Board of Governors of the Federal Reserve System

Figure 1. U.S. Inflation and Unemployment Rate Gaps

Percent

Period	Inflation Gap (Core PCE Inflation Relative to 2%)	Unemployment Rate Gap (Relative to CBO Natural Rate)
January 1960	0.03	-0.3
February 1960	0.14	-0.7
March 1960	0.05	-0.1
April 1960	-0.01	-0.3
May 1960	0.04	-0.4
June 1960	-0.18	-0.1
July 1960	-0.24	0.0
August 1960	-0.25	0.1
September 1960	-0.43	0.0
October 1960	-0.54	0.6
November 1960	-0.46	0.6
December 1960	-0.65	1.1
January 1961	-0.66	1.1
February 1961	-0.74	1.4
March 1961	-0.72	1.4
April 1961	-0.76	1.5
May 1961	-0.80	1.6
June 1961	-0.71	1.4
July 1961	-0.73	1.5
August 1961	-0.77	1.1
September 1961	-0.65	1.2
October 1961	-0.68	1.0
November 1961	-0.93	0.6
December 1961	-0.81	0.5
January 1962	-0.70	0.3
February 1962	-0.64	0.0
March 1962	-0.44	0.1
April 1962	-0.56	0.1
May 1962	-0.55	0.0
June 1962	-0.52	0.0
July 1962	-0.60	-0.1
August 1962	-0.70	0.2
September 1962	-0.71	0.1
October 1962	-0.76	-0.1
November 1962	-0.70	0.2
December 1962	-0.77	0.0
January 1963	-0.69	0.2
February 1963	-0.75	0.4
March 1963	-0.94	0.2
April 1963	-0.83	0.2
May 1963	-0.80	0.4
June 1963	-0.82	0.1
July 1963	-0.81	0.0
August 1963	-0.73	-0.2
September 1963	-0.74	-0.1
October 1963	-0.50	-0.1
November 1963	-0.48	0.1
December 1963	-0.36	-0.1
January 1964	-0.41	0.0
February 1964	-0.32	-0.2
March 1964	-0.27	-0.2
April 1964	-0.30	-0.3
May 1964	-0.38	-0.5
June 1964	-0.47	-0.4
July 1964	-0.46	-0.7
August 1964	-0.41	-0.6
September 1964	-0.55	-0.5
October 1964	-0.73	-0.5
November 1964	-0.68	-0.8
December 1964	-0.68	-0.6
January 1965	-0.69	-0.7
February 1965	-0.77	-0.5
March 1965	-0.81	-0.9
April 1965	-0.79	-0.9
May 1965	-0.69	-1.1
June 1965	-0.80	-1.1
July 1965	-0.80	-1.3
August 1965	-0.75	-1.3
September 1965	-0.68	-1.4
October 1965	-0.76	-1.5
November 1965	-0.71	-1.6
December 1965	-0.55	-1.7
January 1966	-0.65	-1.7
February 1966	-0.52	-1.9
March 1966	-0.44	-1.9
April 1966	-0.20	-2.0
May 1966	-0.11	-1.9
June 1966	0.25	-2.0
July 1966	0.45	-2.0
August 1966	0.45	-2.0
September 1966	0.64	-2.1
October 1966	1.02	-2.1
November 1966	1.09	-2.2
December 1966	1.08	-2.0
January 1967	1.15	-1.9
February 1967	1.08	-2.0
March 1967	1.10	-2.0
April 1967	1.01	-2.0
May 1967	0.97	-2.0
June 1967	0.89	-1.9
July 1967	0.94	-2.0
August 1967	1.06	-2.0
September 1967	1.10	-2.0
October 1967	1.14	-1.8
November 1967	1.20	-1.9
December 1967	1.14	-2.0
January 1968	1.49	-2.1
February 1968	1.75	-2.0
March 1968	2.00	-2.1
April 1968	2.10	-2.3
May 1968	2.27	-2.3
June 1968	2.41	-2.1
July 1968	2.40	-2.1
August 1968	2.49	-2.3
September 1968	2.54	-2.4
October 1968	2.59	-2.4
November 1968	2.65	-2.4
December 1968	2.72	-2.4
January 1969	2.67	-2.4
February 1969	2.58	-2.4
March 1969	2.66	-2.4
April 1969	2.68	-2.4
May 1969	2.70	-2.4
June 1969	2.66	-2.3
July 1969	2.79	-2.4
August 1969	2.69	-2.4
September 1969	2.69	-2.2
October 1969	2.71	-2.2
November 1969	2.72	-2.4
December 1969	2.78	-2.4
January 1970	2.72	-2.0
February 1970	2.76	-1.7
March 1970	2.66	-1.5
April 1970	2.67	-1.3
May 1970	2.62	-1.1
June 1970	2.63	-1.0
July 1970	2.54	-0.9
August 1970	2.61	-0.8
September 1970	2.62	-0.5
October 1970	2.69	-0.4
November 1970	2.83	0.0
December 1970	2.96	0.2
January 1971	3.02	0.0
February 1971	3.03	0.0
March 1971	2.97	0.1
April 1971	2.95	0.0
May 1971	3.04	0.0
June 1971	3.07	0.0
July 1971	3.08	0.1
August 1971	2.86	0.2
September 1971	2.59	0.1
October 1971	2.25	-0.2
November 1971	1.95	0.0
December 1971	1.75	0.0
January 1972	1.79	-0.2
February 1972	1.68	-0.3
March 1972	1.55	-0.2
April 1972	1.40	-0.3
May 1972	1.19	-0.3
June 1972	1.00	-0.3
July 1972	0.90	-0.4
August 1972	0.96	-0.4
September 1972	1.14	-0.5
October 1972	1.04	-0.5
November 1972	1.08	-0.8
December 1972	1.07	-0.9
January 1973	0.69	-1.2
February 1973	0.73	-1.1
March 1973	0.95	-1.2
April 1973	1.31	-1.1
May 1973	1.47	-1.2
