Accessible Version

Accessible Version: The Economic Outlook and the Conduct of Monetary Policy

Figure 1. Labor Utilization

Percent
Period Unemployment
rate		 U-6 measure of
labor utilization
January 1990 5.40 ND
February 1990 5.30 ND
March 1990 5.20 ND
April 1990 5.40 ND
May 1990 5.40 ND
June 1990 5.20 ND
July 1990 5.50 ND
August 1990 5.70 ND
September 1990 5.90 ND
October 1990 5.90 ND
November 1990 6.20 ND
December 1990 6.30 ND
January 1991 6.40 ND
February 1991 6.60 ND
March 1991 6.80 ND
April 1991 6.70 ND
May 1991 6.90 ND
June 1991 6.90 ND
July 1991 6.80 ND
August 1991 6.90 ND
September 1991 6.90 ND
October 1991 7.00 ND
November 1991 7.00 ND
December 1991 7.30 ND
January 1992 7.30 ND
February 1992 7.40 ND
March 1992 7.40 ND
April 1992 7.40 ND
May 1992 7.60 ND
June 1992 7.80 ND
July 1992 7.70 ND
August 1992 7.60 ND
September 1992 7.60 ND
October 1992 7.30 ND
November 1992 7.40 ND
December 1992 7.40 ND
January 1993 7.30 ND
February 1993 7.10 ND
March 1993 7.00 ND
April 1993 7.10 ND
May 1993 7.10 ND
June 1993 7.00 ND
July 1993 6.90 ND
August 1993 6.80 ND
September 1993 6.70 ND
October 1993 6.80 ND
November 1993 6.60 ND
December 1993 6.50 ND
January 1994 6.60 11.80
February 1994 6.60 11.40
March 1994 6.50 11.40
April 1994 6.40 11.20
May 1994 6.10 10.80
June 1994 6.10 10.90
July 1994 6.10 10.70
August 1994 6.00 10.50
September 1994 5.90 10.40
October 1994 5.80 10.30
November 1994 5.60 10.10
December 1994 5.50 10.00
January 1995 5.60 10.20
February 1995 5.40 9.90
March 1995 5.40 9.90
April 1995 5.80 10.00
May 1995 5.60 10.00
June 1995 5.60 10.10
July 1995 5.70 10.10
August 1995 5.70 10.00
September 1995 5.60 10.10
October 1995 5.50 9.90
November 1995 5.60 10.00
December 1995 5.60 10.00
January 1996 5.60 9.80
February 1996 5.50 10.00
March 1996 5.50 9.80
April 1996 5.60 9.90
May 1996 5.60 9.70
June 1996 5.30 9.60
July 1996 5.50 9.70
August 1996 5.10 9.30
September 1996 5.20 9.40
October 1996 5.20 9.40
November 1996 5.40 9.30
December 1996 5.40 9.50
January 1997 5.30 9.40
February 1997 5.20 9.40
March 1997 5.20 9.10
April 1997 5.10 9.20
May 1997 4.90 8.80
June 1997 5.00 8.80
July 1997 4.90 8.60
August 1997 4.80 8.60
September 1997 4.90 8.70
October 1997 4.70 8.40
November 1997 4.60 8.30
December 1997 4.70 8.40
January 1998 4.60 8.40
February 1998 4.60 8.40
March 1998 4.70 8.40
April 1998 4.30 7.90
May 1998 4.40 7.90
June 1998 4.50 8.00
July 1998 4.50 8.10
August 1998 4.50 7.90
September 1998 4.60 7.90
October 1998 4.50 7.80
November 1998 4.40 7.60
December 1998 4.40 7.60
January 1999 4.30 7.70
February 1999 4.40 7.70
March 1999 4.20 7.60
April 1999 4.30 7.60
May 1999 4.20 7.40
June 1999 4.30 7.50
July 1999 4.30 7.50
August 1999 4.20 7.30
September 1999 4.20 7.40
October 1999 4.10 7.20
November 1999 4.10 7.10
December 1999 4.00 7.10
January 2000 4.00 7.10
February 2000 4.10 7.20
March 2000 4.00 7.10
April 2000 3.80 6.90
May 2000 4.00 7.10
June 2000 4.00 7.00
July 2000 4.00 7.00
August 2000 4.10 7.10
September 2000 3.90 7.00
October 2000 3.90 6.80
November 2000 3.90 7.10
December 2000 3.90 6.90
January 2001 4.20 7.30
February 2001 4.20 7.40
March 2001 4.30 7.30
April 2001 4.40 7.40
May 2001 4.30 7.50
June 2001 4.50 7.90
July 2001 4.60 7.80
August 2001 4.90 8.10
September 2001 5.00 8.70
October 2001 5.30 9.30
November 2001 5.50 9.40
December 2001 5.70 9.60
January 2002 5.70 9.50
February 2002 5.70 9.50
March 2002 5.70 9.40
April 2002 5.90 9.70
May 2002 5.80 9.50
June 2002 5.80 9.50
July 2002 5.80 9.60
August 2002 5.70 9.60
September 2002 5.70 9.60
October 2002 5.70 9.60
November 2002 5.90 9.70
December 2002 6.00 9.80
January 2003 5.80 10.00
February 2003 5.90 10.20
March 2003 5.90 10.00
April 2003 6.00 10.20
May 2003 6.10 10.10
June 2003 6.30 10.30
