Accessible Version
Accessible Version
Economic Outlook and Monetary Policy Implementation
Philip N. Jefferson
Vice Chair, Federal Reserve Board
American Institute for Economic Research, Shadow Open Market Committee, and Florida Atlantic University Conference Boca Raton, Florida
January 16, 2026
The views expressed here are my own and are not necessarily those of my colleagues on the Federal Reserve Board or the Federal Open Market Committee.
Roadmap of Talk
- Views on Economic Outlook
- Implications for Monetary Policy
- Developments in Federal Reserve's Monetary Policy Implementation
- Conclusion
Figure 1: Real Gross Domestic Product
Percent
| Date | GDP Growth |
|---|---|
| 2022 H1 | -0.2 |
| 2022 H2 | 2.9 |
| 2023 H1 | 2.7 |
| 2023 H2 | 4.1 |
| 2024 H1 | 2.2 |
| 2024 H2 | 2.6 |
| 2025 H1 | 1.6 |
| 2025 Q3 | 4.3 |
Note: Percent change from preceding period. The vertical dashed line separates half-yearly GDP data from quarterly GDP data. Half-year GDP values represent Q4:Q2 and Q2:Q4 comparisons, and quarterly values represent percent change from one quarter ago. Seasonally adjusted.
Source: U.S. Bureau of Economic Analysis, Real Gross Domestic Product, retrieved from FRED, Federal Reserve Bank of St. Louis.
Figure 2: Monthly Nonfarm Payroll Gains
Thousands, monthly
| Date | Gains |
|---|---|
| 2022-01-01 | 225 |
| 2022-02-01 | 869 |
| 2022-03-01 | 471 |
| 2022-04-01 | 305 |
| 2022-05-01 | 241 |
| 2022-06-01 | 461 |
| 2022-07-01 | 696 |
| 2022-08-01 | 237 |
| 2022-09-01 | 227 |
| 2022-10-01 | 400 |
| 2022-11-01 | 297 |
| 2022-12-01 | 126 |
| 2023-01-01 | 444 |
| 2023-02-01 | 306 |
| 2023-03-01 | 85 |
| 2023-04-01 | 216 |
| 2023-05-01 | 227 |
| 2023-06-01 | 257 |
| 2023-07-01 | 148 |
| 2023-08-01 | 157 |
| 2023-09-01 | 158 |
| 2023-10-01 | 186 |
| 2023-11-01 | 141 |
| 2023-12-01 | 269 |
| 2024-01-01 | 119 |
| 2024-02-01 | 222 |
| 2024-03-01 | 246 |
| 2024-04-01 | 118 |
| 2024-05-01 | 193 |
| 2024-06-01 | 87 |
| 2024-07-01 | 88 |
| 2024-08-01 | 71 |
| 2024-09-01 | 240 |
| 2024-10-01 | 44 |
| 2024-11-01 | 261 |
| 2024-12-01 | 323 |
| 2025-01-01 | 111 |
| 2025-02-01 | 102 |
| 2025-03-01 | 120 |
| 2025-04-01 | 158 |
| 2025-05-01 | 19 |
| 2025-06-01 | -13 |
| 2025-07-01 | 72 |
| 2025-08-01 | -26 |
| 2025-09-01 | 108 |
| 2025-10-01 | -173 |
| 2025-11-01 | 56 |
| 2025-12-01 | 50 |
Note: Seasonally adjusted.
Source: U.S. Bureau of Labor Statistics, All Employees, Total Nonfarm, retrieved from FRED, Federal Reserve Bank of St. Louis.
