Full text of Federal Open Market Committee Meeting Minutes, Transcripts, and Other Documents : Meeting, September 18-19, 2013 : SEP: Individual Projections

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SEP: Compilation and Summary of Individual Economic Projections

September 17–18, 2013

Table 1. Economic projections of Federal Reserve Board members and Federal Reserve Bank presidents,
September 2013
Percent

2013
Change in real GDP . . . . . 2.0 to 2.3
June projection . . . . . . 2.3 to 2.6

Central tendency1
2014
2015
2016
2.9 to 3.1 3.0 to 3.5 2.5 to 3.3
3.0 to 3.5 2.9 to 3.6
n.a.

Unemployment rate. . . . . . 7.1 to 7.3
June projection . . . . . . 7.2 to 7.3

6.4 to 6.8
6.5 to 6.8

5.9 to 6.2
5.8 to 6.2

PCE inflation. . . . . . . . . . . . 1.1 to 1.2
June projection . . . . . . 0.8 to 1.2

1.3 to 1.8
1.4 to 2.0

Core PCE inflation3 . . . . . 1.2 to 1.3
June projection . . . . . . 1.2 to 1.3

1.5 to 1.7
1.5 to 1.8

Variable

Longer run
2.2 to 2.5
2.3 to 2.5

2013
1.8 to 2.4
2.0 to 2.6

2014
2.2 to 3.3
2.2 to 3.6

Range2
2015
2.2 to 3.7
2.3 to 3.8

5.4 to 5.9
n.a.

5.2 to 5.8
5.2 to 6.0

6.9 to 7.3
6.9 to 7.5

6.2 to 6.9
6.2 to 6.9

5.3 to 6.3
5.7 to 6.4

5.2 to 6.0
n.a.

5.2 to 6.0
5.0 to 6.0

1.6 to 2.0
1.6 to 2.0

1.7 to 2.0
n.a.

2.0
2.0

1.0 to 1.3
0.8 to 1.5

1.2 to 2.0
1.4 to 2.0

1.4 to 2.3
1.6 to 2.3

1.5 to 2.3
n.a.

2.0
2.0

1.7 to 2.0
1.7 to 2.0

1.9 to 2.0
n.a.

1.2 to 1.4
1.1 to 1.5

1.4 to 2.0
1.5 to 2.0

1.6 to 2.3
1.7 to 2.3

1.7 to 2.3
n.a.

2016
2.2 to 3.5
n.a.

Longer run
2.1 to 2.5
2.0 to 3.0

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 18–19, 2013.
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

September 17–18, 2013

Table 1.A. Economic projections for the first half of 2013*
(in percent)

Central tendencies and ranges
Central tendency

Range

1.8 to 2.0
0.6
1.1

1.8 to 2.0
0.6
1.1

Change in real GDP
PCE inflation
Core PCE inflation

Participants’ projections
Projection

Change in real GDP

PCE inflation

Core PCE inflation

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

1.8
2.0
1.8
2.0
2.0
1.8
1.9
2.0
2.0
2.0
2.0
1.8
2.0
2.0
2.0
1.9
1.8

0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.6

1.1
1.1
1.1
1.1
1.1
1.1
1.1
1.1
1.1
1.1
1.1
1.1
1.1
1.1
1.1
1.1
1.1

* Growth and inflation are reported at annualized rates.

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SEP: Compilation and Summary of Individual Economic Projections

September 17–18, 2013

Table 1.B. Economic projections for the second half of 2013*
(in percent)

Central tendencies and ranges
Central tendency

Range

2.2 to 2.6
1.6 to 1.8
1.3 to 1.5

1.8 to 2.8
1.4 to 2.0
1.3 to 1.7

Change in real GDP
PCE inflation
Core PCE inflation

Participants’ projections
Projection

Change in real GDP

PCE inflation

Core PCE inflation

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

1.8
2.6
2.2
2.2
2.4
2.4
2.3
2.4
2.8
2.2
2.6
2.6
2.8
2.2
2.0
2.5
2.2

1.4
1.6
1.6
1.6
1.6
1.6
1.8
2.0
1.6
1.8
1.6
1.6
1.8
2.0
1.6
1.6
2.0

1.3
1.3
1.7
1.3
1.3
1.5
1.5
1.3
1.5
1.5
1.3
1.5
1.7
1.5
1.3
1.3
1.7

* Projections for the second half of 2013 implied by participants’ September projections for the first half of 2013
and for 2013 as a whole. Growth and inflation are reported at annualized rates.

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SEP: Compilation and Summary of Individual Economic Projections

September 17–18, 2013

Table 2. September economic projections, 2013–16 and over the longer
run (in percent)
Projection

Year

Change in
real GDP

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

1.8
2.3
2.0
2.1
2.2
2.1
2.1
2.2
2.4
2.1
2.3
2.2
2.4
2.1
2.0
2.2
2.0

7.3
7.3
7.2
7.3
7.2
7.2
7.2
7.2
7.1
7.1
7.2
7.1
6.9
7.3
7.2
7.2
7.2

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

2.8
3.1
2.9
2.9
3.0
3.0
2.9
3.0
3.0
2.2
3.2
3.0
3.0
3.0
2.6
3.3
3.1

6.8
6.8
6.7
6.9
6.5
6.7
6.7
6.7
6.5
6.4
6.6
6.3
6.2
6.9
6.8
6.5
6.3

Authorized for Public Release

Unemployment
PCE
rate
inflation

3DJHRI

Core PCE
inflation

Federal
funds rate

1.0
1.1
1.1
1.1
1.1
1.1
1.2
1.3
1.1
1.2
1.1
1.1
1.2
1.3
1.1
1.1
1.3

1.2
1.2
1.4
1.2
1.2
1.3
1.3
1.2
1.3
1.3
1.2
1.3
1.4
1.3
1.2
1.2
1.4

0.13
0.13
0.13
0.13
0.13
0.13
0.13
0.13
0.13
0.13
0.13
0.13
0.13
0.13
0.13
0.13
0.13

1.7
1.4
1.7
1.3
1.5
1.3
1.6
1.4
1.7
1.6
1.3
1.8
2.0
1.4
1.2
1.8
1.8

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

0.13
0.13
0.13
0.13
0.13
0.13
0.13
0.13
0.13
1.00
0.13
1.00
1.25
0.13
0.13
0.13
0.13

SEP: Compilation and Summary of Individual Economic Projections

September 17–18, 2013

Table 2. (continued)
Projection

Year

Change in
real GDP

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

2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015

3.0
3.2
3.0
3.2
3.0
3.2
3.1
3.3
3.2
2.2
3.5
2.8
2.5
3.5
3.1
3.5
3.7

6.1
6.3
6.0
6.2
6.0
6.0
6.3
6.0
6.0
5.9
5.8
6.0
6.0
6.2
6.2
5.8
5.3

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

2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016

3.0
3.0
2.8
3.3
2.5
3.1
2.8
3.0
3.0
2.2
3.2
2.5
2.5
3.5
3.5
3.5
2.3

5.5
5.9
5.5
5.6
5.8
5.6
6.0
5.7
5.4
5.7
5.3
6.0
6.0
5.7
5.6
5.2
5.3

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Unemployment
PCE
rate
inflation

3DJHRI

Core PCE
inflation

Federal
funds rate

2.0
1.6
2.0
1.5
1.7
1.6
1.8
1.9
2.0
2.0
1.6
2.3
2.0
1.7
1.4
2.1
2.0

2.0
1.8
2.0
1.6
1.8
1.7
1.7
1.7
2.0
2.0
1.8
2.3
2.0
1.7
1.6
2.1
2.0

0.75
0.75
1.50
0.13
1.00
1.25
0.75
1.00
1.50
3.00
0.75
3.00
3.25
0.50
0.75
0.13
1.00

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

2.0
1.9
2.0
1.7
2.0
1.9
1.9
1.7
2.0
2.0
1.9
2.0
2.0
1.9
1.7
2.3
2.0

2.75
1.75
2.50
1.00
2.00
2.50
1.75
1.75
2.75
4.00
1.75
4.25
4.00
1.50
1.75
0.50
2.00

SEP: Compilation and Summary of Individual Economic Projections

September 17–18, 2013

Table 2. (continued)
Projection

Year

Change in
real GDP

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

2.3
2.3
2.5
2.3
2.3
2.1
2.3
2.2
2.4
2.1
2.2
2.3
2.5
2.5
2.5
2.3
2.3

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Unemployment
PCE
rate
inflation
5.5
5.4
5.2
5.3
5.5
5.4
6.0
5.4
5.4
5.8
5.2
6.0
6.0
5.2
5.2
5.8
5.3

3DJHRI

2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0

Core PCE
inflation

Federal
funds rate
4.30
4.30
4.00
3.80
4.00
4.10
4.00
4.00
4.00
4.00
3.25
4.25
4.00
4.00
4.00
3.50
3.50

SEP: Compilation and Summary of Individual Economic Projections

September 17–18, 2013

Figure 1.A. Central tendencies and ranges of economic projections, 2013–16 and over the longer run
Percent

Change in real GDP

5

Central tendency of projections
Range of projections

4
3
2
1
+
0
1

Actual

2
3

2008

2009

2010

2011

2012

2013

2014

2015

2016

Longer
run
Percent

Unemployment rate

10
9
8
7
6
5

2008

2009

2010

2011

2012

2013

2014

2015

2016

Longer
run
Percent

PCE inflation
3

2

1

2008

2009

2010

2011

2012

2013

2014

2015

2016

Longer
run
Percent

Core PCE inflation
3

2

1

2008

2009

2010

2011

2012

2013

2014

2015

2016

Longer
run

Note: Definitions of variables are in the general note to table 1. The data for the actual values of the variables are
annual.

