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SEP: Compilation and Summary of Individual Economic Projections

January 26–27, 2010

Table 1: Economic Projections of Federal Reserve Governors and Reserve
Bank Presidents, January 2010
Percent
Variable

2010

Central tendency1
2011
2012

Range
Longer run

2010

2011

2012

Longer run

Change in real GDP. . . . . . 2.8 to 3.5
November projection. . . 2.5 to 3.5

3.4 to 4.5
3.4 to 4.5

3.5 to 4.5
3.5 to 4.8

2.5 to 2.8
2.5 to 2.8

2.3 to 4.0
2.0 to 4.0

2.7 to 4.7
2.5 to 4.6

3.0 to 5.0
2.8 to 5.0

2.4 to 3.0
2.4 to 3.0

Unemployment rate. . . . . . 9.5 to 9.7
November projection. . . 9.3 to 9.7

8.2 to 8.5
8.2 to 8.6

6.6 to 7.5
6.8 to 7.5

5.0 to 5.2
5.0 to 5.2

8.6 to 10.0
8.6 to 10.2

7.2 to 8.8
7.2 to 8.7

6.1 to 7.6
6.1 to 7.6

4.9 to 6.3
4.8 to 6.3

PCE inflation. . . . . . . . . . . 1.4 to 1.7
November projection. . . 1.3 to 1.6

1.1 to 2.0
1.0 to 1.9

1.3 to 2.0
1.2 to 1.9

1.7 to 2.0
1.7 to 2.0

1.2 to 2.0
1.1 to 2.0

1.0 to 2.4
0.6 to 2.4

0.8 to 2.0
0.2 to 2.3

1.5 to 2.0
1.5 to 2.0

Core PCE inflation3. . . . . . 1.1 to 1.7
November projection. . . 1.0 to 1.5

1.0 to 1.9
1.0 to 1.6

1.2 to 1.9
1.0 to 1.7

1.0 to 2.0
0.9 to 2.0

0.9 to 2.4
0.5 to 2.4

0.8 to 2.0
0.2 to 2.3

NOTE: Projections of change in real gross domestic product (GDP) and of inflation are from the fourth quarter of the previous year to the fourth
quarter of the year indicated. PCE inflation and core PCE inflation are the percentage rates of change in, respectively, the price index for
personal consumption expenditures (PCE) and the price index for PCE excluding food and energy. Projections for the unemployment rate are for
the average civilian unemployment rate in the fourth quarter of the year indicated. Each participant's projections are based on his or her
assessment of appropriate monetary policy. Longer-run projections represent each participant’s assessment of the rate to which each variable
would be expected to converge under appropriate monetary policy and in the absence of further shocks to the economy. The November
projections were made in conjunction with the FOMC meeting on November 3-4, 2009.
1. The central tendency excludes the three highest and three lowest projections for each variable in each year.
2. The range for a variable in a given year includes all participants' projections, from lowest to highest, for that variable in that year.
3. Longer-run projections for core PCE inflation are not collected.

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SEP: Compilation and Summary of Individual Economic Projections

January 26–27, 2010

Table 1a

Economic Projections for the First Half of 2010*

(in percent)

Central Tendencies and Ranges
Central Tendency

Range

Change in Real GDP

2.8 to 3.4

1.8 to 3.8

PCE Inflation

1.5 to 1.8

0.7 to 2.0

Core PCE Inflation

1.1 to 1.6

1.0 to 2.0

PCE Inflation
1.8
2.0
2.0
1.2
1.5
1.6
1.6
1.7
1.8
1.6
1.7
2.0
1.7
1.6
0.7
1.3
1.7

Core PCE Inflation
1.6
2.0
2.0
1.1
1.2
1.2
1.2
1.4
1.4
1.2
1.3
2.0
1.0
1.1
1.0
1.2
1.2

Participants' Projections
Projection
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

Change in Real GDP
3.5
3.8
3.0
2.8
3.1
3.3
3.1
3.1
3.4
3.3
3.2
3.4
1.8
3.2
2.1
2.4
3.1

* Growth and inflation are reported at annualized rates.

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SEP: Compilation and Summary of Individual Economic Projections

January 26–27, 2010

Table 1b

Economic Projections for the Second Half of 2010*

(in percent)

Central Tendencies and Ranges
Central Tendency

Range

Change in Real GDP

2.8 to 3.8

2.5 to 4.2

PCE Inflation

1.2 to 1.7

1.1 to 2.0

Core PCE Inflation

1.1 to 1.6

0.8 to 2.0

PCE Inflation
1.6
2.0
1.6
1.4
1.3
1.2
1.2
1.7
1.6
1.2
1.3
2.0
1.1
1.2
1.7
1.1
1.3

Core PCE Inflation
1.8
2.0
1.6
1.1
1.2
1.2
1.0
1.2
1.4
1.2
1.3
2.0
1.2
1.1
1.2
1.2
0.8

Participants' Projections
Projection
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

Change in Real GDP
2.5
4.2
2.6
3.2
3.3
3.7
3.7
3.9
3.6
3.9
3.8
3.4
2.8
3.8
2.9
2.6
3.1

* Projections for the second half of 2010 implied by participants' January projections for the first half of 2010
and for 2010 as a whole. Growth and inflation are reported at annualized rates.

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SEP: Compilation and Summary of Individual Economic Projections

January 26–27, 2010

Table 2: January Economic Projections

(in percent)

Projection

Year Change in Real GDP Unemployment Rate

PCE Inflation

Core PCE Inflation

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

2010
2010
2010
2010
2010
2010
2010
2010
2010
2010
2010
2010
2010
2010
2010
2010
2010

3.0
4.0
2.8
3.0
3.2
3.5
3.4
3.5
3.5
3.6
3.5
3.4
2.3
3.5
2.5
2.5
3.1

9.7
9.2
9.5
9.7
9.5
9.5
9.5
9.5
9.6
9.5
9.5
8.6
10.0
9.5
9.5
9.7
9.7

1.7
2.0
1.8
1.3
1.4
1.4
1.4
1.7
1.7
1.4
1.5
2.0
1.4
1.4
1.2
1.2
1.5

1.7
2.0
1.8
1.1
1.2
1.2
1.1
1.3
1.4
1.2
1.3
2.0
1.1
1.1
1.1
1.2
1.0

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011

3.2
4.4
3.4
4.5
4.2
4.5
4.3
4.6
4.0
4.7
4.5
3.0
4.1
4.4
4.3
2.7
4.5

8.8
8.2
8.3
8.6
8.5
8.2
8.5
8.4
8.4
8.2
8.2
7.2
8.1
8.2
7.8
8.5
8.7

2.0
2.0
2.0
1.2
1.4
1.1
1.0
1.8
1.5
1.1
1.7
2.4
1.6
1.1
1.8
1.3
1.5

1.9
2.0
2.0
1.0
1.3
1.0
0.9
1.2
1.4
1.1
1.5
2.4
1.5
1.0
1.5
1.3
1.0

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SEP: Compilation and Summary of Individual Economic Projections

