{"id":350198,"date":"2026-09-18T13:18:27","date_gmt":"2026-09-18T13:18:27","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ny\/350198\/"},"modified":"2026-09-18T13:18:27","modified_gmt":"2026-09-18T13:18:27","slug":"the-new-york-fed-dsge-model-forecast-september-2026","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ny\/350198\/","title":{"rendered":"The New York Fed DSGE Model Forecast\u2014September 2026"},"content":{"rendered":"

\n Marco Del Negro, Keshav Dogra, Elena Elbarmi, Donggyu Lee, Michael Pham, and Elizabeth Wright<\/p>\n

\t\"decorative<\/p>\n

This post presents an update of the economic forecasts generated by the Federal Reserve Bank of New York\u2019s dynamic stochastic general equilibrium (DSGE) model. We describe very briefly our forecast and its change since June 2026<\/a>. The New\u00a0York\u00a0Fed DSGE model expects similar growth, and slightly more persistent inflation, compared to its forecasts in June. r* forecasts are slightly lower for 2026 but higher for the remainder of the forecast horizon.<\/p>\n

Note: The DSGE model forecast is not an official New York Fed forecast, but only an input to the Research staff\u2019s overall forecasting process. For more information about the model and variables discussed here, see our DSGE model Q & A<\/a>.\u00a0<\/p>\n

The forecasts are obtained using data released through\u00a02026:Q2, augmented for\u00a02026:Q3 with the median forecasts for real GDP growth and core PCE inflation, and short-run inflation expectations from the August release of the Philadelphia Fed Survey of Professional Forecasters (SPF), expectations of the future level of the federal funds rate from the July release of the New York Fed Survey of Market Expectations, as well as the yields on 10-year Treasury securities and Baa-rated corporate bonds.\u00a0<\/p>\n

The model\u00a0remains\u00a0pessimistic\u00a0on\u00a0growth, and\u00a0keeps being surprised when the economy turns out to be stronger than it expected. In particular, the SPF\u00a0projects\u00a0GDP growth in\u202f2026:Q3 to be more than 1 percent higher in annualized terms than the DSGE model expected in June.\u202fThe model attributes this\u00a0likely forecast miss (under the assumption that the SPF projection will be correct)\u00a0to more buoyant financial conditions than expected\u00a0and to the\u00a0positive growth\u202feffect of the AI-related boom in investment, as captured by MEI (marginal efficiency of investment) shocks.\u00a0The\u00a0model\u2019s\u00a0growth forecasts for 2026\u00a0remained at 1.2\u00a0percent, as in June.\u00a0The DSGE\u00a0forecasts remain\u00a0rather pessimistic on growth for the remainder of the forecast horizon, in part because\u00a0the model\u00a0expects monetary policy to be more restrictive than it did in June, and in part because\u00a0it\u00a0revised downward its expectations for\u00a0total factor productivity (TFP)\u00a0growth. The\u00a0GDP growth\u00a0projections for 2027, 2028, and 2029 are 0.1, 0.5, and 1.2 percent, respectively, compared to 0.2, 0.7, and\u00a01.5 in June.\u00a0<\/p>\n

For core inflation,\u00a0the SPF projections for\u00a02026:Q3 were broadly in line with the DSGE forecast in June.\u00a0Still, the model now expects inflation to revert toward\u00a0the FOMC\u2019s long-run goal of\u00a02 percent more slowly than it did in June,\u00a0in part because lower\u00a0TFP\u00a0growth results in higher inflation. The projections for 2026, 2027, 2028, and 2029 are 3.3, 2.1, 1.8, and 1.8 percent,\u00a0compared to 3.1, 1.8, 1.6, and 1.7 percent in June, respectively.\u00a0<\/p>\n

The model\u2019s prediction for the short-run real natural rate of interest (r*) is 1.9 percent annualized for 2026,\u00a0down from 2.0 percent\u00a0in\u00a0June. The r* forecasts are slightly higher than in June for the\u00a0remainder\u00a0of the forecast horizon,\u00a0however\u00a0(1.8, 1.4, and 1.2 percent for 2027, 2028, and 2029, compared to 1.7, 1.3, and 1.1 percent in June, respectively).<\/p>\n

Forecast Comparison<\/p>\n

Forecast Period2026202720282029Date\u00a0of\u00a0ForecastSep 26Jun 26Sep 26Jun 26Sep 26Jun 26Sep 26Jun 26GDP\u00a0growth
(Q4\/Q4)1.2
\u00a0(-0.8,\u00a03.1)\u00a01.2
\u00a0(-2.2,\u00a04.5)\u00a00.1
\u00a0(-5.2,\u00a05.5)\u00a00.2
\u00a0(-5.0,\u00a05.2)\u00a00.5
\u00a0(-4.9,\u00a05.9)\u00a00.7
\u00a0(-4.8,\u00a06.0)\u00a01.2
\u00a0(-4.4,\u00a06.8)\u00a01.5
\u00a0(-4.1,\u00a06.9)\u00a0Core\u00a0PCE\u00a0inflation
(Q4\/Q4)3.3
\u00a0(3.0,\u00a03.7)\u00a03.1
\u00a0(2.5,\u00a03.7)\u00a02.1
\u00a0(1.0,\u00a03.2)\u00a01.8
\u00a0(0.7,\u00a03.0)\u00a01.8
\u00a0(0.6,\u00a03.0)\u00a01.6
\u00a0(0.4,\u00a02.9)\u00a01.8
\u00a0(0.5,\u00a03.1)\u00a01.7
\u00a0(0.4,\u00a03.0)\u00a0Real\u00a0natural\u00a0rate\u00a0of\u00a0interest
(Q4)1.9
\u00a0(0.7,\u00a03.1)\u00a02.0
\u00a0(0.7,\u00a03.3)\u00a01.8
\u00a0(0.4,\u00a03.3)\u00a01.7
\u00a0(0.2,\u00a03.1)\u00a01.4
\u00a0(-0.1,\u00a03.0)\u00a01.3
\u00a0(-0.3,\u00a02.9)\u00a01.2
\u00a0(-0.5,\u00a02.8)\u00a01.1
\u00a0(-0.5,\u00a02.8)\u00a0Source: Authors\u2019 calculations.
Notes: This table lists the forecasts of output growth, core PCE inflation, and the real natural rate of interest from the September 2026 and June 2026 forecasts. The numbers outside parentheses are the mean forecasts, and the numbers in parentheses are the 68 percent bands.<\/p>\n

