North Carolina A&T State University

2008 College Fed Challenge

Aggies Play to Win

Members: Channing Banks, Marvin Jones, Colin Okoye,Lauren Patton, Brandon Hunter, Angela Stephens,

Maurice Mckoy, Brannon Jones

Coaches: Hal W. Snarr and Jennis Biser

Consumer Confidence(Consumer Comfort Index—weekly, last 5 years)

Consumer Confidence(Rasmussen Consumer Index--weekly last 5 years)

Labor Market(non-service sectors)

Labor Market(service sectors)

Interest Rates

Sales

Industrial Production

Capacity Utilization

Bank Lending

Money

Inflation signals

Inflation signals

Inflation signals

Econ growth, Inflation, and Unemployment

Sept 2008

6.1

4.9

0.8

Augmented Phillips Curve(monthly CPI, 1982-2008)

Dp = -0.6118x + 3.4359

R2 = 0.3076

-6

-5

-4

-3

-2

-1

0

1

2

3

4

0 2 4 6 8 10 1210/086.1 7

1/09

Inflation falls by 1% per month

DInflation = -.4%

Inflation

1.15%

Jan 2008

Inflation could fall by around 0.4% to 1% per month for next 3 months

July 2008

9.3699.391

GDP gap = 9.369 – 9.391 = -2.2%

Real quarterly GDP gap ln(GDP) – ln(GDP potential)

Real quarterly GDP gap ln(GDP) – ln(GDP potential)

9.3699.404

Projected GDP gap = 9.369 – 9.404 = -3.5%

Jan 2009

Current inflation (GDP Deflator)

2.6%

Expected GDP gap

–3.5%

Current GDP gap

–2.2%

Federal Funds Rate Target

* *1.5 0.5 0.5( )ffi r y yp p

Inflation target

2%

Expected future inflation (GDP Deflator)

1.15%

0.975ffi 1.00ffi

Eq real interest rate

2%