FOMC Projections and Press Conference

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by Calculated Risk on 12/15/2021 02:13:00 PM

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

Here are the projections. In September, about half of participants expected one rate hike in 2022. Now, participants expect 3 rate hikes in 2022.

Wall Street forecasts are for GDP to increase at close to a 6.5% annual rate in Q4 that would put Q4-over-Q4 at around 5.4% – so the FOMC projections for 2021 were revised down.

GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1
Projection Date
2021
2022
2023
2024
Dec 2021
5.5
3.6 to 4.5
2.0 to 2.5
1.8 to 2.0
Sept 2021
5.8 to 6.0
3.4 to 4.5
2.2 to 2.5
2.0 to 2.2

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 4.2% in November.

The projections for the unemployment rate in Q4 2021 were revised down.

Note that the unemployment rate doesn’t capture the economic damage to the labor market. Not only are there 1.2 million more people currently unemployed than prior to the pandemic, and additional 2.4 million people have left the labor force since February 2020.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2
Projection Date
2021
2022
2023
2024
Dec 2021
4.2 to 4.3
3.4 to 3.7
3.2 to 3.6
3.2 to 3.7
Sept 2021
4.6 to 4.8
3.6 to 4.0
3.3 to 3.7
3.3 to 3.6

2 Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

As of October 2021, PCE inflation was up 5.0% from October 2020.

The projections for inflation were revised up sharply and the FOMC sees inflation solidly above target in 2022 and 2023.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1
Projection Date
2021
2022
2023
2024
Dec 2021
5.3 to 5.4
2.2 to 3.0
2.1 to 2.5
2.0 to 2.2
Sept 2021
4.0 to 4.3
2.0 to 2.5
2.0 to 2.3
2.0 to 2.2

PCE core inflation was up 4.1% in October 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
2024
Dec 2021
4.4
2.5 to 3.0
2.1 to 2.4
2.0 to 2.2
Sept 2021
3.6 to 3.8
2.0 to 2.5
2.0 to 2.3
2.0 to 2.2