Wishful Thinking

Here’s an interesting graphic from the Wall Street Journal.  It shows the Fed’s economic forecasts compared to the actual economic outcome.  As you can see the Fed overestimated their forecast in both the 6 and 12 month timeframes.  And we’re not talking about small misses in their forecast.  Just eyeballing this chart, it’s clear that they’ve missed the forecast by roughly 1.5% over much of the last 10 year period….

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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Comments

  1. Hmm, if my high school math is right, and I still remember the “power of the exponential function”, 1.5% in 10 years is an accumulative 16%.

    For a 16 trillion dollar economy, it’s about 2 trillion dollars.

    That is exact science: the same size as the Fed’s balance sheet.

    Awesome.

  2. Why do we need a FED? seems like all we need is a Media to hype fiscal Cliff News and Congress to just sign Off.
    Really That’s all there really is to it. Congress Just Tax and Spend. Nothing elese will matter until there is a “Black Swan” event because America is the worlds last best hope.

    So heck Just allocate, allocate because in the end it’s really all about jumping off the ride before the swan spreads her black wings.

    • I would prefer if Congress actually started “taxing and spending” as opposed to “borrowing and spending.”

  3. Don’t feel singled out by official incompetence. The British official forecasts have been just as over-optimistic for more years than I can remember.