January 26–27, 2010

Table 2 (continued): January Economic Projections

Projection

Year Change in Real GDP Unemployment Rate

PCE Inflation

Core PCE Inflation
1.9
1.5
2.0
1.2
1.5
1.2
0.8
1.2
1.4
1.2
1.7
2.0
2.0
1.0
1.7
1.5
1.2

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012

3.4
3.5
3.5
4.5
4.0
4.3
4.5
4.8
4.0
4.5
4.5
3.0
5.0
4.4
4.1
3.0
4.8

7.6
7.2
7.5
7.0
7.4
6.6
7.0
6.9
7.2
6.1
7.0
6.5
6.5
6.8
6.7
7.6
7.5

2.0
1.5
2.0
1.5
1.5
1.3
0.8
1.8
1.5
1.3
1.9
2.0
2.0
1.0
1.7
1.5
1.5

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

LR
LR
LR
LR
LR
LR
LR
LR
LR
LR
LR
LR
LR
LR
LR
LR
LR

2.5
2.8
3.0
2.5
2.5
2.8
2.5
2.6
2.7
2.8
2.5
2.8
2.4
2.5
2.6
2.5
2.8

6.3
5.3
5.0
4.9
5.0
5.0
5.0
5.2
5.0
5.0
5.2
5.3
5.0
5.0
5.0
5.2
5.0

2.0
1.5
2.0
2.0
1.8
2.0
2.0
2.0
1.5
2.0
2.0
1.7
2.0
2.0
2.0
2.0
1.5

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SEP: Compilation and Summary of Individual Economic Projections

January 26–27, 2010

Figure 1. Central tendencies and ranges of economic projections, 2010–12 and over the longer run
Percent

Change in real GDP

Central tendency of projections
Range of projections

4
3

Actual

2
1
+
0
_
1
2

2005

2006

2007

2008

2009

2010

2011

2012

Longer
run
Percent

Unemployment rate

10
9
8
7
6
5

2005

2006

2007

2008

2009

2010

2011

2012

Longer
run
Percent

PCE inflation
3

2005

2006

2007

2008

2009

2010

2011

2012

Longer
run
Percent

Core PCE inflation
3

2005

2006

2007

2008

2009

2010

2011

2012

NOTE: Definitions of variables are in the notes to table 1. The data for the actual values of the variables are annual. The data for the change in real
GDP, PCE inflation, and core PCE inflation shown for 2009 incorporate the advance estimate of GDP for the fourth quarter of 2009, which the Bureau
of Economic Analysis released on January 29, 2010. This information was not available to FOMC meeting participants at the time of their meeting.

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SEP: Compilation and Summary of Individual Economic Projections

January 26–27, 2010

Uncertainty and Risks - GDP Growth

2(a): Please indicate your judgment of the uncertainty attached to your projections relative to
levels of uncertainty over the past 20 years.
Number of participants

0
Lower
(C)

Broadly similar
(B)

Higher
(A)

2(b): Please indicate your judgment of the risk weighting around your projections.
Number of participants

0
Weighted to downside
(C)

Broadly balanced
(B)

Weighted to upside
(A)

Individual Responses
Respondent
2(a)
2(b)

B B A A A A A A B
B B B B B B B B B

10 11 12 13 14 15 16 17
A
B

A
B

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A
C

A
B

SEP: Compilation and Summary of Individual Economic Projections

January 26–27, 2010

Uncertainty and Risks - Unemployment Rate

2(a): Please indicate your judgment of the uncertainty attached to your projections relative to
levels of uncertainty over the past 20 years.
Number of participants

0
Lower
(C)

Broadly similar
(B)

Higher
(A)

2(b): Please indicate your judgment of the risk weighting around your projections.
Number of participants

0
Weighted to downside
(C)

Broadly balanced
(B)

Weighted to upside
(A)

Individual Responses
Respondent
2(a)
2(b)

B B A B A A A A B
B B A B B B B B B

10 11 12 13 14 15 16 17
A
A

A
B

B
B

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A
A

A
B

SEP: Compilation and Summary of Individual Economic Projections

January 26–27, 2010

Uncertainty and Risks - PCE Inflation

2(a): Please indicate your judgment of the uncertainty attached to your projections relative to
levels of uncertainty over the past 20 years.
Number of participants

0
Lower
(C)

Broadly similar
(B)

Higher
(A)

2(b): Please indicate your judgment of the risk weighting around your projections.
Number of participants

0
Weighted to downside
(C)

Broadly balanced
(B)

Weighted to upside
(A)

Individual Responses
Respondent
2(a)
2(b)

A B A B A A A B C
B B A B B B C B B

10 11 12 13 14 15 16 17
A
B

A
B

A
A

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A
B

SEP: Compilation and Summary of Individual Economic Projections

January 26–27, 2010

Uncertainty and Risks - Core PCE Inflation

2(a): Please indicate your judgment of the uncertainty attached to your projections relative to
levels of uncertainty over the past 20 years.
Number of participants

0
Lower
(C)

Broadly similar
(B)

Higher
(A)

2(b): Please indicate your judgment of the risk weighting around your projections.
Number of participants

0
Weighted to downside
(C)

Broadly balanced
(B)

Weighted to upside
(A)

Individual Responses
Respondent
2(a)
2(b)

A B A A A A A B C
B B A B B B C B B

10 11 12 13 14 15 16 17
A
B

A
B

A
A

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A
B

L o n g er-ru n P r o je c tio n s
1 (c ). I f y o u a n tic ip a te t h a t t h e c o n v e rg e n c e p ro c e s s w ill ta k e s h o r te r o r lo n g e r
t h a n a b o u t five o r six y e a rs , p le a s e in d ic a te b e lo w y o u r b e s t e s tim a te o f th e
d u r a tio n o f t h e c o n v e rg e n c e p ro c e ss . Y ou m a y a lso in c lu d e b e lo w a n y o th e r
e x p la n a to r y c o m m e n ts t h a t y o u t h in k w o u ld b e h e lp fu l.
Respondent 1:

Convergence process likely to take somewhat longer than 5 to 6 years
Respondent 2:

I anticipate that the convergence process for real GDP growth and inflation will be substantially shorter
than 5-6 years, perhaps on the order of three years for real growth (with a period of overshoot of real growth
in the interim during recovery), and an overshoot in the interim in inflation as a consequence of significant
past growth in the monetary base supported by longer term asset purchases that cannot be sold off over a
very short time period. I anticipate that the decline in the unemployment rate will lag behind the recovery
of real growth.
Respondent 3:

It will take longer than 5 or 6 years for unemployment.
Respondent 4:

In light of the severity and breadth of shocks to the economy and the continuing, though reduced, risk of
more to come, the convergence process may well extend beyond five or six years to something closer to eight
years.
Respondent 5:

If appropriate policy is followed, I would expect convergence to occur within five to six years. However, I am
concerned that delaying the removal of policy accommodation and the shrinkage of our balance sheet could
result in long term inflation expectations becoming unanchored, leading to higher inflation and therefore
more time would be required to reach our longer term objectives.
Respondent 6:

N/A
Respondent 7:

Convergence to the real economy's equilibrium and to the inflation objective within five years requires lower
long-term interest rates in the near-term than what is assumed in the baseline outlook. As a result, while it
is possible that the maximum employment goal will be achieved within a five-year horizon, inflation is likely
to remain below the target.
Respondent 8:

N/A
Respondent 9:

N/A
Respondent 10:

N/A
Respondent 11:

N/A

Respondent 12:

The convergence process may be slightly shorter than 5-6 years.
Respondent 13:

By 2015-16 potential growth is 2.4%, down from our current estimate of 2.5-2.7%, as the babyboomers re
tire. A reasonable estimate for the long-run unemployment rate is 4.5% to 5.5%. We would expect, with
appropriate policy and no further adverse shocks, unemployment to be in this range and the output gap to
be around zero by 2015-16.
We assume long-term inflation expectations to be anchored around 2.5% on a CPI basis and the FOMC’s
inflation objective to be around 2% for the PCE deflator and around 2.5% for the CPI. Under these condi
tions, with the output gap around zero, we would expect PCE inflation of around 2%.

