Federal Reserve Economic Data

Every quarter, FOMC meeting participants submit their projections of key economic indicators. The committee releases the Summary of Economic Projections (SEP), containing the median, central tendency, and range of these projections:

• civilian unemployment rate
• headline and core PCEPI
• real GDP growth
• and the federal funds rate.

Projections are generally provided for the current year, the next two years, and the “longer run.” In this blog post, we use ALFRED to look at several recent projections for the unemployment rate, core PCEPI inflation, and the federal funds rate through 2027. At the press conference after the March FOMC meeting, Chair Powell noted that these forecasts are always subject to uncertainty, which is unusually elevated now, and the projections are not a committee plan or decision.

Our first ALFRED graph, above, shows the unemployment rate projections for the fourth quarters of 2025, 2026, and 2027 according to the SEPs released in March 2025, December 2024, and September 2024. Most recently, as shown by the red bar, the median FOMC participant projects that the unemployment rate will average 4.4% in Q4 2025 and drop to 4.3% over 2026 and 2027.

How does this stack up against previous projections for the same period? The projected unemployment rate for 2025 is slightly higher now than it was in December of last year (green bar), but is the same as it was in September of last year (blue bar).

At the press conference, Chair Powell noted that labor market conditions remain solid and that a wide set of indicators suggest that the labor market is broadly in balance.

Our second graph, above, shows the core inflation rate projections for the same years and is more interesting. While the median FOMC participant still expects inflation to return to target by 2027, projections of the inflation rate have been revised upward for 2025. In September, the median participant had projected core inflation to measure only 2.2% by the end of this year. However, over the past 6 months, that projection has shifted up by 0.6 percentage points to 2.8%.

At the press conference, Chair Powell noted that some near-term measures of inflation expectations have recently moved up; however, most measures of longer-term inflation expectations remain consistent with the goal of 2% inflation.

Our final graph shows the median participant’s projections of the federal funds rate. The most recent projections are slightly higher than they were in September 2024 for each year from 2025 through 2027. The 2025 and 2026 projections are now 50 basis points higher than they were in September, and the 2027 projection is now 25 basis points higher.

How these graphs were created: Search ALFRED for “FOMC unemployment” and take the median projection. Click on “Edit Graph,” choose a bar graph, and add two bars with the same series again. Finally, select the proper vintage for each bar. For the other two graphs, proceed similarly with “FOMC Consumption” and “FOMC Fed Funds Rate.”

Suggested by Charles Gascon and Joseph Martorana.

Expectations about inflation are an important indicator of actual future inflation: If market participants expect inflation to be higher, they may elevate prices, increasing the actual inflation rate and creating a self-fulfilling prophecy. In this FRED Blog post, we compare “breakeven” inflation expectations with actual inflation to see how they’ve both evolved over time.

The FRED graph above shows 5-year (medium-term) and 30-year (long-term) breakeven inflation rates, along with the consumer price index (CPI), which measures actual inflation in the economy.

The breakeven inflation rate is the difference in yields between a standard Treasury security, which specifies payments in nominal terms, and an inflation-protected Treasury security (or TIPS), which adjusts its principal with inflation. This difference is a common representation of what markets expect inflation to be in the future—here, after 5 years and 30 years.

Before the COVID recession, the 5-year breakeven inflation rate was generally lower than its 30-year equivalent: Households expected that inflation would be higher in the longer term than the medium term or that current inflation was below the long-term trend. During this period, inflation was frequently below the Fed’s 2% inflation target.

During the period of high inflation in 2021-2022, medium-term inflation expectations were higher than long-term expectations, which may mean that markets believed inflation was higher than the long-term trend and would fall in the coming years.

This belief seems to have been validated, as inflation has since dropped. And, since 2023, medium-term and long-term inflation expectations have started to converge: Markets believe average inflation over the next 5 years will be similar to the average inflation over the next 30 years.

How this graph was created: Search FRED for and select “5-Year Breakeven Inflation Rate (T5YIE).” From the “Edit Graph” panel, under “Modify Frequency,” select “Monthly” and make sure “Aggregation Method” is “Average.” Use the “Add Line” tab to search for and select “30-year Breakeven Inflation Rate (T30YIEM)” and again to search for and select “Consumer Price Index for All Urban Consumers: All Items in U.S. City Average (CPIAUCSL).” Under “Units,” select “Percent Change from Year Ago.” Select the time period 2015-02-01 to 2025-02-01. Use the “Format” tab to scroll down to Line 1 and Line 2, click the plus symbol next to the “Customize” bar, and under “Line style” select “Solid.” For Line 3, under “Line Style” select “Dot” and under “Color” type #666360.

Suggested by Yu-Ting Chiang and Mick Dueholm.

The FRED graph above tracks retail sales since 1992, split into two major categories: general retail and food and drink services specifically. To protect our analysis from inflationary illusions, we’ve deflated the series by the consumer price index (CPI).

Both retail categories have increased steadily over time, with declines during the financial crisis and the COVID pandemic. With the pandemic, the data are more interesting: After both series initially dipped, food and drink services struggled to return to previous levels, while general retail shot back up to an even higher level. Both series have stagnated for a couple of years now.

The second graph (below) provides some details on the retail side and shows some stark differences.

It should be no surprise that department stores continue to struggle while mail-order retail (including online shopping) has been booming for many years, including an explosion during the pandemic. What may be less familiar is that liquor stores were one of the very few types of retail stores that did well during the pandemic. This extra business lasted for a few years but has now settled back to previous levels.

So, if sales at restaurants and bars and liquor stores are stagnating, does this mean the US population is sobering up after a drowsy pandemic? To understand this better, we use one more graph (below) to reveal the wholesale of alcoholic beverages, again adjusted for inflation. And, indeed, sales are way down after a peak during the pandemic.

How these graphs were created: From FRED, navigate to the Census Bureau’s Monthly Sales for Retail and Food Services by Kind of Business release table. Select the series to display and click “Add to Graph.” From the “Edit Graph” panel, use the “Edit Line” tab to search for “CPI” and apply the formula a/b*100. For the second graph, also change the units for each line to 100 in 2020-02-01. For the third graph, search FRED for and select “alcohol sales.” From the “Edit Graph” panel, again add CPI to the line and apply formula a/b*100.

Suggested by Christian Zimmermann.