Summary of Economic Projections,20241218

Economic Projections - The Federal Open Market Committee (FOMC) participants submitted projections for real GDP growth, unemployment rate, and inflation from 2024 to 2027, with longer-run projections based on appropriate monetary policy assumptions [2] - The median projection for real GDP growth in 2024 is 2.5%, with a range of 2.4–2.5%, and the unemployment rate is projected at 4.2%, with a range of 4.2–4.5% [5] - PCE inflation is projected at 2.4% for 2024, with a range of 2.4–2.5%, while core PCE inflation is projected at 2.8%, with a range of 2.8–2.9% [5] Federal Funds Rate Projections - The median projection for the federal funds rate in 2024 is 4.4%, with a range of 4.4–4.6%, and it is expected to decline to 3.0% in the longer run [5] - The September projections for the federal funds rate in 2024 were 4.4%, with a range of 4.4–4.6%, and the longer-run projection was 2.9% [5] Uncertainty and Risks - FOMC participants assessed uncertainty and risks around their economic projections, with some participants judging the uncertainty as "broadly similar" to historical levels [36] - The risks to GDP growth were assessed as "broadly balanced" by some participants, while others viewed them as weighted to the downside or upside [35] - The uncertainty around the federal funds rate projections is significant, with historical confidence intervals being quite wide [80] Historical Projection Errors - The average historical projection error for real GDP growth in 2024 is ±0.8 percentage points, while for the unemployment rate, it is ±0.1 percentage points [76] - The error range for short-term interest rates in 2024 is ±0.1 percentage points, reflecting the uncertainty in forecasting the federal funds rate [76]