Accessible Version
Accessible Version
The U.S Economy and Monetary Policy
Philip N. Jefferson
Vice Chair, Federal Reserve Board
Board of Governors of the Federal Reserve System
University of Virginia (UVA) Darden School of Business
Charlottesville, Virginia
October 1, 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.
Road Map of Talk
- Economic Activity
- Labor Market
- Inflation
- Monetary Policy
- Conclusion
Figure 1: Real Gross Domestic Product
Percent, annual rate
| Date | GDP Growth |
|---|---|
| 2024:H1 | 2.5 |
| 2024:H2 | 2.8 |
| 2025:H1 | 2.1 |
| 2025:H2 | 2 |
| 2026:H1 | 2.4 |
Note: Percent change is from the preceding period. Half-year GDP values represent Q4:Q2 and Q2:Q4 comparisons.
Source: U.S. Bureau of Economic Analysis, Real Gross Domestic Product, retrieved from FRED, Federal Reserve Bank of St. Louis.
Figure 2: Retail Sales 3-Month Percent Change
Percent, monthly
| Date | 3-month percent change in retail sales |
|---|---|
| 2024-01-01 | -1.10 |
| 2024-02-01 | -0.31 |
| 2024-03-01 | -0.41 |
| 2024-04-01 | 0.70 |
| 2024-05-01 | 0.50 |
| 2024-06-01 | 0.30 |
| 2024-07-01 | 1.30 |
| 2024-08-01 | 0.49 |
| 2024-09-01 | 1.50 |
| 2024-10-01 | 1.30 |
| 2024-11-01 | 2.32 |
| 2024-12-01 | 2.42 |
| 2025-01-01 | 0.79 |
| 2025-02-01 | -0.31 |
| 2025-03-01 | 0.38 |
| 2025-04-01 | 1.19 |
| 2025-05-01 | 0.28 |
| 2025-06-01 | -0.41 |
| 2025-07-01 | 0.38 |
| 2025-08-01 | 2.11 |
| 2025-09-01 | 1.41 |
| 2025-10-01 | 0.40 |
| 2025-11-01 | 0.80 |
| 2025-12-01 | 0.70 |
| 2026-01-01 | 0.20 |
| 2026-02-01 | 0.39 |
| 2026-03-01 | 2.00 |
| 2026-04-01 | 3.23 |
| 2026-05-01 | 3.33 |
| 2026-06-01 | 1.81 |
| 2026-07-01 | 0.70 |
| 2026-08-01 | 0.80 |
Note: Monthly values represent percent change from 3 months prior, seasonally adjusted.
Source: U.S. Census Bureau, Advance Retail Sales: Retail Trade and Food Services, retrieved from FRED, Federal Reserve Bank of St. Louis.
Figure 3: Unemployment Rate
Percent, monthly
| Date | Unemployment rate |
|---|---|
| 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 |
| 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 |
| 2025-11-01 | 4.5 |
| 2025-12-01 | 4.4 |
| 2026-01-01 | 4.3 |
| 2026-02-01 | 4.4 |
| 2026-03-01 | 4.3 |
| 2026-04-01 | 4.3 |
| 2026-05-01 | 4.3 |
| 2026-06-01 | 4.2 |
| 2026-07-01 | 4.1 |
| 2026-08-01 | 4.1 |
Note: Data for October 2025 are unavailable.
Source: U.S. Bureau of Labor Statistics, Unemployment Rate, retrieved from FRED, Federal Reserve Bank of St. Louis.
Figure 4: Monthly Change in Payroll Employment
Thousands, monthly
| Date | Monthly | 3-Month moving average |
|---|---|---|
| 2024-01-01 | 175 | 152.00 |
| 2024-02-01 | 206 | 178.33 |
| 2024-03-01 | 228 | 203.00 |
| 2024-04-01 | 64 | 166.00 |
| 2024-05-01 | 78 | 123.33 |
| 2024-06-01 | 87 | 76.33 |
| 2024-07-01 | 53 | 72.67 |
| 2024-08-01 | 9 | 49.67 |
| 2024-09-01 | 155 | 72.33 |
| 2024-10-01 | 33 | 65.67 |
| 2024-11-01 | 134 | 107.33 |
| 2024-12-01 | 237 | 134.67 |
| 2025-01-01 | -48 | 107.67 |
| 2025-02-01 | 42 | 77.00 |
| 2025-03-01 | 67 | 20.33 |
| 2025-04-01 | 108 | 72.33 |
| 2025-05-01 | 13 | 62.67 |
| 2025-06-01 | -20 | 33.67 |
| 2025-07-01 | 64 | 19.00 |
| 2025-08-01 | -70 | -8.67 |
| 2025-09-01 | 76 | 23.33 |
| 2025-10-01 | -140 | -44.67 |
| 2025-11-01 | 41 | -7.67 |
| 2025-12-01 | -17 | -38.67 |
| 2026-01-01 | 160 | 61.33 |
| 2026-02-01 | -156 | -4.33 |
| 2026-03-01 | 214 | 72.67 |
| 2026-04-01 | 148 | 68.67 |
| 2026-05-01 | 63 | 141.67 |
| 2026-06-01 | 31 | 80.67 |
| 2026-07-01 | 21 | 38.33 |
| 2026-08-01 | 162 | 71.33 |
Note: Data are seasonally adjusted.