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SEP: Compilation and Summary of Individual Economic Projections

September 17–18, 2013

Figure 1.B. Central tendencies and ranges of economic projections, 2013–16 and over the longer run

Percent

Change in real GDP

5

Central tendency of projections
Range of projections

4
3
2
1
+
0
1

Actual

2
3

2008

2009

2010

2011

2012

2013

2014

2015

2016

Longer
run
Percent

Unemployment rate

10
9
8
7
6
5

2008

2009

2010

2011

2012

2013

2014

2015

2016

Longer
run
Percent

PCE inflation
5
4
3
2
1
+
0
-

2008

2009

2010

2011

2012

2013

2014

2015

2016

Longer
run

Note: Definitions of variables are in the general note to table 1. The data for the actual values of the variables are
annual.

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SEP: Compilation and Summary of Individual Economic Projections

September 17–18, 2013

Figure 2. Overview of FOMC participants’ assessments of appropriate monetary policy

Number of participants

Appropriate timing of policy firming

12

12
11
10
9
8
7
6
5
4

3
3
2

2
1

2014

2015

2016

Appropriate pace of policy firming

Percent

Target federal funds rate at year-end
6

5

4

3

2

1

0

2013

2014

2015

2016

Longer run

Note: In the upper panel, the height of each bar denotes the number of FOMC participants who judge that, under
appropriate monetary policy, the first increase in the target federal funds rate from its current range of 0 to 1/4 percent
will occur in the specified calendar year. In June 2013, the numbers of FOMC participants who judged that the first
increase in the target federal funds rate would occur in 2013, 2014, 2015, and 2016 were, respectively, 1, 3, 14, and 1.
In the lower panel, each shaded circle indicates the value (rounded to the nearest 1/4 percentage point) of an individual
participant’s judgment of the appropriate level of the target federal funds rate at the end of the specified calendar year
or over the longer run.

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SEP: Compilation and Summary of Individual Economic Projections

September 17–18, 2013

Figure 4.A. 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

20

September projections
June projections

18
16
14
12
10
8
6
4
2

Lower
(C)

Broadly similar
(B)

Higher
(A)

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

20

September projections
June projections

18
16
14
12
10
8
6
4
2

Weighted to downside
(C)

Broadly balanced
(B)

Weighted to upside
(A)

Individual responses
Respondent

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

2(a)
2(b)

B
B

A
C

B
C

A
C

B
B

B
B

B
B

B
C

B
B

B
B

B
C

B
B

B
B

B
C

B
C

A
B

A
C

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SEP: Compilation and Summary of Individual Economic Projections

September 17–18, 2013

Figure 4.B. 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

20

September projections
June projections

18
16
14
12
10
8
6
4
2

Lower
(C)

Broadly similar
(B)

Higher
(A)

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

20

September projections
June projections

18
16
14
12
10
8
6
4
2

Weighted to downside
(C)

Broadly balanced
(B)

Weighted to upside
(A)

Individual responses
Respondent

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

2(a)
2(b)

B
B

A
B

B
B

A
A

B
B

B
B

B
B

B
B

B
B

B
B

B
A

B
B

B
B

B
A

B
B

A
B

A
A

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SEP: Compilation and Summary of Individual Economic Projections

September 17–18, 2013

Figure 4.C. 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

20

September projections
June projections

18
16
14
12
10
8
6
4
2

Lower
(C)

Broadly similar
(B)

Higher
(A)

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

20

September projections
June projections

18
16
14
12
10
8
6
4
2

Weighted to downside
(C)

Broadly balanced
(B)

Weighted to upside
(A)

Individual responses
Respondent

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

2(a)
2(b)

B
B

B
B

B
C

A
C

B
B

C
B

B
B

B
B

B
B

C
B

B
C

B
B

A
A

B
C

B
B

A
C

A
B

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SEP: Compilation and Summary of Individual Economic Projections

September 17–18, 2013

Figure 4.D. 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

20

September projections
June projections

18
16
14
12
10
8
6
4
2

Lower
(C)

Broadly similar
(B)

Higher
(A)

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

20

September projections
June projections

18
16
14
12
10
8
6
4
2

Weighted to downside
(C)

Broadly balanced
(B)

Weighted to upside
(A)

Individual responses
Respondent

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

2(a)
2(b)

B
B

B
B

B
C

A
C

B
B

C
B

B
B

B
B

B
B

C
B

B
C

B
B

A
A

B
C

B
B

A
C

A
B

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SEP: Compilation and Summary of Individual Economic Projections

September 17–18, 2013

Longer-run Projections
1(c). If you anticipate that the convergence process will take SHORTER
OR LONGER than about five or six years, please indicate below your best
estimate of the duration of the convergence process. You may also include
below any other explanatory comments that you think would be helpful.
Respondent 1: N/A
Respondent 2: Based on my forecast we appear to be about 4 years away on both inflation and
unemployemt.
Respondent 3: N/A
Respondent 4: Convergence to the long-run levels of the unemployment rate and inflation is expected in about 5 years.
Respondent 5: N/A
Respondent 6: N/A
Respondent 7: N/A
Respondent 8: N/A
Respondent 9: I expect convergence within five years.
Respondent 10: My projection is that the economy has been growing along its medium trend path
for some time. As such, it can be thought of as having already “converged” in this sense, even though
the unemployment rate continues to change.
My projection has the unemployment rate path flattening out in 2016. You could think of that as
a type of “convergence.”
Respondent 11: N/A
Respondent 12: I anticipate a quicker convergence - real GDP growth will converge to its long-run
value in 2017, the unemployment rate in 2015, and PCE inflation in 2016.
Respondent 13: The convergence process may be somewhat shorter than 5-6 years
Respondent 14: N/A
Respondent 15: N/A
Respondent 16: Shorter than five years under appropriate monetary policy.
The fall in labor force participation has led me to a slightly lower estimate of the long-run unemployment rate consistent with 2% inflation.

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SEP: Compilation and Summary of Individual Economic Projections

September 17–18, 2013

Respondent 17: After the comprehensive revision of GDP and the associated productivity revisions, our assessment of the economy’s potential growth rate remains within the 2% to 2 1/2% range,
with a point estimate of about 2 1/4% (rounded to 2.3% above). We also took this opportunity to reassess our assumptions concerning the longer-run unemployment rate: our interpretation of the recent
literature is that a reasonable range for an estimate of the longer-run unemployment rate is 4 1/2%
to 6%, with a point estimate of about 5 1/4% (rounded to 5.3% above). Assuming appropriate policy
and no further significant shocks, we expect the unemployment rate to be near its longer-run level
by the end of 2015 and the output gap to be fairly small around late 2015/early 2016. However, our
analysis of recent long expansions suggests there is a significant probability that the unemployment
rate could fall modestly below 5 1/4% for a period within the 5-6 year timeframe.
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 will remain at 2% for the PCE deflator (equivalent
to about 2.5% for the CPI based on longer-term average of the difference between CPI and PCE
inflation). Under these conditions and with the output gap anticipated to shrink over the coming
years, we expect inflation as measured by the PCE deflator to be about 2% in 2016 and remain near
that level thereafter.
As indicated in our projections, we anticipate that under appropriate monetary policy and no
further shocks, the convergence process should be largely completed by 2016.

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Uncertainty and Risks
2(a). (Optional) If you have any explanatory comments regarding your
judgment of the uncertainty attached to your projections relative to levels
of uncertainty over the past 20 years, you may enter them below.
Respondent 1: N/A
Respondent 2: Uncertainty about growth stems from higher-than-normal uncertainty about potential growth, post-crisis effects and financial risks, uncertainty about Europe and China, US fiscal
policy (including debt limit) and unconventional monetary policy. These factors influence uncertainty
about unemployment, which is further exacerbated by variability in productivity and Okun’s Law.
I am on the margin of rating inflation uncertainty as lower than normal. Well-anchored inflation
expectations, less volatility in commodities make inflation relatively more stable.
Respondent 3: N/A
Respondent 4: N/A
Respondent 5: N/A
Respondent 6: Uncertainty about my projection for economic activity is similar to its average level
over the past 20 years. Of course, that period was characterized by considerable turmoil, including the
Great Recession, the European (and earlier, Asian) financial crises, the Iraq war, 9/11, the dot.com
boom and bust, and so on.
Inflation is anchored by quite stable inflation expectations. The stability of these expectations
has been reinforced by the release in 2012 of an explicit 2 percent objective for inflation. Hence,
uncertainty about inflation is lower than in the past two decades.
Respondent 7: At this point, uncertainty looks to be broadly similar to the norms of the last 20
years.
Respondent 8: N/A
Respondent 9: N/A
Respondent 10: Real GDP is likely to grow more slowly than it has in previous cyclical expansions,
more in line with growth in the last few years. I do not believe that fluctuations in growth around
this lower trend are likely to be larger than they were in the past. Inflation expectations are probably
more firmly anchored following the FOMC’s consensus statement, and uncertainty is correspondingly
lower than in the past.
Respondent 11: N/A
Respondent 12: N/A
Respondent 13: 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.

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Respondent 14: As with the Tealbook, because the experience of the past 5 years is now such a
large part of the comparison period, we think the uncertainty over the GDP growth and unemployment
rate forecasts are broadly similar to the levels of uncertainty over the past 20 years. If not for those
years, we’d say the level of uncertainty was higher than usual.
Respondent 15: N/A
Respondent 16: N/A
Respondent 17: Quantitative judgment based on the width of the probability intervals from the
FRBNY forecast distribution for real GDP growth and core PCE inflation relative to the forecast
errors over the last 20 years. The widths of these intervals are not substantially different from those
at the time of the June SEP. In part, the probability intervals remain wide because of the extraordinary
economic and financial environment, including the policy rate remaining constrained by its effective
lower bound. Another factor contributing to high uncertainty is the political contention surrounding
the fiscal outlook. Moreover, the further increases of volatility in global financial markets since June
suggest that uncertainty continues to be greater than usual.