July 2003 6.20 10.30
August 2003 6.10 10.10
September 2003 6.10 10.40
October 2003 6.00 10.20
November 2003 5.80 10.00
December 2003 5.70 9.80
January 2004 5.70 9.90
February 2004 5.60 9.70
March 2004 5.80 10.00
April 2004 5.60 9.60
May 2004 5.60 9.60
June 2004 5.60 9.50
July 2004 5.50 9.50
August 2004 5.40 9.40
September 2004 5.40 9.40
October 2004 5.50 9.70
November 2004 5.40 9.40
December 2004 5.40 9.20
January 2005 5.30 9.30
February 2005 5.40 9.30
March 2005 5.20 9.10
April 2005 5.20 8.90
May 2005 5.10 8.90
June 2005 5.00 9.00
July 2005 5.00 8.80
August 2005 4.90 8.90
September 2005 5.00 9.00
October 2005 5.00 8.70
November 2005 5.00 8.70
December 2005 4.90 8.60
January 2006 4.70 8.40
February 2006 4.80 8.40
March 2006 4.70 8.20
April 2006 4.70 8.10
May 2006 4.60 8.20
June 2006 4.60 8.40
July 2006 4.70 8.50
August 2006 4.70 8.40
September 2006 4.50 8.00
October 2006 4.40 8.20
November 2006 4.50 8.10
December 2006 4.40 7.90
January 2007 4.60 8.40
February 2007 4.50 8.20
March 2007 4.40 8.00
April 2007 4.50 8.20
May 2007 4.40 8.20
June 2007 4.60 8.30
July 2007 4.70 8.40
August 2007 4.60 8.40
September 2007 4.70 8.40
October 2007 4.70 8.40
November 2007 4.70 8.40
December 2007 5.00 8.80
January 2008 5.00 9.20
February 2008 4.90 9.00
March 2008 5.10 9.10
April 2008 5.00 9.20
May 2008 5.40 9.70
June 2008 5.60 10.10
July 2008 5.80 10.50
August 2008 6.10 10.80
September 2008 6.10 11.00
October 2008 6.50 11.80
November 2008 6.80 12.60
December 2008 7.30 13.60
January 2009 7.80 14.20
February 2009 8.30 15.20
March 2009 8.70 15.80
April 2009 9.00 15.90
May 2009 9.40 16.50
June 2009 9.50 16.50
July 2009 9.50 16.40
August 2009 9.60 16.70
September 2009 9.80 16.70
October 2009 10.00 17.10
November 2009 9.90 17.10
December 2009 9.90 17.10
January 2010 9.80 16.70
February 2010 9.80 17.00
March 2010 9.90 17.10
April 2010 9.90 17.10
May 2010 9.60 16.60
June 2010 9.40 16.40
July 2010 9.40 16.40
August 2010 9.50 16.50
September 2010 9.50 16.80
October 2010 9.40 16.60
November 2010 9.80 16.90
December 2010 9.30 16.60
January 2011 9.10 16.20
February 2011 9.00 16.00
March 2011 9.00 15.90
April 2011 9.10 16.10
May 2011 9.00 15.80
June 2011 9.10 16.10
July 2011 9.00 15.90
August 2011 9.00 16.10
September 2011 9.00 16.40
October 2011 8.80 15.80
November 2011 8.60 15.50
December 2011 8.50 15.20
January 2012 8.30 15.20
February 2012 8.30 15.00
March 2012 8.20 14.60
April 2012 8.20 14.60
May 2012 8.20 14.80
June 2012 8.20 14.80
July 2012 8.20 14.80
August 2012 8.10 14.60
September 2012 7.80 14.80
October 2012 7.80 14.40
November 2012 7.70 14.40
December 2012 7.90 14.40
January 2013 8.00 14.50
February 2013 7.70 14.30
March 2013 7.50 13.80
April 2013 7.60 14.00
May 2013 7.50 13.80
June 2013 7.50 14.20
July 2013 7.30 13.80
August 2013 7.30 13.60
September 2013 7.30 13.70
October 2013 7.20 13.70
November 2013 6.90 13.10
December 2013 6.70 13.10
January 2014 6.60 12.70
February 2014 6.70 12.60
March 2014 6.70 12.60
April 2014 6.20 12.30
May 2014 6.20 12.10
June 2014 6.10 12.00
July 2014 6.20 12.20
August 2014 6.20 12.00
September 2014 6.00 11.80
October 2014 5.70 11.50
November 2014 5.80 11.40
December 2014 5.60 11.20
January 2015 5.70 11.30
February 2015 5.50 11.00
March 2015 5.50 10.90
April 2015 5.40 10.80
May 2015 5.50 10.70
June 2015 5.30 10.50
July 2015 5.30 10.40
August 2015 5.10 10.30
September 2015 5.10 10.00
October 2015 5.00 9.80
November 2015 5.00 9.90
December 2015 5.00 9.90
January 2016 4.90 9.90
February 2016 4.90 9.70
March 2016 5.00 9.80
April 2016 5.00 9.70
May 2016 4.70 9.70
June 2016 4.90 9.60
July 2016 4.90 9.70
August 2016 4.90 9.70
September 2016 5.00 9.70
October 2016 4.90 9.50
November 2016 4.60 9.30
December 2016 4.70 9.20