June 1973	1.71	-1.2
July 1973	1.85	-1.3
August 1973	2.12	-1.3
September 1973	2.29	-1.3
October 1973	2.63	-1.5
November 1973	2.86	-1.3
December 1973	3.13	-1.2
January 1974	3.58	-1.1
February 1974	3.92	-1.0
March 1974	4.31	-1.1
April 1974	4.48	-1.1
May 1974	5.09	-1.1
June 1974	5.73	-0.8
July 1974	6.22	-0.7
August 1974	6.76	-0.7
September 1974	7.18	-0.3
October 1974	7.61	-0.2
November 1974	7.89	0.4
December 1974	8.06	1.0
January 1975	8.16	1.9
February 1975	8.23	1.9
March 1975	7.96	2.4
April 1975	7.67	2.6
May 1975	7.09	2.8
June 1975	6.51	2.6
July 1975	6.22	2.4
August 1975	5.56	2.2
September 1975	5.18	2.2
October 1975	4.88	2.2
November 1975	4.80	2.1
December 1975	4.69	2.0
January 1976	4.62	1.7
February 1976	4.29	1.5
March 1976	4.08	1.4
April 1976	3.98	1.5
May 1976	4.03	1.2
June 1976	3.93	1.4
July 1976	3.86	1.6
August 1976	4.10	1.6
September 1976	4.15	1.4
October 1976	4.14	1.5
November 1976	3.92	1.6
December 1976	3.85	1.6
January 1977	3.94	1.3
February 1977	4.16	1.4
March 1977	4.26	1.2
April 1977	4.37	1.0
May 1977	4.42	0.8
June 1977	4.62	1.0
July 1977	4.70	0.7
August 1977	4.61	0.8
September 1977	4.44	0.6
October 1977	4.44	0.6
November 1977	4.52	0.6
December 1977	4.50	0.2
January 1978	4.52	0.1
February 1978	4.28	0.0
March 1978	4.42	0.0
April 1978	4.58	-0.2
May 1978	4.66	-0.3
June 1978	4.63	-0.4
July 1978	4.59	-0.1
August 1978	4.64	-0.4
September 1978	4.80	-0.3
October 1978	5.06	-0.5
November 1978	5.08	-0.4
December 1978	4.93	-0.3
January 1979	4.82	-0.4
February 1979	4.74	-0.4
March 1979	4.77	-0.5
April 1979	5.05	-0.5
May 1979	5.35	-0.7
June 1979	5.34	-0.6
July 1979	5.25	-0.6
August 1979	5.38	-0.3
September 1979	5.49	-0.4
October 1979	5.48	-0.2
November 1979	5.59	-0.3
December 1979	5.94	-0.2
January 1980	6.21	0.1
February 1980	6.93	0.1
March 1980	7.31	0.1
April 1980	6.87	0.7
May 1980	6.80	1.3
June 1980	6.92	1.4
July 1980	7.13	1.6
August 1980	7.20	1.5
September 1980	7.48	1.3
October 1980	7.58	1.4
November 1980	7.74	1.4
December 1980	7.62	1.1
January 1981	7.74	1.4
February 1981	7.46	1.3
March 1981	7.06	1.3
April 1981	7.18	1.1
May 1981	7.05	1.4
June 1981	6.87	1.4
July 1981	6.77	1.1
August 1981	6.71	1.3
September 1981	6.40	1.5
October 1981	6.15	1.8
November 1981	5.93	2.2
December 1981	5.67	2.4
January 1982	5.39	2.5
February 1982	5.02	2.8
March 1982	4.89	2.9
April 1982	4.64	3.2
May 1982	4.49	3.3
June 1982	4.49	3.5
July 1982	4.54	3.7
August 1982	4.32	3.7
September 1982	4.03	4.0
October 1982	4.07	4.3
November 1982	3.86	4.7
December 1982	3.82	4.7
January 1983	3.93	4.3
February 1983	3.93	4.3
March 1983	3.62	4.2
April 1983	3.52	4.1
May 1983	3.11	4.0
June 1983	3.08	4.0
July 1983	3.11	3.3
August 1983	3.17	3.4
September 1983	3.20	3.1
October 1983	2.73	2.7
November 1983	2.58	2.4
December 1983	2.31	2.2
January 1984	1.91	1.9
February 1984	2.17	1.7
March 1984	2.42	1.7
April 1984	2.60	1.7
May 1984	2.69	1.4
June 1984	2.45	1.2
July 1984	2.20	1.5
August 1984	2.00	1.5
September 1984	1.74	1.3
October 1984	1.79	1.4
November 1984	1.77	1.2
December 1984	2.11	1.3
January 1985	2.35	1.3
February 1985	2.26	1.2
March 1985	2.24	1.2
April 1985	1.88	1.3
May 1985	2.01	1.2
June 1985	2.12	1.4
July 1985	1.98	1.4
August 1985	2.15	1.1
September 1985	2.20	1.1
October 1985	2.12	1.1
November 1985	2.14	1.0
December 1985	2.02	1.0
January 1986	2.00	0.7
February 1986	1.72	1.2
March 1986	1.65	1.2
April 1986	1.69	1.1
May 1986	1.49	1.2
June 1986	1.44	1.2
July 1986	1.31	1.0
August 1986	1.01	0.9
September 1986	1.13	1.0
October 1986	1.32	1.0
November 1986	1.29	0.9
December 1986	1.14	0.6
January 1987	0.81	0.6
February 1987	0.76	0.6
March 1987	0.76	0.6
April 1987	1.01	0.3
May 1987	1.12	0.3
June 1987	1.09	0.2
July 1987	1.18	0.1
August 1987	1.32	0.0
September 1987	1.40	-0.1
October 1987	1.51	0.0
November 1987	1.51	-0.2
December 1987	1.59	-0.3
January 1988	1.84	-0.2
February 1988	1.83	-0.2
March 1988	1.96	-0.2
