Part 3: Summary of Economic Projections

Monetary Policy Report submitted to the Congress on June 12, 2020, pursuant to section 2B of the Federal Reserve Act

In conjunction with the Federal Open Market Committee (FOMC) meeting held on June 9–10, 2020, meeting participants submitted their projections of the most likely outcomes for real gross domestic product (GDP) growth, the unemployment rate, and inflation for each year from 2020 through 2022 and over the longer run. Each participant's projections were based on information available at the time of the meeting, together with his or her assessment of appropriate monetary policy and assumptions about other factors likely to affect economic outcomes. The longer-run projections represent each participant's assessment of the value to which each variable would be expected to converge, over time, under appropriate monetary policy and in the absence of further shocks to the economy.23 "Appropriate monetary policy" is defined as the future path of policy that each participant deems most likely to foster outcomes for economic activity and inflation that best satisfy his or her individual interpretation of the Federal Reserve's congressionally mandated goals of promoting maximum employment and price stability.

All participants judged that the uncertainty attending their projections was higher than the average of the past 20 years. The median of participants' projections for real GDP growth was negative 6.5 percent for 2020, with individual projections ranging from negative 10.0 to negative 4.2 percent table 1 and figure 1. The median of projections for real GDP growth was 5.0 percent for 2021 and 3.5 percent for 2022. The median assessment of real GDP growth in the longer run was 1.8 percent, down 0.1 percentage point since the December 2019 projections included in the February 2020 Monetary Policy Report.

Table 1. Economic projections of Federal Reserve Board members and Federal Reserve Bank presidents, under their individual assumptions of projected appropriate monetary policy, June 2020

Percent

Variable Median 1 Central tendency2 Range3
2020 2021 2022 Longer
run
2020 2021 2022 Longer
run
2020 2021 2022 Longer
run
Change in real GDP -6.5 5 3.5 1.8 -7.6– -5.5 4.5–6.0 3.0–4.5 1.7–2.0 -10.0– -4.2 -1.0–7.0 2.0–6.0 1.6–2.2
December projection 2 1.9 1.8 1.9 2.0–2.2 1.8–2.0 1.8–2.0 1.8–2.0 1.8–2.3 1.7–2.2 1.5–2.2 1.7–2.2
Unemployment rate 9.3 6.5 5.5 4.1 9.0–10.0 5.9–7.5 4.8–6.1 4.0–4.3 7.0–14.0 4.5–12.0 4.0–8.0 3.5–4.7
December projection 3.5 3.6 3.7 4.1 3.5–3.7 3.5–3.9 3.5–4.0 3.9–4.3 3.3–3.8 3.3–4.0 3.3–4.1 3.5–4.5
PCE inflation 0.8 1.6 1.7 2 0.6–1.0 1.4–1.7 1.6–1.8 2 0.5–1.2 1.1–2.0 1.4–2.2 2
December projection 1.9 2 2 2 1.8–1.9 2.0–2.1 2.0–2.2 2 1.7–2.1 1.8–2.3 1.8–2.2 2
Core PCE inflation4 1 1.5 1.7   0.9–1.1 1.4–1.7 1.6–1.8   0.7–1.3 1.2–2.0 1.2–2.2  
December projection 1.9 2 2   1.9–2.0 2.0–2.1 2.0–2.2   1.7–2.1 1.8–2.3 1.8–2.2  
Memo: Projected appropriate policy path
Federal funds rate 0.1 0.1 0.1 2.5 0.1 0.1 0.1 2.3–2.5 0.1 0.1 0.1–1.1 2.0–3.0
December projection 1.6 1.9 2.1 2.5 1.6–1.9 1.6–2.1 1.9–2.6 2.4–2.8 1.6–1.9 1.6–2.4 1.6–2.9 2.0–3.3

Note: Projections of change in real gross domestic product (GDP) and projections for both measures of inflation are percent changes 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 projections for the federal funds rate are the value of the midpoint of the projected appropriate target range for the federal funds rate or the projected appropriate target level for the federal funds rate at the end of the specified calendar year or over the longer run. The December projections were made in conjunction with the meeting of the Federal Open Market Committee on December 10–11, 2019. One participant did not submit longer-run projections for the change in real GDP, the unemployment rate, or the federal funds rate in conjunction with the December 10–11, 2019, meeting, and one participant did not submit such projections in conjunction with the June 9–10, 2020, meeting. No projections were submitted in conjunction with the March 2020 FOMC meeting.

 1. For each period, the median is the middle projection when the projections are arranged from lowest to highest. When the number of projections is even, the median is the average of the two middle projections. Return to table

 2. The central tendency excludes the three highest and three lowest projections for each variable in each year. Return to table

 3. The range for a variable in a given year includes all participants' projections, from lowest to highest, for that variable in that year. Return to table

 4. Longer-run projections for core PCE inflation are not collected. Return to table

The median of projections for the unemployment rate in the fourth quarter of 2020 was 9.3 percent, with individual projections ranging from 7.0 to 14.0 percent. The median of projections for the unemployment rate was 6.5 percent and 5.5 percent in the fourth quarter of 2021 and 2022, respectively. These values are above the median assessment of the longer-run normal unemployment rate, 4.1 percent, which was unchanged from December.

The median of projections for inflation, as measured by changes in the price index for personal consumption expenditures (PCE), was 0.8 percent for 2020, 1.6 percent for 2021, and 1.7 percent for 2022. Almost all participants expected inflation to run below the Committee's longer-run objective of 2 percent through 2022. The medians of projections for core PCE inflation were 1.0 percent for this year, 1.5 percent for 2021, and 1.7 percent for 2022.

With regard to participants' projections of appropriate monetary policy, almost all participants expected to maintain the target range for the federal funds rate at 0 to 1/4 percent through at least the end of 2022 (figure 2). These projections represent participants' individual assessments of appropriate policy consistent with their projections of economic growth, employment, inflation, and other factors. However, the economic outlook is inherently uncertain; thus, each participant's assessment of appropriate policy is also necessarily uncertain and will change in response to changes to the economic outlook and associated risks. The median estimate of the longer-run level for the federal funds rate, 2.5 percent, was unchanged from December.

A more complete description of the Summary of Economic Projections will be released with the minutes of the June 9–10, 2020, FOMC meeting on July 1.

Footnotes

 23. One participant did not submit longer-run projections in conjunction with the June 2020 FOMC meeting. Return to text

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Last Update: June 23, 2020