Finance and Economics Discussion Series (FEDS)
May 2026
Alternative Scenarios at the Federal Reserve from 1968 to 2020: Data, Interpretation, and Evaluation
Edward Herbst, Scott Konzem, and Cristina Scofield
Abstract:
We comprehensively document 1,265 Federal Reserve staff alternative scenarios presented to the Federal Open Market Committee in publicly released materials from 1968 to 2020. Scenarios grew in frequency and sophistication, typically spanning a range of outcomes around the baseline. We construct a taxonomy with six categories: aggregate demand, aggregate supply, external risks, financial conditions, fiscal policy, and expectation shifts. Staff qualitative risk assessments complemented the scenario composition. Comparing scenario forecasts to realized outcomes, the most accurate scenarios often anticipated major macroeconomic developments even when magnitudes were missed, revealing the value and limits of scenario analysis for central bank risk management.
DOI: https://doi.org/10.17016/FEDS.2026.033
PDF: Full Paper
Disclaimer: The economic research that is linked from this page represents the views of the authors and does not indicate concurrence either by other members of the Board's staff or by the Board of Governors. The economic research and their conclusions are often preliminary and are circulated to stimulate discussion and critical comment. The Board values having a staff that conducts research on a wide range of economic topics and that explores a diverse array of perspectives on those topics. The resulting conversations in academia, the economic policy community, and the broader public are important to sharpening our collective thinking.