Economic Indicators

Key macroeconomic indicators monitored by the Federal Reserve for rate decisions.

Consumer Price Index (CPI)

3.1%

The Consumer Price Index measures the average change in prices paid by urban consumers for a market basket of goods and services. It is the most widely used measure of inflation.

Core CPI (ex Food & Energy)

-0.1

3.8%

Core CPI excludes the volatile food and energy categories to give a cleaner picture of underlying inflation trends.

PCE Price Index

-0.1

2.5%

The Personal Consumption Expenditures Price Index is the Fed's preferred inflation gauge. It covers a broader range of expenditures than CPI and adjusts for changes in consumer behavior.

Core PCE Price Index

-0.1

2.8%

Core PCE excludes food and energy. This is the Federal Reserve's primary inflation target — the Fed aims for 2% core PCE over the long run.

Unemployment Rate

+0.1

4.1%

The unemployment rate measures the percentage of the labor force that is jobless, looking for work, and available to take a job. The Fed's dual mandate includes maximum employment.

GDP Growth Rate

-0.8

2.3%

Gross Domestic Product growth rate measures the annualized pace of economic expansion. Strong GDP growth can signal inflationary pressure; weak growth may prompt rate cuts.

Why These Indicators Matter

The Federal Reserve uses a dual mandate: maximum employment and stable prices (2% inflation target). These indicators directly influence rate decisions.

CPI & PCE: When inflation is above 2%, the Fed raises rates to cool the economy. When inflation falls toward 2%, rate cuts become more likely.

Unemployment: High unemployment signals economic weakness, which may prompt rate cuts. Low unemployment with high inflation creates the classic "soft landing" challenge.

GDP: Strong GDP growth gives the Fed room to keep rates higher for longer. Weak GDP signals the need for stimulus via rate cuts.