October 06, 2025

• Working Papers
• Publication
• Macroeconomy
• Inflation

Working Paper 2025-10

Abstract: Although there have been a range of studies investigating the role and importance of global supply and demand shocks in US inflation developments during and since the pandemic, this study uses a heretofore unused dataset for this purpose: a quarterly panel of professional forecasts from Consensus Economics. We use real-time data with daily vintage snapshots since 2005 from the Federal Reserve Board of Governors FAME database to disentangle forecast errors from revisions and to exploit the monthly frequency and partial availability of CPI inflation and industrial production. Our measures of global demand and supply shocks account for nearly 60 percent, and 20 percent, respectively, of the total variability of the five global factors we identify. The global demand shock accounts for a greater share of unanticipated US economic activity growth and inflation than the global supply shock both prior to the pandemic and during and after 2020. Since 2020, however, global demand and global supply shocks have accounted for similar shares of the nowcast errors for US inflation.

JEL classification: C32, E31, E37, F47

Key words: global shocks, professional forecasts, inflation

https://doi.org/10.29338/wp2025-10

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The views expressed here are those of the author and do not necessarily reflect those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Patrick Higgins is in the Research Department, Federal Reserve Bank of Atlanta, 1000 Peachtree Street NE, Atlanta, GA 30309-4470, patrick.higgins@atl.frb.org.

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