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SEP: Compilation and Summary of Individual Economic Projections

November 1–2, 2011

Table 1: Economic projections of Federal Reserve Board members and Federal Reserve
Bank presidents, November 2011
Percent
Variable

2011

Central tendency1
2012
2013
2014

Longer run

2011

2012

Range2
2013

2014

Longer run

Change in real GDP. . . . . .
June projection. . . . . . .

1.6 to 1.7
2.7 to 2.9

2.5 to 2.9
3.3 to 3.7

3.0 to 3.5
3.5 to 4.2

3.0 to 3.9
n/a to n/a

2.4 to 2.7
2.5 to 2.8

1.6 to 1.8
2.5 to 3.0

2.3 to 3.5
2.2 to 4.0

2.7 to 4.0
3.0 to 4.5

2.7 to 4.5
n/a to n/a

2.2 to 3.0
2.4 to 3.0

Unemployment rate. . . . . .
June projection. . . . . . .

9.0 to 9.1
8.6 to 8.9

8.5 to 8.7
7.8 to 8.2

7.8 to 8.2
7.0 to 7.5

6.8 to 7.7
n/a to n/a

5.2 to 6.0
5.2 to 5.6

8.9 to 9.1
8.4 to 9.1

8.1 to 8.9
7.5 to 8.7

7.5 to 8.4
6.5 to 8.3

6.5 to 8.0
n/a to n/a

5.0 to 6.0
5.0 to 6.0

PCE inflation. . . . . . . . . . .
June projection. . . . . . .

2.7 to 2.9
2.3 to 2.5

1.4 to 2.0
1.5 to 2.0

1.5 to 2.0
1.5 to 2.0

1.5 to 2.0
n/a to n/a

1.7 to 2.0
1.7 to 2.0

2.5 to 3.3
2.1 to 3.5

1.4 to 2.8
1.2 to 2.8

1.4 to 2.5
1.3 to 2.5

1.5 to 2.4
n/a to n/a

1.5 to 2.0
1.5 to 2.0

Core PCE inflation3. . . . . .
June projection. . . . . . .

1.8 to 1.9
1.5 to 1.8

1.5 to 2.0
1.4 to 2.0

1.4 to 1.9
1.4 to 2.0

1.5 to 2.0
n/a to n/a

1.7 to 2.0
1.5 to 2.3

1.3 to 2.1
1.2 to 2.5

1.4 to 2.1
1.3 to 2.5

1.4 to 2.2
n/a to n/a

NOTE: Projections of change in real gross domestic product (GDP) and projections for both measures 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 June projections were made in conjunction with the meeting of the Federal Open Market Committee on June 21-22, 2011.
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.

Authorized for Public Release – Page 1 of 38

SEP: Compilation and Summary of Individual Economic Projections

November 1–2, 2011

Table 1a
Economic Projections for the First Half of 2011*
(in percent)
Central Tendencies and Ranges
Central Tendency

Range

Change in Real GDP

0.8 to 0.8

PCE Inflation

3.6 to 3.6

Core PCE Inflation

1.9 to 1.9

1.9 to 2.0

PCE Inflation
3.6
3.6
3.6
3.6
3.6
3.6
3.6
3.6
3.6
3.6
3.6
3.6
3.6
3.6
3.6
3.6
3.6

Core PCE Inflation
1.9
1.9
1.9
1.9
1.9
1.9
1.9
1.9
2.0
1.9
1.9
1.9
1.9
1.9
1.9
1.9
1.9

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

Change in Real GDP
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8

* Growth and inflation are reported at annualized rates.

Authorized for Public Release – Page 2 of 38

SEP: Compilation and Summary of Individual Economic Projections

November 1–2, 2011

Table 1b
Economic Projections for the Second Half of 2011*
(in percent)
Central Tendencies and Ranges
Central Tendency

Range

Change in Real GDP

2.4 to 2.6

2.4 to 2.8

PCE Inflation

1.8 to 2.2

1.4 to 3.0

Core PCE Inflation

1.7 to 1.9

1.5 to 2.1

PCE Inflation
1.6
2.2
2.2
1.8
1.8
1.8
3.0
1.6
2.4
2.2
1.4
1.8
2.2
1.8
2.2
2.2
1.8

Core PCE Inflation
1.9
1.9
1.9
1.7
1.7
1.5
1.9
1.9
1.6
1.7
1.7
1.7
2.1
1.7
1.7
1.9
1.7

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

Change in Real GDP
2.6
2.6
2.6
2.6
2.6
2.6
2.6
2.4
2.8
2.8
2.6
2.4
2.6
2.4
2.8
2.4
2.6

* Projections for the second half of 2011 implied by participants' November projections for the first half of
2011 and for 2011 as a whole. Growth and inflation are reported at annualized rates.

Authorized for Public Release – Page 3 of 38

SEP: Compilation and Summary of Individual Economic Projections

November 1–2, 2011

Table 2: November 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

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

1.7
1.7
1.7
1.7
1.7
1.7
1.7
1.6
1.8
1.8
1.7
1.6
1.7
1.6
1.8
1.6
1.7

9.1
9.0
9.1
9.1
9.1
9.1
9.0
9.1
8.9
9.0
9.0
9.1
9.0
9.1
9.1
9.1
9.1

2.6
2.9
2.9
2.7
2.7
2.7
3.3
2.6
3.0
2.9
2.5
2.7
2.9
2.7
2.9
2.9
2.7

1.9
1.9
1.9
1.8
1.8
1.7
1.9
1.9
1.8
1.8
1.8
1.8
2.0
1.8
1.8
1.9
1.8

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

2.3
2.6
2.7
2.9
2.4
2.7
3.5
2.5
3.2
2.7
2.9
2.5
2.6
2.5
2.8
2.5
2.4

8.7
8.5
8.7
8.4
8.5
8.9
8.5
8.7
8.1
8.7
8.4
8.6
8.6
8.6
8.8
8.7
8.6

1.5
2.1
1.8
1.8
1.7
1.4
2.8
1.9
2.2
1.4
1.5
1.4
1.8
1.4
2.0
2.0
1.5

1.5
2.1
2.0
1.8
1.5
1.4
1.9
1.8
2.1
1.3
1.5
1.5
1.8
1.5
1.8
2.0
1.6

Authorized for Public Release – Page 4 of 38

SEP: Compilation and Summary of Individual Economic Projections

November 1–2, 2011

Table 2 (continued): Economic Projections
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

2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013

3.1
3.0
3.0
4.0
2.7
3.2
3.8
2.9
3.0
3.5
3.0
3.2
3.2
3.2
3.5
3.0
3.0

8.0
8.1
8.2
7.5
8.3
8.4
7.5
8.2
7.5
7.8
8.0
8.1
7.9
8.1
8.3
8.2
8.2

1.5
2.3
2.0
1.9
1.7
1.6
2.5
2.0
2.0
1.5
1.7
1.4
1.7
1.4
1.5
1.8
1.5

1.5
2.1
2.0
1.9
1.6
1.4
1.8
1.9
2.0
1.5
1.6
1.4
1.7
1.4
1.4
1.8
1.6

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

2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014

3.4
3.4
3.3
4.3
2.9
3.8
3.5
2.7
3.0
4.5
4.0
3.9
3.5
3.9
3.5
3.0
3.1

7.1
7.5
7.6
6.5
8.0
7.7
6.5
7.5
6.8
6.7
7.2
7.3
7.1
7.3
7.8
7.7
7.7

1.6
2.4
2.0
2.0
1.9
1.7
2.3
2.0
2.0
2.0
1.7
1.5
1.8
1.5
1.5
1.6
1.5

1.6
2.2
2.0
2.0
1.8
1.5
1.7
2.0
2.0
2.0
1.7
1.4
1.8
1.4
1.4
1.6
1.5

Authorized for Public Release – Page 5 of 38

SEP: Compilation and Summary of Individual Economic Projections

November 1–2, 2011

Table 2 (continued): Economic Projections
Projection

Year

Change in Real GDP

Unemployment Rate

PCE Inflation

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

2.2
2.8
2.5
2.5
2.4
2.5
2.3
2.6
2.7
2.3
2.6
3.0
2.5
2.5
2.5
2.7
2.4

5.3
6.0
5.2
5.3
5.6
5.2
6.0
6.0
6.0
5.0
5.2
5.4
5.5
5.5
6.0
5.3
5.3

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

Authorized for Public Release – Page 6 of 38

Core PCE Inflation

SEP: Compilation and Summary of Individual Economic Projections

November 1–2, 2011

Figure 1. Central tendencies and ranges of economic projections, 2011–14 and over the longer run
Percent

Change in real GDP

Central tendency of projections
Range of projections

3
2
1
+
0
_
1

Actual

2
3

2006

2007

2008

2009

2010

2011

2012

2013

2014

Longer
run
Percent

Unemployment rate

10
9
8
7
6
5

2006

2007

2008

2009

2010

2011

2012

2013

2014

Longer
run
Percent

PCE inflation
3

2006

2007

2008

2009

2010

2011

2012

2013

2014

Longer
run
Percent

Core PCE inflation
3

2006

2007

2008

2009

2010

2011

2012

2013

NOTE: Definitions of variables are in the notes to table 1. The data for the actual values of the variables are annual.

