An Economic Outlook Paula Tkac, Senior Vice President and Associate - PowerPoint PPT Presentation

ECONversatio ions An Economic Outlook Paula Tkac, Senior Vice President and Associate Research Director February 21, 2018 For the latest news: frbatlanta.org/subscribe

Bridging Networks for Better Policy The Atlanta Fed Model President Bostic

. GDP Current GDPNow for 2018Q1 = 3.2% Real GDP Growth percent change - annual rate saar, billions chained 2009$ 6 Q1 average = 1.2% Q2-Q4 average = 2.5% 5 4 3 2 1 0 -1 -2 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: BEA 3

What’s on the Mind of Businesses? Atlanta Fed’s Business Inflation Expectations Survey We would like you to think more generally about your firm. Looking ahead into 2018, what are the biggest areas of concern? frequency of mentions (collated from open-ended responses) Labor Quality/Availability Labor Costs Input Costs Tax Policy Competition Profitability Fiscal Policy Regulation General Economic Concerns Technological Change Demand/Sales Geopolitical Risk 0 5 10 15 20 25

Employment: Labor Market appears ‘tight’ Labor Market Spider Chart Dec. 2007 Dec. 2009 Dec. 2017 Maximum (outer ring) Minimum (inner ring) Median (middle ring)

REIN: The Evolution of Employer Behavior Reducing Non-wage benefits ‘barriers’ Training Industry + Skill- based ‘tightness’ and wage premiums Geographic ‘Tightness’ Substitute technology Increase ‘job’ duties

Data: The Low Inflation Puzzle PCE Price Index year-over-year percent change, monthly 3.0 PCE Core PCE PCE: 10-year annualized rate 2.5 2.0 FOMC’s inflation target 1.5 1.0 0.5 0.0 12 13 14 15 16 17 18 Sources: Bureau of Economic Analysis; FRB Dallas; Haver Analytics; staff calculations data through August 2017 7

REIN: Costs and Pricing Inside Firms • Lowering costs thru increased vendor competition and adoption of technology • Consolidation but little/no pricing power in the output market • Increased differential and dynamic pricing strategies

The View from the FOMC Statement of Economic Projections: December 2017 What is your assessment of the appropriate target range/level for the Federal Funds Rate?

ECONversatio ions An Economic Outlook Paula Tkac, Senior Vice President and Associate Research Director February 21, 2018 For the latest news: frbatlanta.org/subscribe