that inflation would rise gradually over the next several
years but would still be slightly below the Committee’s
longer-run objective of 2 percent at the end of 2018. Inflation
was anticipated to move up to 2 percent thereafter,
with inflation expectations in the longer run assumed
to be consistent with the Committee’s objective and
slack in labor and product markets projected to have
waned.
"The staff viewed the uncertainty around its September
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 and
inflation were seen as tilted to the downside, reflecting
the staff’s assessment that neither monetary nor fiscal
policy was well positioned to help the economy withstand
substantial adverse shocks. Consistent with this
downside risk to aggregate demand and with the further
adjustments to the staff’s supply-side assumptions, the
staff viewed the risks to its outlook for the unemployment
rate as tilted to the upside."
JULY 28-29 FOMC: Minutes released on Aug. 19:
"The U.S. economic forecast prepared by the staff for the July FOMC meeting was broadly similar to that prepared for the June FOMC meeting. Real GDP was again expected to increase faster in the second half of this year than in the first half and to expand more rapidly than potential output
in 2016 and 2017, even as the normalization of the stance of monetary policy was assumed to proceed. However, real GDP growth over the medium term was revised down a small amount, in part because of a slightly stronger forecast for the exchange value of the dollar. The staff also made two small adjustments to its supply-side assumptions. First, the projected rates of productivity gains and potential output growth over the medium term were trimmed. With actual and potential GDP growth both a bit weaker, the projected narrowing of the output gap over the medium term was little re-vised. Second, the staff lowered slightly its estimate of the longer-run natural rate of unemployment. The unemployment rate was expected to decline gradually to this revised estimate.
"The staff’s forecast for inflation was revised down, particularly in the near term, as the decline in crude oil prices over the intermeeting period was expected to result in lower consumer energy prices. Although energy prices and non-oil import prices were expected to begin rising steadily next year, the staff continued to project that inflation would be below the Committee’s longer-run objective of 2 percent over 2016 and 2017. Inflation was anticipated to move up gradually to 2 percent there-after, with inflation expectations in the longer run assumed to be consistent with the Committee’s objective and slack in labor and product markets projected to have waned.
"The staff viewed the uncertainty around its July 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 and inflation were seen as tilted to the downside, reflecting the staff’s assessment that neither monetary nor fiscal policy was well positioned to help the economy withstand substantial adverse shocks. At the same time, the staff viewed the risks around its outlook for the unemployment rate as roughly balanced."
JUNE 16-17 FOMC: Minutes released on July 8:
"In the economic forecast prepared by the staff for the
June FOMC meeting, real GDP growth in the second
half of this year was expected to step up from its pace in
the first half. However, economic growth in the second
half was projected to be a little lower than in the projection
prepared for the April meeting, largely reflecting a
small downward revision to the forecast for household
spending. The staff’s medium-term projection for real
GDP growth was essentially unrevised from the previous
forecast. The staff continued to project that real
GDP would expand at a faster pace than potential output
in 2016 and 2017, supported primarily by increases
in consumer spending, even as the normalization of the
stance of monetary policy was assumed to proceed. The
expansion in economic output over the medium term
was anticipated to trim resource slack; the unemployment
rate was expected to decline gradually to the staff’s
estimate of its longer-run natural rate.
"The staff’s forecast for inflation in the near term was
little changed, and it was unrevised over the medium term.
Energy prices and non-oil import prices were expected
to begin steadily rising next year, but the staff projected
that inflation would continue to be below the Committee’s
longer-run objective of 2 percent over 2016 and
2017. However, inflation was anticipated to reach 2 percent
thereafter, with inflation expectations in the longer
run assumed to be consistent with the Committee’s objective
and slack in labor and product markets projected
to have waned.
"The staff viewed the extent of uncertainty around its
June projections for real GDP growth, the unemployment
rate, and inflation as similar to the average over the
past 20 years. The risks to the forecasts for real GDP
growth and inflation were seen as tilted a little to the
downside, reflecting the staff’s assessment that neither
monetary policy nor fiscal policy was well positioned to
help the economy withstand substantial adverse shocks.
At the same time, the staff saw the risks around its outlook
for the unemployment rate as roughly balanced."
APRIL 28-29 FOMC: Minutes released on May 20:
"In the U.S. economic forecast prepared by the staff for the April FOMC meeting, real GDP growth in the first half of the year was lower than in the projection prepared for the March meeting, as the data on economic activity received during the intermeeting period were generally weaker than the staff had expected. However, much of this weakness was attributed to transitory factors or statistical noise, with little implication for the pace of expansion beyond the near term. Indeed, the medium-term projection for real GDP growth was re-vised up modestly, as monetary policy was assumed to be a little more accommodative in this projection and the projected path for the foreign exchange value of the dollar was a little lower. The staff continued to project that real GDP would expand at a faster pace than potential output in 2015 and 2016, supported by increases in consumer and business confidence and a small pickup in foreign economic growth, even as the normalization of monetary policy was assumed to begin. In 2017, real GDP growth was projected to slow toward, but to re-main above, the rate of growth of potential output. The expansion in economic activity over the medium term was expected to lead to a gradual reduction in resource slack; the unemployment rate was projected to decline slowly and to move a little below the staff’s estimate of its longer-run natural rate for a time.
"The staff’s forecast for inflation in the near term was revised up a little, reflecting the slightly higher-than-expected recent monthly data on core consumer prices and a path for crude oil prices that was a bit higher than in the previous projection. The medium-term forecast for inflation was little changed, with inflation in 2016 and 2017 projected to move closer to, but remain below, the Committee’s longer-run objective of 2 percent, as energy prices were expected to rise, import prices to turn up, and resource utilization to tighten further. Thereafter, inflation was anticipated to move back to 2 percent, with inflation expectations in the longer run assumed to be consistent with the Committee’s objective and slack in labor and product markets projected to have waned.
"The staff viewed the uncertainty around its April 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 and inflation were seen as tilted to the downside, reflecting the staff’s assessment that neither monetary nor fiscal policy appeared well positioned to help the economy withstand substantial adverse shocks. At the same time, the staff viewed the risks around its outlook for the unemployment rate as roughly balanced."