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Uncertainty and Risks (continued)
2(b). (Optional) If you have any explanatory comments regarding your
judgment of the risk weighting around your projections, you may enter
them below.
Respondent 1: N/A
Respondent 2: Downside risks to output include financial risks (Europe, still), the effects of ZLB,
the effects of tighter financial conditions, adverse structural changes in productivity or in the labor
market, fiscal risks (including debt limit again). Downside risks to output normally imply upside risks
to unemployment but some unemployment-specific risks (participation declines, productivity) have
led to downside surprises to unemployment which may be repeated.
Main risk to inflation at this point is commodity prices, which have balanced risks. I don’t see the
Fed’s balance sheet inflation expectations, or the dollar, as having material risks for inflation.
Respondent 3: N/A
Respondent 4: N/A
Respondent 5: N/A
Respondent 6: Brinkmanship over fiscal policy and increased volatility in financial markets are
downside risks to activity. So far, these risks appear modest. On the flip side, other headwinds
continue to abate, raising the plausibility of a virtuous cycle and leaving risks to economic activity
balanced.
The zero lower bound does somewhat constrain our ability to respond to adverse shocks. However,
this constraint has become less of an issue over time, in light of the effectiveness of forward guidance
(especially with the threshold language) and LSAPs. As a result, I do not view the zero lower bound
as a quantitatively significant source of downside skew at this point. This lack of substantial skew is
consistent with the 70- and 90-percent forecast confidence intervals shown in Tealbook A.
Inflation risks are also balanced, despite some upside risk to oil prices from geopolitical factors.
Respondent 7: I believe the risks to my projections are broadly balanced. The real economy faces
downside risks from ongoing fiscal challenges in the United States, but the resilience of the private
sector suggests that there may be more momentum and hence upside risks than are commonly thought.
The risks to my inflation outlook also appear to be broadly balanced. The large size of our balance
sheet poses an upside risk to inflation expectations and, in turn, inflation. On the downside, a faltering
recovery or more persistence in low recent core inflation readings could keep inflation at lower levels
than I currently anticipate.
Respondent 8: N/A
Respondent 9: N/A
Respondent 10: N/A

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Respondent 11: My expectation of a strong pickup in economic growth in the second half of the
year and in 2014, reflecting a pickup in domestic spending and waning fiscal drag, have again proven
overoptimistic, continuing a pattern of disappointments pertaining to growth that we’ve seen over
the last several years. I have now moved back the timing of this anticipated pickup, but I see the
risks around this forecast as weighted to the downside. I am concerned about the potential negative
repercussions of the recent tightening in financial conditions and the fact that, faced with the zero
bound, we have little scope to respond to negative shocks from this or other adverse shocks. Downside
risks to GDP growth, coupled with a possibility of a significant pickup in labor force participation,
create upside risks to my unemployment forecasts.
Respondent 12: N/A
Respondent 13: I view the risks to inflation as weighted to the upside over the medium and
longer run. Longer-term inflation risks reflect uncertainty about the timing and efficacy of the Fed’s
withdrawal of accommodation. The risks to output growth and unemployment are balanced.
Respondent 14: We continue to think the risks to the forecast for growth are weighed to the
downside and for unemployment to the upside. The weakness in consumer spending since last spring
suggests the possibility that the fundamentals for the household sector have not improved to the
degree that we have assumed. Not only is this a risk to the PCE and housing forecasts, but stronger
consumer spending also is critical for inducing the business sector to increase hiring and capital
expenditures. The movements in financial markets over the past several months suggest a heightened
risk that financial conditions will turn tighter than we expect once we actually begin to scale back
asset purchases or, down the road, when we begin to increase the funds rate. Downside risks also
remain from the international sector, although on net these appear to have diminished since the last
SEP. While the incoming data point to a diminished risk of lower-than-expected inflation over the
near term, we still see a downside risk to the inflation outlook over the medium-term. Our projection
depends heavily on inflation expectations pulling actual inflation back towards target. We may be
overestimating the lift from expectations, or the degree to which they will remain well-anchored if we
continue to see very low readings on actual inflation or if the public perceives some wavering of the
FOMC’s commitment to a symmetric 2 percent inflation target.
Respondent 15: N/A
Respondent 16: I remain concerned about our ability to respond effectively to a decline in inflation
or inflation expectations.
Respondent 17: Quantitative judgment based on the difference between the central projection and
the expected value from the FRBNY forecast distribution. Under our appropriate policy stance, the
risks to the inflation outlook are roughly balanced, as has been the case in the previous four SEPs.
The risks to the real activity outlook have shifted modestly to the downside since June, when they
were roughly balanced. This shift reflects primarily four factors. First, the probability of a political
stalemate concerning the federal budget and debt ceiling has increased. Second, geopolitical risks
have increased, even following some deescalation in the Syria situation. Third, the rise in advanced
economy long-term interest rates have raised the probability of adverse effects in the U.S. economy
(particularly in housing) and in some major emerging market economies. Fourth, our assessment of the
productivity revisions suggests a lower probability of a sustained period of above-trend productivity
growth. These downside risks are partially offset by a higher probability of a better outlook in some
of the advanced economies and China. Our risk assessment also reflects the constraints that monetary
policy faces under the zero lower bound.

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Key Factors Informing Your Judgments regarding the
Appropriate Path of the Federal Funds Rate
3(c). Please describe the key factors informing your judgments regarding
the appropriate path of the federal funds rate. You may include other
comments on appropriate monetary policy here as well.
Respondent 1: Key factors informing my judgment regarding the appropriate path of monetary
policy are achieving an inflation objective of 2.0 percent and ensuring a sustainable economic recovery
that reduces unemployment. In addition, I have changed my monetary policy assumption to be
consistent with our thresholds and forward guidance. Since this means raising the federal funds rate
later than would be appropriate without such forward guidance, I have also changed my monetary
policy assumption to reflect a faster increase in the federal funds rate. This is necessary in order to
maintain the stability of long-run inflation expectations and to promote sustainable growth.
Respondent 2: In mid-2015 inflation is near target and unemployment hits 6.5% in my projection.
Two rate increases take us to 0.75 by the end of the year.
Respondent 3: I expect the federal funds rate to remain in the 0 to 25 basis point range until
the unemployment rate exceeds 6 1/2 percent, providing that inflation is projected to be close to the
Committee’s 2 percent objective in the medium term and longer-term inflation expectations remain
anchored. Once the fed funds rate lifts from the zero lower bound, I expect the policy rate to follow
a path broadly consistent with an outcomes-based Taylor rule.
Respondent 4: Liftoff of the federal funds rate from the zero-lower-bound occurs once the the
unemployment rate reaches 6 percent. Given the projected modest acceleration in growth and an
accompanying rate of inflation well below target, monetary policy can afford to be patient when
removing accomodation.
Respondent 5: I am assuming we keep the funds rate near zero until we cross the 6.5% unemployment threshold, which in my forecast happens at the end of 2014. Thereafter, we raise it only
gradually, at a rate of 25 basis points every other meeting, or 100 basis points per year, for each of
the next two years. This gradual rate of increase tracks roughly with the prescriptions of the inertial
Taylor (99) rule, but I am thinking of it more as a practical approximation to how we might plausibly
implement a relatively gradual path of increase.
Respondent 6: Output and unemployment gaps are large and persistent, and my outlook for
inflation over the medium term remains below our 2 percent objective. This situation calls for very
accommodative monetary policy. Even with continuing LSAPs, appropriate policy calls for delaying
liftoff from the zero lower bound until the third quarter of 2015, several months after the unemployment
rate falls below 6-1/2 percent in my forecast. My judgment on appropriate policy is informed by
looking at simple rules that adjust for the zero lower bound and by my expectations of, and uncertainty
about, the costs and benefits of continuing unconventional actions.
Respondent 7: I currently anticipate that conditions will warrant raising the federal funds rate
target in the second half of 2015. At that point, the unemployment rate will be below the 6 1/2
percent threshold and nearing my estimate of the natural rate, and inflation will be moving up toward
the 2 percent long-run objective. With the economic recovery well-established, it will be appropriate
to begin the normalization of monetary policy. Consistent with our current guidance, I further believe
it will be appropriate to raise the funds rate gradually throughout 2016.

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Respondent 8: N/A
Respondent 9: I remain skeptical of the value of this exercise. It is our post-liftoff reaction function–
our long-run strategy–as it is understood by the public that chiefly matters for the strength of the
recovery, and this strategy is not well conveyed either by a time-path for the funds rate or by thresholdbased forward guidance.
For purposes of this exercise, I consider the implications of several simple policy rules, placing
greatest weight on the prescriptions of the 1999 Taylor rule with inertia, as that rule seems to perform
reasonably well in a wide range of circumstances. In simulating each rule, I assume that the natural
real rate of interest is temporarily depressed, and I respect the Committee’s public commitment to
delay liftoff until after the unemployment rate reaches 6.5 percent. It is important to the credibility of
the Committee that we try to honor the pledges of previous FOMCs unless the reasons for modifying
them are clear and compelling.
Respondent 10: I believe that by mid-2014 the labor market will have improved to the point where
an increase in the funds rate will be appropriate. Real growth will be near trend and inflation will be
near 2.0 percent. Under these conditions an optimal policy would be to begin raising the funds rate
in order to prevent an unwelcome increase in inflation.
Respondent 11: My path for the federal funds rate, both before and after liftoff from the zero
bound, is importantly shaped by my expectation that the headwinds that have been holding back
recovery for the last several years will continue to exert a restraining, albeit abating, influence on
aggregate demand for many more years to come. For this reason, a highly accommodative policy–that
is, real values of the federal funds rate that are below their historical 2% average–will be necessary for
a long period of time to promote the attainment of full employment and our 2% inflation objective.
In particular, I now anticipate liftoff of the federal funds rate in the second half of 2015 with an
unemployment rate in the neighborhood of around 6%–which is below our threshold. Relative to
policy rules that fit past behavior of the federal funds rate well, our thresholds, and my assumed
path, reflect the need that I see for the federal funds rate to remain lower for longer than would be
historically typical. I envision only a very gradual increase in the federal funds rate after liftoff occurs,
with the funds rate in the vicinity of 1.75% at the end of 2016, even though the economy, at that point,
is nearing maximum employment and inflation is moving back toward the Committee’s 2% objective.
The slow pace of normalization of the funds rate toward its longer-run normal level reflects the fact
that the equilibrium real funds rate in my forecast, similar to Tealbook, is being held down by only
slowly abating headwinds. These include an abnormally low impetus to aggregate demand from fiscal
policy, an unusually large equity premium and credit spreads, and a continued and abnormal shortfall
in the share of GDP devoted to residential investment. In addition, in contrast to Tealbook but in
line with the staff’s 3-factor model, my assumed longer-run value of the federal funds rate is 3.25%.
Respondent 12: Assuming appropriate policy and my views on the convergence process, my judgment is the the lift-off of the federal funds rate should occur in Q3/2014.
Respondent 13: I use the 6.5% unemployment rate as the trigger for liftoff. The economy returns to
steady state by the end of 2015, with inflation returning to 2%, growth at 2.5%, and the unemployment
at rate 6%. My policy path has the fed funds rate gradually rising over the forecast horizon to reach
its long-run level of 4% by the end of 2016.
Respondent 14: In our forecast, the unemployment rate reaches 6-1/2 percent around the middle
of 2015. At that time, the outlook for average inflation over the next one to two years is still below
2 percent. Accordingly, we assume the Committee keeps policy on hold, delaying the first increase