Respondent 14:

The convergence process will likely be longer than six years because of the current massive output gap, very
low inflation, and limits on possible monetary stimulus resulting from the zero lower bound on interest rates.
Respondent 15:

At a 5-6 year horizon, the economy has yet to fully converge for output and unemployment. Given the
substantial weakness in my near-term projection, the convergence process will likely take 7-8 years.
Respondent 16:

N/A
Respondent 17:

Given the depth of the recession, the damage inflicted on the financial sector, and the difficult domestic and
global adjustments that are needed, convergence may well require the full five-to-six years.

U n c e r ta in ty an d R isk s
2 (a ). (O p tio n a l) I f y o u h a v e a n y e x p la n a to r y c o m m e n ts re g a r d in g y o u r
ju d g m e n t o f t h e u n c e r ta in ty a tta c h e d to y o u r p r o je c tio n s re la tiv e to levels o f
u n c e r ta in ty o v e r t h e p a s t 20 y e a rs , y o u m a y e n te r th e m b elo w .
Respondent 1:

N/A
Respondent 2:

N/A
Respondent 3:

Volatility was low in the past twenty years. It will be higher going forward.
Respondent 4:

N/A
Respondent 5:

N/A
Respondent 6:

The unprecedented circumstances of recovery from very deep recession and severely disrupted financial sys
tem, together with extraordinary monetary, fiscal, and regulatory responses imply great uncertainty about
the actions of both the authorities and the private sector going forward. The unusual behavior of the un
employment rate relative to output growth and of inflation relative to the unemployment rate add to these
uncertainties.
Respondent 7:

N/A
Respondent 8:

N/A
Respondent 9:

I believe that uncertainty regarding projections for GDP and unemployment are now about average. Inflation
projections would be more firmly anchored under an appropriate monetary policy, and therefore uncertainty
would be lower than the trailing 20-year average.
Respondent 10:

N/A
Respondent 11:

N/A
Respondent 12:

Financial market conditions continue to improve and the economy is in recovery. However, the impact of
fiscal stimulus and its unwinding has raised uncertainty around my projected path for real output growth.
In addition, the effect of the extraordinary monetary policy accommodation in place and the uncertainty
about the timing of when we will exit from that accommodation have increased the uncertainty around my
inflation forecast.
Respondent 13:

Quantitative judgment based on the standard deviation of the FRBNY forecast distribution for GDP growth

and core PCE inflation relative to the forecast errors over the last 20 years.
Respondent 14:

The extraordinary financial situation and unusual fiscal and monetary policies all increase uncertainty re
garding the outlook for economic growth. In addition, the unexpected jump in the unemployment rate
last year raises questions about the evolution of the labor market going forward. The heightened risks to
the outlook for economic activity, as well as the elevated variability of commodity prices, raise uncertainty
regarding the outlook for inflation.

Respondent 15:

N/A
Respondent 16:

N/A
Respondent 17:

N/A

U n c e r ta in ty an d R isk s
2 (b ). (O p tio n a l) I f y o u h a v e a n y e x p la n a to r y c o m m e n ts re g a r d in g y o u r
ju d g m e n t o f t h e ris k w e ig h tin g a r o u n d y o u r p r o je c tio n s , y o u m a y e n te r th e m
b elo w .
Respondent 1:

N/A
Respondent 2:

Going forward into 2010 as the economy recovers from the recent recession and experiences the fiscal stimulus
program as well as a substantial persistent increase in the monetary base, I believe that the risks to real
growth and inflation will become weighted to the upside.
Respondent 3:

By “weighted to upside” for unemployment, I mean that I am concerned that unemployment might turn out
to be even higher than my already pessimistic mean forecast.
Respondent 4:

N/A
Respondent 5:

In the near-term, the weakness of the economy and recent price trends pose some downside risks to core and
overall inflation. However, in the medium to long term, the expansion of our balance sheet and increased
public nervousness about increases in our balance sheet and federal borrowing create a risk to the stability
of long-term inflation expectations, and therefore create upside risks to inflation. In addition, there is a risk
that monetary policy will remain too accommodative for too long, creating further upside risks to inflation.
Respondent 6:

N/A
Respondent 7:

N/A
Respondent 8:

N/A
Respondent 9:

N/A
Respondent 10:

N/A
Respondent 11:

The incoming high-frequency data-as aggregated by summary statistics such as the CFNAI-are quite con
sistent with the near term projections for growth. However, looking later into 2010 and beyond, the degree
of uncertainty is greater than it has been over the past 20 years. In part this reflects the severity of the
recession and the resulting uncertainty over the endogenous cyclical dynamics of the recovery. The degree
of repair necessary in the banking sector and the massive change in the Federal Reserve’s balance sheet also
impart a greater-than-usual degree of uncertainty surrounding financial conditioning assumptions-both with
regard to the most appropriate assumptions to make and the influence of those assumptions on economic
activity and inflation expectations.

Respondent 12:

The incoming data have led me to revise up slightly my near-term path for growth compared to my Octo
ber forecast. I view the risks to growth and the unemployment rate as roughly balanced. Over the longer
term, inflation risk is tilted to the upside reflecting uncertainty about the timing and efficacy of the Fed’s
withdrawal of accommodation.
Respondent 13:

Quantitative judgment based on the difference between the projection and the expected value from the
FRBNY forecast distribution. For inflation, risks are modestly to the downside in the near term and mod
estly to the upside in the medium to longer term.
Respondent 14:

N/A
Respondent 15:

N/A
Respondent 16:

The incoming data suggests a pace of spending and production that, if continued, would lead to GDP growth
much stronger in the medium term than I have marked into my forecast. However, the economic environment
remains fragile, and as a result I continue to judge the risks to my growth forecast as being broadly balanced.
Respondent 17:

N/A

A p p r o p r ia te M o n e ta r y P o lic y
3. D o e s y o u r v ie w o f t h e a p p r o p r ia te p a t h o f in te r e s t r a te s d iffer m a te ria lly
fro m t h e in te r e s t r a t e a s s u m e d b y t h e s ta f f in t h e G re e n b o o k ?

