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Wednesday, September 22, 2021

FOMC Projections and Press Conference

by Calculated Risk on 9/22/2021 02:11:00 PM

Statement here.

Fed Chair Powell press conference video here starting at 2:30 PM ET.

Here are the projections. In June, most participants expected around two rate hikes in 2023.  Now, about half of participants expect one rates hike in 2022.

Wall Street forecasts were for GDP to increase at a 8.6% annual rate in Q2 (came in at 6.6%) and forecasts for Q3 have been downgraded recently.  


So GDP was revised down for 2021.

GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1
Projection Date2021202220232024
Sept 20215.8 to 6.03.4 to 4.52.2 to 2.52.0 to 2.2
June 20216.8 to 7.32.8 to 3.82.0 to 2.5 
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 5.2% in August.

Note that the unemployment rate doesn't capture the economic damage to the labor market.  Not only are there 2.7 million more people currently unemployed than prior to the pandemic, over 2.9 million people have left the labor force since February 2020.  And millions more were being supported by various provisions of the disaster relief acts.

The unemployment rate was revised up slightly for 2021.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2
Projection Date2021202220232024
Sept 20214.6 to 4.83.6 to 4.03.3 to 3.73.3 to 3.6
June 20214.4 to 4.83.5 to 4.03.2 to 3.8 
2 Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

As of July 2021, PCE inflation was up 4.2% from July 2020.

The projections for inflation were revised up and the FOMC sees inflation solidly above target in 2021.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1
Projection Date2021202220232024
Sept 20214.0 to 4.32.0 to 2.52.0 to 2.32.0 to 2.2
June 20213.1 to 3.51.9 to 2.32.0 to 2.2 

PCE core inflation was up 3.6% in July year-over-year.

Projections for core inflation were revised up.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1
Projection Date2021202220232024
Sept 20213.6 to 3.82.0 to 2.52.0 to 2.32.0 to 2.2
June 20212.9 to 3.11.9 to 2.32.0 to 2.2