Why are the Fed’s beloved models failing in forecast?

by
Aug 12
  • The action overseas is muffled by Euro-vacation, but stuff is still happening, and a few really big things that should be happening are not.
  • Optimism soared last week on good news for jobs in July. Ground that bird. Worker productivity has fallen in three straight quarters, and July retail sales stalled flat.
  • In Ben Bernanke's blog this week he provided an overview of current Fed policy -- and a simple chart of historical Fed estimations of the future economy and interest rates.

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The action overseas is muffled by Euro-vacation, but new data are as-before: Germany benefitting from a weak euro, the rest hurt by a too-strong euro. Spain and Portugal still have no governments, and Italy still has pretend banks.

Article image credited to Kentoh / Shutterstock.com