April 1988	2.04	-0.5
May 1988	2.11	-0.3
June 1988	2.27	-0.5
July 1988	2.43	-0.5
August 1988	2.34	-0.3
September 1988	2.48	-0.5
October 1988	2.42	-0.5
November 1988	2.47	-0.6
December 1988	2.59	-0.6
January 1989	2.62	-0.5
February 1989	2.66	-0.7
March 1989	2.52	-0.9
April 1989	2.36	-0.7
May 1989	2.31	-0.7
June 1989	2.14	-0.6
July 1989	1.97	-0.7
August 1989	1.86	-0.7
September 1989	1.65	-0.6
October 1989	1.64	-0.6
November 1989	1.63	-0.5
December 1989	1.59	-0.5
January 1990	1.47	-0.5
February 1990	1.71	-0.6
March 1990	1.90	-0.7
April 1990	1.87	-0.5
May 1990	1.87	-0.5
June 1990	2.00	-0.7
July 1990	1.99	-0.4
August 1990	2.29	-0.2
September 1990	2.30	0.0
October 1990	2.27	0.1
November 1990	2.12	0.4
December 1990	1.96	0.5
January 1991	2.08	0.6
February 1991	1.85	0.8
March 1991	1.57	1.0
April 1991	1.46	0.9
May 1991	1.57	1.1
June 1991	1.39	1.1
July 1991	1.46	1.0
August 1991	1.31	1.1
September 1991	1.35	1.1
October 1991	1.23	1.3
November 1991	1.30	1.3
December 1991	1.42	1.6
January 1992	1.19	1.6
February 1992	1.20	1.7
March 1992	1.25	1.7
April 1992	1.39	1.7
May 1992	1.12	1.9
June 1992	0.98	2.1
July 1992	1.06	2.1
August 1992	0.87	2.0
September 1992	0.63	2.0
October 1992	0.81	1.7
November 1992	0.85	1.8
December 1992	0.80	1.8
January 1993	0.82	1.7
February 1993	0.74	1.5
March 1993	0.70	1.4
April 1993	0.67	1.5
May 1993	0.87	1.5
June 1993	0.89	1.4
July 1993	0.72	1.4
August 1993	0.82	1.3
September 1993	0.80	1.2
October 1993	0.57	1.3
November 1993	0.61	1.1
December 1993	0.46	1.0
January 1994	0.24	1.2
February 1994	0.27	1.2
March 1994	0.40	1.1
April 1994	0.25	1.0
May 1994	0.13	0.7
June 1994	0.25	0.7
July 1994	0.26	0.7
August 1994	0.18	0.6
September 1994	0.18	0.5
October 1994	0.25	0.4
November 1994	0.18	0.2
December 1994	0.17	0.1
January 1995	0.34	0.3
February 1995	0.28	0.1
March 1995	0.17	0.1
April 1995	0.25	0.5
May 1995	0.19	0.3
June 1995	0.05	0.3
July 1995	0.00	0.4
August 1995	0.13	0.4
September 1995	0.11	0.3
October 1995	0.12	0.2
November 1995	-0.01	0.3
December 1995	0.10	0.3
January 1996	-0.02	0.4
February 1996	-0.05	0.3
March 1996	-0.06	0.3
April 1996	-0.16	0.4
May 1996	-0.15	0.4
June 1996	-0.15	0.1
July 1996	-0.12	0.3
August 1996	-0.27	-0.1
September 1996	-0.10	0.0
October 1996	-0.11	0.0
November 1996	-0.04	0.2
December 1996	-0.15	0.2
January 1997	-0.16	0.2
February 1997	-0.08	0.1
March 1997	-0.08	0.1
April 1997	-0.02	0.0
May 1997	-0.11	-0.2
June 1997	-0.04	-0.1
July 1997	-0.17	-0.2
August 1997	-0.30	-0.3
September 1997	-0.40	-0.2
October 1997	-0.49	-0.4
November 1997	-0.59	-0.5
December 1997	-0.56	-0.4
January 1998	-0.53	-0.5
February 1998	-0.66	-0.5
March 1998	-0.80	-0.4
April 1998	-0.80	-0.8
May 1998	-0.78	-0.7
June 1998	-1.05	-0.6
July 1998	-0.84	-0.6
August 1998	-0.60	-0.6
September 1998	-0.82	-0.5
October 1998	-0.78	-0.6
November 1998	-0.81	-0.7
December 1998	-0.69	-0.7
January 1999	-0.64	-0.7
February 1999	-0.71	-0.6
March 1999	-0.79	-0.8
April 1999	-0.74	-0.7
May 1999	-0.77	-0.8
June 1999	-0.61	-0.7
July 1999	-0.71	-0.7
August 1999	-0.86	-0.8
September 1999	-0.57	-0.8
October 1999	-0.61	-0.9
November 1999	-0.52	-0.9
December 1999	-0.56	-1.0
January 2000	-0.49	-1.0
February 2000	-0.34	-0.9
March 2000	-0.16	-1.0
April 2000	-0.34	-1.2
May 2000	-0.31	-1.0
June 2000	-0.29	-1.0
July 2000	-0.24	-1.0
August 2000	-0.17	-0.9
September 2000	-0.18	-1.1
October 2000	-0.19	-1.1
November 2000	-0.12	-1.1
December 2000	-0.19	-1.1
January 2001	-0.12	-0.8
February 2001	-0.12	-0.8
March 2001	-0.23	-0.7
April 2001	-0.11	-0.6
May 2001	-0.17	-0.7
June 2001	0.00	-0.5
July 2001	0.04	-0.4
August 2001	-0.01	-0.1
September 2001	-0.83	0.0
October 2001	-0.25	0.3
November 2001	-0.21	0.5
December 2001	-0.26	0.7
January 2002	-0.56	0.7
February 2002	-0.52	0.7
March 2002	-0.49	0.7
April 2002	-0.36	0.9
May 2002	-0.27	0.8
June 2002	-0.34	0.8
July 2002	-0.42	0.8
August 2002	-0.28	0.7