Source: Bureau of Labor Statistics.

Figure 2. Cyclical Labor Market Indicators

Percent
Period Jobs hard to fill Quits rate
January 2000 31.17 ND
February 2000 31.47 ND
March 2000 33.02 ND
April 2000 33.42 ND
May 2000 34.40 ND
June 2000 33.35 ND
July 2000 33.01 ND
August 2000 34.36 ND
September 2000 32.67 ND
October 2000 32.11 ND
November 2000 35.97 ND
December 2000 32.06 2.56
January 2001 31.31 2.91
February 2001 31.43 2.74
March 2001 25.74 2.66
April 2001 25.39 2.75
May 2001 26.39 2.62
June 2001 26.49 2.59
July 2001 25.15 2.53
August 2001 29.33 2.44
September 2001 25.64 2.35
October 2001 21.25 2.47
November 2001 18.99 2.23
December 2001 20.07 2.17
January 2002 19.29 2.50
February 2002 19.30 2.26
March 2002 19.51 2.15
April 2002 20.39 2.34
May 2002 19.35 2.35
June 2002 21.66 2.26
July 2002 22.38 2.36
August 2002 19.24 2.30
September 2002 16.45 2.27
October 2002 19.42 2.23
November 2002 22.09 2.11
December 2002 16.15 2.22
January 2003 19.06 2.18
February 2003 19.24 2.15
March 2003 17.46 2.09
April 2003 16.42 2.09
May 2003 16.35 2.06
June 2003 16.72 2.08
July 2003 15.54 2.08
August 2003 20.20 2.08
September 2003 19.20 2.15
October 2003 18.59 2.20
November 2003 19.20 2.14
December 2003 20.18 2.14
January 2004 18.82 2.11
February 2004 19.19 2.10
March 2004 21.51 2.25
April 2004 20.48 2.30
May 2004 22.41 2.12
June 2004 19.75 2.30
July 2004 23.58 2.34
August 2004 21.23 2.32
September 2004 19.95 2.22
October 2004 23.71 2.28
November 2004 22.27 2.42
December 2004 23.17 2.31
January 2005 20.63 2.44
February 2005 23.22 2.26
March 2005 23.55 2.41
April 2005 22.44 2.38
May 2005 23.49 2.45
June 2005 19.80 2.38
July 2005 21.54 2.38
August 2005 23.35 2.50
September 2005 22.86 2.57
October 2005 21.81 2.48
November 2005 25.23 2.44
December 2005 22.09 2.35
January 2006 25.55 2.46
February 2006 25.18 2.47
March 2006 22.53 2.49
April 2006 30.41 2.30
May 2006 25.56 2.51
June 2006 24.86 2.51
July 2006 24.61 2.46
August 2006 24.45 2.47
September 2006 24.85 2.42
October 2006 27.84 2.42
November 2006 23.17 2.52
December 2006 19.03 2.50
January 2007 25.42 2.44
February 2007 24.18 2.46
March 2007 25.56 2.43
April 2007 25.30 2.36
May 2007 24.58 2.44
June 2007 25.94 2.31
July 2007 23.68 2.39
August 2007 24.56 2.41
September 2007 24.88 2.14
October 2007 22.89 2.35
November 2007 20.04 2.26
December 2007 21.06 2.28
January 2008 23.28 2.32
February 2008 19.03 2.28
March 2008 18.69 2.11
April 2008 20.31 2.36
May 2008 15.60 2.14
June 2008 20.90 2.20
July 2008 17.84 2.12
August 2008 14.60 1.98
September 2008 17.82 2.02
October 2008 14.97 2.00
November 2008 14.86 1.73
December 2008 14.11 1.76
January 2009 10.15 1.74
February 2009 10.00 1.63
March 2009 9.91 1.54
April 2009 8.33 1.50
May 2009 9.64 1.51
June 2009 10.70 1.55
July 2009 9.88 1.50
August 2009 7.65 1.46
September 2009 7.86 1.43
October 2009 8.95 1.46
November 2009 8.76 1.56
December 2009 10.09 1.48
January 2010 9.11 1.46
February 2010 9.88 1.49
March 2010 9.20 1.57
April 2010 10.38 1.68
May 2010 9.71 1.58
June 2010 8.50 1.68
July 2010 10.98 1.61
August 2010 10.57 1.66
September 2010 10.92 1.66
October 2010 10.92 1.61
November 2010 9.65 1.54
December 2010 12.98 1.69
January 2011 12.12 1.57
February 2011 13.85 1.62
March 2011 15.55 1.71
April 2011 13.38 1.66
May 2011 12.75 1.75
June 2011 14.35 1.68
July 2011 13.01 1.68
August 2011 14.45 1.78
September 2011 14.10 1.75
October 2011 14.84 1.67
November 2011 16.49 1.65
December 2011 14.90 1.64
January 2012 17.25 1.68
February 2012 15.74 1.75
March 2012 15.80 1.82
April 2012 16.45 1.76
May 2012 20.67 1.83
June 2012 14.35 1.84
July 2012 16.08 1.77
August 2012 17.24 1.82
September 2012 17.32 1.65
October 2012 16.78 1.68
November 2012 17.29 1.70
December 2012 15.95 1.74
January 2013 17.31 1.93
February 2013 19.64 1.87
March 2013 18.99 1.71
April 2013 17.46 1.89
May 2013 19.59 1.86
June 2013 18.41 1.84
July 2013 21.16 1.95
August 2013 15.00 1.97
September 2013 20.51 1.98
October 2013 21.72 1.97
November 2013 23.11 1.95
December 2013 23.07 1.88
January 2014 21.37 1.93
February 2014 20.57 1.98
March 2014 23.08 1.97
April 2014 23.51 1.98
May 2014 24.51 2.04
June 2014 25.42 2.00
July 2014 25.25 2.08
August 2014 24.80 2.04
September 2014 21.63 2.23
October 2014 24.64 2.22
November 2014 24.02 2.14
December 2014 25.22 2.12
January 2015 25.34 2.21
February 2015 27.57 2.15
March 2015 25.22 2.15
April 2015 26.49 2.12
May 2015 29.44 2.18
June 2015 23.41 2.15
July 2015 26.31 2.14
August 2015 27.65 2.24
September 2015 27.67 2.16
October 2015 27.58 2.18
November 2015 26.93 2.24
December 2015 28.31 2.41
January 2016 28.38 2.21
February 2016 26.61 2.30
March 2016 26.34 2.29
April 2016 28.51 2.25
May 2016 27.35 2.28
June 2016 28.40 2.28
July 2016 27.28 2.30
August 2016 29.56 2.33
September 2016 24.73 2.34
October 2016 28.51 2.30
November 2016 29.91 2.40
December 2016 29.08 ND

Source: For jobs hard to fill, Small Business Economic Trends, National Federation of Independent Business; for quits rate, Bureau of Labor Statistics.

