Professional Documents
Culture Documents
1Berkshire
Economic Outlook Luncheon
Dalton, Massachusetts
bostonfed.org
Recent Monetary Policy Actions
2
Outlook – Continued Robust Growth
3
Clear Risks to the Forecast
4
How Should Policy Respond to Strong
Base Forecast But Rising Risks?
▶ Closely monitoring
▶ My view of most likely outcome – a labor
market that continues to tighten risking
economic imbalances
▶ Gradual monetary tightening balances risk to
avoid a more forceful response
▶ Assuming risks do not materialize – gradually
raise rates until monetary policy is mildly
restrictive
5
Figure 1: Initial Claims for Unemployment Insurance
January 25, 1967 - October 13, 2018
Thousands
700
600
500
400
300
200
100
0
28-Jan-67 29-Jul-78 27-Jan-90 28-Jul-01 26-Jan-13
Recession
Percent
2.6
2.2
1.8
1.4
1.0
Jan-2003 Jan-2006 Jan-2009 Jan-2012 Jan-2015 Jan-2018
Recession
Note: The quits rate is the number of quits during the entire month as a percent of total employment.
Pictured above is the three-month moving average.
Source: BLS, NBER, Haver Analytics
7
Figure 3: Job Openings Rate
January 2003 - August 2018
Percent
5
1
Jan-2003 Jan-2006 Jan-2009 Jan-2012 Jan-2015 Jan-2018
Recession
Note: The job openings rate is the number of job openings on the last business day of the month as a
percent of total employment plus job openings. Pictured above is the three-month moving average.
Source: BLS, NBER, Haver Analytics
8
Figure 4: Unemployment Rate: Actual and Forecast
Actual, 2003:Q1 - 2018:Q3 and Forecast, 2018:Q4 - 2019:Q4
Percent
12
10
2
Actual
Blue Chip Consensus Forecast
0
2003:Q1 2006:Q1 2009:Q1 2012:Q1 2015:Q1 2018:Q1
Recession
0
Jan-2003 Jan-2006 Jan-2009 Jan-2012 Jan-2015 Jan-2018
Recession
-1
Forecasts are represented by diamonds.
-2
2003:Q1 2006:Q1 2009:Q1 2012:Q1 2015:Q1 2018:Q1
Recession
PCE - Goods
4 PCE - Services
-2
-4
-6
2003:Q1 2006:Q1 2009:Q1 2012:Q1 2015:Q1 2018:Q1
Recession
13
Figure 8: Real GDP Growth: Actual and Forecast
Actual, 2003:Q1 - 2018:Q2 and Forecast, 2018:3 - 2019:Q4
-5
-10
2003:Q1 2006:Q1 2009:Q1 2012:Q1 2015:Q1 2018:Q1
Recession
-2
-4
2003:Q1 2006:Q1 2009:Q1 2012:Q1 2015:Q1 2018:Q1
Recession
Percent
16
14
12
10
6
2003:Q1 2006:Q1 2009:Q1 2012:Q1 2015:Q1 2018:Q1
Recession
17
Figure 11: Trade-Weighted Value of the U.S. Dollar
January 2013 - September 2018
120
100
80
Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-2017 Jan-2018
0
02-Jan-2015 01-Jan-2016 30-Dec-2016 29-Dec-2017
Weekly
90
60
30
0
Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-2017 Jan-2018
2.0
1.5
1.0
0.5
0.0
Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-2017 Jan-2018
Percent
4
1
Central Tendency
Median Federal Funds Rate Projection
0
Year-end 2018 Year-end 2019 Year-end 2020 Year-end 2021
Note: The central tendency excludes the three highest and three lowest observations.
Source: FOMC, Summary of Economic Projections (SEP), September 26, 2018
22
Concluding Observations
23