September 2002	0.43	0.7
October 2002	-0.20	0.7
November 2002	-0.31	0.9
December 2002	-0.25	1.0
January 2003	-0.26	0.8
February 2003	-0.33	0.9
March 2003	-0.30	0.9
April 2003	-0.50	1.0
May 2003	-0.48	1.1
June 2003	-0.59	1.3
July 2003	-0.55	1.2
August 2003	-0.65	1.1
September 2003	-0.70	1.1
October 2003	-0.66	1.0
November 2003	-0.64	0.8
December 2003	-0.59	0.7
January 2004	-0.39	0.7
February 2004	-0.32	0.6
March 2004	-0.28	0.8
April 2004	-0.14	0.6
May 2004	-0.13	0.6
June 2004	0.02	0.6
July 2004	-0.04	0.5
August 2004	-0.06	0.4
September 2004	0.02	0.4
October 2004	0.06	0.5
November 2004	0.11	0.4
December 2004	0.12	0.4
January 2005	0.18	0.3
February 2005	0.17	0.4
March 2005	0.23	0.2
April 2005	0.10	0.2
May 2005	0.19	0.1
June 2005	0.05	0.0
July 2005	0.04	0.0
August 2005	0.06	-0.1
September 2005	0.11	0.0
October 2005	0.21	0.0
November 2005	0.29	0.0
December 2005	0.28	-0.1
January 2006	0.16	-0.3
February 2006	0.12	-0.2
March 2006	0.11	-0.3
April 2006	0.24	-0.3
May 2006	0.20	-0.4
June 2006	0.38	-0.4
July 2006	0.34	-0.3
August 2006	0.45	-0.3
September 2006	0.39	-0.5
October 2006	0.27	-0.6
November 2006	0.07	-0.5
December 2006	0.13	-0.6
January 2007	0.35	-0.3
February 2007	0.45	-0.4
March 2007	0.29	-0.5
April 2007	0.13	-0.4
May 2007	0.03	-0.5
June 2007	-0.05	-0.3
July 2007	-0.02	-0.2
August 2007	-0.06	-0.3
September 2007	0.05	-0.2
October 2007	0.15	-0.2
November 2007	0.27	-0.2
December 2007	0.33	0.1
January 2008	0.15	0.1
February 2008	0.02	0.0
March 2008	0.17	0.2
April 2008	0.20	0.1
May 2008	0.28	0.5
June 2008	0.32	0.7
July 2008	0.31	0.8
August 2008	0.26	1.1
September 2008	0.11	1.1
October 2008	-0.15	1.4
November 2008	-0.32	1.7
December 2008	-0.60	2.2
January 2009	-0.78	2.6
February 2009	-0.79	3.1
March 2009	-0.90	3.5
April 2009	-0.76	3.7
May 2009	-0.85	4.1
June 2009	-0.91	4.2
July 2009	-1.03	4.1
August 2009	-1.03	4.2
September 2009	-0.97	4.4
October 2009	-0.67	4.5
November 2009	-0.58	4.4
December 2009	-0.50	4.4
January 2010	-0.44	4.1
February 2010	-0.46	4.1
March 2010	-0.44	4.2
April 2010	-0.67	4.2
May 2010	-0.66	3.9
June 2010	-0.69	3.7
July 2010	-0.65	3.7
August 2010	-0.67	3.8
September 2010	-0.81	3.8
October 2010	-1.03	3.6
November 2010	-1.01	4.0
December 2010	-1.05	3.5
January 2011	-1.01	3.3
February 2011	-0.92	3.2
March 2011	-0.91	3.2
April 2011	-0.69	3.3
May 2011	-0.57	3.2
June 2011	-0.54	3.3
July 2011	-0.42	3.1
August 2011	-0.31	3.1
September 2011	-0.28	3.1
October 2011	-0.22	2.9
November 2011	-0.16	2.7
December 2011	-0.04	2.6
January 2012	0.09	2.5
February 2012	0.06	2.5
March 2012	0.11	2.4
April 2012	0.03	2.4
May 2012	-0.09	2.4
June 2012	-0.10	2.4
July 2012	-0.16	2.5
August 2012	-0.32	2.4
September 2012	-0.27	2.1
October 2012	-0.16	2.1
November 2012	-0.22	2.0
December 2012	-0.28	2.2
January 2013	-0.33	2.5
February 2013	-0.34	2.2
March 2013	-0.44	2.0
April 2013	-0.56	2.2
May 2013	-0.57	2.1
June 2013	-0.55	2.1
July 2013	-0.56	2.0
August 2013	-0.50	2.0
September 2013	-0.50	1.9
October 2013	-0.57	2.0
November 2013	-0.51	1.7
December 2013	-0.45	1.5
January 2014	-0.53	1.5
February 2014	-0.57	1.6
March 2014	-0.46	1.6
April 2014	-0.33	1.2
May 2014	-0.26	1.3
June 2014	-0.29	1.1
July 2014	-0.23	1.3
August 2014	-0.29	1.3
September 2014	-0.28	1.0
October 2014	-0.36	0.8
November 2014	-0.45	0.9
December 2014	-0.50	0.7
January 2015	-0.59	0.9
February 2015	-0.54	0.7
March 2015	-0.56	0.6
April 2015	-0.60	0.6
May 2015	-0.65	0.7
June 2015	-0.64	0.5
July 2015	-0.69	0.4
August 2015	-0.64	0.3
September 2015	-0.62	0.2
October 2015	-0.66	0.2
November 2015	-0.62	0.2
December 2015	-0.61	0.2
January 2016	-0.39	0.2
February 2016	-0.34	0.2
March 2016	-0.45	0.3
April 2016	-0.40	0.3
May 2016	-0.36	0.0
June 2016	-0.40	0.2
July 2016	-0.36	0.2
August 2016	-0.26	0.2
September 2016	-0.30	0.2
October 2016	-0.24	0.1
November 2016	-0.34	-0.1
December 2016	-0.30	0.0
January 2017	-0.39	0.1