Figure 3. Wage Growth

Percent change from a year earlier
Period Employment cost
index		 Compensation per hour
(4-Quarter average)
2000:Q1 4.63 4.79
2000:Q2 4.57 5.52
2000:Q3 4.66 6.73
2000:Q4 4.24 7.24
2001:Q1 4.42 6.96
2001:Q2 4.25 6.61
2001:Q3 4.33 5.46
2001:Q4 4.43 4.68
2002:Q1 3.76 3.67
2002:Q2 3.96 2.86
2002:Q3 3.46 2.62
2002:Q4 3.09 2.20
2003:Q1 3.63 2.35
2003:Q2 3.48 2.62
2003:Q3 3.90 2.99
2003:Q4 4.00 3.78
2004:Q1 3.83 4.35
2004:Q2 3.90 4.64
2004:Q3 3.76 4.85
2004:Q4 3.85 4.63
2005:Q1 3.48 4.74
2005:Q2 3.13 4.45
2005:Q3 2.90 3.95
2005:Q4 2.88 3.60
2006:Q1 2.65 3.51
2006:Q2 2.83 3.70
2006:Q3 3.02 3.69
2006:Q4 3.20 3.93
2007:Q1 3.17 3.85
2007:Q2 3.15 3.97
2007:Q3 3.12 4.43
2007:Q4 3.00 4.44
2008:Q1 3.17 3.98
2008:Q2 2.96 3.40
2008:Q3 2.84 2.89
2008:Q4 2.45 2.62
2009:Q1 1.86 1.85
2009:Q2 1.48 1.69
2009:Q3 1.20 1.40
2009:Q4 1.19 0.99
2010:Q1 1.65 1.86
2010:Q2 1.92 1.86
2010:Q3 2.00 1.81
2010:Q4 2.09 1.81
2011:Q1 1.98 2.01
2011:Q2 2.33 2.11
2011:Q3 2.14 2.30
2011:Q4 2.22 2.12
2012:Q1 2.12 1.48
2012:Q2 1.84 1.52
2012:Q3 1.92 1.44
2012:Q4 1.83 2.75
2013:Q1 1.90 2.76
2013:Q2 1.89 2.72
2013:Q3 1.88 2.81
2013:Q4 1.96 1.35
2014:Q1 1.70 1.96
2014:Q2 2.02 1.88
2014:Q3 2.27 1.94
2014:Q4 2.35 2.64
2015:Q1 2.75 2.10
2015:Q2 1.90 2.48
2015:Q3 1.89 2.69
2015:Q4 1.88 2.79
2016:Q1 1.79 3.02
2016:Q2 2.35 2.84
2016:Q3 2.26 2.75
2016:Q4 ND ND

Source: Bureau of Labor Statistics.

Percent change from a year earlier
Period Average hourly
earnings
March 2007 3.44
April 2007 3.13
May 2007 3.53
June 2007 3.61
July 2007 3.25
August 2007 3.35
September 2007 3.09
October 2007 3.03
November 2007 3.07
December 2007 2.92
January 2008 2.91
February 2008 2.85
March 2008 3.04
April 2008 2.89
May 2008 3.07
June 2008 2.67
July 2008 3.05
August 2008 3.33
September 2008 3.28
October 2008 3.32
November 2008 3.50
December 2008 3.59
January 2009 3.58
February 2009 3.43
March 2009 3.28
April 2009 3.37
May 2009 2.93
June 2009 2.88
July 2009 2.69
August 2009 2.44
September 2009 2.44
October 2009 2.53
November 2009 2.15
December 2009 1.96
January 2010 2.09
February 2010 2.09
March 2010 1.81
April 2010 1.81
May 2010 1.90
June 2010 1.76
July 2010 1.85
August 2010 1.75
September 2010 1.84
October 2010 1.93
November 2010 1.79
December 2010 1.74
January 2011 1.92
February 2011 1.83
March 2011 1.83
April 2011 1.87
May 2011 2.04
June 2011 2.13
July 2011 2.30
August 2011 1.95
September 2011 1.94
October 2011 2.07
November 2011 1.98
December 2011 2.07
January 2012 1.75
February 2012 1.79
March 2012 2.14
April 2012 2.05
May 2012 1.78
June 2012 1.96
July 2012 1.77
August 2012 1.86
September 2012 2.03
October 2012 1.55
November 2012 1.94
December 2012 2.15
January 2013 2.15
February 2013 2.15
March 2013 1.93
April 2013 2.05
May 2013 2.09
June 2013 2.22
July 2013 1.96
August 2013 2.30
September 2013 2.08
October 2013 2.25
November 2013 2.24
December 2013 1.98
January 2014 2.02
February 2014 2.31
March 2014 2.18
April 2014 1.97
May 2014 2.13
June 2014 2.04
July 2014 2.09
August 2014 2.16
September 2014 2.04
October 2014 1.99
November 2014 2.11
December 2014 1.69
January 2015 2.19
February 2015 1.93
March 2015 2.22
April 2015 2.34
May 2015 2.34
June 2015 2.00
July 2015 2.25
August 2015 2.32
September 2015 2.36
October 2015 2.56
November 2015 2.39
December 2015 2.64
January 2016 2.50
February 2016 2.38
March 2016 2.33
April 2016 2.49
May 2016 2.48
June 2016 2.64
July 2016 2.72
August 2016 2.47
September 2016 2.67
October 2016 2.82
November 2016 2.49
December 2016 2.93

Source: Bureau of Labor Statistics.

