U.S. Economy
Trimmed Mean PCE inflation rate
The Trimmed Mean PCE inflation rate over the 12 months ending in July was 2.65 percent. According to the BEA, the overall PCE inflation rate was 2.60 percent on a 12-month basis, and the inflation rate for PCE excluding food and energy was 2.88 percent on a 12-month basis.
August 29, 2025
Middle East geopolitical risk modestly affects inflation and inflation expectations
In Depth: While hostilities between Iran and Israel ended quickly in June 2025 without a major oil supply disruption, it is worthwhile to explore the impact on inflation and inflation expectations if this geopolitical event had turned out differently.
August 21, 2025
How sensitive are interest rates to higher federal debt?
The U.S. faces a historically high federal debt-to-GDP ratio, a measure of debt relative to economic output. But how sensitive are interest rates to higher debt?
August 12, 2025
Research Department Working Papers
A History of U.S. Tariffs: Quantifying Strategic Trade-Offs in Tariff Policy Design
U.S. tariff policy has historically balanced competing goals—revenue, protection and reciprocity. Policy priorities have shifted over time in response to changing economic and political conditions. Using a calibrated general equilibrium model, this paper illustrates these trade-offs through the lens of tariff Laffer curves.
August 05, 2025
Has the Beige Book become disconnected from economic data?
The Federal Reserve's Beige Book, a key tool for identifying U.S. business-cycle shifts, has traditionally aligned with economic data. However, postpandemic, its economic characterizations often appear weaker than what hard data indicated, raising concerns of divergence from official statistics.
May 27, 2025
U.S. tariff outcomes dependent on trading partner responses
In Depth: U.S. tariff policy has historically shifted among competing goals: providing revenue, protecting domestic markets and opening foreign markets to domestic producers. These goals are unlikely to be achieved simultaneously.
May 13, 2025
Research Department Working Papers
Tempting FAIT: Flexible Average Inflation Targeting and the Post-COVID U.S. Inflation Surge
In August 2020, the Federal Reserve replaced Flexible Inflation Targeting (FIT) with Flexible Average Inflation Targeting (FAIT), introducing make-up strategies that allow inflation to temporarily exceed the 2% target. Using a synthetic control approach, this paper estimates that FAIT raised CPI inflation by about 1 percentage point and core CPI inflation by 0.5 percentage points, suggesting a moderate impact net of food and energy and a largely temporary effect. The findings are consistent with the hypothesis of a steeper-than-expected post-pandemic Phillips curve in the New Keynesian model.
April 09, 2025
Globalization Institute Working Paper
Living Up to Expectations: The Effectiveness of Forward Guidance and Inflation Dynamics Post-Global Financial Crisis
This paper studies the effectiveness of forward guidance when central banks face private agents with heterogeneous expectations allowing for a degree of bounded rationality.
April 03, 2025
Strong U.S. employment driven by sectors less sensitive to business cycles
The U.S. has enjoyed strong payroll job gains in the past couple of years despite generally restrictive monetary policy. The sectoral composition of employment reveals job growth has been concentrated in areas that are the least sensitive to national employment fluctuations over the business cycle.
April 01, 2025
Research Department Working Papers
Trade Costs and Inflation Dynamics
Using bilateral trade flows from detailed global input-output data and a gravity framework, this paper estimates trade cost shocks and their effects on CPI inflation.
March 04, 2025