Fed Increasing Public Forecasting; To Confuse Further

The FOMC under Bernanke is now saying that it wants to increase its communication to the public and will increase its public forecasting from twice per year to four-times per year.  This pertains to public reports that are made by Federal Reserve Board members and Reserve Bank presidents and released to the public.  It will also begin a 3-year inflationary forecasting rather than a two-year.  It will also begin forecasting headline CPI rather than just the Core-PPI which excludes food, energy, medical, and everything else that most of us use every day.  Here is the full list of changes:

• overall personal consumption expenditures (PCE) inflation,
• as well as for real gross domestic product (GDP) growth,
• the unemployment rate,
• and core PCE inflation.
• Projections of Nominal GDP Growth will be discontinued.

The full link to this is here at the Federal Reserve site.

Traders may actually like a more open Federal Reserve, but 24/7 Wall St. wonders how this will be any more accurate when you consider how the Fed has been behind the 8-ball over and over.  This is good on the surface, but the old maxim of  "be careful what you wish for" comes to mind when it boils down to forecasting out of academic economists.  Unfortunately, the Fed’s crystal ball is usually no better than that of the bond market.

Jon C. Ogg
November 14, 2007

Jon Ogg produces the more detailed 24/7 Wall St. subscriber-based Special Situation Investing Newsletter; he does not own securities in the companies he covers.