Figure 4. Undershooting and Inflation

Percent
Period Unemployment gap Core PCE inflation
1980:Q1 0.10 8.82
1980:Q2 1.10 8.86
1980:Q3 1.50 9.27
1980:Q4 1.20 9.65
1981:Q1 1.20 9.41
1981:Q2 1.20 9.04
1981:Q3 1.20 8.62
1981:Q4 2.00 7.92
1982:Q1 2.70 7.10
1982:Q2 3.30 6.54
1982:Q3 3.80 6.30
1982:Q4 4.60 5.92
1983:Q1 4.30 5.83
1983:Q2 4.00 5.24
1983:Q3 3.30 5.16
1983:Q4 2.40 4.54
1984:Q1 1.80 4.17
1984:Q2 1.40 4.58
1984:Q3 1.40 3.98
1984:Q4 1.30 3.89
1985:Q1 1.30 4.28
1985:Q2 1.30 4.01
1985:Q3 1.20 4.11
1985:Q4 1.00 4.09
1986:Q1 1.00 3.79
1986:Q2 1.20 3.54
1986:Q3 1.00 3.15
1986:Q4 0.80 3.25
1987:Q1 0.60 2.78
1987:Q2 0.30 3.08
1987:Q3 0.00 3.30
1987:Q4 -0.10 3.54
1988:Q1 -0.20 3.88
1988:Q2 -0.40 4.14
1988:Q3 -0.40 4.42
1988:Q4 -0.60 4.49
1989:Q1 -0.70 4.60
1989:Q2 -0.70 4.27
1989:Q3 -0.60 3.82
1989:Q4 -0.50 3.62
1990:Q1 -0.60 3.69
1990:Q2 -0.60 3.91
1990:Q3 -0.20 4.20
1990:Q4 0.30 4.12
1991:Q1 0.80 3.83
1991:Q2 1.00 3.47
1991:Q3 1.10 3.37
1991:Q4 1.40 3.32
1992:Q1 1.70 3.22
1992:Q2 1.90 3.16
1992:Q3 2.00 2.85
1992:Q4 1.80 2.82
1993:Q1 1.60 2.75
1993:Q2 1.60 2.81
1993:Q3 1.30 2.78
1993:Q4 1.10 2.55
1994:Q1 1.20 2.30
1994:Q2 0.80 2.21
1994:Q3 0.60 2.20
1994:Q4 0.20 2.20
1995:Q1 0.20 2.26
1995:Q2 0.40 2.17
1995:Q3 0.40 2.08
1995:Q4 0.30 2.07
1996:Q1 0.30 1.96
1996:Q2 0.30 1.85
1996:Q3 0.10 1.84
1996:Q4 0.10 1.90
1997:Q1 0.00 1.89
1997:Q2 -0.10 1.94
1997:Q3 -0.20 1.71
1997:Q4 -0.40 1.45
1998:Q1 -0.50 1.34
1998:Q2 -0.70 1.12
1998:Q3 -0.60 1.25
1998:Q4 -0.70 1.24
1999:Q1 -0.70 1.29
1999:Q2 -0.70 1.29
1999:Q3 -0.80 1.29
1999:Q4 -0.90 1.44
2000:Q1 -1.00 1.67
2000:Q2 -1.10 1.69
2000:Q3 -1.00 1.80
2000:Q4 -1.10 1.83
2001:Q1 -0.80 1.84
2001:Q2 -0.60 1.91
2001:Q3 -0.20 1.73
2001:Q4 0.50 1.76
2002:Q1 0.70 1.48
2002:Q2 0.80 1.67
2002:Q3 0.70 1.91
2002:Q4 0.80 1.75
2003:Q1 0.90 1.70
2003:Q2 1.20 1.48
2003:Q3 1.10 1.37
2003:Q4 0.80 1.37
2004:Q1 0.70 1.67
2004:Q2 0.60 1.92
2004:Q3 0.40 1.97
2004:Q4 0.40 2.09
2005:Q1 0.30 2.19
2005:Q2 0.10 2.12
2005:Q3 0.00 2.07
2005:Q4 0.00 2.26
2006:Q1 -0.30 2.13
2006:Q2 -0.30 2.27
2006:Q3 -0.40 2.39
2006:Q4 -0.50 2.16
2007:Q1 -0.50 2.36
2007:Q2 -0.40 2.04
2007:Q3 -0.20 1.99
2007:Q4 -0.10 2.25
2008:Q1 0.10 2.11
2008:Q2 0.40 2.27
2008:Q3 1.10 2.23
2008:Q4 2.00 1.64
2009:Q1 3.40 1.18
2009:Q2 4.30 1.16
2009:Q3 4.60 0.99
2009:Q4 4.90 1.42
2010:Q1 4.70 1.55
2010:Q2 4.60 1.33
2010:Q3 4.40 1.29
2010:Q4 4.40 0.97
2011:Q1 3.90 1.05
2011:Q2 4.00 1.40
2011:Q3 3.80 1.66
2011:Q4 3.50 1.86
2012:Q1 3.20 2.09
2012:Q2 3.10 1.95
2012:Q3 2.90 1.75
2012:Q4 2.70 1.78
2013:Q1 2.60 1.63
2013:Q2 2.50 1.44
2013:Q3 2.30 1.48
2013:Q4 2.00 1.49
2014:Q1 1.60 1.48
2014:Q2 1.30 1.71
2014:Q3 1.20 1.73
2014:Q4 0.80 1.57
2015:Q1 0.60 1.44
2015:Q2 0.50 1.37
2015:Q3 0.20 1.35
2015:Q4 0.10 1.37
2016:Q1 0.00 1.61
2016:Q2 0.10 1.61
2016:Q3 0.10 1.69
2016:Q4 -0.10  

Note: The unemployment gap is the difference between the unemployment rate and its estimated long-run normal level. Core PCE inflation is the four-quarter percent change in the price index for personal consumption expenditures excluding food and energy. The yellow bars represent periods when the unemployment rate was below the CBO's estimate of its normal longer-run value. The three episodes shown in the figure are 1987:Q4 to 1990:Q3, 1997:Q2 to 2001:Q3, and 2006:Q1 to 2007:Q4.
Source: For the unemployment rate, the Bureau of Labor Statistics; for the long-run normal level of the unemployment rate, the Congressional Budget Office; and for core PCE inflation, the Bureau of Economic Analysis.