YES

Respondent 1: Yes
Expect policy rates to move sooner and with greater force than Greenbook forecast - closer to current market
forecast
Respondent 2: Yes
While the pattern of recovery from the recent recession is uncertain, I believe that under appropriate mon
etary policy to maintain price stability we will have to move away from the current target range for the
funds rate as part of the process of withdrawing from quantitative easing much sooner than assumed in the
Greenbook forecast.

No
The path of interest rates is likely to be appropriate. If expected inflation were to tick up appreciably, then
we would have to re-evaluate.
Respondent 3:

Respondent 4:

N/A
Respondent 5: Yes
I expect it will be necessary to begin raising the target for the federal funds rate in 2010, in contrast to the
Greenbook assumption that the current target range is maintained until late 2011. Holding rates down so
low for so long would invite asset imbalances and risk repeating past mistakes. In my judgment, appropriate
policy will also involve taking steps to reduce the size of our balance sheet and normalize its composition in
a timely manner. Finally, I also believe we need to change the language in our press statement from saying
economic conditions “are likely to warrant exceptionally low levels of the federal funds rate for an extended
period” to “are likely to warrant low levels of the federal funds rate for some time.”
Respondent 6: Yes
tightening begins in H1 2011 rather than H2.
Respondent 7: Yes

The forecast is conditioned on a somewhat lower path for the Federal funds rate in 2011 and 2012.
Yes
Anticipate a modest move toward normalization in 2010:H2, further slow rate increases in 2011.
Respondent 8:

Respondent 9: Yes
I believe that under an appropriate monetary policy the committee would announce a numerical inflation
objective. In order to achieve that objective, I believe that policy rates may well need to increase by the end
of this year.
Respondent 10:

N/A
Respondent 11: Yes
We assume the funds rate to be close to the path currently embedded in futures markets in 2010 and the first

part of 2011. We expect a slightly higher path for the funds rate than the markets do later in the projection
period.
Yes
My forecast continues to assume a less accommodative policy than in the Greenbook baseline. I view the
appropriate monetary policy as one that raises the funds rate to about 2 percent by the end of 2010 and 3.5
percent by the end of 2011. By the end of 2012, I see the funds rate at about 4.5 percent.
Respondent 12:

Respondent 13: Yes
For 2010 identical. We assume the normalization of interest rates starts in 2011Q1 and continues at a faster
rate in 2012. Because of differences in our inflation forecast, the difference in real rates is less substantial.
Our views on the size of the balance sheet are close to the Greenbook assumption.
Respondent 14:

N/A
Respondent 15: Yes
Yes. Due to a stronger inflation profile in my outlook, the federal funds rate begins to increase sooner than
in the Greenbook.
Respondent 16:

N/A
No
No, but given the uncertainty regarding the outlook, we must be careful not to lock ourselves in to a particular
rate or path for rates.
Respondent 17:

F o reca st N a rr a tiv e s
4 (a ). P le a s e d e s c rib e t h e k e y fa c to rs s h a p in g y o u r c e n tr a l e c o n o m ic o u tlo o k
a n d t h e u n c e r ta in ty a r o u n d t h a t o u tlo o k .
Respondent 1:

Pace of GDP growth significantly influenced by pace of improvement in labor incomes
Respondent 2:

The path of economic activity in the first three quarters of 2009 was consistent with my earlier expectation
of a slowing contraction in the first half of the year, with output bottoming out in the middle of the year
and recovery in the second half. Hence I have not revised my previous forecast for real growth in 2010. In
2010 and 2011 I anticipate that real growth will occur at greater than steady-state rates, reflecting normal
cyclical patterns reinforced by a modest impact of the fiscal stimulus package and the impact of the sub
stantial monetary stimulus that has been in train since late 2008. I expect that subsequently growth will
slow and approach steady-state rates. I do not see inflation abating in the near future. While headline PCE
inflation from the fourth quarter of 2008 through the third quarter of 2009 is slightly less than one percent
at annual rates, recent increases in energy prices lead me to expect that the headline rate will approach the
core rate as 2010 progresses. Subsequently, under appropriate monetary policy, inflation should approach
my preferred long-run rate of 1.5 percent, though I believe that it will rise above that rate in an interim
period. I do not believe that future energy shocks can be forecasted, so with available information I expect
that core and headline inflation will be roughly equal in the out years of the projection period.
Respondent 3:

Financial markets have normalized. However, unemployment remains high. At the same, hiring rates and
job openings remain at historical lows. I see little chance for significant job growth in 2010. Large fiscal
imbalances and large holdings of excess reserves create the possibility of a low-probability high inflation
scenario.
Respondent 4:

Key factors include slow but steady spread of expectation that recovery has taken hold, but continuing
likelihood of slow employment growth and consequent drag on consumption, drag from commercial real
estate, and uneven nature of housing market recovery. Key uncertainty is timing of turnaround in credit
availability for consumers and small businesses. The impact of diminution in effects of stimulus and of our
LSAP program in first half of 2010 remain important uncertainties.
Respondent 5:

The economic outlook is improving and growth is likely to be above trend over the forecast horizon. Even
so, the recovery is likely to be sluggish by historical standards. Growth in the first half of this year is
driven in part by temporary factors, such as highly stimulative fiscal policy, inventory accumulation, and
census hiring concentrated in the second quarter. However, with the tax credit for home buyers ending in
the second quarter, and fiscal stimulus more generally slowing in the second half of this year, growth in the
second half of 2010 and beyond requires a transition from growth driven by temporary factors to growth
driven by private final demand. I expect such a transition to occur through a few channels: As firms exhaust
productivity gains, hiring and new investment should pick up; then, as labor markets improve, consumer
spending should also trend upward; and finally, strong foreign demand, particularly in Asia, should support
export growth.
I expect core inflation to remain low but move higher over the forecast horizon. Disinflationary pressure
from low resource utilization is currently being offset by stable inflation expectations, a decline in the dollar,
and accommodative monetary policy. Over time, as the recovery continues, inflation is likely to move higher,
to a level more in line with long-term inflation expectations.

While problems in commercial real estate pose downside risks to GDP growth, the easing of financial
stress, the resiliency of the U.S. economy, and traditional business cycle dynamics-especially following a
deep recession-may lead to even stronger consumer and business spending than anticipated. In the near
term, the weakness of the economy and recent price trends pose some downside risks to core and overall
inflation. However, in the medium to long term, the expansion of our balance sheet and increased public
nervousness about increases in our balance sheet and federal borrowing create a risk to the stability of long
term inflation expectations, and therefore create upside risks to inflation. In addition, there is a risk that
monetary policy will remain too accommodative for too long, creating further upside risks to inflation.
Respondent 6:

The growth rate of final demand strengthens gradually, supported by accommodative monetary policy, fur
ther improvement in financial conditions (including for bank credit), and a rebound on spending on houses,
consumer durables, and business capital equipment form unsustainably low levels. Expansion is held back,
especially in the next few quarters, by still-tight credit for some borrowers, and by caution and uncertainty
resulting from the recent events and the still-developing governmental response. Upside risks include a faster
rebound in household and business spending on durables and capital; downside risks include slower recovery
of credit availability, especially from banks partly resulting from much tighter expected and actual capital
and other requirements on them,
Respondent 7:

