These are the forecasts of the Fed when the economy was on the edge of the recent economic collapse

"Economic Projections for 2007 and 2008

In conjunction with the FOMC meeting in January, the members of the Board of Governors and the Federal Reserve Bank presidents, all of whom participate in the deliberations of the FOMC, provided economic projections for 2007 and 2008. The projections indicate that the participants expect sustainable expansion of real economic activity during the next two years, assuming an appropriate course for monetary policy.

The central tendency of the FOMC participants' forecasts for the increase in real GDP is 2-1/2 percent to 3 percent over the four quarters of 2007 and 2-3/4 percent to 3 percent over the four quarters of 2008.

The central tendency of their forecasts for the civilian unemployment rate is 4-1/2 percent to 4-3/4 percent in the fourth quarter both of this year and of 2008. For inflation, the central tendency of the forecasts anticipates an increase in the price index for personal consumption expenditures excluding food and energy--the so-called core PCE price index--of 2 percent to 2-1/4 percent over the four quarters of 2007 and 1-3/4 percent to 2 percent over the four quarters of 2008."

My point. The world stops when the chairman of the Fed speaks. The above forecasts show how naive we are in thinking they have insights that can keep us out of trouble.

Bernanke is giving his testimony to Congress this morning. How relevant is it in light of the above record?

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

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