Authorized for Public Release – Page 7 of 38

2014

SEP: Compilation and Summary of Individual Economic Projections

November 1–2, 2011

Central tendencies and ranges of economic projections, 2011–14 and over the longer run
Percent

Change in real GDP

Central tendency of projections
Range of projections

4
3
2
1
+
0
_

Actual

1
2
3

2006

2007

2008

2009

2010

2011

2012

2013

2014

Longer
run

Percent

Unemployment rate
10
9
8
7
6
5

2006

2007

2008

2009

2010

2011

2012

2013

2014

Longer
run

Percent

PCE inflation
5
4
3
2
1
+
0
_

2006

2007

2008

2009

2010

2011

2012

2013

NOTE: Definitions of variables are in the notes to the projections table. The data for the variables are annual.

Authorized for Public Release – Page 8 of 38

2014

Longer
run

SEP: Compilation and Summary of Individual Economic Projections

November 1–2, 2011

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
November projections
June projections

18
16
14
12
10
8
6
4
2
0

Lower
(C)

Broadly similar
(B)

Higher
(A)

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

18
16
14
12
10
8
6
4
2
0

Weighted to downside
(C)

Broadly balanced
(B)

Weighted to upside
(A)

Individual Responses
Respondent
2(a)
2(b)

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

10 11 12 13 14 15 16 17
A
C

A
C

A
B

Authorized for Public Release – Page 9 of 38

A
B

A
C

A
B

SEP: Compilation and Summary of Individual Economic Projections

November 1–2, 2011

Uncertainty and Risks - Unemployment Rate

18
16
14
12
10
8
6
4
2
0

Lower
(C)

Broadly similar
(B)

Higher
(A)

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

18
16
14
12
10
8
6
4
2
0

Weighted to downside
(C)

Broadly balanced
(B)

Weighted to upside
(A)

Individual Responses
Respondent
2(a)
2(b)

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

10 11 12 13 14 15 16 17
A
A

A
A

A
B

Authorized for Public Release – Page 10 of 38

A
B

A
A

B
B

SEP: Compilation and Summary of Individual Economic Projections

November 1–2, 2011

Uncertainty and Risks - PCE Inflation

18
16
14
12
10
8
6
4
2
0

Lower
(C)

Broadly similar
(B)

Higher
(A)

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

18
16
14
12
10
8
6
4
2
0

Weighted to downside
(C)

Broadly balanced
(B)

Weighted to upside
(A)

Individual Responses
Respondent
2(a)
2(b)

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

10 11 12 13 14 15 16 17
A
C

B
B

A
B

A
A

Authorized for Public Release – Page 11 of 38

A
A

C
B

A
B

B
B

SEP: Compilation and Summary of Individual Economic Projections

November 1–2, 2011

Uncertainty and Risks - Core PCE Inflation

18
16
14
12
10
8
6
4
2
0

Lower
(C)

Broadly similar
(B)

Higher
(A)

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

18
16
14
12
10
8
6
4
2
0

Weighted to downside
(C)

Broadly balanced
(B)

Weighted to upside
(A)

Individual Responses
Respondent
2(a)
2(b)

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

10 11 12 13 14 15 16 17
A
C

B
B

A
B

A
A

Authorized for Public Release – Page 12 of 38

A
A

C
B

A
B

B
B

L o n g er-ru n P r o je c tio n s
1 (c ). If you a n ticip a te th a t th e co n v erg en ce p ro cess w ill ta k e S H O R T E R O R
L O N G E R th a n a b o u t five or six years, p lea se in d ic a te b elo w you r b e st e stim a te
o f th e d u ra tio n o f th e co n v erg en ce p ro cess. Y ou m ay also in clu d e b elo w any
o th er ex p la n a to ry c o m m en ts th a t you th in k w ou ld b e helpful.
R e s p o n d e n t 1:

I expect the convergence process will be similar to that outlined in the long-run Tealbook projection. That
is, it will likely to take a decade for the large unemployment and output gaps to close and PCEPI inflation
to converge to its long-run target of 2 percent.
R e s p o n d e n t 2:

N/A
R e s p o n d e n t 3:

N/A
R e s p o n d e n t 4:

N/A
R e s p o n d e n t 5:

Given my projection of very slow unemployment decline, convergence of unemployment to its long run value
could take more than 5-6 years.
R e s p o n d e n t 6:

By 2016, the unemployment rate is about 1 percentage point above the assumed NAIRU, and inflation
remains below the 2 percent target. Full convergence to full employment and a 2 percent inflation rate is
expected to take 6 to 7 years.
R e s p o n d e n t 7:

N/A
R e s p o n d e n t 8:

N/A
R e s p o n d e n t 9:

The convergence process may be slightly shorter than 5-6 years
R e s p o n d e n t 10:

Our current estimate of the economy’s potential growth rate is in the 2% to 2 ½ range. By 2015-16 we
%
anticipate potential growth of around 2 ¼ A reasonable estimate of the long-run unemployment rate is
%.
4% to 6%. Assuming appropriate policy and no further significant shocks, we expect the unemployment rate
to be in this range and the output gap to be around zero by 2016.
We assume that long-term inflation expectations will continue to be anchored around 2.5% on a CPI basis
and that the FOMC’s inflation objective is and will remain at about 2% for the PCE deflator and around
2.5% for the CPI. Under these conditions and with the output gap anticipated to be near zero, we expect
inflation as measured by the PCE deflator to be around 2% in 2016.

R e s p o n d e n t 11:

The unemployment and inflation rates might not converge to their long-run values until late in the 5-6 year
window.
R e s p o n d e n t 12:

N/A
R e s p o n d e n t 13:

N/A
R e s p o n d e n t 14:

N/A
R e s p o n d e n t 15:

N/A
R e s p o n d e n t 16:

Convergence may well take the full five-to-six years.
R e s p o n d e n t 17:

N/A

U n c e r ta in ty an d R isk s
2 (a ). (O p tio n a l) If you have any ex p la n a to ry c o m m e n ts regard in g your
ju d g m e n t o f th e u n certa in ty a tta ch ed to your p r o je c tio n s r ela tiv e to levels o f
u n certa in ty over th e p a st 20 y ears, you m ay en ter th e m b elow .
R e s p o n d e n t 1:

This is a close call, but uncertainty about our projection for economic activity appears to be somewhat
elevated relative to its average over the past 20 years, in part because of ongoing developments in Europe.
Inflation, however, has been anchored by quite stable inflation expectations.
R e s p o n d e n t 2:

Volatility/uncertainty was unusually low over the past twenty years.
R e s p o n d e n t 3:

N/A
R e s p o n d e n t 4:

N/A
R e s p o n d e n t 5:

The US has not had a comparable recession/recovery in the postwar period. Uncertainty about the factors
restraining recovery, and the pace at which they will recede, remains high; reasonable possibilities include
a lost decade and an acceleration of the expansion to above-trend rates. Uncertainty in PCE inflation is
driven by the unusual volatility in commodity prices, which in turn is affected by uncertainty about global
growth as well as supply conditions. Uncertainty about the pace of recovery also affects projections of core
PCE inflation; however, with core inflation low and inflation expectations well anchored, the uncertainty in
this case is more comparable to the past 20 years.
R e s p o n d e n t 6:

N/A
R e s p o n d e n t 7:

N/A
R e s p o n d e n t 8:

While recent data releases point to a reduced near-term risk of a recession, the medium-term risks remain
considerable.
R e s p o n d e n t 9:

While the incoming data has been somewhat weaker than my June projection, financial market conditions
continue to improve and the economic recovery will continue to gain momentum. However, the possibility
that the European debt crisis is not resolved in an orderly fashion is a concern. It remains the case that the
effect of the extraordinary monetary policy in place and uncertainties surrounding the future path of policy,
including the timing of the exit from accommodative policy, contribute to uncertainty around my inflation
forecast.
R e s p o n d e n t 10:

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.
R e s p o n d e n t 11:

N/A

R e s p o n d e n t 12:

N/A
R e s p o n d e n t 13:

The European debt crisis and future U.S. fiscal and regulatory policies are major sources of uncertainty.
In addition, the Federal Reserve’s unconventional policies are a source of uncertainty because they have no
historical precedent.
R e s p o n d e n t 14:

N/A
R e s p o n d e n t 15:

Inflation expectations would be more firmly anchored under an appropriate monetary policy, and uncertainty
would therefore be lower than the trailing average.
R e s p o n d e n t 16:

N/A
R e s p o n d e n t 17:

N/A

U n c e r ta in ty an d R isk s
2 (b ). (O p tio n a l) If y o u have any ex p la n a to ry co m m en ts regard in g your
ju d g m e n t o f th e risk w e ig h tin g arou n d your p r o je c tio n s, you m ay en ter th em
b elow .
R e s p o n d e n t 1:

Growth and unemployment risks appear skewed in large measure due to the possibility of bad outcomes in
Europe, while inflation risks are more typically balanced.
R e s p o n d e n t 2:

The various DSGE models and FRB/US are forecasting declines in inflation. Those forecasts have led me
to put extra weight on the possibility of future disinflation.
R e s p o n d e n t 3:

N/A
R e s p o n d e n t 4:

N/A
R e s p o n d e n t 5:

N/A
R e s p o n d e n t 6:

N/A
R e s p o n d e n t 7:

N/A
R e s p o n d e n t 8:

N/A
R e s p o n d e n t 9:

I view the risks to inflation as weighted to the upside both in both the short run and over the longer term.
Longer-term inflation risks reflect uncertainty about the timing and efficacy of the Fed’s withdrawal of ac
commodation.
R e s p o n d e n t 10:

Quantitative judgment based on the difference between the central projection and the expected value from
the FRBNY forecast distribution.
R e s p o n d e n t 11:

The potential failure to resolve the European crisis is a major downside risk to the U.S. economic outlook.
Furthermore, many businesses appear to have made plans to promptly cut spending on labor and capital at
the first sign of a downturn in final demand, so there is a downside risk that some modest but unexpected
weakness in household sector spending or in exports could be magnified into a more meaningful reduction
in U.S. production.
R e s p o n d e n t 12:

N/A
R e s p o n d e n t 13:

The current highly accommodative stance of monetary policy, combined with long-term fiscal imbalances,
poses an upside risk to inflation.

R e s p o n d e n t 14:

N/A
R e s p o n d e n t 15:

It has become harder to rule out the possibility that the cumulative effect of regulations that significantly
raise business costs and reduce hiring and output, and the uncertainty concerning the exact nature of future
taxes and regulations will materially reduce growth over the medium term. More specifically, my concern is
we may not return to the historic trend, but that the growth rate will remain stuck around the trend rate
of growth and activity will track a new lower trend line, regardless of the stance of monetary policy.
R e s p o n d e n t 16:

N/A
R e s p o n d e n t 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 you r v ie w o f th e a p p ro p ria te p a th for m o n eta ry p o licy differ m a teria lly
from th a t a ssu m ed by th e sta ff in th e T ealbook?

YES

10
R e s p o n d e n t 1:

N/A
R e s p o n d e n t 2: Yes
I anticipate that it will be appropriate to reduce accommodation earlier than is estimated by the Tealbook.

R e s p o n d e n t 3:

N/A
Yes
My path for monetary policy is more accommodative than that assumed in the staff forecast. I would hold
the funds rate in its current range until the last quarter of 2014 and communicate an intention to raise the
funds rate, once lift-off commences, more gradually than is assumed in the Tealbook baseline (which follows
the outcome-based rule) and is presumably now incorporated in market expectations. Therefore, my path
for long-term nominal interest rates is lower than in Tealbook. In addition, inflation in my forecast runs
below, but somewhat closer to my 2% target, than in Tealbook, so the path of real interest rates is also lower
for this reason.
R e s p o n d e n t 4:

R e s p o n d e n t 5:

N/A
Yes
The target federal funds rate is raised later than in the Tealbook. With inflation running below target, the
first increase in the federal funds rate occurs when the unemployment rate declines to a level in the range of
7 to 7.5 percent. Such a range is reached over the course of 2015.
R e s p o n d e n t 6:

The baseline forecast is conditioned on no further portfolio-related policies in addition to the ones agreed
upon at the September 2011 FOMC meeting. Since the unemployment rate is expected to remain above the
NAIRU and inflation below 2 percent for more than 5 years, there is scope for additional portfolio-related
policies. For these policies to materially affect the outlook, they would have to be of very sizable magnitude.
R e s p o n d e n t 7: Yes
I believe that under appropriate monetary policy to maintain price stability we will have to increase the
current target range for the funds rate and allow the SOMA portfolio to run off sooner than assumed in the
Tealbook. In the interim, depending on how the economy evolves, it may be appropriate to accelerate or
slow down the growth of the SOMA portfolio.
R e s p o n d e n t 8:

N/A
Yes
My forecast continues to assume a less accommodative policy than in the Tealbook baseline. I view the
R e s p o n d e n t 9:

appropriate monetary policy as one that begins raising the funds rate and/or shrinking the balance sooner
than mid-2013.
R e s p o n d e n t 10:

N/A
R e s p o n d e n t 11: Yes
We expect the period of exceptionally low policy rates will extend into 2015. We also assume that the Com
mittee will undertake some action to clarify the forward guidance currently in the statement. Such forward
guidance could be complemented by additional asset purchases if, as we move through the forecast period,
progress towards the dual mandate objectives is slower than we project.

Yes
Given the current slow growth of the economy, I project right now that firming would not occur until 2015.
However, if enhanced forward guidance or another commitment strategy were to be undertaken in early 2012
with the goal of achieving more proximity to longer terms objectives, then I could contemplate more robust
growth and a lift-off as early as late 2014.
R e s p o n d e n t 12:

R e s p o n d e n t 13: Yes
In my view, the appropriate path for monetary policy would call for a lift-off of the federal funds rate target
from its current range of 0 to 25 basis points to 50 basis points by the end of 2013. In 2014, the funds rate
target would be increased gradually.
R e s p o n d e n t 14:

N/A
R e s p o n d e n t 15: Yes
I believe that in order to achieve an inflation rate of 1.5 percent we would want to begin raising the funds
rate in September 2012.
R e s p o n d e n t 16: Yes
Our ability to keep long-run inflation expectations well anchored and the recovery of the real economy on
track depends more than usually on our ability to formulate and communicate a coherent strategy for fundsrate adjustments in the years beyond the Tealbook forecast horizon. Since my long-term inflation objective
is lower than the 2-percent Tealbook rate, I believe it will be necessary to begin removing monetary-policy
accommodation earlier than is assumed by Board staff, and to pursue normalization more vigorously. I am
very skeptical of the usefulness of additional purchases of Treasury securities and of ongoing changes to the
maturity distribution of our Treasury portfolio.
R e s p o n d e n t 17:

N/A

F o reca st N a rr a tiv e s
4 (a ). P le a se d escrib e th e key factors sh a p in g your cen tra l eco n o m ic o u tlo o k
and th e u n ce r ta in ty around th a t o u tlo o k .
R e s p o n d e n t 1:

The economic recovery appears to have lost considerable momentum. However, monetary stimulus, im
provements in banking and financial market conditions, and further household de-leveraging should support
a moderate expansion over the next few years, even as firms and households adjust to higher food and
gasoline prices and fiscal policy at all levels turns increasingly contractionary. Still, it will take several years
of robust growth to return the economy to full employment. Inflation has been boosted by jumps in energy
and commodity prices; however, significant slack in labor and goods markets will keep underlying inflation
low. Well-anchored inflation expectations should help avoid significant pass-through of higher inflation to
wages.
R e s p o n d e n t 2:

Growth will continue to be constrained by both demand and supply. On the demand side, household spend
ing will grow but only slowly, as households continue to engage in balance sheet repair. On the supply side,
I believe that the changes over the past four years (to the financial sector, anticipated taxes/regulations,
and the nature of jobs at firms) have had a significant and adverse impact on the ability of the economy to
exploit its available resources. For that reason, I believe that the output gap is larger (less negative) than
the Tealbook estimates it to be.
Both demand and supply forces push down on growth and up on unemployment. However, they oper
ate in opposite directions on inflation. On balance, my forecast for core inflation has emphasized the supply
effect, which gets relatively short shrift in FRB/US and in the DSGE models. However, I cannot fully
discount the effect of demand (which leads to my judgement that the risks to inflation are to the downside).
R e s p o n d e n t 3:

A confluence of forces will restrain the growth rate of the economy over the forecast horizon. Deleveraging
within most sectors of the domestic economy continue to play out and are likely to adversely affect the
pace of the expansion for several more years. A slowing European economy and shifts in the growth and
composition of emerging economies is also likely to restrain demand for U.S. exports in the coming year and
perhaps in 2013. Weak confidence over jobs and the economy are likely to hold back the spending of U.S.
households and the expansion plans of business over much of 2012. Confidence in the economy will return
only slowly as the expansion proceeds.
With the exception of food and some energy commodities, cost pressures have been light and my fore
cast for inflation over the balance of 2011 and 2012 shows a significant deceleration in the headline measure.
However, I have assumed considerably less slack in the economy than conventional estimates would suggest
and, as a result, my inflation forecast stays in the neighborhood of 2 percent over the forecast horizon.
My assessment of the risk to the growth and employment outlook is weighted to the downside. Notably,
volatility in financial markets, slow jobs growth, and weak confidence make the economy vulnerable to any
number of adverse shocks coming from Europe or elsewhere.
Regarding inflation, I think there is a risk that the influence of commodity prices and other pressures
on the core inflation numbers could play out for a longer time than I have assumed and that inflationary
sentiment could be adversely affected as a result. At the same time, there is a risk that the amount of slack
is actually greater than I have assumed.

R e s p o n d e n t 4:

U.S. economic growth appears to have strengthened after a particularly anemic first half. This is due, in
part, to the reversal of the two largely transitory factors depressing growth during the first half of the yearsharp increases in the prices of oil and other commodities and the shocks that struck Japan, disrupting
global supply chains. These same shocks boosted inflation during the first half of the year, but as their
influence has receded, inflation has declined and should decline further. With an exceptionally high degree
of slack in the labor market, I expect inflation to decline further below rates consistent with our dual man
date. While I expect the pickup in growth seen during the third quarter to persist and strengthen over
time, the pace of the recovery will nevertheless be undesirably slow due to a range of other, more persistent
factors that are restraining the recovery. In particular, the pace of consumer spending seems to be weaker
than can be explained by transitory factors. It is apparently being held back by slow gains in wages and
income, declines in the values of homes and financial assets, still elevated debt levels and reduced access of
households to credit. Moreover, consumer sentiment dropped markedly over the summer and has remained
low since then, reflecting households' concerns and uncertainty about their future income prospects and
financial situations. Weak consumer spending, in turn, means that many businesses have been reluctant
to significantly expand their payrolls. Additional drags on the pace of recovery result from the continued
problems afflicting residential construction, ongoing pressures on state and local government budgets, and
the likely decline in fiscal impetus as earlier stimulus policies by the federal government wind down. In
addition, I now anticipate slower growth in the global economy, particularly in Europe, due to the financial
stresses afflicting the financial sector, which is likely to curtail credit growth, and the substantial reductions
in government spending and increases in taxes that some countries have had to put in place to address their
fiscal problems. Economic activity in many emerging market economies also looks to be moderating. A final
factor influencing my forecast is the tightening we have recently seen in financial markets reflected in higher
volatility, higher spreads, lower equity prices, and greater pressures on financial institutions. The euro area
appears to be making progress in addressing its sovereign debt and banking problems, so “tail risk” appears
to have declined; but many details remain to be worked out and it is too soon to declare that the European
financial situation has now been stabilized.
R e s p o n d e n t 5:

The economy has shown a bit of resilience in the second half, in part reflecting the reversal of the temporary
factors (commodity prices, Japan) that slowed growth in the first half. Final demand was surprisingly good
in Q3—both consumption and investment, with a little help from exports as well. Inventory declines bode
well for the near term, as does the substantial improvement in equity and credit markets associated with
the declining risk of recession and the positive steps in Europe. Still, I have marked down my growth pro
jections going forward (and reduced slightly my estimate of potential growth). In part this is an attempt to
compensate for my persistent overprediction in past rounds, i.e., it appears that the structural and psycho
logical headwinds are simply more powerful, and receding less quickly, than I had thought. More specifically,
I worry about the following: (1) Europe’s problems are not solved yet, and could be exacerbated by an
economic slowdown there; hence, financial stresses are likely to continue; (2) significant fiscal headwinds,
together with political gridlock; (3) sentiment: income has been growing only slowly and, more importantly,
income expectations are very depressed — businesses are also more downbeat; (4) the housing and mortgage
markets still seem far from normal; (5) credit conditions remain tight for consumers and small businesses;
(6) commodity prices remain high in absolute terms (and relative to 2010). The lack of improvement in
unemployment is consistent with the slow pace of economic recovery; as in the Tealbook, it seems reasonable
to assume some reduction in measured unemployment if EEB is phased out, however. I described above why
these projections are more uncertain than usual; the size of the recent revisions is testament to that.
Core inflation appears to be receding as earlier projected, reflecting the decline in auto prices and (more
importantly) the reduction in commodity cost pressures. Wage gains remain very weak (see the latest ECI
reading), slack is large, and both survey and market-based inflation expectations are relatively low. Hence
I have core inflation falling next year and remaining slightly below target. Overall inflation is much more
uncertain, given the difficulty of predicting commodity prices.

R e s p o n d e n t 6:

The economic recovery remains disappointingly slow. The most recent data have allayed concerns about the
economy slipping again into a recession, but uncertainty remains high and business and consumer confidence
is low. While unexpected adverse shocks have contributed to the slow recovery, more persistent factors such
as limited credit availability for some sectors of the economy, the residential and commercial real estate crisis,
and fiscal retrenchment at the state and local level, have been exerting more restraint on the economy than
previously thought.
We continue to expect an acceleration in the pace of growth going forward, as some of the headwinds
recede. However, the speed of the recovery remains sub-par by historical standards as federal fiscal policy is
expected to turn contractionary, and support from monetary policy is limited by the presence of the zerolower-bound. In all, the unemployment rate is projected to remain above 7.5 percent by the end of 2014.
With considerable slack in the labor market, wage and price inflation remain subdued over the course of the
forecast horizon.
Risks to the projection for real activity remain skewed to the downside. The baseline forecast continues
to be predicated on European problems remaining contained and not having a large impact on the United
States. While some progress has been made for a solution to the fiscal and financial stresses in the euro
area, it remains to be seen whether a framework will be in place and effective should a tail event occur.
Households also have a limited buffer stock of savings and remain especially vulnerable to adverse shocks.
The potential downside risks to the real outlook also remain costlier than the potential upside risks, as
any worsening of the economy in the current situation would be aggravated by the limited scope for further
fiscal and monetary policy actions.
The balance of risks to inflation is skewed to the downside. Several inflation models would predict lower
inflation than in our baseline outlook. The projected path for inflation deviates from these models by fac
toring in an increased pass-through from commodities prices into core prices.
R e s p o n d e n t 7:

In 2011 through 2014 I anticipate that real growth will occur at greater than steady-state rates, reflecting
normal cyclical patterns reinforced by the substantial monetary stimulus that has been in train since late
2008. I expect that beginning in 2013 real growth will slow and subsequently approach steady-state rates.
Real growth in excess of the steady-state rate will drive down the unemployment rate. I expect increases
in food and energy prices to keep the headline rate above the core rate through 2014. Under appropriate
monetary policy, inflation should approach my preferred long-run rate of 1.5 percent. With available infor
mation I expect that the core and headline inflation will be roughly equal in the out years of the projection
period.
R e s p o n d e n t 8:

In my assessment, the recent good news on the economy points to some improvement in the near-term
outlook: a slightly stronger pace of growth in the second half of this year and a reduced risk of a near
term recession. But in the absence of improvement in some key indicators of economic fundamentals (such
as personal income), I don't judge the recent good news as signaling a stronger pace of growth next year
and beyond. For 2012-2014, I continue to expect the economy to recover at a slow pace. The slow pace of
recovery reflects competing forces: the economy's usual self-corrective forces and considerable monetary stim
ulus versus various headwinds, including consumer de-leveraging and cutbacks in state and local government.
Similarly, while I am a little encouraged by September's CPI data, it provided only a tentative sign of
a slowing in the underlying price trend. Trimmed mean measures of core inflation didn't slow as much as
the CPI ex food and energy did, reflecting the influence of some unusual item-level price changes. In light of
these technical factors, I don't believe the underlying trend in prices has changed. With long-term inflation

expectations stable and the still-weak labor market keeping growth in labor costs subdued, I continue to
expect core inflation of about 2 percent for 2011-2014. As pressures from energy prices continue to dissi
pate, headline inflation should slow to about 2 percent in 2012 and remain around 2 percent in 2013 and 2014.
For 2012-2014, I continue to see the outlook for growth, unemployment, and inflation as highly uncertain.
The key risk to growth (downside) and unemployment (upside) is a recession in Europe and the additional
financial stress the recession would cause. Consumer de-leveraging constitutes another key uncertainty: the
potential for yet more balance sheet adjustment poses another downside risk to growth and upside risk to
unemployment. While I don’t think that significantly faster de-leveraging is the most likely scenario, it
remains a risk. For inflation, the weakness of the economy could create more disinflation than expected. On
the other hand, I judge the surprise increases of earlier this year as pointing to the potential for surprise in
creases over the medium term forecast horizon. The potential for renewed volatility of commodity prices and
extremely accommodative monetary policy are upside risks that further elevate the uncertainty surrounding
the inflation outlook.

R e s p o n d e n t 9:

The recent economic data has been somewhat weaker than what I expected in my June forecast. The
persistence of negative shocks earlier in the year such as higher oil prices, bad weather, sovereign debt
developments, and the supply chain disruptions associated with the Japan disaster has been greater than
I anticipated. However, I expect this recent weakness is now waning and that the economy is poised for
moderately above-trend growth in 2012.
The economy has a bit less momentum going into 2012 than I anticipated in June, but as the recovery
strengthens I expect a modest pace of 3.2 percent growth in 2012, down only slightly from my June forecast.
For 2013 and 2014, I expect growth to run at a 3 percent pace, which remains slightly above my longer-term
trend. With a moderate pace of growth over the forecast horizon, the labor market recovery is gradual —
I expect the unemployment rate to move down to about 6.8 percent by the end of the forecast horizon, at
which time it remains above my estimate of the natural rate of unemployment. I anticipate that headline
inflation will pull back to a 2.2 percent pace in 2012 and then edge down a bit further in 2013 and 2014 in
response to tighter monetary policy than that anticipated in the Tealbook.
In my view, the substantial liquidity that is now in the financial system continues to imply a risk that
inflation will rapidly accelerate to unacceptable levels and that inflation expectations may become unan
chored. To ward off these developments, the FOMC will need to commence a steady tightening of monetary
policy that begins some time before mid-2013.

R e s p o n d e n t 10:

We have again lowered our growth projections from those of the last SEP. For 2011, we now expect real GDP
growth to be under 2% compared to 3% in the June SEP. While much of this reduction reflects the impact
of past events, including the downward revision of real GDP growth over 2011H1, we expect 2011H2 growth
to be 2 ¾ (annual rate), well below the 4% growth we anticipated in June despite raising the forecast some
%
over the past month. We have also lowered our growth forecast for 2012 and 2013, as we see some of the
factors slowing growth this year as persisting into coming years. Correspondingly, we now expect the unem
ployment rate to average 9.0% in 2011Q4 rather than 8.4%, and to decline gradually over the forecast horizon.
The pronounced slowing of growth in the first half of 2011 appears to have been due in part to a num
ber of temporary factors. Energy and other commodity prices rose sharply over the six to seven month
period ending in May of this year, reducing consumers’ real purchasing power: real disposable income rose

at an annual rate of just 0.9% in 2011H1. Consumers responded to this loss of purchasing power through a
combination of slower growth of real PCE and a reduction of the personal saving rate.
A second transitory factor was the supply chain disruptions emanating from the earthquake and tsunami
that occurred in Japan in March. The effect of these disruptions has been most evident in the production
and sales of light weight motor vehicles, but it is likely that they affected other sectors of the economy as
well. Despite lean inventories, production of motor vehicles and parts as well as of computer and of electrical
equipment declined in 2011Q2. Sales of light weight motor vehicles also fell during this period, apparently
because prospective buyers decided to delay purchases until inventories and prices of popular models re
turned to more normal levels.
The advance estimate of 2011Q3 real GDP growth indicates that these temporary factors have begun to
abate. The rate of increase of energy prices slowed significantly over the third quarter, greatly reducing the
negative effect on real incomes and helping to support stronger growth of real PCE in the quarter. Further
more, final sales to domestic purchasers grew at a 3.2% annual rate in 2011Q3, the fastest since 2010Q2,
suggesting some momentum into 2011Q4.
Nevertheless, the US confronts significant structural problems that are impeding a more vigorous recov
ery. In particular, the legacy of the housing boom and bust continues to weigh on the economy. Moreover,
state and local governments are cutting back spending and reducing employment. Finally, based on current
law, federal fiscal policy is in the process of moving from providing significant stimulus to exerting substantial
drag.
Despite record low mortgage interest rates and quite high cash flow affordability, housing market activ
ity remains at quite depressed levels, and thus is not providing the boost to economic activity. The reasons
for this are several, including a large inventory of homes, many of which are distressed, the continued pipeline
of delinquencies and foreclosures, the large number of mortgages that are “underwater” or close to it, tight
underwriting standards, a weak labor market, and general uncertainty about the future path of home prices.
Furthermore, due to the loss of housing wealth stemming from the decline of home prices, consumer spending
is more restrained than otherwise would be the case.
Both employment and spending by the state and local government sector have been declining for some
time, and the rate of decline intensified over the first half of 2011. While state and local government tax
receipts have recovered to their previous peak level, grants in aid from the federal government are now de
clining. Thus, spending and employment at the state and local government level is likely to continue to fall
over the near future.
At the federal level, fiscal policy is evolving from being highly stimulative in 2010 to being essentially
neutral in mid-2011. Based on current law, in 2012 federal fiscal policy will begin exert a significant drag on
growth. The reduction of the employee's share of the OASDI payroll tax and the full expensing of qualified
investment in equipment and software, enacted in late 2010, are both set to expire at the end of 2011.
The recently enacted Budget Control Act of 2011 calls for a reduction of about $25 billion of discretionary
spending in FY2012, with additional deficit reduction measures likely once the Congressional Joint Select
Committee on Deficit Reduction releases its proposals later this year.
Finally, the events in the Euro area and elsewhere indicate weaker global growth over the forecast hori
zon, which would reduce the growth of US exports. Given all of these factors, projected growth of real GDP
in 2012 and 2012 has been marked down to 2 ¾% (Q4/Q4) and 3 ½ from 3.7% and 4.5%, respectively.
%
With this lower growth trajectory, the unemployment rate in is expected to average 8.7% (versus 7.5%) in
2012Q4 and 7.8% (versus 6.5%) in 2013Q4.