Figure 5. FOMC Participants' Assessments of Appropriate Policy and Prescriptions from the Taylor Rule

 

December 2016 SEP Projections
Midpoint of target
range or target level
(Percent)		 2016 2017 2018 2019
0.125        
0.250        
0.375        
0.500        
0.625 17      
0.750        
0.875   2 1 1
1.000        
1.125   4    
1.250        
1.375   6    
1.500        
1.625   3 1  
1.750   1    
1.875     5  
2.000        
2.125   1 3 1
2.250        
2.375     2 2
2.500        
2.625     2 3
2.750        
2.875       2
3.000     1 2
3.125       2
3.250     1 2
3.375     1  
3.500        
3.625       1
3.750        
3.875       1
Percent
Period Taylor rule (R* = 2) Median of projections
2016 3.650 0.625
2017 4.000 1.375
2018 4.300 2.125
2019 4.300 2.875

Note: Each solid circle indicates the value of an individual participant's judgment of the midpoint of the appropriate target range for the federal funds rate at the end of the specified calendar year.
Source: For the Taylor rule, Federal Reserve Board staff calculations; for the projections (solid circles) and median of projections, Summary of Economic Projections (SEP), December 2016, available at www.federalreserve.gov/monetarypolicy/fomccalendars.htm.

Figure 6. Evolving Estimates of the Long-Run Normal Levels of Real Short-Term Interest Rates and the Unemployment Rate

Percent
Period Projected long-run
real short-term
interest rates
(Blue Chip)		 Projected long-run
real short-term
interest rates
(median SEP projection)		 Projected long-run
unemployment rate
(Blue Chip)		 Projected long-run
unemployment rate
(median SEP projection)
2000:Q1 3.10 ND 4.70 ND
2000:Q2 3.10 ND 4.67 ND
2000:Q3 3.10 ND 4.63 ND
2000:Q4 3.10 ND 4.60 ND
2001:Q1 3.00 ND 4.60 ND
2001:Q2 2.84 ND 4.70 ND
2001:Q3 2.67 ND 4.80 ND
2001:Q4 2.50 ND 4.90 ND
2002:Q1 2.40 ND 4.90 ND
2002:Q2 2.40 ND 4.93 ND
2002:Q3 2.40 ND 4.97 ND
2002:Q4 2.40 ND 5.00 ND
2003:Q1 2.20 ND 5.10 ND
2003:Q2 2.20 ND 5.13 ND
2003:Q3 2.20 ND 5.17 ND
2003:Q4 2.20 ND 5.20 ND
2004:Q1 2.10 ND 5.10 ND
2004:Q2 2.13 ND 5.07 ND
2004:Q3 2.17 ND 5.03 ND
2004:Q4 2.20 ND 5.00 ND
2005:Q1 2.20 ND 5.00 ND
2005:Q2 2.17 ND 4.97 ND
2005:Q3 2.13 ND 4.93 ND
2005:Q4 2.10 ND 4.90 ND
2006:Q1 2.50 ND 4.90 ND
2006:Q2 2.47 ND 4.90 ND
2006:Q3 2.43 ND 4.90 ND
2006:Q4 2.40 ND 4.90 ND
2007:Q1 2.60 ND 4.80 ND
2007:Q2 2.53 ND 4.80 ND
2007:Q3 2.47 ND 4.80 ND
2007:Q4 2.40 ND 4.80 ND
2008:Q1 2.30 ND 4.80 ND
2008:Q2 2.30 ND 4.90 ND
2008:Q3 2.30 ND 5.00 ND
2008:Q4 2.30 ND 5.10 ND
2009:Q1 1.90 ND 5.50 4.90
2009:Q2 1.97 ND 5.60 4.90
2009:Q3 2.03 ND 5.70 5.00
2009:Q4 2.10 ND 5.80 5.10
2010:Q1 2.00 ND 6.00 5.10
2010:Q2 1.93 ND 5.97 5.15
2010:Q3 1.87 ND 5.93 5.30
2010:Q4 1.80 ND 5.90 5.50
2011:Q1 1.80 ND 5.60 5.50
2011:Q2 1.73 ND 5.73 5.40
2011:Q3 1.67 ND 5.87 5.40
2011:Q4 1.60 ND 6.00 5.60
2012:Q1 1.50 2.25 5.80 5.60
2012:Q2 1.50 2.25 5.80 5.60
2012:Q3 1.50 2.00 5.80 5.60
2012:Q4 1.50 2.00 5.80 5.60
2013:Q1 1.50 2.00 5.60 5.60
2013:Q2 1.50 2.00 5.60 5.60
2013:Q3 1.50 2.00 5.60 5.50
2013:Q4 1.50 2.00 5.60 5.50
2014:Q1 1.50 2.00 5.30 5.50
2014:Q2 1.43 2.00 5.33 5.40
2014:Q3 1.37 1.75 5.37 5.35
2014:Q4 1.30 1.75 5.40 5.35
2015:Q1 1.30 1.75 5.10 5.10
2015:Q2 1.20 1.75 5.07 5.10
2015:Q3 1.10 1.40 5.03 4.90
2015:Q4 1.00 1.30 5.00 4.90
2016:Q1 0.90 1.30 4.90 4.80
2016:Q2 0.87 1.00 4.87 4.80
2016:Q3 0.83 0.90 4.83 4.80
2016:Q4 0.80 1.00 4.80 4.80

Note: For the Summary of Economic Projections (SEP) medians, real short-term interest rates equal the federal funds rate less inflation as measured by the price index for personal consumption expenditures; for the Blue Chip, they equal the 3-month Treasury bill rate less inflation as measured by the price index for gross domestic product.
Source: For the Blue Chip data, Blue Chip Economic Indicators, from Wolters Kluwer Legal and Regulatory Solutions, various releases; for the median SEP projections, various SEP releases, available at www.federalreserve.gov/monetarypolicy/fomccalendars.htm.

