US Federal Reserve policymakers have become less optimistic about the long-term growth potential of the US economy. The table shows the evolving thoughts...
US Federal Reserve policymakers have become less optimistic about the long-term growth potential of the US economy. The table shows the evolving thoughts of those contributing GDP forecasts each year since the middle of 2009 about the economy's growth potential. The central tendency of the forecasts has declined as have expectations among the least and most optimistic of the forecasters. As usual, policymakers' ideas about the future may prove too heavily anchored in the most recent past. To the extent there is an assumption among business leaders, reinforced by Fed officials, of broadly deteriorating conditions, business planning will reflect such an outcome. If conditions prove better than expected because forecasters have lulled themselves into a false sense of insecurity, businesses will find themselves with insufficient production capacity in the future with a need to adjust quickly to more buoyant conditions. Hence we have cycles.
John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...
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