Glossary
Educational only. Short definitions for learning. Not financial advice and not a signal to trade.
In one line: A plain-English dictionary of Fed, inflation, labor, markets, rates, and related macro terms — each definition opens with a single crisp sentence, then optional context, then links back to primers.
Jump: Fed · Inflation · Labor · Markets · Rates & FX · Money & banking · Measurement & trade · Housing & commodities · Sources · Fiscal & cycle · Expectations · Plumbing · Wave 6 terms
Fed
Dual mandate
The Fed’s Congressionally assigned goals: maximum sustainable employment and stable prices. In practice, officials weigh both when setting the policy rate, discussing the balance sheet, and offering forward guidance. Tension between the two goals is normal when inflation is high while the labor market is still firm.
Learn more: Dual mandate · The Fed toolkit · Jobs and growth
Fed funds rate
The interest rate banks charge each other for overnight loans of reserves; the Fed sets a target range for this rate as its main policy tool. When people say “the Fed hiked” or “the Fed cut,” they usually mean this target range moved. It influences other borrowing costs without setting your mortgage or credit-card APR directly.
Learn more: The Fed toolkit · Interest rates and yields
FOMC
The Federal Open Market Committee—the group inside the Fed that votes on the policy-rate target and issues the post-meeting statement. Meeting weeks often include a press conference and, at times, updated economic projections. FOMC days are one of the three core event types beginners should learn first.
Learn more: Event playbook · The Fed toolkit
Forward guidance
How the Fed communicates the likely path of policy—not only today’s decision. Statements, press conferences, speeches, and projection materials all shape expectations. Markets can move on wording because investors update their guess of future rates and liquidity.
Learn more: The Fed toolkit · Priced in / expectations
QE (quantitative easing)
A balance-sheet policy where the central bank buys longer-term securities and creates bank reserves in the process. In plain language, it adds reserves into the financial plumbing, often when the policy rate is already very low or markets need support. It is not a simple guarantee that any particular risk asset will rise.
Learn more: QE and QT explained · The Fed toolkit · Fed balance sheet and reserves
QT (quantitative tightening)
The reverse direction on the balance sheet: allowing holdings to mature without full replacement (or selling), so the balance sheet shrinks and reserves leave the system over time. QT is part of the “plumbing” story alongside the policy rate—not a day-trading signal by itself.
Learn more: QE and QT explained · The Fed toolkit · Fed balance sheet and reserves
Dot plot
A chart in the Fed’s Summary of Economic Projections showing each participant’s appropriate policy-rate projection by year. Projections, not promises—and not a future vote already cast.
Learn more: Reading the Fed · The Fed toolkit · Priced in / expectations
Inflation
CPI
The Consumer Price Index—a measure of prices for a basket of goods and services paid by urban consumers, published by the Bureau of Labor Statistics. Headline CPI includes food and energy. Investors and households watch CPI because it is a familiar gauge of inflation in daily life and a major input to the policy debate.
Learn more: Inflation 101 · Event playbook
Core CPI
CPI excluding food and energy. The aim is to highlight underlying inflation without the most volatile categories. Core is a complement to headline, not a replacement; both answer useful but different questions about a given month’s print.
Learn more: Inflation 101
PCE
The Personal Consumption Expenditures Price Index—an inflation gauge tied to what households actually spend. The Fed has long preferred PCE when describing its inflation goal. Headline and core PCE versions exist, parallel to the CPI family.
Learn more: Inflation 101 · The Fed toolkit
Disinflation
Inflation still positive, but the rate of increase is slowing. Prices may keep rising—just more slowly than before. Not the same as deflation.
Learn more: Disinflation, deflation, and stagflation · Inflation 101
Deflation
A falling broad price level—negative inflation. Distinct from one item getting cheaper. Rare in recent U.S. headline experience relative to how often the word is used casually.
Learn more: Disinflation, deflation, and stagflation · Inflation 101
Stagflation
Vocabulary label for weak growth or soft labor alongside sticky high inflation—an uncomfortable policy mix often linked to adverse supply-shock stories.
Learn more: Disinflation, deflation, and stagflation · Demand shocks vs supply shocks
Breakeven inflation
Teaching shorthand: roughly a nominal Treasury yield minus a similar-maturity TIPS yield. A market-implied inflation story—not a Fed promise or a trade signal.
Learn more: Real rates and inflation expectations · Bonds for beginners
Real rate
An interest rate after subtracting inflation or expected inflation—so learners can ask what remains in purchasing-power terms. Sibling of real yield in bond talk.
Learn more: Real vs nominal · Real rates and inflation expectations
Labor
NFP
Nonfarm payrolls—the monthly estimate of jobs added or lost outside the farming sector, released with the broader employment situation report. Markets also watch the unemployment rate, wages, and revisions. NFP is a flagship event for the jobs half of the dual mandate.
Learn more: Jobs and growth · Event playbook
GDP
Gross domestic product—the broadest common scoreboard for the value of goods and services produced in an economy over a period. GDP growth summaries show whether activity expanded or contracted overall, but monthly jobs and inflation prints often drive day-to-day macro conversation more than the quarterly GDP release.
Learn more: GDP and how we measure the economy · Jobs and growth · Business cycle
Soft landing
A scenario label: inflation cools toward the central bank’s comfort zone while growth slows only modestly and the labor market softens without a deep downturn. It is a way to organize debate—not a forecast this glossary or site makes, and not a dated recession call.
Learn more: Jobs and growth · Business cycle
Frictional unemployment
Normal job-search churn—people between roles, newly entering, or relocating. Part of a healthy labor market’s turnover.
Learn more: Unemployment types · Jobs and growth
Structural unemployment
Unemployment from mismatch—skills, industry decline, or location—that takes longer to clear than simple job-search friction.
Learn more: Unemployment types · Long-run growth and productivity
Cyclical unemployment
Unemployment tied to soft demand in a downturn—firms need fewer workers until activity recovers.
Learn more: Unemployment types · Business cycle · Jobs and growth
Markets
Liquidity
In macro slang, how easily money and credit flow through the financial system—reserves, market functioning, and willingness to lend or take risk—not only how fast you can sell an asset. QE/QT and private credit conditions both show up in liquidity conversations that affect risk mood.
Learn more: Risk assets 101 · The Fed toolkit
Risk-off
A mood label for when investors prefer safety over risk assets—often during uncertainty spikes, tighter financial conditions, or growth scares. The opposite informal idea is a “risk-on” appetite. These labels describe behavior in headlines; they are not instructions to buy or sell.
Learn more: Risk assets 101
Credit spread
Roughly a corporate (or other credit) yield minus a similar-maturity Treasury yield—the extra compensation markets demand for credit risk. Wider often accompanies caution; narrower often accompanies firmer risk appetite. Context only.
Learn more: Credit spreads as a macro signal · Financial conditions · Risk assets 101
Rates & FX
Yield
The return implied by a bond’s price and cash flows, usually quoted as an annual percentage. In everyday headline language: when bond prices rise, yields fall; when bond prices fall, yields rise. Market yields are set in trading—not typed in by the Fed as the policy rate.
Learn more: Interest rates and yields · The Fed toolkit
Yield curve
A snapshot of yields across maturities—from short-term bills to longer-term notes and bonds. Short yields sit closer to the policy-rate story; longer yields fold in growth, inflation, and policy-path guesses. Curve shape is vocabulary for what markets are pricing—not a recession-date forecast on this site.
Learn more: The yield curve for beginners · Interest rates and yields · Business cycle
DXY
A widely quoted U.S. Dollar Index—newspaper shorthand for the dollar’s value against a basket of major currencies. Rising DXY usually tracks a “stronger dollar” story in U.S. media; falling DXY tracks a “weaker dollar” story. It is a teaching and headline gauge here, not a pitch to trade FX.
Learn more: US dollar and FX
Duration
A teaching shortcut for how sensitive a bond’s price is to a change in yields. Longer-maturity bonds usually have higher duration and tend to wiggle more when yields move; shorter bonds usually wiggle less. Duration describes interest-rate sensitivity—it is not a recommendation to buy or sell any bond.
Learn more: Bonds for beginners · Interest rates and yields
Real yield
Roughly, a bond yield after subtracting an inflation measure or inflation expectation—so learners can compare a nominal yield with the inflation backdrop. Real-yield talk shows up in debates about bonds versus cash or risk assets. This glossary defines the phrase; it does not publish “real yields say buy X” calls.
Learn more: Real vs nominal · Real rates and inflation expectations · Bonds for beginners
Financial conditions
Broadcaster shorthand for how easy or expensive it feels for households, firms, and markets to get money and take risk—market yields, credit spreads, the dollar, equity volatility, and lending appetite—not only the Fed’s policy rate. “Tighter” leans toward dearer/scarcer money and more caution; “easier” leans the other way. Educational context only.
Learn more: Financial conditions · The Fed toolkit · Risk assets 101
TIPS
Treasury Inflation-Protected Securities—U.S. government bonds whose principal adjusts with a consumer-price index so that, in design, they offer inflation-linked protection. Beginners meet “TIPS yields” or breakeven inflation talk in market commentary. This site treats TIPS as vocabulary for inflation-and-rates conversation, not a product recommendation.
Learn more: Real rates and inflation expectations · Bonds for beginners · Inflation 101
Money & banking
M1
A narrow money aggregate—currency and closely spendable deposits in common teaching language. Definitions evolve; treat M1 as a map of readily usable balances, not a magic forecasting number.
Learn more: Money and banking basics
M2
A broader money aggregate that starts from M1 and adds certain savings-like and short-term balances. Headline “money supply” talk often points here. Context beside rates and credit—not a standalone trade rule.
Learn more: Money and banking basics · The Fed toolkit
Leverage
Using borrowed money (or similar gearing) so gains and losses loom larger than with equity alone. Leverage can feel invisible in expansions and painful in stress—teaching vocabulary for why debt amplifies cycles.
Learn more: Debt, leverage, and cycles · Money and banking basics
Deleveraging
Reducing leverage—paying down debt, writing it down, or rebuilding equity cushion—so balance sheets become less geared. A map label for debates, not a timed crash prophecy on this site.
Learn more: Debt, leverage, and cycles · Financial conditions
Measurement & trade
Potential GDP
A teaching estimate of what an economy could sustainably produce given labor, capital, and technology—closer to “climate” than quarterly “weather.” Imperfect to measure; useful for talking about slack vs overheating.
Learn more: Output gap and potential GDP · Long-run growth and productivity · GDP and how we measure the economy
Productivity
Efficiency of production—often summarized as output per hour worked. Rising productivity lets living standards grow without simply working more hours.
Learn more: Long-run growth and productivity · AI, productivity, and potential growth
Current account
A balance-of-payments snapshot covering trade in goods and services plus certain income and transfer flows. Surplus/deficit is an accounting label—not a moral score or automatic FX signal.
Learn more: Trade and the balance of payments · US dollar and FX
Demand shock
A sudden shift in spending appetite—too much or too little demand chasing goods and services. In clean demand stories, activity and prices often lean the same direction.
Learn more: Demand shocks vs supply shocks · Inflation 101
Supply shock
A sudden shift in capacity or costs—energy, shipping, lockdowns, crop failures. Adverse supply shocks can raise prices while activity struggles.
Learn more: Demand shocks vs supply shocks · Inflation regimes
Housing & commodities
Mortgage rate
The interest rate a lender quotes on a home loan. It is influenced by market yields and lender margins—not set equal to the Fed’s overnight policy rate. Policy moves and guidance transmit into mortgage quotes through the bond market and expectations, with lags and plenty of noise.
Learn more: Housing, mortgages, and rates · Interest rates and yields · Financial conditions
Hard assets
Loose headline slang for physical or commodity-linked claims—gold, oil, and sometimes real estate in broadcaster talk. Fuzzy marketing category, not an accounting term, and not an automatic “buy hard assets” rule on this site.
Learn more: Commodities and the dollar · Cash, stocks, and bonds
Soft assets
Loose headline slang for financial claims more tied to paper markets and duration—long bonds or growth equities in some talks—contrasted with “hard assets.” Recognize the phrase; do not treat it as a portfolio recipe.
Learn more: Commodities and the dollar · Cash, stocks, and bonds
Commodity supercycle
A storytelling label for a long phase of strong demand and elevated prices across many commodities. Useful only as media vocabulary. This site does not date supercycles, treat them as scientific laws, or recommend positioning for them.
Learn more: Commodities and the dollar · Inflation 101
Sources
BLS
The U.S. Bureau of Labor Statistics—publisher of CPI and the monthly employment situation report (including nonfarm payrolls), among other labor and price statistics. A primary source beginners should bookmark before relying on viral screenshots.
Learn more: Sources and habits · Inflation 101 · Jobs and growth
BEA
The U.S. Bureau of Economic Analysis—publisher of GDP and PCE price indexes (among other national accounts). The Fed has long preferred PCE when describing its inflation goal.
Learn more: Sources and habits · Inflation 101 · Jobs and growth
Fiscal & cycle
Fiscal deficit
When government spending exceeds tax and other receipts over a period. A deficit is a flow (this year’s gap); government debt is the stock accumulated from past borrowing. Deficits show up in debates about demand, inflation, and bond supply—this glossary defines the term without campaigning for a party or budget plan.
Learn more: Deficits, debt, and debt-to-GDP · Fiscal policy basics
Business cycle
The familiar pattern of expansion, peak, contraction, and trough in economic activity. Useful as a learning map for how jobs, inflation, and policy debates fit together. This site does not date peaks, troughs, or recessions in real time.
Learn more: Business cycle · Jobs and growth
Expectations
Priced in
Everyday phrase meaning a possibility is already reflected in asset prices and investor stories. When an outcome is largely priced in, delivering it can produce a muted or even opposite short-term reaction; surprises vs expectations often move markets more than the raw level alone. Educational framing only—not a trade rule.
Learn more: Priced in / expectations · Event playbook
Plumbing
Bank reserves
Electronic balances banks hold in accounts at the Fed—the core of overnight settlement and money-market plumbing. In ample-reserves regimes, the level and distribution of reserves shape liquidity conversations beside the policy rate.
Learn more: Fed balance sheet and reserves · QE and QT explained · Money and banking
Ample reserves
A policy-framework idea: enough reserves in the banking system that the overnight policy rate is steered mainly with administered rates (such as interest on reserves and the ON RRP offering rate), rather than by keeping reserves scarce day to day.
Learn more: Fed balance sheet and reserves · Overnight RRP plumbing
ON RRP (overnight reverse repo)
A Fed facility where eligible counterparties—notably many money-market funds—can place cash overnight with the Fed against Treasury collateral at an offering rate. Teaching shorthand: a safe overnight parking spot for wholesale cash.
Learn more: Overnight RRP plumbing · Fed balance sheet and reserves · SOFR vs federal funds
SOFR
Secured Overnight Financing Rate—a broad measure of overnight borrowing costs secured by Treasury collateral in U.S. repo markets. A major reference rate after Libor; related to, but not the same as, the Fed’s federal funds target.
Learn more: SOFR vs federal funds · Interest rates and yields · The Fed toolkit
Term premium
Teaching label for the extra (or reduced) yield investors require for holding longer-term bonds beyond the average expected path of short rates—compensation tied to uncertainty, duration risk, and supply/demand.
Learn more: Term premium · Yield curve · Interest rates and yields
Output gap
Roughly actual GDP minus potential GDP (often as a percent of potential). Negative gap / slack suggests unused capacity; positive gap / overheating suggests demand running ahead of sustainable supply—imperfect estimates, useful vocabulary.
Learn more: Output gap and potential GDP · Phillips curve for beginners · Dual mandate
Phillips curve
A teaching relationship linking inflation and unemployment (or resource utilization). Classic short-run sketches show a tradeoff; modern debates stress expectations, supply shocks, and shifting curves—not a trading rule.
Learn more: Phillips curve for beginners · Dual mandate · Inflation 101
Credit cycle
The pattern of easy credit, leverage stretch, tightening, and repair that can amplify business-cycle swings. Related to—but not identical with—the broader expansion–contraction map.
Learn more: Credit cycles · Debt and leverage · Credit spreads
Leading indicator
A data series that tends to turn earlier than broad economic activity—useful for early whispers, prone to false alarms. Part of a leading / coincident / lagging sorting habit, not a standalone forecast engine.
Learn more: Leading vs lagging indicators · Business cycle · Event playbook
Debt-to-GDP
Government (or other) debt stock divided by GDP—so the load is compared with economic size. A scale metric for fiscal debate, not a moral score or automatic crisis timer.
Learn more: Deficits, debt, and debt-to-GDP · Fiscal policy basics
Multiplier
Teaching idea that an initial spending impulse can ripple through income and re-spending, so total demand may rise by more than the first round—reduced by saving, taxes, and import leakages. Vocabulary only, not a forecast number.
Learn more: The multiplier effect · Fiscal policy basics · Consumption and saving
Policy transmission
The chain from a central-bank policy-rate (or balance-sheet) change into loans, mortgages, yields, the exchange rate, risk mood, and—with lags—spending and hiring.
Learn more: Monetary policy transmission · The Fed toolkit · Financial conditions
Inflation expectations
Beliefs about future inflation used in wage bargaining, contracts, and pricing plans. Anchored expectations stay near the policy goal; unanchored expectations drift and can prolong inflation.
Learn more: Inflation expectations and anchoring · Real rates and breakevens · Phillips curve for beginners
Participation rate
Labor force divided by working-age population—the share of people who are employed or actively unemployed. Changes who is “in” the jobs story beside the unemployment rate.
Learn more: Labor force participation · Unemployment types · Jobs and growth
Fiscal dominance
Debate label for situations where government financing needs are said to constrain or overshadow the central bank’s inflation goals. A definition for reading essays—not a prediction this glossary makes.
Learn more: Fiscal dominance vocabulary · Deficits, debt, and debt-to-GDP · The Fed toolkit
Treasury bills (notes, bonds)
U.S. government securities by maturity family: bills (short-term), notes (medium-term), bonds (longer-term). Issuance is how deficit funding shows up in markets—plumbing vocabulary, not a trade.
Learn more: Treasury issuance basics · Bonds for beginners · Interest rates and yields
Exchange-rate regime
The rule for how a currency’s value is set—float, peg/managed, or currency union. The regime shapes what monetary policy can do when shocks hit.
Learn more: Exchange-rate regimes · US dollar and FX · Capital flows for beginners
Capital flows
Cross-border purchases of financial and real assets. Push factors send money abroad; pull factors attract it. A sudden stop is a sharp reversal of inflows.
Learn more: Capital flows for beginners · Trade and the balance of payments · Exchange-rate regimes
Liquidity vs solvency
Liquidity: short of cash/funding now. Solvency: short of capital so assets may not cover liabilities even with time. Crisis headlines often blur the two.
Learn more: Liquidity vs solvency · Debt and leverage · Credit cycles
Nowcasting
Estimating the current state of the economy with timely indicators before official prints arrive. A description craft—not a beat-the-print trading system on this site.
Learn more: Data revisions and nowcasting · Leading vs lagging indicators · Sources and habits
Stablecoin
A crypto token designed to track a reference value—often one U.S. dollar. Macro talk focuses on dollar liquidity and reserve backing stories; this glossary never recommends buying or selling any token.
Learn more: Stablecoins and dollar liquidity · Crypto and macro liquidity · Money and banking
TGA (Treasury General Account)
The U.S. Treasury’s checking account at the Federal Reserve. Building or spending down the TGA can rearrange Fed liabilities—often raising or lowering bank reserves, other things equal.
Learn more: Treasury General Account (TGA) · Fed balance sheet and reserves · QE and QT explained
Automatic stabilizers
Fiscal features—such as progressive taxes and unemployment insurance—that cushion downturns and withdraw support in upswings without a new law each time.
Learn more: Automatic stabilizers · Fiscal policy basics · Business cycle
Central bank independence
Institutional room for a central bank to pursue its mandate with instruments day to day, insulated from short-term political micromanagement, usually paired with accountability.
Learn more: Central bank independence · Dual mandate · The Fed toolkit
Unit labor costs
Compensation relative to productivity—roughly labor cost per unit of output. Used in wage–inflation debates alongside average hourly earnings.
Learn more: Wage growth vocabulary · Growth and productivity · Inflation 101
Sudden stop
A sharp reversal of capital inflows that can stress FX and funding—common teaching language in open-economy and EM crises.
Learn more: Capital flows for beginners · Emerging markets and the dollar · Exchange-rate regimes
Lender of last resort
Central-bank teaching role: provide liquidity against collateral in a panic to illiquid but (ideally) solvent institutions.
Learn more: Financial crises vocabulary · Liquidity vs solvency · The Fed toolkit
Risk premium
Extra required return or wider spread for bearing uncertainty or loss risk. Geopolitical and policy shocks can widen premiums across assets.
Learn more: Geopolitics and risk premiums · Credit spreads · Policy uncertainty as a shock
Policy uncertainty
Fog about future taxes, tariffs, regulations, or other rules that can delay spending and widen risk premiums—even before the final rule is known.
Learn more: Policy uncertainty as a shock · Demand shocks vs supply shocks · Tariffs as a macro shock
Telegram
For live FOMC / CPI / NFP decoding while you keep these definitions open: Macro Simplified on Telegram.