Recent data have been broadly in line with expectations. Average growth in final sales during the second
half of 2009 was mildly positive, and the fluctuations in inventories have altered the projected quarterly
pattern of GDP growth but not the assessment of the underlying strength of the economy. In this regard,
the recovery in activity this year is likely to be relatively muted. Banking problems remain even if the
banking crisis has passed. Lending standards continue to be tight as banks are unwilling to take on too
much additional risk given the ongoing problems with existing loans. As a result, credit availability is likely
to place constraints on both households’ and firms’ spending. Housing prices remain well off their peaks,
and the desire to build a more meaningful buffer of savings may also dampen consumption in the near term.
Growth in private sources of income, while expected to increase during the recovery, is still modest at this
point and the high level of unemployment suggests only small advances in the wage rate over the forecast
horizon. These factors, together with a waning support from the fiscal stimulus, are likely to result in a slow
recovery in spending compared to past episodes. In addition, many businesses may expand investment only
gradually, at least until they are more confident that the economy will continue expanding even after some
of the stimulative government support winds down.
In all, we expect the ongoing recovery to make only a relatively small dent to the unemployment rate
gap by the end of 2011. Given the sizable slack in the labor market over the forecast horizon, the rate of
core inflation remains well below target in 2011 and 2012.
The risks to activity have become somewhat more balanced, but the downside risks at this point are much
more costly than the potential upside, given that a faster-than-expected recovery is unlikely to generate
meaningful inflationary pressures. The risks to inflation continue to be on the downside. Given the unem
ployment rate forecast, several accelerationist Phillips curve models would predict outright deflation over
the course of the forecast horizon.
Respondent 8:

Firms have slowed inventory liquidation more quickly than expected, leading to a strong 09:Q4 and sug
gesting perhaps a bit more optimism on the part of firms about 2010. However, the broad outline of the
forecast-a moderate recovery in 2010, picking up steam thereafter-remains the same, or perhaps just a bit
stronger. Key to recovery is that private final demand take over from the inventory cycle and fiscal policy
as the principle source of growth; it is early to tell whether that will occur, but recent growth in consumer

spending and firms’ investment in equipment and software is encouraging. Global economic conditions con
tinue to improve, especially in emerging markets. Manufacturing has been stronger (moreso than services),
perhaps reflecting strengthening foreign demands and the greater cyclicality of the manufacturing sector.
Housing remains relatively weak, with prices likely to fall a bit further and gains in construction moderate.
Outside of banking, financial conditions are approaching normal, with equity prices up, credit spreads tighter,
money markets functioning well, and larger firms (including banks) having good access to public capital mar
kets. Banks have continued to stabilize, except that regional and smaller banks still face serious concerns in
commercial real estate. Bank credit has continued to contract, however, reflecting tight lending terms but
also lower credit demand and weak borrower balance sheets. Presumably the continued tightness in bank
lending is having the greatest effects on consumers and small businesses. Continued financial normalization
and slow improvement in bank credit conditions will be needed for a sustainable recovery.
The labor market continues to be very weak, with no signs yet of significant hiring. Labor market weakness
is also a risk to the recovery, as households are unlikely to regain confidence with unemployment so high.
The relatively moderate expected pace of recovery suggests slow improvement in unemployment. However,
the productivity gains of recent quarters, the result of cost-cutting, are unsustainable; some reversal of this
trend might lead to somewhat better job growth than implied by the expected pace of output growth. Un
certainties about output and employment remain high, however, because of continuing financial restraint,
political uncertainty, and the usual difficulties of forecasting around turning points.
Core inflation is likely to respond to slack, but the decline is likely to be relatively modest given the stability
of inflation expectations. Energy and commodity prices will rise faster than other prices as the global econ
omy strengthens, so that headline inflation will exceed core inflation. The dollar has shown greater stability
recently. The stability of inflation expectations limits the amount of uncertainty one can have about the
inflation forecast.
Respondent 9:

I believe that the pace of expansion will be solid, although less rapid than has often occurred in previous
recoveries, due in part to further significant declines in nonresidential construction and low levels of activity
in residential construction and autos. In addition, under current legislation the stock of federal debt will
grow rapidly relative to GDP for the foreseeable future. There is considerable uncertainty on the nature
and timing of the fiscal policy actions that will put the stock of debt onto a more sustainable path. That
uncertainty, in combination with the likelihood of higher future taxes, is likely to make firms and households
more cautious in their spending plans
Respondent 10:

N/A
Respondent 11:

We continue to see important bimodal aspects to the forecast. The downside scenario is a function of
slower-than-anticipated repair of the banking system and more persistent effects of depreciated worker skills
and resulting difficulties in matching job applicants to labor demand. The upside scenario reflects greaterthan-expected impulses from accommodative monetary policy and pent up demand from the recession. Our
baseline forecast averages these cases.
Respondent 12:

The recent data on the economy has been broadly in line with what I anticipated in my October forecast.
In my view, the economy is now is in recovery and I expect an above-trend pace of 3.4 percent growth
in 2010 as recovery dynamics take hold. I expect growth slightly above trend in 2011 and 2012. The labor
market recovery is gradual — I expect the unemployment rate edges down to about 6.5 percent by the end of

the forecast horizon, at which time it remains above the natural rate of unemployment by about 1 percentage
point. I anticipate that inflation will rise into 2011 then pull back in 2012 in response to tighter monetary
policy than anticipated in the Greenbook.
In my view, the substantial liquidity that is now in the financial system raises the risk that inflation will
rapidly accelerate to unacceptable levels and that inflation expectations may become unanchored. To ward
off these developments, the FOMC will need to commence a steady tightening of monetary policy that begins
some time in 2010.
Respondent 13:

