Both in Ferris, Kim, and Schlusche (2017) and in the illustration here, the evolution of the balance sheet is represented by the path of the Federal Reserve’s System Open Market Account holdings. 23 In the simulations from which these values are obtained, it is assumed that some prominent items in the “Other liabilities” category diminish to zero by the end of 2022.
Primarily, that boost will arise from U.S. households having the wherewithal to increase their spending on other goods and services as they spend less on gasoline. Foreign economic developments, however, could pose risks to the outlook for U.S. economic growth.