RSS Feed by Calculated Risk on 3/17/2021 02:08:00 PM
Wednesday, March 17, 2021
FOMC Projections and Press Conference
Statement here.
Fed Chair Powell press conference video here starting at 2:30 PM ET.
Here are the projections.
Wall Street forecasts are for GDP to increase at a 6% to 8% annual rate in Q1. For the year, from Goldman Sachs "We have raised our GDP forecast to reflect the latest fiscal policy news and now expect 8% growth in 2021 (Q4/Q4) and an unemployment rate of 4% at end-2021"
The FOMC also increased their GDP forecast to 5.8% to 6.6%. GDP for 2023 was revised down.
1 Projections of change in real GDP and inflation are from the fourth quarter of the previous year to the fourth quarter of the year indicated.
The unemployment rate was at 6.2% in February.
| GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1 | ||||
|---|---|---|---|---|
| Projection Date | 2021 | 2022 | 2023 | |
| Mar 2021 | 5.8 to 6.6 | 3.0 to 3.8 | 2.0 to 2.5 | |
| Dec 2020 | 3.7 to 5.0 | 3.0 to 3.5 | 2.2 to 2.7 | |
The unemployment rate was at 6.2% in February.
Note that the unemployment rate doesn't remotely capture the economic damage to the labor market. Not only are there 10 million people unemployed, but 4.2 million people have left the labor force since January 2020. And millions more are being supported by various provisions of the various disaster relief acts.
The decline in the unemployment rate depends on both job growth, and the participation rate. A strong labor market will probably encourage people to return to the labor force, and the improvements in the unemployment rate might be slower than some expect.
The unemployment rate was revised down for all years.
2 Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.
As of January 2020, PCE inflation was up 1.5% from January 2020.
The projections for inflation were revised up and the FOMC sees inflation above target in 2021.
PCE core inflation was up 1.5% in January year-over-year.
Projections for core inflation were revised up.
The decline in the unemployment rate depends on both job growth, and the participation rate. A strong labor market will probably encourage people to return to the labor force, and the improvements in the unemployment rate might be slower than some expect.
The unemployment rate was revised down for all years.
| Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2 | ||||
|---|---|---|---|---|
| Projection Date | 2021 | 2022 | 2023 | |
| Mar 2021 | 4.2 to 4.7 | 3.6 to 4.0 | 3.2 to 3.8 | |
| Dec 2020 | 4.7 to 5.4 | 3.8 to 4.6 | 3.5 to 4.3 | |
As of January 2020, PCE inflation was up 1.5% from January 2020.
The projections for inflation were revised up and the FOMC sees inflation above target in 2021.
| Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1 | ||||
|---|---|---|---|---|
| Projection Date | 2021 | 2022 | 2023 | |
| Mar 2021 | 2.2 to 2.4 | 1.8 to 2.1 | 2.0 to 2.2 | |
| Dec 2020 | 1.7 to 1.9 | 1.8 to 2.0 | 1.9 to 2.1 | |
PCE core inflation was up 1.5% in January year-over-year.
Projections for core inflation were revised up.
| Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1 | ||||
|---|---|---|---|---|
| Projection Date | 2021 | 2022 | 2023 | |
| Mar 2021 | 2.0 to 2.3 | 1.9 to 2.1 | 2.0 to 2.2 | |
| Dec 2020 | 1.7 to 1.8 | 1.8 to 2.0 | 1.9 to 2.1 | |