In our central projection, the recovery of the US economy began in 2009Q3 after a post WWII record
four-quarter decline of real GDP of nearly 4%. Indeed, at this writing it appears that real GDP rose 3.7%
(annual rate) over the second half of 2009, somewhat stronger than expected last October. After falling 1.7%
over the preceding four quarters, real personal consumption expenditures increased 2.8% (annual rate) in
2009Q3, led by a significant increase in light-weight vehicle sales fueled by the “cash for clunkers” program.
Similarly, single-family housing starts rose by nearly 40% from 2009Q1 to 2009Q3, reflecting a larger-thananticipated response to the first time home buyer tax credit as well as the success of the Fed's purchases
of agency MBS in lowering mortgage interest rates. Despite a very low capacity utilization rate, business
investment in new equipment and software eked out a modest gain in Q3 and looks to have increased at
a roughly 10% annual rate in Q4, likely due in part to the pending expiration of the bonus depreciation
provision in the stimulus bill. Finally, the economy experienced an unusually large inventory cycle that we
estimate to have contributed a full 2 percentage points to growth over the second half of 2009.
Despite the stronger-than-expected second half growth of real GDP, labor market conditions turned out
to be roughly as expected. Based on available data, it appears that productivity growth remained very
high in 2009Q4 and that hours worked continued to decline, although at a much slower rate than over the
preceding seven quarters. The unemployment rate averaged 10.0% in the fourth quarter, slightly below our
expectations, due to a steeper than expected decline of the labor force participation rate.
The PCE deflator probably increased at a 2 2 % annual rate in the second half of 2009 after being es
sentially zero over the first half of the year. This is somewhat higher than we previously expected due to
larger than assumed increases of energy prices. The overall rate of increase of the core PCE deflator over
the second half of 2009 was in line with our expectations, at a 1.2% annual rate versus 1.6% over the first
half of 2009. This is consistent with our view that the high degree to which resources are underutilized has
put downward pressure on core inflation.
For 2010 we have raised our projected growth rate to 2 4% (Q4/Q4) from 2%, reflecting an upward revision
to labor compensation which feeds through into somewhat more rapid growth of real consumer spending.
This still is very sluggish growth for the first full year of recovery and is below the consensus. As before,
we expect the first half of the year to be notably weaker than the second half. As growth in 2010 remains
below our estimate of potential, we expect the unemployment rate to rise to about 10 1 % by midyear. A key
feature of our modal forecast is that the current cycle is qualitatively different from the typical post WWII
cycle such that we are unlikely to see the robust growth of consumer spending that normally occurs over
the first year of recovery. A major factor for this relatively tepid growth is the large declines in employment
and hours during the recession, which will continue to impact household income. In addition, the household
sector continues to have a substantial debt overhang, the effects of the stimulus bill on taxes and transfers
are largely behind us, and energy prices have increased from their recent lows. While equity and home prices
have recovered somewhat, we estimate that as of 2009Q4 the ratio of household net worth to disposable
income remains over 20 percent below its peak. Finally, while financial conditions appear to be gradually
easing, we expect credit availability to be tight relative to the standards of the recent past.

A second key feature of our modal forecast is that while it appears that the correction in housing pro
duction is over, it is unlikely that we will experience the surge of residential investment typical of the early
stages of post WWII recoveries. In addition to tightened mortgage underwriting standards, a large number
of homes will continue to come onto the market through the foreclosure process. Finally, new construction
of multifamily units has moved downward reflecting excess supply of condos and high rental vacancy rates.
With consumption and residential investment recovering only gradually-in conjunction with historically low
capacity utilization rates, rapidly rising retail and office vacancy rates, and sharply declining prices for com
mercial real estate-any recovery of business investment in new equipment and software and new structures is
likely to be weak. Also contributing to the relatively tepid growth expected for 2010 is the ongoing structural
adjustment taking place in state and local governments which is expected to result in significant declines
in employment in this sector for much of the first half of the year. Finally, while growth prospects for our
trading partners have generally improved, suggesting a continued rebound of exports, the modest upgrade in
final demand as the US recovers will be associated with rising imports. Thus, while net exports will not be a
major drag on growth, they are unlikely to be a major positive contributor to growth over the forecast horizon.
By the second half of 2010 and into 2011 we expect the recovery to gather steam with growth of 4%
(Q4/Q4) in 2011, placing the level of real GDP very close to the consensus forecast. We expect the recovery
to gather further momentum in 2012 with a 5% growth in GDP and a fall in the unemployment rate below
7%. Underlying this projection is the expectation that financial market functioning continues to return to
a more normal state and that consumer and business confidence and the general appetite for risk continue
to recover. With household income and balance sheets improving and credit flowing more normally, the
substantial pent-up demand for consumer durables, housing, and business equipment and software will start
to be satisfied. Moreover, the structural adjustments of state and local governments and of the commercial
real estate sector will likely have run their course by that time.
Barring a significant decline in (either or both) the level of the economy’s potential output or its poten
tial growth rate, this point forecast implies that a large output gap will persist over most of the forecast
horizon. Accordingly, we expect core inflation to slow to around 1% (Q4/Q4) in 2010. But by late 2010
and into 2011, as final demand firms within the context of anchored inflation expectations, we expect core
inflation to move up to within the “mandate consistent” range.
The risks to our central projection for real activity are somewhat more balanced than in October but
remain skewed to the downside. A key downside risk is that the loss of income and wealth suffered by the
household sector induces a steeper-than-expected increase of the personal saving rate, keeping consumer
spending weaker for longer. The sharp decrease in the prime age employment to population ratio during the
current cycle, combined with the large share of workers nearing retirement age, makes this risk particularly
acute. Finally, an important risk over the medium term is the uncertainty surrounding our assumption of the
economy’s potential growth rate. On the one hand, given the weakness of business investment and the nec
essary reallocation of labor and capital, the economy’s potential growth rate may have slowed significantly.
On the other hand, current estimates of labor productivity continue to surprise to the upside. Another
source of risk to the forecast is fiscal policy. Under current law many of the tax provisions enacted in 2001
and 2003 are scheduled to expire at the end of 2010. The outcome of the debate over these provisions could
potentially have a significant impact on both growth prospects and inflation expectations. Finally, relatively
modest changes in variables such as productivity growth, the participation rate, and the average work week
could have a significant impact on the path of the unemployment rate.
The risks around the central scenario for inflation are relatively balanced. Clearly, the downside risk to
the growth projection combined with the possibility of no meaningful decline in potential implies downside
risk to the inflation projection. In contrast, with the aggressive global monetary and fiscal policy response
to the financial crisis, there is a risk of higher inflation.

The heightened uncertainty associated with the shape of recoveries from periods of banking and finan
cial crisis as well as the uncertainty associated with the timing and synchronization of the removal of global
policy accommodation result in greater uncertainty around our central projection compared to typical levels
over the last twenty years.
Respondent 14:

Although labor markets remain very weak, recent economic indicators suggest that a moderate recovery is
in train. Financial conditions have improved; however, the process of repairing the banking and financial
sectors will proceed slowly, and financial intermediation will remain impaired for some time and will hold
back the pace of recovery. In addition, households are in the midst of repairing balance sheets that have
been weakened by equity and housing losses and debt accumulation. Fiscal and monetary stimulus provide
key drivers for recovery this year. Significant slack in labor and goods markets will keep inflation low, but
well-anchored inflation expectations should help avoid sustained deflation.

Respondent 15:

The consumer continues to be under considerable strain well into 2010 and possibly beyond, facing a weak
labor market, high debt burdens, and tight credit conditions. A renewed respect for economic uncertainty in
the wake of the recession also produces a stronger precautionary saving motive further restraining consumer
spending. Although business equipment spending recovers in 2010, many firms delay purchases to await
further resolution in demand uncertainty limiting the strength of the rebound compared to historical norms.
Business spending on structures continues to contract in 2010 hampered by high vacancy rates and ongoing
credit problems in commercial real estate. The robust resumption of foreign growth, notably from Asia,
supports both strong export and import growth in the near-term.
My forecast assumes that inflation expectations will remain “anchored” near current levels of roughly 2%
throughout the forecast period. However, considerable uncertainty surrounds this assumption. Incoming
data indicating further and substantial core price deceleration balances worries of an impending inflationary
episode due to the Federal Reserve’s balance sheet actions that could move expectations higher.
Respondent 16:

The influence of fiscal and monetary stimulus is expected to moderate during 2010 in an environment where
the supply of credit to households and small businesses remains constrained as banks deal with continuing
problems. These forces, and ongoing uncertainty over the general business environment, will restrain busi
ness investment and jobs creation relative to a more typical recovery experience. In addition, I anticipate
an elevated personal savings rate that will dampen spending as households attempt to rebuild their balance
sheets. I assume that adverse forces affecting economic growth over the medium-term are also weighing,
somewhat, on economic potential.
Respondent 17:

Recent developments have been encouraging, but much of the recent growth impetus has come from fiscal
stimulus and a slowing rate of inventory liquidation, which will carry us only so far. Significant retardants
remain. For example, the drag from delayed losses in residential real estate coupled with consumer and
commercial real estate losses threatens to delay a recovery in credit availability, and the uncertainty cre
ated by a plethora of new economic and regulatory initiatives is discouraging commitments to expansion of
employment and CAPEX in the U.S.