Figure 3: Unemployment Rate
Percent
| Date | Monthly unemployment rate |
|---|---|
| 2022-01-01 | 4.0 |
| 2022-02-01 | 3.9 |
| 2022-03-01 | 3.7 |
| 2022-04-01 | 3.7 |
| 2022-05-01 | 3.6 |
| 2022-06-01 | 3.6 |
| 2022-07-01 | 3.5 |
| 2022-08-01 | 3.6 |
| 2022-09-01 | 3.5 |
| 2022-10-01 | 3.6 |
| 2022-11-01 | 3.6 |
| 2022-12-01 | 3.5 |
| 2023-01-01 | 3.5 |
| 2023-02-01 | 3.6 |
| 2023-03-01 | 3.5 |
| 2023-04-01 | 3.4 |
| 2023-05-01 | 3.6 |
| 2023-06-01 | 3.6 |
| 2023-07-01 | 3.5 |
| 2023-08-01 | 3.7 |
| 2023-09-01 | 3.7 |
| 2023-10-01 | 3.9 |
| 2023-11-01 | 3.7 |
| 2023-12-01 | 3.8 |
| 2024-01-01 | 3.7 |
| 2024-02-01 | 3.9 |
| 2024-03-01 | 3.9 |
| 2024-04-01 | 3.9 |
| 2024-05-01 | 3.9 |
| 2024-06-01 | 4.1 |
| 2024-07-01 | 4.2 |
| 2024-08-01 | 4.2 |
| 2024-09-01 | 4.1 |
| 2024-10-01 | 4.1 |
| 2024-11-01 | 4.2 |
| 2024-12-01 | 4.1 |
| 2025-01-01 | 4.0 |
| 2025-02-01 | 4.2 |
| 2025-03-01 | 4.2 |
| 2025-04-01 | 4.2 |
| 2025-05-01 | 4.3 |
| 2025-06-01 | 4.1 |
| 2025-07-01 | 4.3 |
| 2025-08-01 | 4.3 |
| 2025-09-01 | 4.4 |
| 2025-10-01 | |
| 2025-11-01 | 4.5 |
| 2025-12-01 | 4.4 |
Note: There is no data for October 2025.
Source: U.S. Bureau of Labor Statistics, Unemployment Rate, retrieved from FRED, Federal Reserve Bank of St. Louis.
Figure 4: Nonfarm Job Openings/Unemployment Level
Level of openings/unemployed persons
| Date | Monthly Vacancy/Unemployment Ratio |
|---|---|
| 2022-01-01 | 1.72 |
| 2022-02-01 | 1.84 |
| 2022-03-01 | 2.01 |
| 2022-04-01 | 1.98 |
| 2022-05-01 | 1.92 |
| 2022-06-01 | 1.88 |
| 2022-07-01 | 2.01 |
| 2022-08-01 | 1.72 |
| 2022-09-01 | 1.88 |
| 2022-10-01 | 1.76 |
| 2022-11-01 | 1.79 |
| 2022-12-01 | 1.88 |
| 2023-01-01 | 1.80 |
| 2023-02-01 | 1.64 |
| 2023-03-01 | 1.63 |
| 2023-04-01 | 1.74 |
| 2023-05-01 | 1.53 |
| 2023-06-01 | 1.54 |
| 2023-07-01 | 1.45 |
| 2023-08-01 | 1.48 |
| 2023-09-01 | 1.48 |
| 2023-10-01 | 1.32 |
| 2023-11-01 | 1.39 |
| 2023-12-01 | 1.36 |
| 2024-01-01 | 1.37 |
| 2024-02-01 | 1.30 |
| 2024-03-01 | 1.24 |
| 2024-04-01 | 1.17 |
| 2024-05-01 | 1.19 |
| 2024-06-01 | 1.08 |
| 2024-07-01 | 1.06 |
| 2024-08-01 | 1.08 |
| 2024-09-01 | 1.04 |
| 2024-10-01 | 1.10 |
| 2024-11-01 | 1.13 |
| 2024-12-01 | 1.08 |
| 2025-01-01 | 1.13 |
| 2025-02-01 | 1.05 |
| 2025-03-01 | 1.01 |
| 2025-04-01 | 1.03 |
| 2025-05-01 | 1.06 |
| 2025-06-01 | 1.04 |
| 2025-07-01 | 0.99 |
| 2025-08-01 | 0.98 |
| 2025-09-01 | 1.01 |
| 2025-10-01 | |
| 2025-11-01 | 0.92 |
Note: There is no data for October 2025. Seasonally adjusted.
Source: U.S. Bureau of Labor Statistics, Job Openings: Total Nonfarm and Unemployment Level, retrieved from FRED, Federal Reserve Bank of St. Louis.
