Is the Fed missing the point

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)


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

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.