4 (c ). P le a s e d e s c rib e a n y i m p o r ta n t d iffe re n c e s b e tw e e n y o u r c u r r e n t e c o n o m ic
fo re c a s t a n d t h e G re e n b o o k .
Respondent 1:

N/A
Respondent 2:

Compared to the 70% confidence intervals indicated for the Greenbook forecasts, the differences between
the point estimates in the Greenbook baseline forecasts and my forecasts are not different in any meaningful
statistical sense. However the time path of my projections does differ from the Greenbook baseline, in that I
see stronger near-term growth than that in the Greenbook baseline in 2010, slightly weaker real growth than
the Greenbook in 2011 and real growth subsequently tapering off in 2012. This contrasts with the higher real
growth rates that the Greenbook shows in 2011 and 2012. I see inflation higher in the intermediate period
before returning to the rate that I believe is consistent with appropriate monetary policy. In contrast, the
Greenbook forecast sees inflation declining and persisting at very low rates for “an extended period” .
Respondent 3:

N/A
Respondent 4:

I continue to be moderately more pessimistic on job creation, with concomitant effects on some other vari
ables.
Respondent 5:

I believe that we will need to be normalize policy sooner and more aggressively than in Greenbook. Holding
rates so low through late 2011 will invite asset imbalances and lead to a problematic rise in inflation expec
tations and, eventually, inflation. With a more restrictive fiscal policy, I expect real GDP growth will be
somewhat slower than in Greenbook and the unemployment rate will be somewhat higher. Even with a less
accommodative monetary policy, I expect inflation to be higher in 2011 and 2012.
Respondent 6:

slightly slower growth and lower inflation. assumed constant exchange rate and slight uptilt in household
saving rate.
Respondent 7:

We expect a somewhat slower recovery in activity and employment than in the Greenbook. As concerns in
flation, we expect core inflation to be lower than in the Greenbook as a result of a more meaningful trade-off
between inflation and unemployment.
Respondent 8:

Similar to the Greenbook; perhaps slightly more pessimistic in the near term due to concerns about the
labor market and bank credit.
Respondent 9:

I believe that under an appropriate monetary policy the public's inflation expectations would be well an
chored, and the inflation path would be higher than in the Greenbook. An appropriate monetary policy
might place policy rates on an upward trajectory by year-end.
Respondent 10:

N/A

Respondent 11:

Despite similar GDP growth forecast, we do not see the unemployment rate falling as sharply in 2012. We
are putting more weight on the possibility that the erosion of worker skills due to the long duration of
unemployment spells in this recession will prove a more persistent drag on labor markets than assumed by
the Greenbook.
Respondent 12:

My inflation forecast is less influenced by the degree of resource utilization in the economy and so I project a
higher pace of inflation over 2010-2012 than does the Greenbook. Given the strength of economic growth in
my forecast and the higher inflation path, the policy path is less accommodative over the forecast horizon.
Respondent 13:

We assume lower inflation persistence than does the GB. Thus, for our medium-term inflation outlook we
project inflation within the “mandate-consistent” range in late 2011 under the assumption of well-anchored
inflation expectations.
Respondent 14:

My forecast is very similar to the Greenbook forecast.
Respondent 15:

My forecast calls for considerably slower growth in 2010 largely due to a weaker business fixed investment
profile. Despite weaker growth, my outlook entails higher core PCE inflation in the second half of 2010 and
beyond. My assumption of stable inflation expectations in the neighborhood of 2% and a notionally smaller
measure of excess capacity pulls the inflation rate upward as the economy recovers, and into the 1.7-2%
range by the end of 2012.
Respondent 16:

My forecast for unemployment and inflation is reasonably well aligned to the Greenbook baseline. However,
I project a more restrained pace of real GDP growth that is reflected across most expenditure categories,
and particularly business fixed investment, where I judge uncertainties about the business environment and
access to credit to be especially constraining.
Respondent 17:

The Greenbook baseline forecast underestimates the drag on the economy arising from the uncertainty cre
ated by new economic and regulatory initiatives. It does not take into account inducements deriving from
regulatory and taxation initiatives for corporations and investors to invest in more promising markets abroad
at the expense of job creation and CAPEX at home. It may also underestimate future upward pressure on
commodity prices and headline inflation due to a strengthening world economy.

4 (d ) . P le a s e d e s c rib e t h e k e y fa c to rs c a u s in g y o u r fo re c a s t to c h a n g e sin c e th e
p re v io u s q u a r t e r ’s p ro je c tio n s .
Respondent 1:

N/A
Respondent 2:

Recent measures of economic activity appear to be evolving as I had expected in my projections from
last quarter, hence I have not revised my projected path of real output for 2010 . My forecasts for the
unemployment rate are unchanged, as are my inflation forecasts (headline and Core PCE) for 2010 and
beyond.
Respondent 3:

I am more pessimistic about unemployment because I have been looking at the turnover data in JOLTS.
Respondent 4:

Continued overall improving trend over the last quarter strengthens my expectation of modestly above trend
growth in 2010, though the unexpectedly large GDP increase in Q4 has likely pulled some growth from the
early part of 2010
Respondent 5:

My forecasts have not changed appreciably since the November FOMC meeting. However, there have been
some minor timing changes.
Respondent 6:

no material difference. economic activity and core inflation tracking reasonably closely to expectations.
Respondent 7:

There were only small changes to both the real and the inflation outlook.
Respondent 8:

Incoming data have generally been positive, making me slightly more optimistic and also a bit more confident
about the outlook. Financial markets generally continue to improve and the banking system is a bit stronger.
My concerns about a jobless recovery remain but have diminished somewhat, since firms have cut costs so
deeply that they are likely to need to hire to meet new orders.
Respondent 9:

My forecast is very similar to the one submitted last fall. One small change is that PCE inflation is higher
early this year due to energy prices.
Respondent 10:

N/A
Respondent 11:

Our forecast is very close to last quarter’s. We increased our projection for total PCE inflation a couple of
tenths in response to higher oil prices.
Respondent 12:

N/A
Respondent 13:

Releases since the end of October were on net broadly consistent with our central scenario. The most

significant changes in the output forecast were produced by the revisions to labor compensation in the first
half of 2009. For our inflation forecast the main change was in our assessment of the upside risks to inflation.
The level of concern about the potential inflationary impact of large government deficits and an enlarged
Federal Reserve balance sheet has lead us to increase the level of inflation associated with a temporary
unanchoring of inflation expectations.
Respondent 14:

Since October, economic news and financial conditions have been about what I had anticipated, and my
forecasts for real activity and inflation are little changed.
Respondent 15:

A quicker resolution of the inventory cycle compared to my previous outlook shifts some GDP growth from
the first half of 2010 into the fourth quarter of 2009. The underlying weaknesses that I had previously
identified remain, and will likely produce a weaker recovery relative to historical norms.
Respondent 16:

I have pushed up my growth estimate for the fourth quarter of 2009 on the basis of the stronger Incoming
data. As a result, I have also marginally increased my real GDP growth forecast relative to the previous
quarter's projection.
Respondent 17:

Recent reports confirm growth in household incomes and consumer purchases, the stabilization of residential
investment, the beginnings of an upturn in business equipment and software investment, and the elimination
of the negative growth contribution from cuts in business inventories. Job cuts and the tightening of bank
lending standards may soon be ending. Consequently, the near-term outlook for real activity has brightened.