Forecasts of Output Growth<\/p>\n

\"<\/a>Source: Authors\u2019 calculations.
Notes: These two panels depict output growth. In the top panel, the black line indicates actual data and the red line shows the model forecasts. The shaded areas mark the uncertainty associated with our forecasts at 50, 60, 70, 80, and 90 percent probability intervals. In the bottom panel, the blue line shows the current forecast (quarter-to-quarter, annualized), and the gray line shows the June 2026 forecast.<\/p>\n

Forecasts of Inflation<\/p>\n

\"<\/a>Source: Authors\u2019 calculations.
Notes: These two panels depict core personal consumption expenditures (PCE) inflation. In the top panel, the black line indicates actual data and the red line shows the model forecasts. The shaded areas mark the uncertainty associated with our forecasts at 50, 60, 70, 80, and 90 percent probability intervals. In the bottom panel, the blue line shows the current forecast (quarter-to-quarter, annualized), and the gray line shows the June 2026 forecast.<\/p>\n

Real Natural Rate of Interest<\/p>\n

\"<\/a>Source: Authors\u2019 calculations.
Notes: The black line shows the model\u2019s mean estimate of the real natural rate of interest; the red line shows the model forecast of the real natural rate. The shaded area marks the uncertainty associated with the forecasts at 50, 60, 70, 80, and 90 percent probability intervals.<\/p>\n

\"Photo<\/p>\n

Marco Del Negro<\/a> is an economic research advisor in the Federal Reserve Bank of New York\u2019s Research and Statistics Group.<\/p>\n

\"Portrait<\/p>\n

Keshav Dogra<\/a> is an economic research advisor in the Federal Reserve Bank of New York\u2019s Research and Statistics Group.<\/p>\n

\"Elena<\/p>\n

Elena Elbarmi is a research analyst in the Federal Reserve Bank of New York\u2019s Research and Statistics Group.\u00a0<\/p>\n

\"Photo:<\/p>\n

Donggyu Lee<\/a> is a research economist in the Federal Reserve Bank of New York\u2019s Research and Statistics Group.<\/p>\n

\"Michael<\/p>\n

Michael Pham is a research analyst in the\u00a0Federal Reserve Bank of New York\u2019s Research and Statistics Group.\u00a0<\/p>\n

\"Elizabeth<\/p>\n

Elizabeth Wright is a research analyst in the Federal Reserve Bank of New York\u2019s Research and Statistics Group.\u00a0<\/p>\n

\n How to cite this post:
Marco Del Negro, Keshav Dogra, Elena Elbarmi, Donggyu Lee, Michael Pham, and Elizabeth Wright, \u201cThe New York Fed DSGE Model Forecast\u2014September 2026,\u201d Federal Reserve Bank of New York Liberty Street Economics, September 18, 2026, https:\/\/libertystreeteconomics.newyorkfed.org\/2026\/09\/the-new-york-fed-dsge-model-forecast-september-2026\/
\n BibTeX: View<\/a> | Download\n <\/p>\n

@article{DelNegroDograElbarmiLeePhamWright2026,
\n author={Del Negro, Marco and Dogra, Keshav and Elbarmi, Elena and Lee, Donggyu and Pham, Michael and Wright, Elizabeth},
\n title={The New York Fed DSGE Model Forecast\u2014September 2026},
\n journal={Liberty Street Economics},
\n note={Liberty Street Economics Blog},
\n number={September 18},
\n year={2026},
\n url={https:\/\/libertystreeteconomics.newyorkfed.org\/2026\/09\/the-new-york-fed-dsge-model-forecast-september-2026\/}
\n}<\/p>\n

Disclaimer
The views expressed in this post are those of the author(s) 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 author(s).<\/p>\n","protected":false},"excerpt":{"rendered":"Marco Del Negro, Keshav Dogra, Elena Elbarmi, Donggyu Lee, Michael Pham, and Elizabeth Wright This post presents an…\n","protected":false},"author":2,"featured_media":350199,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[105399,130811,6079,105400,9,11,10,118400],"class_list":["post-350198","post","type-post","status-publish","format-standard","has-post-thumbnail","category-new-york","tag-dsge","tag-gdp-growth","tag-inflation","tag-macroeconomic-forecast","tag-new-york","tag-new-york-headlines","tag-new-york-news","tag-r-star"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/350198","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/comments?post=350198"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/350198\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media\/350199"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media?parent=350198"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/categories?post=350198"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/tags?post=350198"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}