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Forecast Note: U.S. - Macro model [Sep 2019]
Wednesday, 11 Sep 2019 15:09 ET
By Kara Naccarelli
September 2019 -- Brief notes on changes to the Moody's Analytics U.S. macro forecast outlook pertaining to GDP, government policy, interest rates, oil prices, employment and inflation.

Changes to the Moody’s Analytics outlook for the U.S. economy were modest in September, with most adjustments the result of a revised outlook for interest rates.

View Comparison Table: U.S. Macro Forecast M/M Comparison

A tabular comparison of the current and prior vintages including an assessment of whether meaningful changes can be attributed to new or revised data, changed assumptions, or model changes.

National income

U.S. GDP growth slowed in the second quarter, according to the second report from the Bureau of Economic Analysis. Real GDP grew 2%, down from 3.1% in the first quarter and 2.1% reported last month. The weakening came despite an acceleration in consumer spending growth as inventory accumulation slowed, the trade deficit widened, and fixed investment fell.

The forecast for several GDP components changed this month mostly in response to newly released history, as well as a change in our forecast for interest rates. On the whole, Moody’s Analytics expects GDP to grow by 2.3% this year, similar to last month’s forecast. Growth will clock in at 1.7% in 2020 and 2.1% in 2021.

Fiscal policy

Movements in the government spending forecast resulted from new history in state and local infrastructure expenditures. Moreover, our forecast for the federal budget balance was adjusted to reflect CBO assumptions.

Monetary policy

Our September forecast includes an additional rate cut by the Federal Reserve this year. Our August vintage featured cuts in September and December. A cut in October has now been added. Following the December decrease, the Fed will hold rates steady. We believe that this additional cut is an attempt by the Fed to avoid disruption in financial markets and to ease the economic impact of U.S.-China trade tensions. More information on the forecast change can be found here.

Labor market

Our near-term unemployment rate forecast changed moderately from August, the result of newly released history for both the number of unemployed and the labor force. The jobless rate will average 3.7% this year and next. The forecast for total employment held steady. Job additions will continue at a sturdy clip through the middle of 2020.


The forecast for WTI oil prices was adjusted to reflect revised assumptions for global oil demand. Prices for 2019 and 2020 are projected to come in notably lower than in the previous baseline forecast. There has been a profound weakening in global oil demand, and despite Iranian exports falling substantially, we expect surpluses in the first half of 2020. Such market conditions will put downward pressure on prices in the near term. Moody’s Analytics expects oils prices to average near $58.93/barrel in 2020 and $61.29/barrel in 2021.


The forecast path for CPI changed in response to movement in the forecast for non-energy services CPI. The forecast for non-energy services CPI was impacted by newly released history and a change in the forecast for services compensation. CPI gains will average 1.8% this year and 2% in 2020.

CCAR variables

The only stochastic CCAR variable that received a qualitative overlay this month was the 10-year Treasury rate. It was updated to reflect the most recent historical data in order to keep the forecast and history consistent.

The change to our federal funds rate forecast coupled with the recent drop in the 10-year Treasury yield has lowered our forecast for long-term rates this year and next. The September baseline shows the 10-year Treasury yield averaging around 2.1% in the fourth quarter of this year, compared with 2.3% in the August baseline.

Changes to Historical Data: Global Macro Model Historical Data Changes

A summary of this month’s major changes to historical dataset(s) used in the global model.

Related ReleaseU.S. Forecast - Baseline
SourceMoody's Analytics (ECCA)
GeographyUnited States
Release DateReference date
10 Mar 2020Mar 2020