Note: PCE is personal consumption expenditures.

Source: U.S. Department of Labor, Bureau of Labor Statistics; Congressional Budget Office (CBO).

Figure 2. Labor Force Participation Rate

Period	Percent
January 2000	67.3
February 2000	67.3
March 2000	67.3
April 2000	67.3
May 2000	67.1
June 2000	67.1
July 2000	66.9
August 2000	66.9
September 2000	66.9
October 2000	66.8
November 2000	66.9
December 2000	67.0
January 2001	67.2
February 2001	67.1
March 2001	67.2
April 2001	66.9
May 2001	66.7
June 2001	66.7
July 2001	66.8
August 2001	66.5
September 2001	66.8
October 2001	66.7
November 2001	66.7
December 2001	66.7
January 2002	66.5
February 2002	66.8
March 2002	66.6
April 2002	66.7
May 2002	66.7
June 2002	66.6
July 2002	66.5
August 2002	66.6
September 2002	66.7
October 2002	66.6
November 2002	66.4
December 2002	66.3
January 2003	66.4
February 2003	66.4
March 2003	66.3
April 2003	66.4
May 2003	66.4
June 2003	66.5
July 2003	66.2
August 2003	66.1
September 2003	66.1
October 2003	66.1
November 2003	66.1
December 2003	65.9
January 2004	66.1
February 2004	66.0
March 2004	66.0
April 2004	65.9
May 2004	66.0
June 2004	66.1
July 2004	66.1
August 2004	66.0
September 2004	65.8
October 2004	65.9
November 2004	66.0
December 2004	65.9
January 2005	65.8
February 2005	65.9
March 2005	65.9
April 2005	66.1
May 2005	66.1
June 2005	66.1
July 2005	66.1
August 2005	66.2
September 2005	66.1
October 2005	66.1
November 2005	66.0
December 2005	66.0
January 2006	66.0
February 2006	66.1
March 2006	66.2
April 2006	66.1
May 2006	66.1
June 2006	66.2
July 2006	66.1
August 2006	66.2
September 2006	66.1
October 2006	66.2
November 2006	66.3
December 2006	66.4
January 2007	66.4
February 2007	66.3
March 2007	66.2
April 2007	65.9
May 2007	66.0
June 2007	66.0
July 2007	66.0
August 2007	65.8
September 2007	66.0
October 2007	65.8
November 2007	66.0
December 2007	66.0
January 2008	66.2
February 2008	66.0
March 2008	66.1
April 2008	65.9
May 2008	66.1
June 2008	66.1
July 2008	66.1
August 2008	66.1
September 2008	66.0
October 2008	66.0
November 2008	65.9
December 2008	65.8
January 2009	65.7
February 2009	65.8
March 2009	65.6
April 2009	65.7
May 2009	65.7
June 2009	65.7
July 2009	65.5
August 2009	65.4
September 2009	65.1
October 2009	65.0
November 2009	65.0
December 2009	64.6
January 2010	64.8
February 2010	64.9
March 2010	64.9
April 2010	65.2
May 2010	64.9
June 2010	64.6
July 2010	64.6
August 2010	64.7
September 2010	64.6
October 2010	64.4
November 2010	64.6
December 2010	64.3
January 2011	64.2
February 2011	64.1
March 2011	64.2
April 2011	64.2
May 2011	64.1
June 2011	64.0
July 2011	64.0
August 2011	64.1
September 2011	64.2
October 2011	64.1
November 2011	64.1
December 2011	64.0
January 2012	63.7
February 2012	63.8
March 2012	63.8
April 2012	63.7
May 2012	63.7
June 2012	63.8
July 2012	63.7
August 2012	63.5
September 2012	63.7
October 2012	63.8
November 2012	63.6
December 2012	63.7
January 2013	63.6
February 2013	63.4
March 2013	63.3
April 2013	63.4
May 2013	63.4
June 2013	63.4
July 2013	63.3
August 2013	63.2
September 2013	63.3
October 2013	62.8
November 2013	63.0
December 2013	62.9
January 2014	62.9
February 2014	63.0
March 2014	63.2
April 2014	62.8
May 2014	62.8
June 2014	62.8
July 2014	62.9
August 2014	62.9
September 2014	62.8
October 2014	62.9
November 2014	62.9
December 2014	62.7
January 2015	62.9
February 2015	62.8
March 2015	62.7
April 2015	62.7
May 2015	62.8
June 2015	62.6
July 2015	62.6
August 2015	62.6
September 2015	62.4
October 2015	62.5
November 2015	62.5
December 2015	62.6
January 2016	62.7
February 2016	62.9
March 2016	63.0
April 2016	62.8
May 2016	62.6
June 2016	62.7
July 2016	62.8
August 2016	62.8
September 2016	62.9
October 2016	62.8
November 2016	62.6
December 2016	62.7
January 2017	62.9

Source: U.S. Department of Labor, Bureau of Labor Statistics.

Figure 3. GDP and Unemployment Forecasts

Recent Forecast Record for Blue Chip Consensus

Year	Real GDP (4-qtr. % change)			Unemployment rate (4th qtr.)
	Actual	Forecast	Difference	Actual	Forecast	Difference
2011	1.7	3.3	-1.6	8.6	9.1	-.5
2012	1.3	2.3	-1.0	7.8	8.5	-.7
2013	2.7	2.2	.5	6.9	7.5	-.6
2014	2.5	2.8	-.3	5.7	6.6	-.9
2015	1.9	2.9	-1.0	5.0	5.3	-.3
2016	1.9	2.6	-.7	4.7	4.6	.1

Note: Forecasts were made in January of year indicated. GDP is gross domestic product, current vintage.

Source: Blue Chip Economic Indicators, Wolters Kluwer; U.S. Department of Commerce, Bureau of Economic Analysis; U.S. Department of Labor, Bureau of Labor Statistics.

Long-Range GDP Forecasts (Percent)

	Blue Chip	SPF	CBO
2007	2.9	3.0	2.6
2008	2.7	2.8	2.5
2009	2.6	2.6	2.4
2010	2.6	2.7	2.4
2011	2.6	2.8	2.4
2012	2.5	2.6	2.3
2013	2.5	2.5	2.2
2014	2.4	2.6	2.2
2015	2.3	2.5	2.1
2016	2.1	2.3	2.0

Source: SPF is Survey of Professional Forecasters; CBO is Congressional Budget Office. SPF and CBO forecasts were made in January of each year. Blue Chip forecasts were made in March of each year.

