We’ve all come to expect real-time data—information that is immediately available as soon as it’s collected.
For example, live weather updates can show you an hour-to-hour forecast. A GPS tracking device can show your car’s current location and give you on-demand directions. Not to mention that you can track a package that’s out for delivery as it moves from location to location before it arrives at your home.
So, it should come as no surprise to hear that the Federal Reserve’s Board of Governors has access to a variety of tools that provide real-time economic data.
When the Fed reviews business activity to determine its next move with interest rates, it relies on these real-time tools as well as more traditional indicators that track the economy on a weekly (jobs reports, for example), monthly (inflation reports), and quarterly basis (gross domestic product updates).
Here’s a quick look at some of the tools the Fed has at its fingertips:
Pro tip: You can access these tools, too! Type a few key words into your search engine and the tools will pop up!
Inflation Nowcasting: The Federal Reserve Bank of Cleveland sponsors the Inflation Nowcasting tool, which gives daily updates on inflation. On its website, the Cleveland Fed gives estimates for monthly inflation, which for some is more valuable than waiting for the official monthly update provided by the Bureau of Labor Statistics.1
Historically, Nowcasting has been reasonably accurate in its forecasts for both consumer inflation and core inflation (i.e., consumer prices excluding the more volatile food and energy costs).
The Cleveland Fed maintains records on its site starting from Q3 2013. Although inflation has cooled in recent months, the Nowcasting tool continues to get considerable attention from economists and other market watchers.
GDPNow: The Federal Reserve Bank of Atlanta manages the GDPNow tool, which is updated weekly and provides a real-time estimate of the nation’s gross domestic product (GDP). The tracker compares the GDPNow estimate to the Blue-Chip economist estimate, which is compiled from 50 economists from America’s largest banks, manufacturing companies, and brokerage firms.2
The Atlanta Fed made its initial GDPNow forecast in Q1 2018. In early 2024, when there was a lot of concern that the economy might slip into a recession, GDPNow was frequently cited by market observers when giving economic updates.
CME Group’s FedWatch Tool: The FedWatch Tool is updated daily and provides estimates on the likelihood that the Fed will adjust interest rates at the upcoming Federal Open Market Committee (FOMC) meetings. (The CME Group is not connected with any Federal Reserve Bank.)3
You may see this tool talked about prior to a Fed meeting as economists speculate about the Fed’s next move with interest rates. The CME Group introduced the FedWatch Tool in Q2 2017. It’s in the spotlight because more attention is given to how interest rates can help manage inflation.
- ClevelandFed.org, 2023
- AtlantaFed.org, 2023
- CMEGroup.com, 2023