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in the funds rate until late in the year–at which time we think the unemployment rate will be closer
to 6 percent. Our assumption for appropriate policy has rates rising slowly after lift-off, reaching
only 1.5 percent by the end of 2016. We also assume that the Committee will strongly communicate
its patience in removing accommodation. The delay in raising the policy rate upon hitting the 6-1/2
percent unemployment rate threshold and strong communication of accommodative policy should help
support inflation expectations and buoy actual inflation.
In June we assumed the first reduction in the flow of LSAP purchases would occur in September.
We now see it occurring at the October or December meeting, but this does not have a meaningful
impact on our assumptions concerning the total purchases over the course of the program. Our
assumptions concerning the path for the funds rate through 2016 have not changed.
Respondent 15: N/A
Respondent 16: Under appropriate monetary policy, the FOMC should keep the fed funds rate
extraordinarily low at least until the unemployment rate falls below 5.5%, as long as the medium-term
outlook for inflation remains below 2%.
It’s worth noting that, under my benchmark outlook, the FOMC would raise the fed funds rate
considerably in 2017. Growth would be below its long-run average. Unemployment would likely rise
(back to its longer-run level of 5.8%) and inflation would fall (back toward 2%).
Respondent 17: The crucial factors behind our assessment of the appropriate path for monetary
policy and the FFR are the current state of the economy, our central economic outlook, and our
balance of risks around the central outlook. Overall, the indicators over the past year generally still
point to a sluggish expansion. In particular, although the labor market outlook has improved some, our
assessment is that the improvement has not reached the “substantial” standard. Financial conditions
are still not fully normal and remain susceptible to sharp reversals depending upon developments;
since June, these conditions have deteriorated to some degreee on net. Furthermore, we have seen
the “whatever it takes” policy approach of the Federal Reserve and other advanced economy central
banks as an important factor behind the extent of improvement in U.S. and global economic data. In
contrast, recent uncertainties about whether central banks will maintain such accommodative postures
have been a factor that contributed to the increased volatility and pressures in financial markets since
May. As we noted earlier, these developments have contributed to a shift in our risk assessment for
real activity from balanced to a modest downward skew.
In these circumstances and noting that the economic developments since September have been in
rough accord with our September projection (when we had proposed the introduction of an outcomebased purchase program and policy stance), we thus see appropriate monetary policy as remaining
accommodative to strengthen the economic expansion; under such a policy, it will be the economic
outcomes and outlook that will dictate the path of the policy stance. Under our modal outlook, we
still anticipate that the target FFR will remain near zero until the second half of 2015. We expect that
long-term inflation expectations will remain anchored over this period. The pace of renormalization of
the target FFR following the period of near zero policy rates will then depend upon our assessment of
economic conditions, longer-term inflation expectations, and overall financial conditions. At this point,
we expect that the increase in the FFR will be gradual such that it will still be below our estimate
of its longer-run level at the end of 2016, as a commitment to remain “low for long” is important for
providing accommodation at this time when the FFR is constrained by the zero lower bound.
Another factor informing our assessment of the appropriate path for the target FFR is our estimate
of the equilibrium real short-term interest rate. In normal times, we assume that this rate is in the
range of 1% - 3%; adding the objective for inflation (2%) then gives our estimated range for nominal
equilibrium rate as 3.0 - 5.0%. Given the behavior of nominal and real Treasury yields and productivity
growth since the end of the recession, we currently see this rate over the longer run as more likely to

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be in the lower half of the indicated range, which results in the point estimate given in the response
to question 3(a). Moreover, given our assessment of economic and financial conditions, our judgement
of the current “neutral” FFR is below our estimate of the longer-run FFR and is expected to remain
so for some time.
Although we do not expect that additional tools will need to be implemented to provide accommodation in our modal outlook, we believe it is still important for the FOMC to be prepared to employ
all of its tools in case some downside risks to the outlook are realized.

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Appropriate Monetary Policy – Balance Sheet
3(d)&(e). Does your view of the appropriate path of the Federal Reserve’s
balance sheet, other than the projected timing for implementing the
FOMC’s exit strategy, differ materially from that assumed by the staff in
the Tealbook? If yes, please specify in what ways (either qualitatively, or
if you prefer, quantitatively).

September survey
June survey

YES

NO

6
11

11
8

Respondent 1: No
I agree with the Tealbook assumption that asset purchases will be reduced from $85 billion per month
to zero by the middle of 2014. However, I believe that we should begin tapering asset purchases at
this meeting.
Respondent 2: No
N/A
Respondent 3: No
N/A
Respondent 4: Yes
Tapering of monthly purchases occurs only once labor market improvements are driven by sustained
gains in employment. There is currently a lot of uncertainty surrounding the impact of FOMC
announcements on long-term interest movements. With this caveat in mind, the expectation is that
tapering will start in the first half of next year, and that the cumulative asset purchases since the
beginning of 2013 will total $1.4 trillion.
Respondent 5: No
N/A
Respondent 6: No
N/A
Respondent 7: No
Like the Tealbook, I believe the pace of purchases should be slowed this year and ended by the middle
of 2014, bringing the cumulative amount of purchases since September 2012 in the current program
to $1.2 trillion.
Respondent 8: No
N/A

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Respondent 9: Yes
I believe, specifically, that the Committee ought to immediately slow the pace of purchases, and
I expect that economic conditions will warrant ending purchases completely by the end of the first
quarter of 2014. This projected timing produces cumulative purchases below $1.2 trillion. Put another
way, $1.2 trillion in cumulative purchases would be a “material disappointment”.
Respondent 10: Yes
I favor the immediate cessation of long-term asset purchases and reinvestment of funds from maturing
mortgage-backed securities into U.S. Treasury securities.
Respondent 11: Yes
I see the appropriate pace of asset purchases as data dependent so that the total should be linked
to actual economic developments. My forecast for growth this year and next has been revised down
relative to my June projection and the Committee projection articulated by the Chairman. Although
the overall contours of the forecast are similar, I now think it likely that asset purchases will exceed
those in the Tealbook baseline and continue somewhat longer than the middle of 2014, although
total purchases in line with the Tealbook assumption are not ruled out and would remain possible
and appropriate if incoming data provides confirmation of a pickup in the pace of growth, continued
improvement in labor market conditions, and inflation moving back up toward our 2% objective.
Respondent 12: No
N/A
Respondent 13: Yes
I anticipate following the Committee’s June 2011 exit strategy principles, but because my funds rate
path is steeper than in the Tealbook, I anticipate that we would reduce the size of the balance sheet
more quickly than in the Tealbook over the forecast horizon.
Respondent 14: No
N/A
Respondent 15: No
N/A
Respondent 16: Yes
I attribute much of the recent tightening of financial market conditions to the Committee’s communications about its plans to reduce the flow of purchases. The scale of the tightening was much larger
than I anticipated. In this sense, I would say that the tightening should be seen as due to a monetary
policy “error” - a given action/communication has led to larger tightening effects than expected.
In my view, we should acknowledge that the outlook for financial market conditions in September
is worse than we expected at the time of the press conference in June. Given that, we should be
willing to change our policy choices - and, in particular, I would counsel against any reduction in the
flow of purchases before the end of the year.
Respondent 17: No
With the changes in the Tealbook baseline for the balance sheet since June toward the assumptions
we have generally maintained since last September, there is now little substantive difference between
the Tealbook and us. We would note that within our overall strategy for appropriate monetary policy,

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we believe that a collective emphasis on an accommodative stance based on a portfolio of tools would
enhance the efficacy of policy under current circumstances.

