HMMMM- Imagine that

[stevenash]

But even a board packed with Ph.D. economists does not guarantee a good record when it comes to economic forecasting. Such a board definitely did not see the Great Recession happening. At its meeting at the end of October 2007, the members forecast growth of 1.8% to 2.5% in 2008 and 2.5% in both 2009 and 2010. They also projected that the unemployment rate would never rise above 5% through 2010.

In fact, according to the National Bureau of Economic Research, the recession began that December and lasted through June 2009. Economic growth was a negative 2.8% in 2008 and just 0.2% in 2009. The unemployment rate climbed to 10%. The Fed's forecast ability wasn't any better during the recovery. At the end of 2010, its projection was for 3.3% growth in 2011 accelerating to 4% in both 2012 and 2013.

It was too high for 2011 by 1.7 points and too high for the next two years by an average of 2 percentage points. At the end of 2012, it forecast 2.7% growth for 2013 followed by an acceleration to 3.25% and then 3.4%. it came close for 2013 but missed the next two years by an average of a full point. At the end of 2013, it forecast an average of 3% growth over the next three years, we got 2.3%.

Then, for the Trump presidency the errors went in the opposite direction. In December 2016, the Fed projected 2.1% growth for 2017 and we got 2.5%. In December 2017, it projected 2.5% growth for 2018 and we got 3.1%. (GDP figures measure from fourth quarter of the previous year to the fourth quarter of the following year.)