Just a week ago, Ben and his merry band of FOMC cronies paraded their version of economic forecasting in front of a watchful market. The market didn’t like having its punch bowl taken away, or more appropriately, mere talk that it might be taken away sometime toward the end of the year. Bernanke went so far to say that should the Fed’s economic growth forecasts hold true then the QE tapering would begin as early as December. The operative words here are “Fed” and “forecasting. Those two should more accurately be labeled an oxymoron. Today we learned that 1st quarter GDP was revised downward from 2.4 percent to 1.8 percent annualized. That’s a surprising downward miss/revision to actual growth numbers, and it would suggest the Fed is being pretty darn rosy with their growth assumptions. No surprise there. With the damage the Fed just inflicted on the mortgage markets, it will be interesting to see how Bernanke plans to get the additional growth needed for a stick save. The real estate market was one of Bernanke’s best hopes for real stimulus to the economy in 2013. Instead of staying the course, Bernanke just took the housing finance market to the woodshed. Who knows, maybe Ben and his buddies already have a reserve seat to Elysium?
The next employment report promises to have some real entertainment value as well. I can’t wait to see how many more full time jobs the BLS can shred and re-assemble into part-time employment stats. Stay tuned. This is going to be one interesting summer!
Looking at this 10-Year moving average of GDP and the linear regression, it’s hard to spot the new growth Ben is talking about.