Figure 5: 12-Month CPI and Core CPI Inflation
12-month percent change, monthly
| Date | CPI Inflation | Core CPI Inflation |
|---|---|---|
| 2022-01-31 | 7.58 | 6.06 |
| 2022-02-28 | 7.95 | 6.46 |
| 2022-03-31 | 8.54 | 6.48 |
| 2022-04-30 | 8.24 | 6.16 |
| 2022-05-31 | 8.53 | 6.02 |
| 2022-06-30 | 9.00 | 5.91 |
| 2022-07-31 | 8.45 | 5.90 |
| 2022-08-31 | 8.22 | 6.29 |
| 2022-09-30 | 8.21 | 6.63 |
| 2022-10-31 | 7.76 | 6.30 |
| 2022-11-30 | 7.13 | 5.96 |
| 2022-12-31 | 6.41 | 5.68 |
| 2023-01-31 | 6.34 | 5.54 |
| 2023-02-28 | 5.96 | 5.50 |
| 2023-03-31 | 4.93 | 5.56 |
| 2023-04-30 | 4.95 | 5.51 |
| 2023-05-31 | 4.13 | 5.34 |
| 2023-06-30 | 3.06 | 4.86 |
| 2023-07-31 | 3.28 | 4.70 |
| 2023-08-31 | 3.72 | 4.40 |
| 2023-09-30 | 3.70 | 4.14 |
| 2023-10-31 | 3.25 | 4.03 |
| 2023-11-30 | 3.14 | 4.01 |
| 2023-12-31 | 3.32 | 3.91 |
| 2024-01-31 | 3.11 | 3.87 |
| 2024-02-29 | 3.17 | 3.77 |
| 2024-03-31 | 3.47 | 3.81 |
| 2024-04-30 | 3.35 | 3.62 |
| 2024-05-31 | 3.24 | 3.39 |
| 2024-06-30 | 2.97 | 3.26 |
| 2024-07-31 | 2.94 | 3.23 |
| 2024-08-31 | 2.61 | 3.29 |
| 2024-09-30 | 2.43 | 3.29 |
| 2024-10-31 | 2.57 | 3.29 |
| 2024-11-30 | 2.71 | 3.28 |
| 2024-12-31 | 2.87 | 3.21 |
| 2025-01-31 | 3.00 | 3.29 |
| 2025-02-28 | 2.81 | 3.14 |
| 2025-03-31 | 2.41 | 2.81 |
| 2025-04-30 | 2.33 | 2.78 |
| 2025-05-31 | 2.38 | 2.77 |
| 2025-06-30 | 2.67 | 2.91 |
| 2025-07-31 | 2.73 | 3.05 |
| 2025-08-31 | 2.94 | 3.11 |
| 2025-09-30 | 3.02 | 3.03 |
| 2025-10-31 | 2.77 | 2.78 |
| 2025-11-30 | 2.71 | 2.62 |
| 2025-12-31 | 2.65 | 2.65 |
Note: Consumer price index (CPI) inflation is the change in the consumer price index, and core CPI inflation is the change in consumer price index excluding food and energy. CPI and core CPI are 12-month inflation percentages calculated using seasonally adjusted annual rates. October values are interpolations by Haver Analytics.
Source: U.S. Bureau of Labor Statistics, Consumer Price Index; Haver Analytics, https://www.haver.com/our-data.
Figure 6: Components of Core CPI Inflation
12-month percent change, monthly
| Date | Core Goods | Core services less rent of shelter | Rent of Shelter |
|---|---|---|---|
| 2022-01-01 | 11.79 | 3.65 | 4.43 |
| 2022-02-01 | 12.48 | 3.88 | 4.78 |
| 2022-03-01 | 11.83 | 4.17 | 5.04 |
| 2022-04-01 | 9.76 | 4.59 | 5.20 |
| 2022-05-01 | 8.49 | 4.74 | 5.51 |
| 2022-06-01 | 7.08 | 5.29 | 5.67 |
| 2022-07-01 | 6.84 | 5.33 | 5.77 |
| 2022-08-01 | 6.92 | 5.79 | 6.32 |
| 2022-09-01 | 6.63 | 6.64 | 6.68 |
| 2022-10-01 | 5.14 | 6.42 | 7.01 |
| 2022-11-01 | 3.74 | 6.35 | 7.20 |
| 2022-12-01 | 2.14 | 6.33 | 7.60 |
| 2023-01-01 | 1.28 | 6.10 | 7.95 |
| 2023-02-01 | 0.88 | 6.04 | 8.16 |
| 2023-03-01 | 1.48 | 5.60 | 8.24 |
| 2023-04-01 | 2.03 | 5.05 | 8.18 |
| 2023-05-01 | 2.04 | 4.54 | 8.10 |
| 2023-06-01 | 1.39 | 3.86 | 7.91 |
| 2023-07-01 | 0.94 | 3.93 | 7.79 |
| 2023-08-01 | 0.42 | 3.97 | 7.34 |
| 2023-09-01 | -0.02 | 3.64 | 7.21 |
| 2023-10-01 | 0.06 | 3.76 | 6.77 |
| 2023-11-01 | 0.03 | 4.00 | 6.55 |
