Wednesday, June 19, 2013

This Graph Shows How Bad the Fed is at Predicting the Future

Ben Bernnake and the Fed are out with their latest happy talk economic projections. They project the economy will grow by 2.3 to 2.6 percent, in real terms, in the fourth quarter of 2013 relative to the fourth quarter of 2012. That speeds up to 3.0 to 3.5 percent in 2014 and 2.9 to 3.6 percent in 2015. Unemployment also is projected to fall, hitting 5.8 to 6.2 percent in 2015, all while inflation stays below 2 percent.

The chart put together by WaPo shows how abysmal the Fed's actual forecasts have been (and this is not counting the Fed missing the housing crash or the overall financial crisis).

For the most part Fed members are just trend followers with no understanding of how monetary changes impact different aspects of the economy. They didn't see the downturn in the fall  of 2008, I did,  and they don't see the potential crisis ahead, now.  As I point out in the current  EPJ Daily Alert, money growth has slowed dramatically. If this continues, we are headed for another crash of the stock market and economy. Judging by the current Fed forecasts, they have no clue about the ominous cloud hanging overhead.

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