Assessing the Economy s Progress

Transcription

1 EMBARGOED UNTIL MONDAY, NOVEMBER 9, 15 AT 1: P.M. EASTERN TIME OR UPON DELIVERY Assessing the Economy s Progress Eric S. Rosengren President & CEO Federal Reserve Bank of Boston November 9, 15 Newport County Chamber of Commerce Portsmouth, Rhode Island bostonfed.org

2 Figure 1: Real Final Sales to Domestic Purchasers 1:Q - 15:Q Percent Change at Annual Rate Average over Period 1 1:Q 1:Q 1:Q 15:Q Source: BEA, Haver Analytics

3 Figure : Real Consumer Spending 1:Q - 15:Q Percent Change from Year Earlier Average over Period 1 1:Q 1:Q 1:Q 15:Q Source: BEA, Haver Analytics

4 Figure : Measures of Labor Underutilization January October Percent U-6 Unemployment Rate Civilian Unemployment Rate (U-) Jan-199 Jan-1999 Jan- Jan-9 Jan-1 Recession Note: The U-6 measure is total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force. Source: BLS, NBER, Haver Analytics

5 Figure : Unemployment Rate Projections of Federal Reserve Governors and Federal Reserve Bank Presidents, September 15 15:Q - 18:Q 6. Percent Central Tendency of Longer-Run Range High of Longer-Run Range Median of Forecast Low of Longer-Run Range :Q 16:Q 17:Q 18:Q Note: The central tendency excludes the three highest and three lowest projections in each period. Source: FOMC, Summary of Economic Projections (SEP), September 15

6 Figure 5: Real Federal Funds Rate January October 15 6 Percent - Jan-199 Jan-1995 Jan- Jan-5 Jan-1 Jan-15 Recession Note: The real federal funds effective rate is calculated by subtracting the core PCE inflation rate from the nominal federal funds effective rate. A core PCE inflation rate of 1.% is assumed for October. Source: BEA, Federal Reserve Board, NBER, Haver Analytics

7 Figure 6: Real Federal Funds Rate and the Civilian Unemployment Rate January October Civilian Unemployment Rate (Y-Axis) Before Reaching the Zero Lower Bound After Reaching the Zero Lower Bound 6 Most recent observation in red Real Federal Funds Rate (X-Axis) Note: The real federal funds effective rate is calculated by subtracting the core PCE inflation rate from the nominal federal funds effective rate. In December 8, the FOMC lowered the Federal Funds Target to a range of to 5 basis points. A core PCE inflation rate of 1.% is assumed for October. Source: BEA, BLS, Federal Reserve Board, Haver Analytics

8 Figure 7: Real Federal Funds Rate and the Inflation Rate January October 15 5 Percent Change in Core PCE from Year Earlier (Y-Axis) Before Reaching the Zero Lower Bound After Reaching the Zero Lower Bound 1 Most recent observation in red Real Federal Funds Rate (X-Axis) Note: The real federal funds effective rate is calculated by subtracting the core PCE inflation rate from the nominal federal funds effective rate. In December 8, the FOMC lowered the Federal Funds Target to a range of to 5 basis points. A core PCE inflation rate of 1.% is assumed for October. Source: BEA, Federal Reserve Board, Haver Analytics

9 Figure 8: Federal Funds Rate Projections of Federal Reserve Governors and Federal Reserve Bank Presidents and the Federal Funds Futures Market December 15 - December 18 Percent Increases of 5 basis points after each FOMC meeting, until reaching the SEP projection for the longer-run federal funds rate. 1 SEP 9/17/15 Implied by Futures Contracts on 11//15 Dec-15 Dec-16 Dec-17 Dec-18 Note: Estimates from the Summary of Economic Projections (SEP) are the medians of the projections for the midpoint of the target range at yearend for The orange line provides a smoothed path based on an assumption that there are increases of 5 basis points following each FOMC meeting until the rate reaches the SEP longer-run projection. Source: FOMC, Summary of Economic Projections, September 15, Bloomberg

10 Figure 9: Real GDP Growth Projections of Federal Reserve Governors and Federal Reserve Bank Presidents, September 15 15:Q - 18:Q Percent Change from Year Earlier Median 1 15:Q 16:Q 17:Q 18:Q Source: FOMC, Summary of Economic Projections (SEP), September 15

11 Figure 1: NCREIF Commercial Real Estate Transactions-Based Real Price Indices 199:Q1-15:Q 5 5 Index West East South Midwest :Q1 1998:Q1 :Q1 6:Q1 1:Q1 1:Q1 Recession Note: Series are adjusted for inflation using the GDP Deflator. Source: National Council of Real Estate Investment Fiduciaries (NCREIF), BEA, NBER, Haver Analytics