Tuesday, October 15, 2013

Janet Yellen's Crystal Ball Utterly Failed Her In May 2007: She Never Saw The Crisis Coming

(as always, click on the image to enlarge)




“Taking a longer view, I anticipate real GDP growth over the next two and a half years [2008 & 2009] of about 2.6 percent, just a bit below my assessment of potential. My forecasts of both actual and potential growth are a tenth or two stronger than the Greenbook forecasts; but the basic story is very similar, and the underlying assumptions, including the path for the nominal funds rate, are essentially the same. I view the stance of monetary policy as remaining somewhat restrictive throughout the entire forecast period. The key factors shaping the longer-term outlook include continued fallout from the housing sector, with housing wealth projected to be roughly flat through 2008. Given the reduced impetus from housing wealth, household spending should advance at a more moderate pace going forward than over the past few years.” (Quoted here)