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Forecast Narratives
4(a). Please describe the key factors shaping your central economic
outlook and the uncertainty around that outlook.
Respondent 1: Despite the 1-1/2 percentage point of fiscal tightening this year, the economy
continues to grow at a moderate pace of about 2 percent. In the current quarter, growth will likely
slow temporarily from the pace in the second quarter. I then expect growth to pick up to about 2 3/4
percent percent next year and then 3 percent in 2015 and 2016. The pick-up in growth reflects the
diminution of the fiscal drag, an improving labor market, and rising household net worth from both
the stock market and housing. While the housing recovery has slowed somewhat of late, it remains on
track. The rate of auto sales has returned to its level of before the recession. Finally, the ISM indexes
in August point to solid gains in manufacturing and nonmanufacturing activity.
I continue to see sustained improvement in labor market conditions. A broad measure of labor
market conditions (that includes the unemployment rate, labor force participation, other measures of
resource slack, growth in employment and earnings, and survey responses by businesses, consumers,
and economists) shows that conditions have improved since last September and that labor market
momentum remains strong by historical standards.
Turning to inflation, inflation remains below target but appears to have bottomed. And while
wage inflation is below its historical average, it has remained steady or has even picked up, which
would be consistent with inflation having bottomed. Therefore, with an improving labor market and
stronger growth, we should see an increase in inflation over the forecast horizon.
Respondent 2: Moderate growth continues, supported by stronger housing and autos, higher wealth
and stronger household and firm balance sheets. Payroll gains remain stuck in the 180K or so range,
but unemployment has come down more quickly than expected. Confidence is generally higher, but has
slipped a bit recently. Risks to growth are described above, but main difference from June is notable
increase in interest rates, which will slow housing activity at least to some extent. Federal fiscal
policy is both a restraint and a source of risk, state and local fiscal policy is flat to slightly negative.
Accomodative monetary policy can only partially overcome fiscal drag. Conditions in AFEs look a
little better (Europe, Japan, UK), with EMEs expected to get through recent volatility. Inflation
seems well explained by anchored inflation expectations, some wiggles in oil prices, and a flat Phillips
curve.
Respondent 3: The combined influences of ongoing stimulus and a dissipation of recent and longerterm headwinds are expected to allow for a modest acceleration in aggregate spending as we approach
year-end and into 2014. Real GDP growth is expected to follow a path somewhat above real potential
GDP growth over the medium term, gradually closing the current gap with potential GDP and lowering
further the rate of unemployment.
I expect consumer spending to strengthen, as labor markets continue to improve providing greater
support to income growth. Rising home and equity prices further bolster household confidence and
wealth. Stronger export demand will likely lift industrial activity, a process that appears to be already
underway. A stepped-up pace of industrial production and the expectation of stronger economic
activity more generally, combined with solid profitability, liquid corporate balance sheets, and low
interest rates, prompt stronger capital expansion. The adverse influence of the fiscal situation evident
in the first half of the year will lessen. The fiscal position of state and local governments has improved
and will allow for more spending activity from this sector over the forecast period.
As business activity improves and existing slack is reduced, downward pressures of wages and
prices will lessen, allowing the inflation trend to gradually rise to its longer-term objective.
The forces restraining growth could be persistent and a stepped-up pace of growth may not materialize over the near-term or longer. I also see tail risks in conjunction with financial instability,

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potentially associated with deteriorating financial conditions in the emerging-market economies. With
respect to inflation, persistent slack and weak pricing power of firms indicates a risk that we could
continue to miss on our inflation objective to the downside for several more years and erode the anchor
that current inflation expectations provide.
Respondent 4: Since June, medium- and long-term interest rates have increased well above expectations. The unexpected increase in interest rates largely shapes the revision to the current forecast
relative to June. The predicted acceleration in the second half of the year is now forecast to be modest at best, in part owing to a slowdown in the interest-sensitive components of demand. While it is
too early to gauge the ultimate impact of the increase in rates on the economy, there are signs of a
slowdown in residential investment and business spending remains subdued. Consumer confidence is
retracing some of the earlier gains, while high-frequency data are now pointing to modest growth in
consumer spending this quarter. Factors affecting foreign demand are largely offsetting, with better
news from some advanced foreign economies balanced by an appreciation of the real dollar. Improvements in the labor market are uneven, and it is not obvious that labor market conditions will brighten
over the rest of this year if demand remains muted.
The main factors shaping the contours of the forecast have not changed. As the effects of fiscal
policy wane, the pace of activity is expected to accelerate and generate a virtuous cycle in terms
if improved confidence and spending. However, the acceleration is somewhat delayed and weakened
by the recent rise in rates. To counter some of the unexpected rise in rates, tapering is deferred
until the first half of next year, and the current asset purchase program is expected to total $1.4
trillion. Moreover, the liftoff of the federal funds rate from the zero-lower-bound occurs only once the
unemployment rate reaches 6 percent, as the modest projected acceleration in growth in a context
of low inflation allows for additional policy accomodation. With this policy stimulus in place, the
unemployment rate is projected to reach 5.6 percent by the end of 2016. Inflation is expected to
remain below target over the forecast horizon.
Risks to the real outlook remain skewed to the downside, in part reflecting the limited scope for
further policy action. On the fiscal side, protracted negotiations over budget appropriations and the
lifting of the federal debt limit are more than a tail risk. On the inflation side, the risk is that the recent
low readings of core inflation may prove more long-lasting than what we assuming in our forecast.
Respondent 5: My central outlook is based on the premise that fiscal drag will fade over the rest of
this year, so that barring any other important new developments, growth in 2014 and 2015 should be
somewhat stronger than in 2013. In terms of risks, I worry about the increased potential for volatility
in financial markets as we begin to exit from our extraordinarily accomodative policies, and what the
resulting tightening of financial conditions might do to derail the recovery. Also, although it strikes
me as quite improbable, there is perhaps a scenario where the spillovers from this financial-market
volatility to emerging market economies, combined with some of their own structural weaknesses, leads
to a broad and contagious collapse of activity in a subset of the most vulnerable of these economies.
Respondent 6: The economy is still recovering from the severe housing collapse and financial crisis.
Recoveries from these types of episodes are associated with sustained weakness in aggregate demand
through a variety of channels, which policy has only partially offset. The associated headwinds
are easing as housing is strengthening, and consumer balance sheets as well as banking and credit
conditions are improving. Nevertheless, fiscal policy has turned increasingly contractionary this year,
fiscal debates and geopolitical risks raise uncertainty, and the global economy remains weak. In
addition, the jump in bond yields in recent months has passed through into higher mortgage and
corporate lending rates and has significantly tightened financial conditions.
In this environment, I expect the economic recovery will proceed at a moderate pace, which will
allow us to continue making progress on closing output and unemployment gaps over the next few

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years. Even with substantial monetary stimulus, it will take several years of above-trend growth to
return the economy to full employment.
In terms of inflation, significant slack in labor and goods markets and subdued commodity and
import prices should keep inflation below the FOMC’s 2 percent inflation target for the next few
years. Well-anchored inflation expectations and diminishing slack eventually pull inflation back to our
objective.
Respondent 7: I expect the economy to recover at a moderate rate from 2013 through 2016,
reflecting a range of forces. On the negative side, U.S. fiscal policy, geopolitical events, and slowing
growth abroad are weighing on the near-term outlook. But these forces should abate over time,
and growth should pick up as low interest rates and expanding credit availability stimulate interestsensitive sectors, the housing recovery continues in spite of the recent uptick in mortgage rates, business
spending and hiring perk up, and the healing labor market supports stronger consumer spending.
Incoming data related to inflation suggest that the second quarter’s very low inflation readings
were likely a temporary aberration. Year-over-year headline inflation rates have been moving higher
on the back of higher gasoline prices, and third quarter readings look to be in the 2 percent range.
Core CPI inflation tentatively looks to have bottomed out within the last two months and begun to
rebound, and I expect core PCE inflation will soon follow suit. Thus, I am more comfortable with
my previous projection that the combination of well-anchored inflation expectations and an improving
economy will help bring inflation back toward the 2 percent long-run objective over the next few years.
As to uncertainty and risks, the U.S. fiscal outlook remains uncertain, but overall uncertainty is
comparable to historical norms of the last 20 years. While a stronger-than-expected U.S. housing
recovery could provide a lift to growth, confrontations over the debt ceiling and further tightening
of U.S. fiscal policy could weigh on growth. For inflation, I believe the uncertainty surrounding the
forecast is consistent with historical norms and the risks are balanced. As I noted above, a faltering
recovery or more persistence in low recent core inflation readings could keep inflation at lower levels
than I currently anticipate. Alternatively, concerns about the continued expansion of our balance
sheet could eventually cause inflation expectations and, in turn, inflation to rise.
Respondent 8: Economic data since the June meeting have, taken as a whole, been less positive
than I antiipated would be the case and have led me to adjust GDP expectations somewhat down. I
have also adjusted my unemployment numbers slighlty down, on the assumption that some combination of lower than projected labor participation rates and lower productivity increases will continue to
bring reported unemployment down even in the face of lower growth than previously projected. The
fairly modest nature of my adjustments reflects the view that the relatively disappointing data of the
last few months are due in part to the financial tighenening that has been taking place, in part to
some potentially transitory restraining factors, and in part to some noise in the data. The narrative
of gradually diminishing fiscal drag and of substnatial progress on post-crisis balance sheet repair is
still a reasonable one, which would suggest a path only mildly different from that anticipated in June.
Having said that, I now have less assurance around this modal set of expectations. The Teal Book’s
supply side damage alternative scenario looks more plausible, if not yet convincing. As we receive
more data in the coming months, including on productivity change and labor market developments,
we have need to consider more directly whether trend growth is lower than most of us have heretofore
been assuming.
Respondent 9: Sustained low real interest rates, abundant credit, improved household and strong
corporate finances, and pent-up demand for consumer-durable and capital goods provide the basis
for an acceleration in the pace of the recovery. Concerns about European and several major Asian
economies and financial systems linger, but in several instances have begun to abate. Ongoing and

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prospective fiscal restraint, and uncertainty about the costs of healthcare and other regulation, continue to act as a drag on the economy. The housing recovery is proceeding, albeit at a somewhat
slower pace. On balance, confidence in the durability of the recovery has increased.
Inflation appears to have stabilized. If the recovery accelerates, as expected, inflation will likely
return gradually to target or near-target levels.
Respondent 10: Productivity growth has been lower than in past expansions, and the labor force
participation rate is trending down. Therefore unemployment is declining at a rate consistent with
past expansions while output growth remains low.
Respondent 11: I continue to expect a strengthening in the pace of growth as fiscal drag wanes
later this year and continued albeit slow improvement in the labor market. With well-anchored
inflation expectations, I anticipate that inflation will gradually move back toward the Committee’s
longer-run objective over the forecast horizon. Importantly, monetary policy will need to remain
highly accommodative for many years to come in order for the Committee to achieve its dual mandate
objectives in light of the continued headwinds that are holding back aggregate demand and will abate
only slowly. Incoming data, particularly indicators pertaining to consumer and investment spending,
have been weaker than I’d expected and, as a consequence, I’ve reduced my estimate of growth in
the second half growth and in 2014. The marked increase in mortgage rates since May appears to be
having a discernible negative impact on the housing market and the pace of housing price increases;
the stronger dollar diminishes slightly my forecast contribution from net exports. I consider this
deterioration in financial conditions since May to pose significant risks to the outlook. Unemployment
has declined considerably more than I’d anticipated, although with declining labor force participation,
and a significant cyclical participation shortfall, I believe that the overall degree of labor market slack
is understated by the unemployment rate. I have been surprised by the strength in payroll employment
growth during the past year, given the trendlike pace of output growth and I interpret the decline
in the pace of payroll gains in recent months as a potential indication that productivity growth may
finally be moving up to a more normal pace. If so, an improvement in the pace of growth will be
needed to see a sustained improvement in the labor market. I see some of the transitory factors that
held down inflation in the first half of the year as dissipating; that said, inflation is still notably below
the Committee’s 2% objective and I anticipate that it will rise only gradually over time as the economy
recovers.
Respondent 12: I expect real growth to accelerate somewhat in the near term. The outlook
overseas is improving and I expect a reasonable resolution of fiscal issues.
Respondent 13: I expect the economic recovery to continue at a moderate pace in 2013H2, accelerating to 3 percent growth in 2014. The pace of growth then runs at my longer-term trend of
2.5 percent in 2015 and 2016. With a moderate pace of growth over the forecast horizon, the labor
market recovery remains gradual – I expect the unemployment rate to move down to about 6 percent
by the end of 2015, at which time it reaches my estimate of the natural rate of unemployment. I
anticipate that headline inflation will rise to 2 percent in 2014, and remain at that level in 2015 and
2016. Inflation stays anchored around my target of 2 percent 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
unanchored. To ward off these developments, the FOMC will need to commence a steady tightening
of montary policy by ending asset purchases in 2014H1 and then beginning to raise rates in 2014H2.