Figure 4. Labor Productivity Growth

Period	Percent, 5-year average
1970:Q1	2.545
1970:Q2	2.770
1970:Q3	2.630
1970:Q4	2.200
1971:Q1	2.420
1971:Q2	2.540
1971:Q3	2.740
1971:Q4	2.415
1972:Q1	2.425
1972:Q2	2.755
1972:Q3	2.780
1972:Q4	2.935
1973:Q1	2.865
1973:Q2	2.715
1973:Q3	2.420
1973:Q4	2.520
1974:Q1	2.190
1974:Q2	2.280
1974:Q3	2.055
1974:Q4	2.260
1975:Q1	2.465
1975:Q2	2.565
1975:Q3	2.420
1975:Q4	2.585
1976:Q1	2.285
1976:Q2	2.410
1976:Q3	2.190
1976:Q4	2.475
1977:Q1	2.390
1977:Q2	1.915
1977:Q3	2.125
1977:Q4	1.690
1978:Q1	1.235
1978:Q2	1.580
1978:Q3	1.900
1978:Q4	1.900
1979:Q1	2.065
1979:Q2	1.955
1979:Q3	2.125
1979:Q4	1.925
1980:Q1	1.775
1980:Q2	1.210
1980:Q3	1.020
1980:Q4	1.195
1981:Q1	1.320
1981:Q2	1.010
1981:Q3	1.255
1981:Q4	0.855
1982:Q1	0.610
1982:Q2	0.640
1982:Q3	0.390
1982:Q4	0.805
1983:Q1	1.080
1983:Q2	1.050
1983:Q3	1.085
1983:Q4	1.190
1984:Q1	1.400
1984:Q2	1.615
1984:Q3	1.720
1984:Q4	1.800
1985:Q1	1.735
1985:Q2	2.050
1985:Q3	2.370
1985:Q4	2.220
1986:Q1	1.990
1986:Q2	2.290
1986:Q3	2.145
1986:Q4	2.355
1987:Q1	2.395
1987:Q2	2.460
1987:Q3	2.480
1987:Q4	2.445
1988:Q1	2.315
1988:Q2	1.970
1988:Q3	1.950
1988:Q4	1.815
1989:Q1	1.755
1989:Q2	1.680
1989:Q3	1.655
1989:Q4	1.635
1990:Q1	1.780
1990:Q2	1.880
1990:Q3	1.660
1990:Q4	1.410
1991:Q1	1.275
1991:Q2	1.475
1991:Q3	1.490
1991:Q4	1.675
1992:Q1	2.190
1992:Q2	2.210
1992:Q3	2.360
1992:Q4	2.305
1993:Q1	2.080
1993:Q2	1.965
1993:Q3	1.900
1993:Q4	2.030
1994:Q1	2.070
1994:Q2	1.940
1994:Q3	1.750
1994:Q4	1.900
1995:Q1	1.595
1995:Q2	1.450
1995:Q3	1.355
1995:Q4	1.715
1996:Q1	1.850
1996:Q2	1.790
1996:Q3	1.745
1996:Q4	1.635
1997:Q1	1.155
1997:Q2	1.260
1997:Q3	1.265
1997:Q4	1.260
1998:Q1	1.545
1998:Q2	1.735
1998:Q3	2.035
1998:Q4	2.010
1999:Q1	2.150
1999:Q2	2.215
1999:Q3	2.495
1999:Q4	2.650
2000:Q1	2.685
2000:Q2	3.085
2000:Q3	3.070
2000:Q4	3.115
2001:Q1	2.860
2001:Q2	2.910
2001:Q3	2.935
2001:Q4	3.185
2002:Q1	3.630
2002:Q2	3.440
2002:Q3	3.435
2002:Q4	3.300
2003:Q1	3.380
2003:Q2	3.615
2003:Q3	3.705
2003:Q4	3.715
2004:Q1	3.565
2004:Q2	3.670
2004:Q3	3.585
2004:Q4	3.400
2005:Q1	3.645
2005:Q2	3.140
2005:Q3	3.305
2005:Q4	3.105
2006:Q1	3.305
2006:Q2	2.975
2006:Q3	2.760
2006:Q4	2.620
2007:Q1	2.235
2007:Q2	2.335
2007:Q3	2.385
2007:Q4	2.480
2008:Q1	2.095
2008:Q2	1.950
2008:Q3	1.615
2008:Q4	1.340
2009:Q1	1.420
2009:Q2	1.670
2009:Q3	1.915
2009:Q4	2.020
2010:Q1	1.910
2010:Q2	2.040
2010:Q3	1.985
2010:Q4	2.015
2011:Q1	1.715
2011:Q2	1.775
2011:Q3	1.830
2011:Q4	1.865
2012:Q1	1.865
2012:Q2	1.810
2012:Q3	1.525
2012:Q4	1.380
2013:Q1	1.685
2013:Q2	1.480
2013:Q3	1.510
2013:Q4	1.815
2014:Q1	1.485
2014:Q2	1.180
2014:Q3	1.020
2014:Q4	0.685
2015:Q1	0.640
2015:Q2	0.640
2015:Q3	0.640
2015:Q4	0.455
2016:Q1	0.585
2016:Q2	0.515
2016:Q3	0.760
2016:Q4	0.695

Note: Average is shown as a horizontal line at 2.031 percent.

Source: Output per hour in the business sector, U.S. Department of Labor, Bureau of Labor Statistics.

