There's a WSJ article on the Fed's new projections for the economy. It's not very good. Embedded in that article is the real story - the fact that the economic modelers at the Fed, who should be some of the very best in the country, are essentially ignorant of how the economy works. Here's the chart that says it all.
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| Outside of 2013, the Fed's models have consistently missed way high. Morons. |
It's all rubbish. They should have known it was rubbish from the start.
In the last 4 years, government meddling has wrecked the pricing of debt, taken control of the entire healthcare industry and larded up the Federal Register with mounds of new regulations. That they think those actions would lead to growth in the 3-5% range is a tribute to their theology, but not rational, evidence-based thought.
The data is right in front of them, but I doubt the larger lessons are being learned. It's hard to give up your religion, even if what you worship is the State.
4 comments:
I wonder how much of this is because the Fed bosses want the economy to be improving, and so modelers that predict it to be getting worse get fired.
It makes you wonder, doesn't it? I can't think of a time in history when printing money at the levels all the central banks have been printing has led to prosperity.
I could understand missing the mark, but to miss high every time to the point where even your most pessimistic projections don't intersect reality is a real problem.
Even our weather models do better than this. Although I seem to remember that at your college Econ was considered a breadth option for science majors.
I wish I could find it, but I recall reading from a reasonably reliable source that one of the way various numbers are getting pumped up is by changing definitions. Don't like your GDP numbers? Include numbers from the illegal businesses! They are, after all "non-farm unincorporated businesses."
The article I read was looooong, very detailed, and too dry to attract much attention. But if you want your economy to look good on paper, count the things that do well when most of it goes south...
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