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Respondent 14: The key factors shaping our forecast are the same as they have been for some time.
Accommodative monetary policy, improved household and business balance sheets, and the diminution
of fiscal restraint should allow domestic demand to gain momentum as we move through the projection
period. Pent-up demands for capital goods and consumer durables should provide further impetus to
growth. Demand from abroad is projected to firm as Europe emerges from recession and emerging
market economies work through recent disruptions. Our forecast also assumes that much of the recent
increase in interest rates reflects a “one-off” adjustment as financial markets came to grips with the
fact that policy will not remain in its current stance forever. Going forward, we assume no further
unusual movements in financial conditions, including when we actually begin to reduce asset purchases
or eventually increase the policy rate.
Together, these factors are assumed to produce above-potential growth in 2014, 2015, and 2016.
Nonetheless, growth is not expected to be strong enough to close resource gaps completely, and we
project that the unemployment rate will still be about 1/2 percentage point above its long-run neutral
level at the end of the projection period. Resource slack thus is expected to exert some downward
influence on inflation through much of the projection period. However, under our view of appropriate
monetary policy, enough accommodation will remain in place (and be expected to remain in place)
to support inflation expectations and produce an updrift in inflation. Nonetheless, we see inflation
remaining a bit below 2 percent even in 2016.
The main sources of uncertainty and risks to our forecast are described in 2(b) above.
Respondent 15: My forecast is that the economy will continue to improve, but at a slower pace
than indicated by the Baseline. There is a significant probability that fiscal headwinds will not abate
until late next year or 2015, even if Congress raises the debt ceiling, funds the government, and declines
to enact further spending restraint. I do not see a compelling narrative for a sharp increase in activity
for the foreseeable future. I see more of the same.
Respondent 16: 1. As noted above: I continue to be concerned about possible declines in inflation
expectations.
2. It is possible that the debates about the budget over the remainder of the year could cause
untoward financial market fluctuations. But I believe that those fluctuations are unlikely to be as
large as in 2011.
3. As in June: the main risk to the outlook is monetary policy itself. We seem to be cautious in
our pursuit of our long-run price stability and employment goals. That caution will leave households
and firms concerned about our ability/willingness to insulate the economy against tail risks, and push
down on current spending.
Respondent 17: Other conditioning assumptions: We expect the lower degree of inflation persistence evident since the early 1990s to continue. Inflation expectations remain well anchored. We
project real foreign GDP growth (GDP weighted) at 2.8% in 2013 and 3.0% in 2014–changes from
June are small. Our assumptions concerning the nominal dollar exchange rate are similar to those in
the Tealbook. Reflecting intermeeting developments, our assumed path of WTI oil prices, based on
recent futures quotes, has moved up to $107.50 (from $94.50 in June) for 2013Q4 and to $94.50 (from
$89.00 in June) for 2014Q4. Our federal fiscal assumptions are similar to those in the Tealbook, with
significant fiscal restraint through the forecast horizon. We adopt the Tealbook assumptions regarding
equity and home prices.
Outlook: Because much of the recent spending and production data have been on the weak side,
we expect U.S. economic growth over the very near term to be subdued; however, we anticipate it to
begin to strengthen later this year and to move to a little over 3% (Q4/Q4) in 2014 and about 3 3/4%
in 2015, notably above our estimate of the potential growth rate. We believe that the private sector
of the economy has made substantial progress in repairing balance sheets and working off excesses.

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Consequently, the economy has been set to move to a higher level of activity, but it has been delayed
by a series of negative shocks; in particular, contractionary federal fiscal policy and slowing global
growth.
Several developments support this view of a pickup in 2014-15. Key measures of household financial
conditions signal that household balances sheets have been largely repaired. The household net worthdisposable income ratio is at its average of the previous decade, reflecting rising equity and home prices
and declining liabilities, and credit standards are beginning to ease somewhat; consequently, we are
now experiencing a fairly typical cyclical recovery of consumer durable goods spending. After five
years in which housing production was well below levels consistent with demographics, it appears that
most of the excess housing supply has been dissipated. In addition, it appears that the downturn in the
Euro Area has ended, and the contraction in state and local government spending is near completion.
Federal fiscal drag is likely to reach its maximum in the second half of 2013 and then begin to subside.
As the economy moves into higher gear, the unemployment rate is projected to fall to between 6
1/4% and 6 1/2% by 2014Q4 and then to 5 1/4% by the end of 2015.
With the gradual reduction of economic slack, a decline of the exchange rate of the dollar, a firming
in global demand, and the upward pull of anchored inflation expectations, inflation as measured by
the PCE deflator is expected to move back up toward the FOMC longer-run objective by early 2015.
Thereafter, with stable inflation expectations and dissipating economic slack (as the unemployment
rate is expected to be near its longer-run value), inflation is expected to be near the FOMC longer-run
objective.
There have been some positive developments consistent with our forecast, including the general
improvement in consumer confidence, the ongoing recovery of motor vehicle sales, improvement in some
indicators of manufacturers’ orders, and more positive news out of the euro area and China. Moreover,
home prices continue to increase and, while off recent highs, equity prices have risen substantially over
the course of this year. Both developments support household net worth which could, in turn, prompt
some decline of the personal saving rate and sustain consumer spending growth.
There has, however, been one significant development generally inconsistent with our forecast–the
steep rise of mortgage interest rates and the leveling off of housing starts. There have been previous
episodes in which long-term interest rates have moved up in anticipation of the beginning of the process
of normalization of monetary policy. We suspect, however, that in the current case the increase has
been greater than that implied by the fundamentals. Our modal forecast presumes that the recovery
of housing starts will resume later in 2013 and continue in 2014, as we expect some of the increase
in long rates to be reversed in the months ahead. Moreover, in an absolute sense, mortgage interest
rates are still quite low by the standards of the past 50 years. However, the possibility that housing
market activity does not recover as envisioned represents a notable downside risk to the forecast.

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Forecast Narratives (continued)
4(b). Please describe the key factors causing your forecast to change since
the previous SEP.
Respondent 1: The general contours of my forecast have not significantly changed since the last
SEP. Given the incoming data, I have slightly reduced my forecast for real growth and inflation in
2013. In addition, I have pushed out the date for raising the federal funds rate to the first half of
2015, in line with our thresholds and forward guidance. I have also increased the trajectory of the
federal funds rate after lift-off. As a result, my outlook for growth in 2014 and 2015 is slightly higher,
and my outlook for unemployment in 2014 and 2015 is slightly lower.
Respondent 2: Main difference is change in financial conditions–higher interest rates for mortgages,
corporate bonds, etc. Housing will be affected, at least to some degree. The stimulative effects of
stock price gains probably do not fully offset higher yields. Incoming data do not show much evidence
of pickup in growth (although more rapid declines in unemployment than expected) which led me to
mark down growth going forward. Although the effect on my forecast is marginal, AFEs have done
better and EMEs worse than expected since June.
Respondent 3: The incoming data have caused me to lower my 2013 growth projection by about
a 1/4 percentage point. Otherwise, my forecast remains largely unchanged from what I submitted in
June.
Respondent 4: The current forecast calls for slower growth as a result of higher-than-expected
long-term interest rates. With a weaker real economy, the projected path for inflation is also lower.
Respondent 5: The most important change in my forecast in this round is that, while maintaining
the same broad path of the unemployment rate, I have marked down GDP growth in 2014 and 2015
significantly, by about a half-percentage point in each year. In other words, I have begun to treat
the productivity slowdown that we have been persistently seeing over the last few years as having
something of a more permanent component.
Respondent 6: Since June, the data on spending have, on balance, been a little weaker than I
expected and financial conditions have tightened further. These factors suggest a little less momentum
to the recovery in output growth but do not substantially change the contours of the recovery. The
unemployment rate has come in lower than I had anticipated, leading me to lower its projected path a
touch. Incoming data have also led me to revise up slightly my near-term inflation forecast, especially
for headline inflation, but led to minimal revisions further out.
The benchmark NIPA revisions showed higher historical output growth. The revisions imply faster
historical growth in potential output, leaving the current output gap little affected. The revisions also
led me to revise up my long-run projections for GDP growth and the equilibrium funds rate by about
1/10th.
Respondent 7: Overall, my forecasts are little changed since the June SEP. GDP continues to grow
at a moderate pace, notwithstanding some changes in the quarterly pattern of growth, and I continue
to expect that the pace of growth will increase going forward. The declines in the unemployment
rate have been slightly faster than anticipated, precipitating another modest downward revision to
my unemployment forecast. Past data revisions and recent gasoline price movements have caused me
to nudge up my inflation outlook for 2013, but they have not had a meaningful impact on the outlook