Source: U.S. Bureau of Labor Statistics, All Employees, Total Nonfarm, retrieved from FRED, Federal Reserve Bank of St. Louis.
Figure 5: Ratio of Vacancies to Unemployment
Level of openings/unemployed persons, monthly
| Date | Vacancy/Unemployment Ratio |
|---|---|
| 2024-01-01 | 1.37 |
| 2024-02-01 | 1.26 |
| 2024-03-01 | 1.28 |
| 2024-04-01 | 1.25 |
| 2024-05-01 | 1.11 |
| 2024-06-01 | 1.11 |
| 2024-07-01 | 1.02 |
| 2024-08-01 | 1.04 |
| 2024-09-01 | 1.08 |
| 2024-10-01 | 0.98 |
| 2024-11-01 | 1.02 |
| 2024-12-01 | 1.06 |
| 2025-01-01 | 1.05 |
| 2025-02-01 | 1.03 |
| 2025-03-01 | 1.00 |
| 2025-04-01 | 0.97 |
| 2025-05-01 | 0.98 |
| 2025-06-01 | 1.03 |
| 2025-07-01 | 0.99 |
| 2025-08-01 | 0.96 |
| 2025-09-01 | 0.90 |
| 2025-10-01 | 0.93 |
| 2025-11-01 | 0.92 |
| 2025-12-01 | 0.91 |
| 2026-01-01 | 0.89 |
| 2026-02-01 | 0.96 |
| 2026-03-01 | 0.96 |
| 2026-04-01 | 0.93 |
| 2026-05-01 | 1.04 |
| 2026-06-01 | 1.06 |
| 2026-07-01 | 1.04 |
| 2026-08-01 | 1.04 |
Note: Vacancies are Job Openings and Labor Turnover Survey job openings as of the end of the previous month. Values before January 2026 are estimated by Federal Reserve Board staff to eliminate discontinuities in the published history.
Source: U.S. Bureau of Labor Statistics, Job Openings: Total Nonfarm and Unemployment Level, retrieved from FRED, Federal Reserve Bank of St. Louis.
Figure 6: 12-Month PCE and Core PCE Inflation
12-month percent change, monthly
| Date | PCE Inflation | Core PCE Inflation |
|---|---|---|
| 2024-01-01 | 2.75 | 3.22 |
| 2024-02-01 | 2.81 | 3.18 |
| 2024-03-01 | 2.95 | 3.15 |
| 2024-04-01 | 2.84 | 3.02 |
| 2024-05-01 | 2.70 | 2.81 |
| 2024-06-01 | 2.57 | 2.78 |
| 2024-07-01 | 2.60 | 2.81 |
| 2024-08-01 | 2.44 | 2.90 |
| 2024-09-01 | 2.26 | 2.84 |
| 2024-10-01 | 2.41 | 2.90 |
| 2024-11-01 | 2.49 | 2.87 |
| 2024-12-01 | 2.65 | 2.90 |
| 2025-01-01 | 2.63 | 2.81 |
| 2025-02-01 | 2.57 | 2.82 |
| 2025-03-01 | 2.26 | 2.56 |
| 2025-04-01 | 2.33 | 2.68 |
| 2025-05-01 | 2.46 | 2.79 |
| 2025-06-01 | 2.61 | 2.83 |
| 2025-07-01 | 2.59 | 2.84 |
| 2025-08-01 | 2.69 | 2.85 |
| 2025-09-01 | 2.78 | 2.82 |
| 2025-10-01 | 2.66 | 2.70 |
| 2025-11-01 | 2.71 | 2.72 |
| 2025-12-01 | 2.78 | 2.87 |
| 2026-01-01 | 2.73 | 2.94 |
| 2026-02-01 | 2.80 | 2.96 |
| 2026-03-01 | 3.37 | 3.11 |
| 2026-04-01 | 3.57 | 3.08 |
| 2026-05-01 | 3.82 | 3.16 |
| 2026-06-01 | 3.45 | 3.04 |
| 2026-07-01 | 3.36 | 2.98 |
| 2026-08-01 | 3.42 | 3.01 |
Note: PCE inflation is the change in the personal consumption expenditures price index, and core PCE inflation is the change in the PCE price index excluding food and energy. PCE and core PCE are 12-month inflation percentages calculated using seasonally adjusted annual rates.
