The US unemployment rate has experienced a significant increase this year. Starting at 3.7% at the beginning of the year, it rose to 4.3% by July, marking the highest rate since fall 2021. Although it slightly decreased to 4.2% last month, Federal Reserve officials do not anticipate further drops. Forecasts from the Summary of Economic Projections, known as the 'dot plot,' suggest that the unemployment rate is expected to reach 4.4% by the end of this year, a revision from the previous estimate of not exceeding 4% made in June.
Conversely, officials are more optimistic about progress in controlling inflation. They predict that the Personal Consumption Expenditures price index, the Fed's preferred inflation measure, will moderate to an annual rate of 2.3% this year, down from the 2.6% rate projected in June. The Federal Reserve aims for a 2% annual inflation rate, which they now anticipate achieving by 2026. In August, the Fed's key inflation gauge stood at 2.5%.