SEP: Compilation and Summary of Individual Economic Projections

January 26–27, 2010

Figure 2.A. Distribution of participants’ projections for the change in real GDP, 2010–12 and over the longer run
Number of participants

2010

November
January
Greenbook Greenbook

January projections
November projections

12
10
8
6
4
2

2.0
2.1

2.2
2.3

2.4
2.5

2.6
2.7

2.8
2.9

3.0
3.1

3.2
3.3

3.4
3.5

3.6
3.7

3.8
3.9

4.0
4.1

4.2
4.3

4.4
4.5

4.6
4.7

4.8
4.9

5.0
5.1

Percent range
Number of participants

2011

November January
Greenbook Greenbook

12
10
8
6
4
2

2.02.1

2.22.3

2.42.5

2.62.7

2.82.9

3.03.1

3.23.3

3.43.5

3.63.7

3.83.9

4.04.1

4.24.3

4.44.5

4.64.7

4.84.9

5.0
5.1

Percent range
Number of participants

2012

January
Greenbook

November
Greenbook

14
12
10
8
6
4
2

2.0
2.1

2.2
2.3

2.4
2.5

2.6
2.7

2.8
2.9

3.0
3.1

3.2
3.3

3.4
3.5

3.6
3.7

3.8
3.9

4.0
4.1

4.2
4.3

4.4
4.5

4.6
4.7

4.8
4.9

5.0
5.1

Percent range
Number of participants

Longer run

14
12
10
8
6
4
2

2.0
2.1

2.2
2.3

2.4
2.5

2.6
2.7

2.8
2.9

3.0
3.1

3.2
3.3

3.4
3.5

3.6
3.7

3.8
3.9

4.0
4.1

4.2
4.3

Percent range
NOTE: Definitions of variables are in the general note to table 1.

Authorized for Public Release – 29 of 32

4.4
4.5

4.6
4.7

4.8
4.9

5.0
5.1

SEP: Compilation and Summary of Individual Economic Projections

January 26–27, 2010

Figure 2.B. Distribution of participants’ projections for the unemployment rate, 2010–12 and over the longer run
Number of participants

2010

January and November
Greenbooks

January projections
November projections

14
12
10
8
6
4
2

4.8- 5.0- 5.2- 5.4- 5.6- 5.8- 6.0- 6.2- 6.4- 6.6- 6.8- 7.0- 7.2- 7.4- 7.6- 7.8- 8.0- 8.2- 8.4- 8.6- 8.8- 9.0- 9.2- 9.4- 9.6- 9.8- 10.0- 10.2
4.9 5.1 5.3 5.5 5.7 5.9 6.1 6.3 6.5 6.7 6.9 7.1 7.3 7.5 7.7 7.9 8.1 8.3 8.5 8.7 8.9 9.1 9.3 9.5 9.7 9.9 10.1 10.3

Percent range
Number of participants

2011

January and November
Greenbooks

12
10
8
6
4
2

Percent range
Number of participants

2012

January and November

Greenbooks

12
10
8
6
4
2

Percent range
Number of participants

Longer run

14
12
10
8
6
4
2

Percent range
NOTE: Definitions of variables are in the general note to table 1.

Authorized for Public Release – 30 of 32

SEP: Compilation and Summary of Individual Economic Projections

January 26–27, 2010

Figure 2.C. Distribution of participants’ projections for PCE inflation, 2010–12 and over the longer run
Number of participants

2010

January and November
Greenbooks

January projections
November projections

12
10
8
6
4
2

0.10.2

0.30.4

0.50.6

0.70.8

0.91.0

1.11.2

1.31.4

1.51.6

1.71.8

1.92.0

2.12.2

2.3
2.4

Percent range
Number of participants

2011

November
Greenbook

January
Greenbook

12
10
8
6
4
2

0.10.2

0.30.4

0.50.6

0.70.8

0.91.0

1.11.2

1.31.4

1.51.6

1.71.8

1.92.0

2.12.2

2.3
2.4

Percent range
Number of participants

2012

November
Greenbook

January
Greenbook

12
10
8
6
4
2

0.1
0.2

0.3
0.4

0.5
0.6

0.7
0.8

0.9
1.0

1.1
1.2

1.3
1.4

1.5
1.6

1.7
1.8

1.9
2.0

2.1
2.2

2.3
2.4

Percent range
Number of participants

Longer run

14
12
10
8
6
4
2

0.1
0.2

0.3
0.4

0.5
0.6

0.7
0.8

0.9
1.0

1.1
1.2

1.3
1.4

1.5
1.6

1.7
1.8

Percent range
NOTE: Definitions of variables are in the general note to table 1.

Authorized for Public Release – 31 of 32

1.9
2.0

2.1
2.2

2.3
2.4

SEP: Compilation and Summary of Individual Economic Projections

January 26–27, 2010

Figure 2.D. Distribution of participants’ projections for core PCE inflation, 2010–12
Number of participants

2010

January and November
Greenbooks

January projections
November projections

14
12
10
8
6
4
2

0.1
0.2

0.3
0.4

0.5
0.6

0.7
0.8

0.9
1.0

1.1
1.2

1.3
1.4

1.5
1.6

1.7
1.8

1.9
2.0

2.1
2.2

2.3
2.4

Percent range
Number of participants

2011

November
Greenbook

January
Greenbook

12
10
8
6
4
2

0.1
0.2

0.3
0.4

0.5
0.6

0.7
0.8

0.9
1.0

1.1
1.2

1.3
1.4

1.5
1.6

1.7
1.8

1.9
2.0

2.1
2.2

2.3
2.4

Percent range
Number of participants

2012

January and November
Greenbooks

12
10
8
6
4
2

0.1
0.2

0.3
0.4

0.5
0.6

0.7
0.8

0.9
1.0

1.1
1.2

1.3
1.4

1.5
1.6

1.7
1.8

Percent range
NOTE: Definitions of variables are in the general note to table 1.

Authorized for Public Release – 32 of 32

1.9
2.0

2.1
2.2

2.3
2.4

Full text of Federal Open Market Committee Meeting Minutes, Transcripts, and Other Documents : Meeting, January 26-27, 2010 : Summary of Economic Projections - Compilation and Summary of Individual Economic Projections

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