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going forward: I continue to anticipate that an improving economy will help pull inflation toward our
2 percent long-run objective over the next few years.
Respondent 8: Not much change, for reasons explaind in 4(a).
Respondent 9: Real growth has been slightly weaker than I had anticipated, and I carry some of
that weakness forward through the end of the year. Apart from that, the economy has performed very
much as expected, and my forecast revisions are, accordingly, small.
Respondent 10: My forecast has not changed materially.
Respondent 11: I’ve lowered my forecasts for growth in 2013 and 2014 in response to weaker than
anticipated incoming data. My unemployment projection is marginally lower at the end of 2013,
reflecting a larger than anticipated decline since June, but is little changed at the end of the forecast
period. My forecast for core inflation is essentially unchanged.
Respondent 12: Recent data on real GDP growth has caused me to reduce my growth estimates
for 2013 and 2014.
Respondent 13: The weaker tone of incoming data led me to revise down slightly my forecast for
output growth and inflation in 2013.
I’ve taken on board the 6.5% unemployment rate as the trigger for liftoff of the fed funds rate.
Respondent 14: Growth in the first half of 2013 was a tad softer than we anticipated in the
June SEP. Moreover, the composition of growth – notably, softer consumer spending on nondurables
and services and greater inventory investment – points to less momentum in activity going forward.
Financial conditions have become less accommodative than we assumed in June. The news from
labor markets has been mixed. The drag from the sequester may not be as great as we had feared
and growth in Europe finally seems to be moving up. The revisions to the NIPA caused us to revise
up our assumptions concerning potential output growth over history a bit, but we made no material
changes our projections for potential going forward.
As a result of the changes, we have revised down our projection for growth a little more than 1/4
percentage point per year over the projection period. However, our projection for the unemployment
rate at the end of 2015 is up only a touch, largely due to the bigger-than-anticipated drop in the rate
so far this year. Our projection for inflation through 2015 is not materially different from the June
SEP.
Respondent 15: N/A
Respondent 16: There has been little change in my forecast, except that I have lowered my estimate
of the long-run unemployment rate consistent with 2% inflation.
Respondent 17: The data released since the June SEP have given mixed signals about economic
conditions. Consequently, the changes to our medium term forecast have been relatively modest on
net.
Over the near term, the data have suggested that the economy had less momentum going into
the second half of the year, and we have lowered our real growth forecast for 2013H2. A number
of data releases and financial developments have contributed to that. Overall, consumer spending
indicators suggest that real PCE growth over the near term will be somewhat lower than we expected in

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June. Equipment investment indicators, particularly shipments of nondefense capital goods excluding
aircraft, were weaker than anticipated in June and July, leading us to reduce projections for equipment
investment over the near term.
Because the rise in housing starts stalled starting in 2013Q2 and mortgage rates have risen substantially since May, we have lowered our residential investment projections for 2013Q4 and 2014Q1
modestly (because of the lag between housing starts and residential investment, our 2013Q3 projection
is slightly higher). We also have lowered our profile for housing starts and residential investment over
the rest of the forecast horizon.
The inflation data since June have been a bit higher than we anticipated in June, and we have
raised our near-term inflation forecasts modestly. Because we see the rise as a slightly more rapid
unwinding of temporary factors, we have not made significant changes to our medium-term inflation
forecasts.
As we noted in our answer to question 2(b), our assessment of the balance of risks to the real
GDP growth outlook has shifted to the downside because of a higher probability of a fiscal stalemate,
increased geopolitical risks, higher long-term interest rates, and continued weak productivity growth.

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Forecast Narratives (continued)
4(c). Please describe any important differences between your current
economic forecast and the Tealbook.
Respondent 1: I see weaker economic growth over the forecast horizon (but still above trend).
Correspondingly, I see a slightly higher unemployment rate. I also expect that inflation will rise more
quickly than Tealbook and will average 2 percent in 2015 and 2016.
Respondent 2: I’m a bit more pessimistic. I still have a pickup in growth over the next few years,
but I have marked it down a bit, correcting for earlier over-optimism. I think that inflation will move
toward 2 percent a bit more quickly than the TB does, reflecting anchored inflation expectations and
perhaps some “speed limit” effects. My NAIRU is a bit higher than TB.
Respondent 3: My growth projection tracks 1/4 to 1/2 percentage point under the Tealbook over
the forecast horizon. This is a difference in perception about the pace of growth for potential GDP,
not an important disagreement about the cyclical dynamics of the recovery. My inflation forecast
runs about 1/2 percentage point above the Tealbook. My forecast for the rate of unemployment is
essentially the same as the Tealbook.
Respondent 4: Despite being conditioned on greater monetary policy stimulus, my outlook for the
real economy is somewhat more pessimistic than the Tealbook’s.
Respondent 5: I am quite close to the Tealbook on the path of the unemployment rate, but
somewhat more pessimistic on GDP growth, and hence implicitly on productivity growth.
Respondent 6: My forecast is broadly similar to the Tealbook projection.
Respondent 7: My forecast is broadly similar to the Tealbook. I expect that GDP growth will
pick up over the course of this year and proceed at above-trend rates from 2014 through 2016, which
will bring the unemployment rate down to a level near its natural rate in 2016 and pull inflation up
toward our 2 percent long-term objective.
Respondent 8: N/A
Respondent 9: With long-run inflation expectations anchored and an anticipated pick up in real
growth, I see a somewhat faster rise in inflation than is called for in the Tealbook. The faster rise in
inflation combines with an assumed normalization of the natural real interest rate (due to balance-sheet
repair, greater confidence in growth prospects, and the lifting of fiscal and regulatory uncertainties),
to produce a more rapid increase in the funds rate than is assumed in the Tealbook baseline forecast.
Respondent 10: With sluggish growth in disposable income, I do not believe that consumer spending is poised to accelerate significantly. Nor do I expect productivity growth to pick up. As a result
I expect GDP growth to remain around 2 percent. I also expect labor force participation to decline
more rapidly than in the Tealbook, and thus unemployment will decline more rapidly than might be
suggested by my GDP forecast.
Respondent 11: N/A

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Respondent 12: While my forecast of real GDP growth in the long run matches the one in the
Tealbook, my long run forecast for unemployment is higher than the one in the Tealbook (6% vs.
5.2%). My view on the amount of slack in the economy produces differences in some of my forecasts
relative to the Tealbook. My forecast of real GDP in 2015 and 2016 is less than the ones in the
Tealbook. I also see the appropriate path for the federal funds rate target increasing at a faster pace
than the one in the Tealbook. Finally, I anticipate a slight, temporary overshooting of inflation that
is not present in the Tealbook forecast.
Respondent 13: My forecast calls for higher inflation and tighter monetary policy over the forecast
horizon than the Tealbook.
Respondent 14: Our top-line GDP forecast is similar to the Tealbook’s through 2015, but our
composition contains less household sector spending. We also assume a somewhat faster pace of
potential output growth than the Tealbook ; his accounts for our higher growth projection in 2016.
Given these paths for GDP growth and potential, our forecast contains a bit larger output and
unemployment gaps at the end of the projection period than the Tealbook. Our inflation forecasts
are similar. This largely reflects our assumptions for monetary policy, which incorporate a somewhat
lower path for the federal funds rate than assumed in the Tealbook.
Respondent 15: Under my forecast, GDP growth is 2.0% in 2013, 2.6% in 2014, and 3.1% in 2015.
I do not see a strong basis for expecting a faster return to stronger growth. I expect that we will
continue to see significant reductions in unemployment, in part due to declining participation.
Respondent 16: I see appropriate monetary policy as being more accommodative than the TB’s
assumed policy stance. As a result, I’m forecasting that the unemployment rate will fall more rapidly
than does the TB and the inflation rate will rise more rapidly (and to higher levels).
Respondent 17: Our forecast for real GDP growth in 2014-15 is similar to that of the Tealbook,
but the composition of growth differs between the two forecasts. The Tealbook projects higher consumption growth than in our forecast; the difference appears to reflect a stronger wealth effect than
we have in our forecast. With higher consumption growth from wealth effects, the Tealbook also
projects the saving rate to decline further, while our forecast has the saving rate roughly flat over
the forecast horizon. The Tealbook projects slower growth in business fixed investment than in our
forecast; the reason for this difference appears to be that the Tealbook has a more moderate pace of
business output growth than we have in our forecast.
The projected path of the unemployment rate in the Tealbook is somewhat above our forecast,
with the unemployment rate in the Tealbook approaching the assumed natural rate by the end of
2016, one year later than in our projection. The Tealbook also sees the labor force participation rate
declining modestly over the forecast horizon, whereas we anticipate a small increase. In part, these
differences seem to reflect somewhat differing assessments of the labor market flows and dynamics
that would be typical for this stage of an expansion.
We see a stronger influence of anchored inflation expectations on inflation dynamics than does the
Tealbook. Consequently, our inflation forecast and the Tealbook forecast are similar for 2013, but
beyond that we see total and core inflation rising more quickly to near 2% than does the Tealbook.
The risk assessments in the Tealbook and in our projection are now similar. However, we continue
to see uncertainty around both the real activity and inflation forecasts as still higher than normal
whereas the Tealbook sees uncertainty at near normal levels. This assessment reflects our view that
the unusual nature of the current expansion as well as a policy environment that is constrained by
the effective lower bound leaves uncertainty about both real activity and inflation above normal levels
(even the more elevated normal levels now associated with the 20-year window of forecast errors). The

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volatility in global financial markets since early May seems consistent to us with large uncertainty
about the economic outlook.