Figure 5. U.S. Interest Rates

Percent

Period	Federal Funds	10-year Treasury
1975:Q1	6.26	7.54
1975:Q2	5.42	8.05
1975:Q3	6.14	8.29
1975:Q4	5.40	8.06
1976:Q1	4.82	7.76
1976:Q2	5.20	7.77
1976:Q3	5.29	7.73
1976:Q4	4.87	7.18
1977:Q1	4.68	7.36
1977:Q2	5.16	7.37
1977:Q3	5.82	7.36
1977:Q4	6.52	7.60
1978:Q1	6.78	8.01
1978:Q2	7.30	8.33
1978:Q3	8.10	8.49
1978:Q4	9.57	8.82
1979:Q1	10.08	9.11
1979:Q2	10.18	9.11
1979:Q3	10.91	9.09
1979:Q4	13.52	10.44
1980:Q1	14.98	11.94
1980:Q2	12.62	10.50
1980:Q3	9.77	10.94
1980:Q4	15.83	12.40
1981:Q1	16.55	12.96
1981:Q2	17.75	13.74
1981:Q3	17.70	14.83
1981:Q4	13.61	14.10
1982:Q1	14.27	14.28
1982:Q2	14.52	13.94
1982:Q3	11.01	13.12
1982:Q4	9.29	10.65
1983:Q1	8.66	10.56
1983:Q2	8.83	10.55
1983:Q3	9.46	11.63
1983:Q4	9.43	11.69
1984:Q1	9.70	11.95
1984:Q2	10.62	13.22
1984:Q3	11.42	12.89
1984:Q4	9.27	11.76
1985:Q1	8.47	11.58
1985:Q2	7.95	10.83
1985:Q3	7.93	10.33
1985:Q4	8.15	9.76
1986:Q1	7.88	8.57
1986:Q2	6.96	7.60
1986:Q3	6.23	7.30
1986:Q4	6.39	7.26
1987:Q1	6.28	7.19
1987:Q2	6.66	8.34
1987:Q3	6.86	8.87
1987:Q4	6.91	9.13
1988:Q1	6.67	8.42
1988:Q2	7.17	8.91
1988:Q3	7.99	9.10
1988:Q4	8.48	8.96
1989:Q1	9.47	9.21
1989:Q2	9.73	8.76
1989:Q3	9.08	8.11
1989:Q4	8.64	7.91
1990:Q1	8.26	8.41
1990:Q2	8.24	8.67
1990:Q3	8.18	8.70
1990:Q4	7.76	8.41
1991:Q1	6.49	8.02
1991:Q2	5.88	8.12
1991:Q3	5.68	7.95
1991:Q4	4.83	7.34
1992:Q1	4.05	7.30
1992:Q2	3.82	7.38
1992:Q3	3.31	6.62
1992:Q4	3.08	6.74
1993:Q1	3.09	6.27
1993:Q2	3.02	5.99
1993:Q3	3.09	5.61
1993:Q4	2.99	5.62
1994:Q1	3.24	6.08
1994:Q2	3.96	7.09
1994:Q3	4.51	7.33
1994:Q4	5.18	7.84
1995:Q1	5.82	7.48
1995:Q2	6.02	6.60
1995:Q3	5.81	6.33
1995:Q4	5.75	5.90
1996:Q1	5.39	5.90
1996:Q2	5.28	6.71
1996:Q3	5.34	6.78
1996:Q4	5.31	6.35
1997:Q1	5.30	6.57
1997:Q2	5.55	6.70
1997:Q3	5.57	6.24
1997:Q4	5.54	5.91
1998:Q1	5.52	5.59
1998:Q2	5.51	5.59
1998:Q3	5.55	5.21
1998:Q4	4.87	4.67
1999:Q1	4.75	4.99
1999:Q2	4.75	5.54
1999:Q3	5.12	5.88
1999:Q4	5.31	6.14
2000:Q1	5.73	6.47
2000:Q2	6.29	6.18
2000:Q3	6.52	5.89
2000:Q4	6.50	5.57
2001:Q1	5.61	5.05
2001:Q2	4.32	5.28
2001:Q3	3.49	4.99
2001:Q4	2.14	4.76
2002:Q1	1.74	5.08
2002:Q2	1.76	5.11
2002:Q3	1.75	4.28
2002:Q4	1.45	4.00
2003:Q1	1.25	3.92
2003:Q2	1.25	3.62
2003:Q3	1.01	4.22
2003:Q4	1.00	4.29
2004:Q1	1.00	4.02
2004:Q2	1.01	4.60
2004:Q3	1.44	4.30
2004:Q4	1.95	4.18
2005:Q1	2.48	4.31
2005:Q2	2.94	4.16
2005:Q3	3.46	4.21
2005:Q4	3.98	4.49
2006:Q1	4.46	4.57
2006:Q2	4.91	5.07
2006:Q3	5.25	4.90
2006:Q4	5.25	4.63
2007:Q1	5.26	4.68
2007:Q2	5.25	4.85
2007:Q3	5.09	4.74
2007:Q4	4.49	4.27
2008:Q1	3.18	3.67
2008:Q2	2.09	3.88
2008:Q3	1.96	3.86
2008:Q4	0.53	3.23
2009:Q1	0.19	2.73
2009:Q2	0.18	3.32
2009:Q3	0.15	3.52
2009:Q4	0.12	3.47
2010:Q1	0.13	3.72
2010:Q2	0.19	3.49
2010:Q3	0.19	2.79
2010:Q4	0.19	2.88
2011:Q1	0.16	3.46
2011:Q2	0.09	3.20
2011:Q3	0.08	2.42
2011:Q4	0.08	2.05
2012:Q1	0.10	2.04
2012:Q2	0.15	1.82
2012:Q3	0.15	1.64
2012:Q4	0.16	1.71
2013:Q1	0.14	1.95
2013:Q2	0.12	1.99
2013:Q3	0.09	2.71
2013:Q4	0.09	2.75
2014:Q1	0.07	2.77
2014:Q2	0.09	2.62
2014:Q3	0.09	2.50
2014:Q4	0.10	2.28
2015:Q1	0.11	1.97
2015:Q2	0.13	2.16
2015:Q3	0.14	2.22
2015:Q4	0.16	2.19
2016:Q1	0.36	1.92
2016:Q2	0.37	1.75
2016:Q3	0.40	1.56
2016:Q4	0.45	2.14
January 2017	0.65	2.40

Source: Federal Reserve Board, Statistical Release H.15, "Selected Interest Rates."

Figure 6. General Form of Taylor Rule

$$ R=r^*+\pi+a\left(\pi-\pi^{LR}\right)+b(gap) $$

where $$ R$$ = nominal federal funds rate;
$$ r^*$$ = neutral real federal funds rate;
$$ \pi$$ = the inflation rate;
$$ \pi^{LR}$$ = 2 percent;
$$ gap$$ = percentage deviation of output from its potential level or unemployment from its natural rate.

Taylor (1993) sets $$ a=0.5$$, $$ b=0.5$$;
Balanced-approach rule sets $$ a=0.5$$, $$ b=1.0$$.

