Alert: The Fed Is Really, Really Confident – Uh-Oh
April 24, 2017
A previous post looked at the amazing analytical abilities of the Federal Reserve. We have truly been blessed in this country to have such economic geniuses (wo)manning the Fed, where they are able to precisely ramp up or cool down the economy, based upon their cherry-picked data points rear-view-mirror back-tested PhD built econometric models. These precision models allow them to consistently give accurate economic outlooks. So they just need to adjust their dials to keep our vibrant economy running in consistent permabull mode. This is why we as a nation have decided to let a handful of PhDs completely control our $18 trillion economy. And what has truly helped their forecasting abilities, is that not one of them has any idea what actually goes on in the real world. So it’s very reassuring to know we can rely on their accurate economic outlooks for guidance. For instance, inJanuary 2000, two months from the massive bubble top in the Nasdaq Stock Market and the eventual plunge in GDP,Chairman Greenspan most assuredly was already preparing for the huge problems about to hit – right? “Four or five years into this expansion, in the middle of the 1990s, it was unclear whether, going forward, this cycle would differ significantly from the many others that have characterized post-World War II America. More recently, however, it has become increasingly difficult to deny that something profoundly different from the typical postwar business cycle has emerged.Not only is the expansion reaching record length, but it is doing so with far stronger-than-expected economic growth.”…..Oops,he wasn’t even close!
Well that must have just been a fluke, so let’s see what Chairman Bernanke said in January 2008, right at the start of the worst economic crisis in 70 years. We entrust these brilliant economists to run our $18 trillion economy, so certainly he must have seen the dangers lurking just ahead,”The Federal Reserve is not currently forecasting a recession.” ……Oh boy, missed that one by a mile!
So let’s fast forward to today, as the Atlanta Fed GDPNow forecast is running at only 0.5% for the first quarter. But we can relax because Chairwoman Yellen must be completely aware of this, thus is concerned about the situation, “We have confidence in the robustness of the economy and its resilience to shocks. There’s job security. It’s finally safe to feel good about the U.S. economy.”……..UH-OH!