Both total and core PCE deflator inflation have been somewhat higher than anticipated, such that total
inflation is now expected to be 2.9% (Q4/Q4) in 2011 rather than 2.5% and core inflation is expected to be
1.8% rather than 1.6%. The bulk of the increase in headline inflation has been due to the direct effect of the
run up of energy and other commodity prices, the impulse behind which was external to the US.
Nonetheless, core inflation also moved up more than expected, with the 12-month change of the ex food
and energy PCE deflator up 1.6% in October from below 1% at the end of 2010. From an accounting sense,
the bulk of that increase of core inflation is due to some faster increases in rents, followed by unusually rapid
gains in prices for apparel and new vehicles. We suspect that as rents firm, more of the quite substantial
stock of vacant housing will move into rental usage, helping to limit further rent increases. The more rapid
increase of apparel prices reflect the steep increases in cotton and other fiber prices over the past year.
Similarly, the unusually large increase in new vehicle prices of the past six months or so appears to be the
result of the supply disruptions discussed earlier.
Fortunately, energy and many other commodity prices have declined from their peak levels. Motor ve
hicle production is returning to more normal levels, which will boost inventories over the coming months.
Thus, barring another energy price shock, it appears that headline and core inflation measures are at or
near their peaks. Fundamentals remain consistent with a slowing in inflation. Even if we assume that the
natural rate of unemployment has increased somewhat, the economy is operating with substantial slack.
Profit margins are wide, allowing for greater price competition going forward, which should help hold down
overall inflation. Moreover, inflation expectations remain well anchored. Accordingly, we expect inflation to
slow to 1.4% (Q4/Q4) in 2012 before moving gradually higher to around the 2% objective in 2014.
The uncertainty around our outlook remains sizable and the balance of risks to both real activity and
inflation are to the downside. The uncertainty engendered by the intensification of the European crisis and
reaction of financial markets to that crisis indicate that the US and global economies as well as financial
conditions remain quite fragile and susceptible to shocks, indicating considerable downside risks to the real
activity outlook. In addition, there is considerable risk that fiscal consolidation at the federal, state, and
local levels-however necessary for the longer run-could occur too quickly given the fragile state of the econ
omy. With evidence that inflation expectations remain anchored, the downside real risks combined with
the current large amount of slack, indicate that the risks to the medium-term inflation outlook are now
somewhat to the downside.

R e s p o n d e n t 11:

Household balance sheet repair is continuing to restrain consumer spending; this process likely has been
compounded as the failure of labor market conditions to improve noticeably and further concerns over future
income and wealth prospects have increased the demand for precautionary balances. Businesses see this lack
of demand, making them hesitant to expand workforce and physical capacity. These factors have resulted in
liquidity trap conditions in which the zero lower bound prevents real interest rates falling enough to equate
the supply of saving with the demand for investment.
Eventually, in the absence of major shocks and with the support of accommodative monetary policy, balance
sheet repair will reach the stage that household sector expenditures will gain momentum and generate an
associated lift off in business spending. However, the fragility of household and business confidence could
slow this process relative to other economic fundamentals.
Even accounting for some slower growth in potential output over the recession and early stages of recovery,
our forecast implies substantial resource slack even beyond 2014. This slack is expected to exert downward
pressure on prices throughout the projection period. However, accommodative monetary policy provides
an important offsetting support to inflation expectations. A critical element of this policy is clear forward

guidance with regard to the setting of the federal funds rate.
R e s p o n d e n t 12:

Growth in the economy, while better in this second half of 2011 than earlier in the year, remains modest.
Supply chain slow-downs from Japan have eased, but demand remains hampered by the housing market
which remains characterized by low equity values, poor servicing, supply overhang and deteriorating qual
ity. People have been out of the labor market for longer periods of time. The growth of consumption and
aggregate demand are further depressed by not just continued unemployment but low home equity values
and low levels of consumer confidence.

R e s p o n d e n t 13:

I continue to expect a modest economic recovery over the next several years, with only a gradual improve
ment in unemployment. The temporary factors that damped growth in the first half of 2011-including rising
energy prices and the supply disruptions associated with the Japanese earthquake and tsunami-have largely
abated. However, growth is still expected to remain subdued. Financial headwinds, deleveraging, an anemic
housing market, and reduced government spending will hold back growth. In contrast, pent-up demand,
exports, and an accommodative monetary policy will support economic growth. Considerable uncertainty
surrounds the outlook due to the European sovereign debt crisis and fiscal consolidation in the United States.
But the outlook for inflation has improved. Inflation has begun to show signs of receding and should fall
below 2 percent next year. Nevertheless, there is a risk of higher inflation if our accommodative mone
tary policy stance and long-run fiscal imbalances lead to an upturn in inflation expectations. In addition,
maintaining the current extraordinary level of monetary policy accommodation could generate financial im
balances which could eventually destabilize the economy.
R e s p o n d e n t 14:

N/A
R e s p o n d e n t 15:

Real growth is gradually gaining momentum. Consumer spending is firming, although sentiment is depressed.
Business investment and exports are fairly robust. Multifamily housing construction is expanding, although
single family construction is depressed. Government consumption and investment are gradually declining.
Inflation has been high this year, and energy prices remain elevated.
R e s p o n d e n t 16:

We continue to suffer from overhangs of housing and debt. The sharp deterioration in the fiscal outlook that
has occurred as a result of the recession means that fiscal policy has become a drag on growth. The poor
fiscal outlook has also increased concerns about future taxes. Consumers are discouraged and fatigued by
the slow and uneven pace of the recovery, and have been squeezed by high energy prices. Banks are also
being squeezed-by the low, flat yield curve-and some indicators suggest increased financial-system strains.
Businesses, however, are generally flush with liquidity. Yet, despite rising labor costs overseas, firms remain
more interested in foreign than in domestic expansion. The potential for job-creating investment and eco
nomic expansion within the U.S. is stymied by uncertainty over fiscal policy and concerns about regulatory
excess. European sovereign debt concerns have eased, for now, but underlying structural problems remain
unresolved. Emerging markets may be shifting to a slightly slower growth gearing. For all of these reasons,
growth in coming quarters is likely to be subdued.
R e s p o n d e n t 17:

It appears as though the economy continues to be stuck in a quite slow-moving recovery, successfully warding
off recessionary risks but not showing any signs of achieving the kind of momentum that would lead to the
kind of sustained, significantly above-trend growth that would reduce the output gap appreciably within

quarters, rather than years. It is hard to see where such momentum would come from, at least until house
hold debt, most importantly including mortgage debt, is substantially reduced. There seems little prospect
of that happening.
Major downside risks continue to be largely external, in that they are being generated either abroad or
through the domestic political process. If Eurozone leaders do not follow their framework announcement
with credible details, the market relief could reverse quickly, leading once again to a deterioration of financial
conditions and, quite possibly, real economy performance as well. I t’s still a little hard to see significant
upside risks. At some point, of course, enough debt will have been worked off and enough slimming of
employment levels completed that the conditions for an acceleration in the economy will be present.. At
this juncture, though, a “semi-lost” decade seems as likely as the quickening of growth contemplated in the
preceding sentence.

4 (c ). P le a se d escrib e any im p o rta n t d ifferen ces b e tw e en you r cu rren t eco n o m ic
foreca st and th e T ealb ook .
R e s p o n d e n t 1:

My forecast is broadly similar to the Tealbook projection, but with weaker GDP growth in 2013 and 2014,
as I have grown more pessimistic about recent and future potential output growth.
R e s p o n d e n t 2:

N/A
R e s p o n d e n t 3:

My growth forecast is very similar to the Tealbook baseline through 2013, but is about ½ a percentage point
lower than the Tealbook in 2014. My projection for inflation runs about ½ a percentage point above the
Tealbook over the forecast horizon.
R e s p o n d e n t 4:

I forecast a more rapid pickup in growth, particularly in 2013 and 2014, due to the more accommodative
monetary policy I have assumed. In addition, my inflation forecast is a bit higher-closer to my 2% targetthan Tealbook as unemployment declines more rapidly than in the Tealbook baseline. Were it not for the
difference in assumption concerning monetary policy, my forecast would coincide closely with that in Teal
book.
R e s p o n d e n t 5:

Continue to be more pessimistic than the TB about growth going forward. Since June have seen considerable
financial turmoil (Europe, debt ceiling), more fiscal gridlock, a substantial worsening in sentiment, continued
very weak conditions in housing and mortgage markets, weak job numbers (with implications for the number
of long-term unemployed and their skills and labor force attachment), renewed signs of slowdown in Europe,
Japan, and EMEs. Growth slowed between 2010 and 2011, so there is not much on which to base a projection
of an accelerating recovery.
R e s p o n d e n t 6:

Both the outlook for real activity and the outlook for inflation are similar to the Tealbook forecast.
R e s p o n d e n t 7:

Compared to the Tealbook forecasts, most differences between the point estimates in the Tealbook baseline
forecast and my projections are minor. However, I see higher headline inflation in the intermediate period
before returning to the rate that I believe is consistent with appropriate monetary policy.
R e s p o n d e n t 8:

The key difference is in the inflation outlook. I don’t expect core inflation to decline as much as it does in
the Tealbook forecast, because I don’t expect the weak recovery and decelerating commodity prices to have
as much influence on inflation as they do in the Tealbook.
R e s p o n d e n t 9:

My forecast calls for a tighter monetary policy path than the Tealbook.
R e s p o n d e n t 10:

We continue to assume lower inflation persistence than does the Tealbook. Given changes in both our forecast
and the Tealbook forecast, this differing assumption has little impact for the 2011-13 forecasts. However, at
the 2014 horizon and beyond, under the assumption of well anchored inflation expectations, we project that
core and overall inflation will move more quickly toward the 2% objective than does the Tealbook forecast.