Figure 7. FOMC Participants' Assessments of Appropriate Policy and Taylor Rule Prescriptions with Alternative Estimates of R*

December 2016 SEP Projections
Midpoint of target
range or target level
(Percent)		 2016 2017 2018 2019
0.125        
0.250        
0.375        
0.500        
0.625 17      
0.750        
0.875   2 1 1
1.000        
1.125   4    
1.250        
1.375   6    
1.500        
1.625   3 1  
1.750   1    
1.875     5  
2.000        
2.125   1 3 1
2.250        
2.375     2 2
2.500        
2.625     2 3
2.750        
2.875       2
3.000     1 2
3.125       2
3.250     1 2
3.375     1  
3.500        
3.625       1
3.750        
3.875       1
Percent
Period Taylor rule (R* = 2) Taylor rule (R* = 1) Taylor rule (R* = 0) Median of projections
2016 3.650 2.650 1.650 0.625
2017 4.000 3.000 2.000 1.375
2018 4.300 3.300 2.300 2.125
2019 4.300 3.300 2.300 2.875

Note: For the definition of the solid circles, see the note to Figure 5.
Source: For the three versions of the Taylor rule, Federal Reserve Board staff calculations; for the projections (solid circles) and median of projections, Summary of Economic Projections (SEP), December 2016, available at www.federalreserve.gov/monetarypolicy/fomccalendars.htm.

Figure 8. FOMC Participants' Assessments of Appropriate Policy and Prescriptions from Alternative Policy Rules

December 2016 SEP Projections
Midpoint of target
range or target level
(Percent)		 2016 2017 2018 2019
0.125        
0.250        
0.375        
0.500        
0.625 17      
0.750        
0.875   2 1 1
1.000        
1.125   4    
1.250        
1.375   6    
1.500        
1.625   3 1  
1.750   1    
1.875     5  
2.000        
2.125   1 3 1
2.250        
2.375     2 2
2.500        
2.625     2 3
2.750        
2.875       2
3.000     1 2
3.125       2
3.250     1 2
3.375     1  
3.500        
3.625       1
3.750        
3.875       1
Percent
Period Taylor rule (R* = 1) Balanced-approach rule (R* = 1) Change rule Median of projections
2016 2.650 2.750 0.220 0.625
2017 3.000 3.300 0.990 1.375
2018 3.300 3.600 1.980 2.125
2019 3.300 3.600 2.720 2.875

Note: For the definition of the solid circles, see the note to Figure 5.
Source: For the three rules, Federal Reserve Board staff calculations; for the projections (solid circles) and the median of projections, Summary of Economic Projections (SEP), December 2016, available at www.federalreserve.gov/monetarypolicy/fomccalendars.htm.

Figure 9. Historical Funds Rate Prescriptions of Three Simple Policy Rules

Percent
Period Taylor rule Balanced-approach rule Change rule
2000:Q1 5.30 6.00 6.50
2000:Q2 5.40 6.16 7.16
2000:Q3 5.44 6.07 7.53
2000:Q4 5.54 6.24 7.70
2001:Q1 5.17 5.57 7.11
2001:Q2 4.99 5.29 5.49
2001:Q3 4.27 4.27 3.43
2001:Q4 3.54 2.94 1.51
2002:Q1 2.82 2.02 -0.48
2002:Q2 3.04 2.18 -0.37
2002:Q3 3.53 2.80 0.17
2002:Q4 3.22 2.42 -0.15
2003:Q1 2.95 2.15 -0.71
2003:Q2 2.35 1.28 -1.51
2003:Q3 2.32 1.38 -1.63
2003:Q4 2.65 2.05 -0.96
2004:Q1 3.00 2.40 -0.60
2004:Q2 3.47 2.94 -0.17
2004:Q3 3.76 3.39 0.48
2004:Q4 3.94 3.54 1.06
2005:Q1 4.19 3.89 1.88
2005:Q2 4.21 4.08 2.62
2005:Q3 4.17 4.11 3.20
2005:Q4 4.39 4.29 3.86
2006:Q1 4.89 5.09 4.80
2006:Q2 5.07 5.27 5.48
2006:Q3 5.32 5.62 6.32
2006:Q4 5.04 5.44 6.24
2007:Q1 5.44 5.74 6.29
2007:Q2 4.89 5.19 5.89
2007:Q3 4.55 4.65 5.44
2007:Q4 4.77 4.77 5.05
2008:Q1 4.27 4.07 3.98
2008:Q2 4.30 3.90 1.77
2008:Q3 3.64 2.64 0.27
2008:Q4 1.96 0.16 -2.03
2009:Q1 -0.13 -2.93 -6.46
2009:Q2 -0.99 -4.69 -8.28
2009:Q3 -1.38 -5.28 -8.88
2009:Q4 -0.88 -4.98 -8.77
2010:Q1 -0.47 -4.27 -8.01
2010:Q2 -0.81 -4.54 -8.14
2010:Q3 -0.76 -4.33 -7.85
2010:Q4 -1.34 -4.94 -8.31
2011:Q1 -1.02 -4.42 -7.80
2011:Q2 -0.53 -3.90 -7.33
2011:Q3 0.03 -3.11 -6.54
2011:Q4 0.69 -2.01 -5.44
2012:Q1 1.13 -1.37 -4.77
2012:Q2 1.02 -1.38 -4.74
2012:Q3 0.92 -1.28 -4.57
2012:Q4 1.17 -0.83 -4.14
2013:Q1 0.84 -1.26 -4.52
2013:Q2 0.76 -1.14 -4.34
2013:Q3 1.02 -0.68 -3.89
2013:Q4 1.34 -0.06 -3.28
2014:Q1 1.42 0.12 -3.09
2014:Q2 2.13 1.26 -1.95
2014:Q3 2.23 1.50 -1.66
2014:Q4 2.35 2.05 -0.99
2015:Q1 2.06 1.66 -1.35
2015:Q2 1.92 1.59 -1.30
2015:Q3 2.06 1.99 -0.78
2015:Q4 2.05 2.05 -0.63
2016:Q1 2.31 2.31 -0.09
2016:Q2 2.25 2.22 -0.15
2016:Q3 2.30 2.23 -0.13
2016:Q4 2.45 2.55 0.22

