FED FORECASTING

There are several things amiss with this article. That it appeared on Bloomberg, however, tells you most of what you need to know. That the author is a former member of the Fed is another. Then there's most likely the most damning part: he's an economist.

One could start with the old joke, economists have correctly predicted 10 of the last three recessions. Of all the social sciences, economists are probably the most pathetic. And that's saying something because sociologists are right up there, too.

In the main when it comes to clear writing neither one could pass a decent freshman composition class in even a subpar English department. But to be precise we'll focus on economists and their  econometric babble. A data wonk is a data wonk.

He writes:  bloomberg.com/view/articles/2016-05-25/the-fed-s-amazing-self-fulfilling-forecast

The Federal Reserve’s track record of economic forecasting is a lot better than many observers recognize. It might also offer some insight into the central bank’s approach to managing the recovery.

Criticism of the Fed’s forecasting has focused largely on its failure to recognize, as late as mid-2008, the depth and persistence of the recession that the global financial crisis would engender. I agree that this error -- which the Fed was not alone in making -- should lead economists at the central bank and elsewhere to do a better job of including financial markets in their forecasting models.

That said, the Fed’s forecasters did better after the recession. Consider, for example, the projections they supplied for the central bank’s November 2010 policy-making meeting (the latest for which staff materials have been released to the public). Here’s how their estimates of unemployment and inflation, formulated in October 2010, compare to what actually happened:

What the good author conveniently leaves out is the "actual"  numbers he cites are bogus. Actual unemployment numbers were far higher than that. It's just that this good economist and his friends at the Fed use their well selected indicators to tally the numbers not anyone else's. The same holds true for inflation. Obviously, this dude wasn't out looking for a job during this time.

To suggest, as he does, that the Fed's forecasts even remotely compare with what happened is what your mother used to threaten but is now politically incorrect, wash your mouth out with soap. Notice his little deceptive attempt to misplace the criticism of the Fed, saying most of it centers on the failure to see the recession coming.

Early on that might have been true, but not for the last few years. It's been about excessive money printing. One round of QE after another because they didn't' then and still don't have a clue about what they're doing. Many of the Fed's defenders are like the Trump critics. Trump is rattling cages, pointing out deep flaws in the system's fabric. It's a system, like the Fed, that's in dire need of substantial changes.

People are growing increasingly sick of a system that keeps screwing with their lives. And the same holds for an institution of non-elected, academic, out-of-touch bureaucrats who make up the rules and their bogus indicators as they go along.