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Figure 3.A. Distribution of participants’ projections for the change in real GDP, 2013–16 and over the longer run

Number of participants

September
Tealbook

2013

September projections
June projections

June
Tealbook

1.8 1.9

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

20
18
16
14
12
10
8
6
4
2

3.8 3.9

Percent range
Number of participants

September
Tealbook

2014

1.8 1.9

2.0 2.1

2.2 2.3

2.4 2.5

2.6 2.7

2.8 2.9

3.0 3.1

20
18
16
14
12
10
8
6
4
2

June
Tealbook

3.2 3.3

3.4 3.5

3.6 3.7

3.8 3.9

Percent range
Number of participants

20
18
16
14
12
10
8
6
4
2

September
Tealbook

2015

June
Tealbook

1.8 1.9

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

Percent range
Number of participants

1.8 1.9

20
18
16
14
12
10
8
6
4
2

September
Tealbook

2016

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

Percent range
Number of participants

20
18
16
14
12
10
8
6
4
2

Longer run

1.8 1.9

2.0 2.1

2.2 2.3

2.4 2.5

2.6 2.7

2.8 2.9

3.0 3.1

Percent range

Note: Definitions of variables are in the general note to table 1.

Authorized for Public Release

3DJHRI

3.2 3.3

3.4 3.5

3.6 3.7

3.8 3.9

SEP: Compilation and Summary of Individual Economic Projections

September 17–18, 2013

Figure 3.B. Distribution of participants’ projections for the unemployment rate, 2013–16 and over the longer run

Number of participants

September and June
Tealbook

2013
September projections
June projections

5.0 5.1

5.2 5.3

5.4 5.5

5.6 5.7

5.8 5.9

6.0 6.1

6.2 6.3

6.4 6.5

6.6 6.7

6.8 6.9

7.0 7.1

7.2 7.3

20
18
16
14
12
10
8
6
4
2

7.4 7.5

Percent range
Number of participants

20
18
16
14
12
10
8
6
4
2

September and June
Tealbook

2014

5.0 5.1

5.2 5.3

5.4 5.5

5.6 5.7

5.8 5.9

6.0 6.1

6.2 6.3

6.4 6.5

6.6 6.7

6.8 6.9

7.0 7.1

7.2 7.3

7.4 7.5

Percent range
Number of participants

20
18
16
14
12
10
8
6
4
2

September and June
Tealbook

2015

5.0 5.1

5.2 5.3

5.4 5.5

5.6 5.7

5.8 5.9

6.0 6.1

6.2 6.3

6.4 6.5

6.6 6.7

6.8 6.9

7.0 7.1

7.2 7.3

7.4 7.5

Percent range
Number of participants

2016

20
18
16
14
12
10
8
6
4
2

September
Tealbook

5.0 5.1

5.2 5.3

5.4 5.5

5.6 5.7

5.8 5.9

6.0 6.1

6.2 6.3

6.4 6.5

6.6 6.7

6.8 6.9

7.0 7.1

7.2 7.3

7.4 7.5

Percent range
Number of participants

20
18
16
14
12
10
8
6
4
2

Longer run

5.0 5.1

5.2 5.3

5.4 5.5

5.6 5.7

5.8 5.9

6.0 6.1

6.2 6.3

6.4 6.5

Percent range

Note: Definitions of variables are in the general note to table 1.

Authorized for Public Release

3DJHRI

6.6 6.7

6.8 6.9

7.0 7.1

7.2 7.3

7.4 7.5

SEP: Compilation and Summary of Individual Economic Projections

September 17–18, 2013

Figure 3.C. Distribution of participants’ projections for PCE inflation, 2013–16 and over the longer run

Number of participants

2013
June
Tealbook

0.7 0.8

0.9 1.0

September
Tealbook

1.1 1.2

September projections
June projections

1.3 1.4

1.5 1.6

1.7 1.8

1.9 2.0

2.1 2.2

20
18
16
14
12
10
8
6
4
2

2.3 2.4

Percent range
Number of participants

2014

0.7 0.8

0.9 1.0

September
Tealbook

June
Tealbook

1.1 1.2

1.3 1.4

20
18
16
14
12
10
8
6
4
2
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

2015

0.7 0.8

0.9 1.0

1.1 1.2

September
Tealbook

June
Tealbook

1.3 1.4

1.5 1.6

20
18
16
14
12
10
8
6
4
2
1.7 1.8

1.9 2.0

2.1 2.2

2.3 2.4

Percent range
Number of participants

20
18
16
14
12
10
8
6
4
2

September
Tealbook

2016

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

20
18
16
14
12
10
8
6
4
2

Longer run

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

3DJHRI

1.9 2.0

2.1 2.2

2.3 2.4

SEP: Compilation and Summary of Individual Economic Projections

September 17–18, 2013

Figure 3.D. Distribution of participants’ projections for core PCE inflation, 2013–16

Number of participants

2013
September projections
June projections

September and June
Tealbook

1.1 1.2

1.3 1.4

1.5 1.6

1.7 1.8

1.9 2.0

2.1 2.2

20
18
16
14
12
10
8
6
4
2

2.3 2.4

Percent range
Number of participants

2014

September and June
Tealbook

1.1 1.2

1.3 1.4

1.5 1.6

20
18
16
14
12
10
8
6
4
2
1.7 1.8

1.9 2.0

2.1 2.2

2.3 2.4

Percent range
Number of participants

2015

1.1 1.2

1.3 1.4

September
Tealbook

June
Tealbook

1.5 1.6

1.7 1.8

20
18
16
14
12
10
8
6
4
2
1.9 2.0

2.1 2.2

2.3 2.4

Percent range
Number of participants

2016

September
Tealbook

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

3DJHRI

20
18
16
14
12
10
8
6
4
2
1.9 2.0

2.1 2.2

2.3 2.4

SEP: Compilation and Summary of Individual Economic Projections

September 17–18, 2013

Figure 3.E. Distribution of participants’ projections for the target federal funds rate, 2013–16 and over the longer run

Number of participants

2013

September and June
Tealbook

0.00 0.37

0.38 0.62

0.63 0.87

September projections
June projections

0.88 1.12

1.13 1.37

1.38 1.62

1.63 1.87

1.88 2.12

2.13 2.37

2.38 2.62

2.63 2.87

2.88 3.12

3.13 3.37

3.38 3.62

3.63 3.87

3.88 4.12

4.13 4.37

20
18
16
14
12
10
8
6
4
2

4.38 4.62

Percent range
Number of participants

2014
September and June
Tealbook

0.00 0.37

0.38 0.62

0.63 0.87

20
18
16
14
12
10
8
6
4
2

0.88 1.12

1.13 1.37

1.38 1.62

1.63 1.87

1.88 2.12

2.13 2.37

2.38 2.62

2.63 2.87

2.88 3.12

3.13 3.37

3.38 3.62

3.63 3.87

3.88 4.12

4.13 4.37

4.38 4.62

Percent range
Number of participants

2015

September
Tealbook
20
18
16
14
12
10
8
6
4
2

June
Tealbook

0.00 0.37

0.38 0.62

0.63 0.87

0.88 1.12

1.13 1.37

1.38 1.62

1.63 1.87

1.88 2.12

2.13 2.37

2.38 2.62

2.63 2.87

2.88 3.12

3.13 3.37

3.38 3.62

3.63 3.87

3.88 4.12

4.13 4.37

4.38 4.62

Percent range
Number of participants

2016

September
Tealbook
20
18
16
14
12
10
8
6
4
2

0.00 0.37

0.38 0.62

0.63 0.87

0.88 1.12

1.13 1.37

1.38 1.62

1.63 1.87

1.88 2.12

2.13 2.37

2.38 2.62

2.63 2.87

2.88 3.12

3.13 3.37

3.38 3.62

3.63 3.87

3.88 4.12

4.13 4.37

4.38 4.62

Percent range
Number of participants

Longer run
20
18
16
14
12
10
8
6
4
2

0.00 0.37

0.38 0.62

0.63 0.87

0.88 1.12

1.13 1.37

1.38 1.62

1.63 1.87

1.88 2.12

2.13 2.37

2.38 2.62

2.63 2.87

2.88 3.12

3.13 3.37

3.38 3.62

3.63 3.87

3.88 4.12

4.13 4.37

4.38 4.62

Percent range
Note: The target federal funds rate is measured as the level of the target rate at the end of the calendar year or
in the longer run.

Authorized for Public Release

3DJHRI

SEP: Compilation and Summary of Individual Economic Projections

September 17–18, 2013

Figure 4. Uncertainty and risks in economic projections

Number of participants

Uncertainty about GDP growth

20
18
16
14
12
10
8
6
4
2

September projections
June projections

Lower

Broadly
similar

Number of participants

Risks to GDP growth

Higher

Weighted to
downside

Broadly
balanced

Number of participants

Uncertainty about the unemployment rate

Lower

Broadly
similar

20
18
16
14
12
10
8
6
4
2

Risks to the unemployment rate

Weighted to
downside

Broadly
balanced

Number of participants

Lower

Broadly
similar

20
18
16
14
12
10
8
6
4
2

Broadly
balanced

Number of participants

Lower

Broadly
similar

20
18
16
14
12
10
8
6
4
2

Weighted to
upside
Number of participants

Risks to core PCE inflation

Higher

Weighted to
downside

Note: Definitions of variables are in the general note to table 1.

Authorized for Public Release

Weighted to
upside

Risks to PCE inflation

Weighted to
downside

20
18
16
14
12
10
8
6
4
2

20
18
16
14
12
10
8
6
4
2

Number of participants

Higher

Uncertainty about core PCE inflation

Weighted to
upside
Number of participants

Higher

Uncertainty about PCE inflation

20
18
16
14
12
10
8
6
4
2

September projections
June projections

3DJHRI

Broadly
balanced

20
18
16
14
12
10
8
6
4
2

Weighted to
upside

SEP: Compilation and Summary of Individual Economic Projections

September 17–18, 2013

Figure 5. Scatterplots of projections in the initial year of policy firming (in percent)

Unemployment
rate

PCE
inflation
2.5

7.0

6.5
2.0

6.0

1.5
5.5

5.0

2.0

2.5
3.0
3.5
Change in real GDP

4.0

1.0

2.0

2.5
3.0
3.5
Change in real GDP

4.0

PCE
inflation
2.5

2.0

Year of Firming
2014
2015
2016

1.5

1.0

5.0

5.5
6.0
6.5
Unemployment rate

7.0

Note: When the projections of two or more participants are identical, larger markers, which represent one participant each, are used so that each projection can be seen.

Authorized for Public Release

3DJHRI