Figure 7. Historical Prescriptions of Simple Policy Rules

Percent

Period	Taylor (1993)	Inertial Balanced-Approach Rule	First-Difference Rule*	Historical value of federal funds rate
2000:Q1	5.250	5.392	5.317	5.68
2000:Q2	5.346	5.740	5.676	6.27
2000:Q3	5.409	6.235	6.191	6.52
2000:Q4	5.520	6.475	6.307	6.47
2001:Q1	5.108	6.321	5.783	5.60
2001:Q2	4.974	5.551	5.121	4.33
2001:Q3	4.215	4.308	3.917	3.50
2001:Q4	3.518	3.413	2.033	2.13
2002:Q1	2.799	2.110	1.580	1.73
2002:Q2	2.987	1.783	1.692	1.75
2002:Q3	3.473	1.894	1.633	1.74
2002:Q4	3.130	1.819	1.598	1.44
2003:Q1	2.967	1.554	1.357	1.25
2003:Q2	2.399	1.272	0.992	1.25
2003:Q3	2.271	1.259	1.171	1.02
2003:Q4	2.604	1.163	1.091	1.00
2004:Q1	2.983	1.207	1.071	1.00
2004:Q2	3.447	1.288	1.250	1.01
2004:Q3	3.697	1.352	1.272	1.43
2004:Q4	3.874	1.732	1.638	1.95
2005:Q1	4.150	2.235	2.246	2.47
2005:Q2	4.182	2.707	2.757	2.94
2005:Q3	4.167	3.119	3.202	3.46
2005:Q4	4.386	3.589	3.727	3.98
2006:Q1	4.827	4.132	4.284	4.45
2006:Q2	5.106	4.588	4.583	4.91
2006:Q3	5.248	5.001	4.881	5.25
2006:Q4	5.069	5.293	5.008	5.24
2007:Q1	5.403	5.309	4.973	5.25
2007:Q2	4.854	5.236	5.238	5.25
2007:Q3	4.558	5.166	4.812	5.07
2007:Q4	4.735	5.020	4.712	4.50
2008:Q1	4.235	4.430	3.988	3.18
2008:Q2	4.228	3.272	2.805	2.08
2008:Q3	3.602	2.158	1.501	1.94
2008:Q4	1.976	1.680	-0.373	0.51
2009:Q1	-0.108	0.002	-2.336	0.18
2009:Q2	-0.997	-0.703	-4.344	0.18
2009:Q3	-1.425	-1.401	-5.244	0.15
2009:Q4	-0.925	-1.950	-5.998	0.12
2010:Q1	-0.520	-2.310	-5.940	0.13
2010:Q2	-0.753	-2.626	-5.757	0.19
2010:Q3	-0.741	-2.874	-5.873	0.19
2010:Q4	-1.351	-3.185	-6.119	0.19
2011:Q1	-1.060	-3.382	-5.582	0.15
2011:Q2	-0.522	-3.453	-4.986	0.09
2011:Q3	0.012	-3.403	-5.019	0.08
2011:Q4	0.733	-3.177	-4.844	0.07
2012:Q1	1.130	-2.901	-4.398	0.10
2012:Q2	0.990	-2.678	-4.232	0.15
2012:Q3	0.865	-2.481	-4.119	0.14
2012:Q4	1.144	-2.237	-3.873	0.16
2013:Q1	0.789	-2.103	-3.798	0.14
2013:Q2	0.714	-1.971	-3.490	0.12
2013:Q3	1.037	-1.770	-3.144	0.09
2013:Q4	1.387	-1.496	-2.928	0.09
2014:Q1	1.342	-1.275	-2.332	0.07
2014:Q2	2.102	-0.899	-1.728	0.09
2014:Q3	2.213	-0.542	-1.278	0.09
2014:Q4	2.330	-0.156	-0.765	0.10
2015:Q1	2.007	0.103	-0.553	0.11
2015:Q2	1.906	0.324	-0.107	0.13
2015:Q3	2.041	0.406	0.293	0.13
2015:Q4	2.040	0.416	0.417	0.16
2016:Q1	2.256	0.469	0.397	0.36
2016:Q2	2.274	0.648	0.643	0.37
2016:Q3	2.276	0.645	0.574	0.39
2016:Q4	2.438	0.712	0.715	0.45

* First-Difference Rule: $$ \Delta R_t=0.5\left(\pi_{t+3|t}-\pi^{LR}\right)-\left(\Delta_4 {ugap}_{t+3|t}\right)$$ Return to table

Note: The black line is the historical value of the federal funds rate. The Taylor (1993) and inertial balanced-approach rules use the difference between 4-quarter core PCE (personal consumption expenditures) price inflation and 2 percent for the inflation gap, and the difference between the unemployment rate and the forecast of the unemployment rate in the long run from the Blue Chip survey for the unemployment rate gap. These rules have a time-varying intercept equal to the longer-run forecast of the 3-month Treasury bill rate less the longer-run forecast of inflation (measured by the gross domestic product price deflator) from forecasts in the Blue Chip survey, interpolated to a quarterly frequency. The first-difference rule uses the difference between the forecast from the Blue Chip survey for 4-quarter gross domestic product price deflator 3 quarters ahead and 2 percent for the inflation gap, and the forecast from the Blue Chip survey for the unemployment rate 3 quarters ahead less the unemployment rate in the previous period as the change in the unemployment rate gap.

Source: Federal Reserve Economic Data; Blue Chip Economic Indicators, Wolters Kluwer; Federal Reserve Board staff calculations.

 

Figure 8. SEP Projected Federal Funds Rate: Taylor (1993)

Percent

Year-End	Intercept: 2 percent	Intercept: 1 percent	Intercept: 0 percent	SEP Median
2016	3.65	2.65	1.65	0.6
2017	4.00	3.00	2.00	1.4
2018	4.30	3.30	2.30	2.1
2019	4.30	3.30	2.30	2.9

Note: Line chart superimposed on Figure 2 of SEP, years 2016-2019, given within the FOMC Minutes on December 13-14, 2016.

Source: Summary of Economic Projections (SEP), December 2016 (document available on the Board's website at https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm).

Figure 9. SEP Projected Federal Funds Rate from Simple Policy Rules

Percent

Year-End	Taylor (1993) Rule (R*=1)	Inertial Balanced-Approach Rule (R*=1)	First-Difference Rule	SEP Median
2016	2.65	0.72	0.48	0.6
2017	3.00	0.96	0.60	1.4
2018	3.30	1.69	1.40	2.1
2019	3.30	2.28	1.80	2.9

Note: Line chart superimposed on Figure 2 of SEP, years 2016-2019, given within the FOMC Minutes on December 13-14, 2016. Forecasts in the first-difference rule are the 1-year-ahead SEP forecasts; for 2020 numbers, the long-run SEP forecasts are used.

Source: Summary of Economic Projections (SEP), December 2016 (document available on the Board's website at https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm).