Is the Fed missing the point
Livewire
Is the Fed missing the point? Throughout the post-Lehman period, the Fed has consistently overestimated real GDP growth. At the beginning of each year from 2010 through 2013, growth in the subsequent three years was expected to range between 3.5% and 4%, but was later revised downward as the economy disappointed. For example, based on the Fed's initial expectations, real GDP was projected to grow 4% in 2011 and 2012, but ended closer to 2% in both years. Similarly, 2013 Fed forecasts came down to 2.25% from initial expectations of 4%. The Fed's estimates have been off by about two percentage points, a large margin of error. We see signs that what the Fed has called a cyclical problem is increasingly becoming a structural problem. If persistent joblessness and the lackluster economy are structural, then we may need to change our baseline expectations for growth. Read more: (VIEW LINK)
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Livewire News brings you a wide range of financial insights with a focus on Global Macro, Fixed Income, Currencies and Commodities.
Expertise
No areas of expertise