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February 8, 2019

The New York Fed DSGE Model Forecast—January 2019

This post presents an update of the economic forecasts generated by the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (DSGE) model. We describe very briefly our forecast and its change since October 2018. As usual, we wish to remind our readers that the DSGE model forecast is not an official New York Fed forecast, but only an input to the Research staff’s overall forecasting process. For more information about the model and variables discussed here, see our DSGE model Q & A.

The January model forecast for 2018-21 is summarized in the table below, alongside the October forecast, and in the following charts. The model uses quarterly macroeconomic data released through the third quarter of 2018, financial data available through January 31, 2019, and staff nowcasts of GDP growth for the fourth quarter through January 31, 2019.

The New York Fed DSGE Model Forecast—January 2019

The New York Fed DSGE Model Forecast—January 2019

The New York Fed DSGE Model Forecast—January 2019

The New York Fed DSGE Model Forecast—January 2019

How do the latest forecasts compare with the October forecasts?

  • The current 2019 Q4/Q4 GDP growth forecast is lower than the one from October 2018 (1.6 percent vs. 1.9 percent). The model attributes the temporarily slower growth relative to the October projection to worsening financial conditions, as measured by the spread between the yields of Baa corporate bonds and Treasuries. The output growth forecast is similar to the October one for the remainder of the forecast horizon.
  • The inflation projections are lower by 0.2 percentage point throughout the forecast horizon. This is partly due to inflation in the second half of 2018 being lower than anticipated in October.
  • The estimate for the real natural rate of interest at the end of 2018 and its projections are lower by 0.1 to 0.2 percentage point than in October.


The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.

Michael CaiMichael Cai is a senior research analyst in the Federal Reserve Bank of New York’s Research and Statistics Group.

Marco Del NegroMarco Del Negro is a vice president in the Bank’s Research and Statistics Group.

Ethan MatlinEthan Matlin is a senior research analyst in the Bank’s Research and Statistics Group.

Reca SarfatiReca Sarfati is a senior research analyst in the Bank’s Research and Statistics Group.

How to cite this blog post:

Michael Cai, Marco Del Negro, Ethan Matlin, and Reca Sarfati, “The New York Fed DSGE Model Forecast—January 2019,” Federal Reserve Bank of New York Liberty Street Economics (blog), February 8, 2019,

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The editors are Michael Fleming, Andrew Haughwout, Thomas Klitgaard, and Asani Sarkar, all economists in the Bank’s Research Group.

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