We have a somewhat lower path for the personal saving rate than the Tealbook despite similar consumption
paths. Apparently this reflects a somewhat lower path of disposable income in our forecast as we expect the
profit share to remain higher than in the Tealbook.
Based on our assumptions of modest increases in the labor force participation rate and average weekly
hours, we expect a somewhat greater decline in the unemployment rate than is projected in the Tealbook,
particularly in 2013 and 2014.
R e s p o n d e n t 11:

Our projections for real economic activity are similar to the Tealbook's. However, as noted above, we assume
that appropriate policy keeps rates lower for longer and provides more explicit forward guidance than the
Tealbook's policy assumption. This additional accommodation contributes to our inflation projection being
a touch higher than in the Tealbook.
R e s p o n d e n t 12:

N/A
R e s p o n d e n t 13:

The key difference is the monetary policy path. With a higher projection for inflation than Tealbook and the
potential for a buildup of financial imbalances, I believe an earlier move toward less accommodative policy
is appropriate. With a less accommodative policy stance, I project somewhat slower growth in 2014 than
Tealbook.
R e s p o n d e n t 14:

N/A
R e s p o n d e n t 15:

I do not see the decline in energy prices in the current quarter that the Tealbook projects. I also do not
expect core inflation to decline materially from its pace this year.
R e s p o n d e n t 16:

The Tealbook GDP and unemployment forecasts are not unreasonable, but I anticipate a somewhat higher
trajectory for inflation. Given my inflation forecast and my relatively stringent inflation objective, I believe
that policy stimulus will need to be withdrawn more rapidly than is assumed in the Tealbook.
R e s p o n d e n t 17:

As usual, I continue to be less confident that oil prices will remain subdued over the forecast period.

4 (d ). P le a se d escrib e th e key factors ca u sin g you r fo reca st to ch an ge sin ce th e
p rev io u s q u a rter’s p ro jectio n s.
R e s p o n d e n t 1:

The data on growth since June have generally surprised on the downside, and we have revised down real
GDP growth by almost a percentage point in 2011, 2012, and 2013. Besides weak near-term indicators of
real economic activity, the July 2011 annual NIPA revision lowered that past few years of labor productivity
growth. It now appears that the mid-1990s acceleration in labor productivity has ended. Coupled with weak
business investment and labor market problems, it seems likely that potential output has grown more slowly
recently.
R e s p o n d e n t 2:

N/A
R e s p o n d e n t 3:

I have revised my 2011 growth forecast lower in light of the softer incoming data between July and September.
I have also built in a somewhat weaker growth trajectory in 2012 and 2013 owing in part to the deterioration
in the European economy and the increased likelihood of fiscal drag domestically.
R e s p o n d e n t 4:

I have revised down my estimate of real GDP growth for the next several years and revised up my estimate
of the unemployment rate due to weak incoming data and an assessment that the headwinds to growth in
output and recovery of the labor market are even more serious than I anticipated in June. As a partial offset,
I have assumed a more accommodative stance for monetary policy over the forecast horizon
R e s p o n d e n t 5:

See above.
R e s p o n d e n t 6:

Spending data have been considerably below expectations. Deterioration in the labor market, lower house
holds' net worth, continued spending cuts at the state and local level, and no meaningful improvement in the
housing sectors are all factors contributing to the downward revision to the near- and medium-term outlook
for the real economy. Increased uncertainty and low business and consumer sentiment also affect the outlook
negatively.
R e s p o n d e n t 7:

My forecasts for near-term real growth have been revised downward reflecting slower growth to date this
year than I had previously expected. My forecast path for the unemployment rate has been revised up to
reflect the weaker than expected growth this year. My view of real GDP growth in 2012 has also been revised
down, with unemployment revised accordingly. In light of the data revisions in late July and my view that
some of the growth prior to the financial crisis and Great Recession was due to a bubble, I have also revised
downward my expectation of long-run GDP growth. My projections of inflation are changed only slightly.

R e s p o n d e n t 8:

Since the June submission, I revised my forecast to reflect sharp revisions to the NIPA accounts that revealed
a significantly slower pace of recovery in the first half of 2011 and incoming data that pointed to a slower pace
of recovery in the second half of 2011 and a higher underlying price trend. Compared to the June forecast of

GDP growth, my new projection shows a significantly slower pace of recovery in 2011 and a modestly slower
pace in 2012 and 2013. For inflation, I continue to expect prices to rise at an underlying trend of about 2
percent. I continue to expect that dissipating pressures from energy prices will slow headline inflation from
about 2 1/2 percent this year to about the rate of core inflation next year.
R e s p o n d e n t 9:

Recent weaker-than-expected data have led me to revise down my near-term projection.
R e s p o n d e n t 10:

As noted earlier, the data generally have been weaker than expected since the June SEP. Although the latest
spending data have been somewhat better, consumer confidence indicators and business survey data remain
quite weak. Furthermore, the subdued growth seen so far in 2011 suggest that, although the transitory
factors discussed earlier were a factor, more structural factors probably also were holding down growth,
which suggests that real growth could continue to be subdued in the coming quarters. In addition, the
weaker outlook for the Euro area and the tightening in some indicators of financial conditions indicate a
more subdued outlook for real activity. Because of these factors, our projected real GDP growth path is
lower throughout this period.
The unemployment rate was little changed since the June SEP. Other labor market indicators also have
not improved much during this period. Combined with our relatively subdued outlook for real growth, we
have raised our projected path for the unemployment rate throughout the forecast horizon.
Because the inflation data have run somewhat above our expectations, we have raised our near-term in
flation forecasts. However, given the large amount of resource slack and our forecast that it will shrink more
slowly than previously expected, we now anticipate that it will take longer for core inflation to reach the
objective. Accordingly, our forecasts of inflation in 2012 and 2013 are below those in the June SEP.
In regard to our risk assessment for real economic activity, the European sovereign debt crisis has intensified
(despite the agreement on October 26) and there is a higher probability of a greater fiscal consolidation
(especially with the agreement following the debt ceiling crisis). Furthermore, the financial market reaction
during the period since June indicates continued fragility of financial conditions, which suggests some more
downside risks to the real outlook over the medium term. Consequently, our risk assessment for real activity
is more skewed to the downside than it was in June, reflecting an increase in downside risks.
For the inflation risk assessment, the decline in the 5-10 year TIPS-implied inflation compensation since
June suggests a smaller probability that inflation expectations are becoming unmoored to the upside. More
over, the greater downside real risks combined with continued significant resource slack indicates greater
downside risks. Therefore, the inflation risks have shifted from a rough balance to a downside skew, partic
ularly at medium term horizons, reflecting both lower upside risks and greater downside risks.

R e s p o n d e n t 11:

The incoming data indicate that the softness in some of the monthly indicators we were seeing at the time of
our last forecast submission were symptoms of a more general economic sluggishness rather than a tempo
rary soft patch due to the Japanese disaster and other transitory factors. The weak 2011:H1 growth evident
following the annual revisions to the NIPA were an important factor in changing this judgement. We have
marked down our projection of growth throughout the projection period accordingly. In addition, household
and business caution has intensified with the heightened uncertainty and financial market volatility associ
ated with events in Europe and the U.S. debt ceiling showdown.
R e s p o n d e n t 12:

N/A
R e s p o n d e n t 13:

Because this is my first submission of economic projections, my comparison will be relative to my forecast
at the time of the last FOMC meeting. My outlook for 2011 as a whole has improved based on stronger
reported GDP growth in the third quarter. My longer-term outlook is little changed from a month ago.
R e s p o n d e n t 14:

N/A
R e s p o n d e n t 15:

The data flow on overall activity weakened considerably over the summer, but has improved in recent weeks.
Inflation has risen this year, and with the (Brent) crude oil price still fairly high, it is difficult to see much
disinflation ahead with policy settings unchanged.
R e s p o n d e n t 16:

Second-half growth appears to be rebounding less strongly than I had anticipated, and the growth outlook
generally has deteriorated, somewhat. Uncertainty over fiscal policy is significantly retarding business confi
dence. In consequence, I've made upward revisions to the forecasted path of unemployment and downward
revisions to the forecasted path of inflation.
R e s p o n d e n t 17:

Obviously the much-worse than expected performance in the months around the last set of projections, but
also the accumulating evidence that the momentum referred to in the preceding answer is not on the horizon
(at least not yet)

SEP: Compilation and Summary of Individual Economic Projections

November 1–2, 2011

Figure 2.A. Distribution of participants’ projections for the change in real GDP, 2011–14 and over the longer run
Number of participants

November
Tealbook
November projections
June projections

June
Tealbook

2011

0.80.9

1.01.1

1.21.3

1.41.5

1.61.7

1.81.9

2.02.1

2.22.3

2.42.5

2.62.7

18
16
14
12
10
8
6
4
2
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

Percent range
Number of participants

November
Tealbook

2012

0.80.9

1.01.1

1.21.3

1.41.5

1.61.7

1.81.9

2.02.1

2.22.3

2.42.5

June
Tealbook

2.62.7

2.82.9

3.03.1

3.23.3

3.43.5

18
16
14
12
10
8
6
4
2
3.63.7

3.83.9

4.04.1

4.24.3

4.44.5

Percent range
Number of participants

November
Tealbook

2013

0.80.9

1.01.1

1.21.3

1.41.5

1.61.7

1.81.9

2.02.1

2.22.3

2.42.5

2.62.7

2.82.9

3.03.1

3.23.3

June
Tealbook

3.43.5

3.63.7

3.83.9

4.04.1

4.24.3

18
16
14
12
10
8
6
4
2
4.44.5

Percent range
Number of participants

November June
Tealbook Tealbook

2014

0.80.9

1.01.1

1.21.3

1.41.5

1.61.7

1.81.9

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

18
16
14
12
10
8
6
4
2
4.44.5

Percent range
Number of participants

18
16
14
12
10
8
6
4
2

Longer run

0.80.9

1.01.1

1.21.3

1.41.5

1.61.7

1.81.9

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

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

Authorized for Public Release – Page 34 of 38

3.83.9

4.04.1

4.24.3

4.44.5

SEP: Compilation and Summary of Individual Economic Projections

November 1–2, 2011

Figure 2.B. Distribution of participants’ projections for the unemployment rate, 2011–14 and over the longer run
Number of participants

June November 18
Tealbook Tealbook 16
14
12
10
8
6
4
2

2011
November projections
June projections

5.05.1

5.25.3

5.45.5

5.65.7

5.85.9

6.06.1

6.26.3

6.46.5

6.66.7

6.86.9

7.07.1

7.27.3

7.47.5

7.67.7

7.87.9

8.08.1

8.28.3

8.48.5

8.68.7

8.88.9

9.09.1

Percent range
Number of participants

June
Tealbook

2012

5.05.1

5.25.3

5.45.5

5.65.7

5.85.9

6.06.1

6.26.3

6.46.5

6.66.7

6.86.9

7.07.1

7.27.3

7.47.5

7.67.7

7.87.9

8.08.1

November
Tealbook

8.28.3

8.48.5

8.68.7

8.88.9

18
16
14
12
10
8
6
4
2
9.09.1

Percent range
Number of participants

June
Tealbook

2013

5.05.1

5.25.3

5.45.5

5.65.7

5.85.9

6.06.1

6.26.3

6.46.5

6.66.7

6.86.9

7.07.1

November
Tealbook

7.27.3

7.47.5

7.67.7

7.87.9

8.08.1

8.28.3

18
16
14
12
10
8
6
4
2
8.48.5

8.68.7

8.88.9

9.09.1

Percent range
Number of participants

June
Tealbook

2014

5.05.1

5.25.3

5.45.5

5.65.7

5.85.9

6.06.1

November
Tealbook

6.26.3

6.46.5

6.66.7

6.86.9

7.07.1

7.27.3

7.47.5

18
16
14
12
10
8
6
4
2
7.67.7

7.87.9

8.08.1

8.28.3

8.48.5

8.68.7

8.88.9

9.09.1

Percent range
Number of participants

18
16
14
12
10
8
6
4
2

Longer run

5.05.1

5.25.3

5.45.5

5.65.7

5.85.9

6.06.1

6.26.3

6.46.5

6.66.7

6.86.9

7.07.1

7.27.3

7.47.5

7.67.7

7.87.9

8.08.1

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

Authorized for Public Release – Page 35 of 38

8.28.3

8.48.5

8.68.7

8.88.9

9.09.1

SEP: Compilation and Summary of Individual Economic Projections

November 1–2, 2011

Figure 2.C. Distribution of participants’ projections for PCE inflation, 2011–14 and over the longer run
Number of participants

June
Tealbook

2011
November projections
June projections

1.11.2

1.31.4

1.51.6

1.71.8

1.92.0

2.12.2

2.32.4

November
Tealbook

2.52.6

2.72.8

18
16
14
12
10
8
6
4
2
2.93.0

3.13.2

3.33.4

3.53.6

Percent range
Number of participants

2012

November June
Tealbook Tealbook

1.11.2

1.31.4

1.51.6

18
16
14
12
10
8
6
4
2
1.71.8

1.92.0

2.12.2

2.32.4

2.52.6

2.72.8

2.93.0

3.13.2

3.33.4

3.53.6

Percent range
Number of participants

2013

November June
Tealbook Tealbook

1.11.2

1.31.4

1.51.6

18
16
14
12
10
8
6
4
2
1.71.8

1.92.0

2.12.2

2.32.4

2.52.6

2.72.8

2.93.0

3.13.2

3.33.4

3.53.6

Percent range
Number of participants

2014

1.11.2

November and June
Tealbook

1.31.4

1.51.6

1.71.8

18
16
14
12
10
8
6
4
2
1.92.0

2.12.2

2.32.4

2.52.6

2.72.8

2.93.0

3.13.2

3.33.4

3.53.6

Percent range
Number of participants

18
16
14
12
10
8
6
4
2

Longer run

1.11.2

1.31.4

1.51.6

1.71.8

1.92.0

2.12.2

2.32.4

2.52.6

2.72.8

2.93.0

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

Authorized for Public Release – Page 36 of 38

3.13.2

3.33.4

3.53.6

SEP: Compilation and Summary of Individual Economic Projections

November 1–2, 2011

Figure 2.D. Distribution of participants’ projections for core PCE inflation, 2011–14
Number of participants

November and June
Tealbook

2011
November projections
June projections

1.11.2

1.31.4

1.51.6

1.71.8

18
16
14
12
10
8
6
4
2
1.92.0

2.12.2

2.32.4

2.52.6

Percent range
Number of participants

November and June
Tealbook

2012

1.11.2

1.31.4

1.51.6

18
16
14
12
10
8
6
4
2
1.71.8

1.92.0

2.12.2

2.32.4

2.52.6

Percent range
Number of participants

November
Tealbook

2013

1.11.2

June
Tealbook

1.31.4

1.51.6

18
16
14
12
10
8
6
4
2
1.71.8

1.92.0

2.12.2

2.32.4

2.52.6

Percent range
Number of participants

November
Tealbook

2014

1.11.2

June
Tealbook

1.31.4

1.51.6

18
16
14
12
10
8
6
4
2
1.71.8

1.92.0

2.12.2

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

Authorized for Public Release – Page 37 of 38

2.32.4

2.52.6

SEP: Compilation and Summary of Individual Economic Projections

November 1–2, 2011

Figure 3. Risks and uncertainty in economic projections
Number of participants

Uncertainty about GDP growth

November projections
June projections

Number of participants

Risks to GDP growth

November projections
June projections

Similar

Lower

Downside

Higher

Balanced

Number of participants

Uncertainty about Unemployment

Upside
Number of participants

Risks to Unemployment

Similar

Lower

Higher

Downside

Balanced

Number of participants

Uncertainty about PCE inflation

Upside
Number of participants

Risks to PCE inflation

Similar

Lower

Higher

Downside

Balanced

Number of participants

Uncertainty about Core PCE inflation

Upside
Number of participants

Risks to Core PCE inflation

Higher

Similar

Lower

Downside

Authorized for Public Release – Page 38 of 38

Balanced

Upside

Full text of Federal Open Market Committee Meeting Minutes, Transcripts, and Other Documents : Meeting, November 1-2, 2011 : Summary of Economic Projections - Compilation and Summary of Individual Economic Projections

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