Summary of Economic Projections

Embargoed for release at 2:00 p.m., EDT, June 22, 2011

Economic Projections of Federal Reserve Board Members and Federal Reserve Bank Presidents, June 2011 Advance release of table 1 of the Summary of Economic Projections to be released with the FOMC minutes

Percent Variable

Central tendency1

Range2

2011

2012

2013

Longer run

2011

2012

2013

Longer run

Change in real GDP. . . . . . April projection. . . . . .

2.7 to 2.9 3.1 to 3.3

3.3 to 3.7 3.5 to 4.2

3.5 to 4.2 3.5 to 4.3

2.5 to 2.8 2.5 to 2.8

2.5 to 3.0 2.9 to 3.7

2.2 to 4.0 2.9 to 4.4

3.0 to 4.5 3.0 to 5.0

2.4 to 3.0 2.4 to 3.0

Unemployment rate. . . . . . April projection. . . . . .

8.6 to 8.9 8.4 to 8.7

7.8 to 8.2 7.6 to 7.9

7.0 to 7.5 6.8 to 7.2

5.2 to 5.6 5.2 to 5.6

8.4 to 9.1 8.1 to 8.9

7.5 to 8.7 7.1 to 8.4

6.5 to 8.3 6.0 to 8.4

5.0 to 6.0 5.0 to 6.0

PCE inflation. . . . . . . . . . . April projection. . . . . .

2.3 to 2.5 2.1 to 2.8

1.5 to 2.0 1.2 to 2.0

1.5 to 2.0 1.4 to 2.0

1.7 to 2.0 1.7 to 2.0

2.1 to 3.5 2.0 to 3.6

1.2 to 2.8 1.0 to 2.8

1.3 to 2.5 1.2 to 2.5

1.5 to 2.0 1.5 to 2.0

Core PCE inflation3. . . . . . April projection. . . . . .

1.5 to 1.8 1.3 to 1.6

1.4 to 2.0 1.3 to 1.8

1.4 to 2.0 1.4 to 2.0

1.5 to 2.3 1.1 to 2.0

1.2 to 2.5 1.1 to 2.0

1.3 to 2.5 1.2 to 2.0

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 April projections were made in conjunction with the meeting of the Federal Open Market Committee on April 26-27, 2011. 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 consists of all participants’ projections, from lowest to highest, for that variable in that year. 3. Longer-run projections for core PCE inflation are not collected.

Central tendencies and ranges of economic projections, 2011–13 and over the longer run Percent

Change in real GDP

5

Central tendency of projections Range of projections

4 3 2 1 + 0 _

Actual

1 2

2006

2007

2008

2009

2010

2011

2012

2013

Longer run

Percent

Unemployment rate 10 9 8 7 6 5

2006

2007

2008

2009

2010

2011

2012

2013

Longer run

Percent

PCE inflation 5 4 3 2 1 + 0 _

2006

2007

2008

2009

2010

2011

2012

NOTE: Definitions of variables are in the notes to the projections table. The data for the variables are annual.

2013

Longer run

Explanation of Projections Charts The charts show actual values and projections for three economic variables:  Change in Real Gross Domestic Product (GDP)—as measured from the fourth quarter of the previous year to the fourth quarter of the year indicated, with values plotted at the end of each year.  Unemployment Rate—the average civilian unemployment rate in the fourth quarter of each year, with values plotted at the end of each year.  PCE Inflation—as measured by the change in the personal consumption expenditures (PCE) price index from the fourth quarter of the previous year to the fourth quarter of the year indicated, with values plotted at the end of each year. Information for these variables is shown for each year from 2006 to 2013, and for the longer run. The solid line, labeled “Actual,” shows the historical values for each variable. The lightly shaded areas represent the ranges of the projections of policymakers. The bottom of the range for each variable is the lowest of all of the projections for that year or period. Likewise, the top of the range is the highest of all of the projections for that year or period. The dark shaded areas represent the central tendency, which is a narrower version of the range that excludes the three highest and three lowest projections for each variable in each year or period. The longer-run projections, which are shown on the far right side of the charts, are the rates of growth, unemployment, and inflation to which a policymaker expects the economy to converge over time—maybe in five or six years—in the absence of further shocks and under appropriate monetary policy. Because appropriate monetary policy, by definition, is aimed at achieving the Federal Reserve’s dual mandate of maximum employment and price stability in the longer run, policymakers’ longer-run projections for economic growth and unemployment may be interpreted, respectively, as estimates of the economy’s longer-run potential growth rate and the longerrun normal rate of unemployment. Similarly, the longer-run projections of inflation are for the rate of inflation that each policymaker judges to be most consistent with the Federal Reserve’s dual mandate in the longer term.