Note: The rules use actual historical values of the unemployment rate, 4-quarter core PCE (personal consumption expenditures) inflation, and the federal funds rate as well as the projected values of the long-run real Treasury bill rate and the unemployment rate reported in the Blue Chip survey at the time.
Source: Federal Reserve Board staff calcuations.

Percent
Period Federal funds rate
(month-end)
January 2000 5.50
February 2000 5.75
March 2000 6.00
April 2000 6.00
May 2000 6.50
June 2000 6.50
July 2000 6.50
August 2000 6.50
September 2000 6.50
October 2000 6.50
November 2000 6.50
December 2000 6.50
January 2001 5.50
February 2001 5.50
March 2001 5.00
April 2001 4.50
May 2001 4.00
June 2001 3.75
July 2001 3.75
August 2001 3.50
September 2001 3.00
October 2001 2.50
November 2001 2.00
December 2001 1.75
January 2002 1.75
February 2002 1.75
March 2002 1.75
April 2002 1.75
May 2002 1.75
June 2002 1.75
July 2002 1.75
August 2002 1.75
September 2002 1.75
October 2002 1.75
November 2002 1.25
December 2002 1.25
January 2003 1.25
February 2003 1.25
March 2003 1.25
April 2003 1.25
May 2003 1.25
June 2003 1.00
July 2003 1.00
August 2003 1.00
September 2003 1.00
October 2003 1.00
November 2003 1.00
December 2003 1.00
January 2004 1.00
February 2004 1.00
March 2004 1.00
April 2004 1.00
May 2004 1.00
June 2004 1.25
July 2004 1.25
August 2004 1.50
September 2004 1.75
October 2004 1.75
November 2004 2.00
December 2004 2.25
January 2005 2.25
February 2005 2.50
March 2005 2.75
April 2005 2.75
May 2005 3.00
June 2005 3.25
July 2005 3.25
August 2005 3.50
September 2005 3.75
October 2005 3.75
November 2005 4.00
December 2005 4.25
January 2006 4.50
February 2006 4.50
March 2006 4.75
April 2006 4.75
May 2006 5.00
June 2006 5.25
July 2006 5.25
August 2006 5.25
September 2006 5.25
October 2006 5.25
November 2006 5.25
December 2006 5.25
January 2007 5.25
February 2007 5.25
March 2007 5.25
April 2007 5.25
May 2007 5.25
June 2007 5.25
July 2007 5.25
August 2007 5.25
September 2007 4.75
October 2007 4.50
November 2007 4.50
December 2007 4.25
January 2008 3.00
February 2008 3.00
March 2008 2.25
April 2008 2.00
May 2008 2.00
June 2008 2.00
July 2008 2.00
August 2008 2.00
September 2008 2.00
October 2008 1.00
November 2008 1.00
December 2008 0.13
January 2009 0.13
February 2009 0.13
March 2009 0.13
April 2009 0.13
May 2009 0.13
June 2009 0.13
July 2009 0.13
August 2009 0.13
September 2009 0.13
October 2009 0.13
November 2009 0.13
December 2009 0.13
January 2010 0.13
February 2010 0.13
March 2010 0.13
April 2010 0.13
May 2010 0.13
June 2010 0.13
July 2010 0.13
August 2010 0.13
September 2010 0.13
October 2010 0.13
November 2010 0.13
December 2010 0.13
January 2011 0.13
February 2011 0.13
March 2011 0.13
April 2011 0.13
May 2011 0.13
June 2011 0.13
July 2011 0.13
August 2011 0.13
September 2011 0.13
October 2011 0.13
November 2011 0.13
December 2011 0.13
January 2012 0.13
February 2012 0.13
March 2012 0.13
April 2012 0.13
May 2012 0.13
June 2012 0.13
July 2012 0.13
August 2012 0.13
September 2012 0.13
October 2012 0.13
November 2012 0.13
December 2012 0.13
January 2013 0.13
February 2013 0.13
March 2013 0.13
April 2013 0.13
May 2013 0.13
June 2013 0.13
July 2013 0.13
August 2013 0.13
September 2013 0.13
October 2013 0.13
November 2013 0.13
December 2013 0.13
January 2014 0.13
February 2014 0.13
March 2014 0.13
April 2014 0.13
May 2014 0.13
June 2014 0.13
July 2014 0.13
August 2014 0.13
September 2014 0.13
October 2014 0.13
November 2014 0.13
December 2014 0.13
January 2015 0.13
February 2015 0.13
March 2015 0.13
April 2015 0.13
May 2015 0.13
June 2015 0.13
July 2015 0.13
August 2015 0.13
September 2015 0.13
October 2015 0.13
November 2015 0.13
December 2015 0.38
January 2016 0.38
February 2016 0.38
March 2016 0.38
April 2016 0.38
May 2016 0.38
June 2016 0.38
July 2016 0.38
August 2016 0.38
September 2016 0.38
October 2016 0.38
November 2016 0.38
December 2016 0.63

Source: Federal Reserve Board.

Last Update: January 19, 2017