Percent 10 8  Figure 1: U.S. Unemployment and Inflation Gaps Inflation Gap (year-over-year core PCE relative to 2% target)  6 4 2 0 Unemployment Gap (relative to CBO natural rate of unemployment)  -2 -4 1960  1965  1970  1975  1980  1985  Note: PCE is personal consumption expenditures. Source: Haver Analytics; Congressional Budget Office (CBO).
1990  1995  2000  2005  2010  2015  Percent 10  Figure 2: Term-Structure Decomposition of the Nominal 10-Year Rate 10-Year Zero-Coupon Rate Expected Average Real Short Rate  8  Expected Average Inflation Term Premium 6  4  2  0  -2 1990  1992  1994  1996  1998  2000  2002  2004  2006  2008  2010  2012  2014  Source: Federal Reserve Board staff calculations based on Stefania D'Amico, Don H. Kim, and Min Wei (forthcoming), "Tips from TIPS: The Informational Content of Treasury Inflation-Protected Security Prices," Journal of Financial and Quantitative Analysis.