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FOMC Projections and Press Conference

Summary:
Statement here. Fed Chair Powell press conference video here starting at 2:30 PM ET.Here are the projections.Note that GDP decreased at a 5.0% annual rate in Q1, and decreased at a 31.7% annual rate in Q2.Most forecasts are for GDP to increase at a 25% to 35% annual rate in Q3.It is important to note that GDP is reported at a seasonally adjusted annual rate (SAAR).  A 30% annualized increase in Q3 GDP, is about 6.8% QoQ, and would leave real GDP down about 4.2% from Q4 2019.The course of the economy will depend on the course of the pandemic, so the FOMC has to factor in their expectations of when the pandemic will subside and end (and no one knows at this time).This FOMC revised up their GDP projections for 2020, and revised down their projections for the following years.GDP projections of

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Statement here.

Fed Chair Powell press conference video here starting at 2:30 PM ET.

Here are the projections.

Note that GDP decreased at a 5.0% annual rate in Q1, and decreased at a 31.7% annual rate in Q2.

Most forecasts are for GDP to increase at a 25% to 35% annual rate in Q3.

It is important to note that GDP is reported at a seasonally adjusted annual rate (SAAR).  A 30% annualized increase in Q3 GDP, is about 6.8% QoQ, and would leave real GDP down about 4.2% from Q4 2019.

The course of the economy will depend on the course of the pandemic, so the FOMC has to factor in their expectations of when the pandemic will subside and end (and no one knows at this time).

This FOMC revised up their GDP projections for 2020, and revised down their projections for the following years.

GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1
Projection Date2020202120222023
Sept 2020-4.0 to -3.03.6 to 4.72.5 to 3.32.4 to 3.0
June 2020-7.6 to -5.54.5 to 6.03.0 to 4.5NA
1 Projections of change in real GDP and inflation are from the fourth quarter of the previous year to the fourth quarter of the year indicated.

The unemployment rate was at 8.4% in August.   The unemployment rate declined faster than most expectations.

Note that the unemployment rate doesn't remotely capture the economic damage to the labor market.  Not only are there almost 14 million people unemployed, close to 4 million people have left the labor force since January.  And millions more are being supported by various provisions for the CARES Act - that hasn't been renewed

The unemployment rate was revised down for all three years.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2
Projection Date2020202120222023
Sept 20207.0 to 8.05.0 to 6.24.0 to 5.03.5 to 4.4
June 20209.0 to 10.05.9 to 7.54.8 to 6.1NA
2 Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

As of July 2020, PCE inflation was up 1.0% from July 2019.   The projections for inflation were revised up this month.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1
Projection Date2020202120222023
Sept 20201.1 to 1.31.6 to 1.91.7 to 1.91.9 to 2.0
June 20200.6 to 1.01.4 to 1.71.6 to 1.8NA

PCE core inflation was up 1.3% in July year-over-year.  Projections for core inflation were revised up.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1
Projection Date2020202120222023
Sept 20201.3 to 1.51.6 to 1.81.7 to 1.91.9 to 2.0
June 20200.9 to 1.11.4 to 1.71.6 to 1.8NA

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