Source: U.S. Bureau of Economic Analysis, Personal Consumption Expenditures: Chain-Type Price Index and Personal Consumption Expenditures Excluding Food and Energy (Chain-Type Price Index), retrieved from FRED, Federal Reserve Bank of St. Louis.
Figure 7: Components of Core PCE Inflation
12-month percent change, monthly
| Date | Core goods | Core services less housing | Housing services |
|---|---|---|---|
| 2024-01-01 | -0.21 | 3.89 | 6.15 |
| 2024-02-01 | -0.15 | 3.86 | 5.88 |
| 2024-03-01 | -0.31 | 3.89 | 5.80 |
| 2024-04-01 | -0.32 | 3.72 | 5.62 |
| 2024-05-01 | -0.77 | 3.59 | 5.51 |
| 2024-06-01 | -0.64 | 3.53 | 5.31 |
| 2024-07-01 | -0.35 | 3.48 | 5.20 |
| 2024-08-01 | -0.42 | 3.66 | 5.23 |
| 2024-09-01 | -0.31 | 3.55 | 5.05 |
| 2024-10-01 | -0.48 | 3.75 | 5.01 |
| 2024-11-01 | -0.30 | 3.69 | 4.76 |
| 2024-12-01 | -0.30 | 3.77 | 4.66 |
| 2025-01-01 | 0.19 | 3.44 | 4.50 |
| 2025-02-01 | 0.31 | 3.45 | 4.34 |
| 2025-03-01 | -0.02 | 3.16 | 4.29 |
| 2025-04-01 | 0.09 | 3.32 | 4.23 |
| 2025-05-01 | 0.57 | 3.35 | 4.09 |
| 2025-06-01 | 0.94 | 3.25 | 4.08 |
| 2025-07-01 | 1.13 | 3.23 | 3.97 |
| 2025-08-01 | 1.17 | 3.26 | 3.88 |
| 2025-09-01 | 1.30 | 3.20 | 3.70 |
| 2025-10-01 | 1.20 | 3.13 | 3.42 |
| 2025-11-01 | 1.33 | 3.14 | 3.30 |
| 2025-12-01 | 1.91 | 3.15 | 3.28 |
| 2026-01-01 | 1.72 | 3.38 | 3.18 |
| 2026-02-01 | 2.04 | 3.31 | 3.08 |
| 2026-03-01 | 2.47 | 3.41 | 2.98 |
| 2026-04-01 | 2.44 | 3.33 | 3.18 |
| 2026-05-01 | 2.12 | 3.59 | 3.22 |
| 2026-06-01 | 1.78 | 3.55 | 3.15 |
| 2026-07-01 | 1.85 | 3.42 | 3.14 |
| 2026-08-01 | 1.97 | 3.46 | 2.99 |
Note: Core goods inflation is the change in the personal consumption expenditures (PCE) price index excluding energy and food. Core services inflation is the change in the PCE price index excluding energy services.
Source: U.S. Bureau of Economic Analysis; Haver Analytics, https://www.haver.com/our-data.
Figure 8: Federal Funds Rate
Percent, monthly
| Date | Fed Funds Monthly Average Rate |
|---|---|
| 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 |
| 2026-02-01 | 3.64 |
| 2026-03-01 | 3.64 |
| 2026-04-01 | 3.64 |
| 2026-05-01 | 3.63 |
| 2026-06-01 | 3.63 |
| 2026-07-01 | 3.63 |
| 2026-08-01 | 3.63 |
| 2026-09-01 | 3.74 |
Source: Federal Reserve Bank of New York, https://www.newyorkfed.org/markets/reference-rates/effr.