| 2023-12-01 | 0.12 | 4.05 | 6.19 |
| 2024-01-01 | -0.33 | 4.44 | 6.05 |
| 2024-02-01 | -0.29 | 4.49 | 5.75 |
| 2024-03-01 | -0.59 | 5.01 | 5.65 |
| 2024-04-01 | -1.14 | 5.00 | 5.56 |
| 2024-05-01 | -1.73 | 4.92 | 5.41 |
| 2024-06-01 | -1.79 | 4.84 | 5.19 |
| 2024-07-01 | -1.68 | 4.71 | 5.09 |
| 2024-08-01 | -1.57 | 4.52 | 5.25 |
| 2024-09-01 | -1.15 | 4.59 | 4.89 |
| 2024-10-01 | -1.19 | 4.55 | 4.91 |
| 2024-11-01 | -0.73 | 4.25 | 4.77 |
| 2024-12-01 | -0.68 | 4.17 | 4.61 |
| 2025-01-01 | -0.07 | 4.18 | 4.43 |
| 2025-02-01 | -0.03 | 3.92 | 4.26 |
| 2025-03-01 | -0.03 | 3.20 | 4.01 |
| 2025-04-01 | 0.16 | 2.98 | 4.00 |
| 2025-05-01 | 0.27 | 3.04 | 3.87 |
| 2025-06-01 | 0.64 | 3.31 | 3.79 |
| 2025-07-01 | 1.09 | 3.62 | 3.64 |
| 2025-08-01 | 1.49 | 3.60 | 3.61 |
| 2025-09-01 | 1.54 | 3.41 | 3.53 |
| 2025-10-01 | 1.39 | 3.21 | 3.24 |
| 2025-11-01 | 1.36 | 3.06 | 2.99 |
| 2025-12-01 | 1.40 | 2.96 | 3.11 |
Note: Core goods inflation is the change in the Consumer price index (CPI) for commodities excluding food and energy. Core services inflation less rent of shelter is the change in the CPI for services excluding energy and rent of shelter. October values are staff interpolations for core services less rent of shelter and Haver interpolations for core goods and rent of shelter.
Source: U.S. Bureau of Labor Statistics, Consumer Price Index; Haver Analytics, https://www.haver.com/our-data; Staff estimates.
Figure 7: Federal Funds Rate
Percent
| Date | Fed Funds Monthly Average Rate |
|---|---|
| 2022-01-01 | 0.08 |
| 2022-02-01 | 0.08 |
| 2022-03-01 | 0.20 |
| 2022-04-01 | 0.33 |
| 2022-05-01 | 0.76 |
| 2022-06-01 | 1.19 |
| 2022-07-01 | 1.65 |
| 2022-08-01 | 2.33 |
| 2022-09-01 | 2.58 |
| 2022-10-01 | 3.08 |
| 2022-11-01 | 3.76 |
| 2022-12-01 | 4.09 |
| 2023-01-01 | 4.33 |
| 2023-02-01 | 4.57 |
| 2023-03-01 | 4.65 |
| 2023-04-01 | 4.83 |
| 2023-05-01 | 5.05 |
| 2023-06-01 | 5.08 |
| 2023-07-01 | 5.12 |
| 2023-08-01 | 5.33 |
| 2023-09-01 | 5.33 |
| 2023-10-01 | 5.33 |
| 2023-11-01 | 5.33 |
| 2023-12-01 | 5.33 |
| 2024-01-01 | 5.33 |
| 2024-02-01 | 5.33 |
| 2024-03-01 | 5.33 |
| 2024-04-01 | 5.33 |
| 2024-05-01 | 5.33 |
| 2024-06-01 | 5.33 |
| 2024-07-01 | 5.33 |
| 2024-08-01 | 5.33 |
| 2024-09-01 | 5.13 |
| 2024-10-01 | 4.83 |
| 2024-11-01 | 4.65 |
| 2024-12-01 | 4.48 |
| 2025-01-01 | 4.33 |
| 2025-02-01 | 4.33 |
| 2025-03-01 | 4.33 |
| 2025-04-01 | 4.33 |
| 2025-05-01 | 4.33 |
| 2025-06-01 | 4.33 |
| 2025-07-01 | 4.33 |
| 2025-08-01 | 4.33 |
| 2025-09-01 | 4.23 |
| 2025-10-01 | 4.08 |
| 2025-11-01 | 3.88 |
| 2025-12-01 | 3.73 |
| 2026-01-01 | 3.64 |
Source: Federal Reserve Bank of New York.
Recent Developments in Monetary Policy Implementation
May 2022: Fed adopts plans for reducing the size of its balance sheet
June 2022: Fed starts balance sheet runoff process
October 2025: Fed announces it will conclude reduction of its aggregate securities holdings on Dec. 1
December 2025: Fed initiates reserve management purchases to maintain ample reserves