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Federal Reserve Economic Projections: Difference between revisions
Federal Reserve Economic Projections (view source)
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[[File:Projections.PNG|thumb|https://www.kansascityfed.org/ER-Archive/documents/506/Monetary_Policy_at_the_Zero_Lower_Bound_Revelations_form_the_FOMCs_Summary_of_Economic.pdf|480x480px]] | [[File:Projections.PNG|thumb|https://www.kansascityfed.org/ER-Archive/documents/506/Monetary_Policy_at_the_Zero_Lower_Bound_Revelations_form_the_FOMCs_Summary_of_Economic.pdf|480x480px]] | ||
== Projections accuracy == | == Projections accuracy == | ||
According to a Kansas City Fed research, the projections from the SEP shows how Committee members’ outlook for growth, inflation, and unemployment led to overly optimistic projections that policy would lift off from the effective lower bound. | According to a 2018 Kansas City Fed research, the projections from the SEP shows how Committee members’ outlook for growth, inflation, and unemployment led to overly optimistic projections that policy would lift off from the effective lower bound.<ref>https://www.kansascityfed.org/ER-Archive/documents/506/Monetary_Policy_at_the_Zero_Lower_Bound_Revelations_form_the_FOMCs_Summary_of_Economic.pdf</ref> | ||
* Projections of real GDP growth, for example, have been too optimistic since the beginning of the SEP in 2007. For most of the period, the midpoints of the central tendencies projected faster real GDP growth than actually occurred. As an example, the Committee participants missed the onset of the recession in 2007, underestimated its severity, and overestimated the speed of recovery. | * Projections of real GDP growth, for example, have been too optimistic since the beginning of the SEP in 2007. For most of the period, the midpoints of the central tendencies projected faster real GDP growth than actually occurred. As an example, the Committee participants missed the onset of the recession in 2007, underestimated its severity, and overestimated the speed of recovery. | ||
* Projections of unemployment were also too optimistic throughout the recession and early stages of recovery. In contrast, as the recovery gained momentum, Committee participants’ projections of unemployment became too pessimistic | * Projections of unemployment were also too optimistic throughout the recession and early stages of recovery. In contrast, as the recovery gained momentum, Committee participants’ projections of unemployment became too pessimistic | ||
* Projections of inflation have also consistently missed the mark, most likely due to unexpected fluctuations in energy prices. | |||
* Since they were first reported in the SEP in 2012, the Committee’s projections of the target federal funds rate appear to have reflected participants’ projections of real GDP growth, inflation, and unemployment. | |||
* | * | ||
== References == | == References == | ||