Tags: Fed | Yellen | dove | hawk

WSJ: Fed Doves Have Forecast Economy Better Than Hawks Have

Tuesday, 30 Jul 2013 08:36 AM

By Dan Weil

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Policy doves on the Federal Reserve have forecast the economy better than the hawks have, according to a Wall Street Journal analysis.

It looked at more than 700 predictions made from 2009 to 2012 by 14 Fed policymakers, scoring the forecasts on growth, jobs and inflation.

The rankings range from negative 1.0 for someone who's extremely wrong to positive 1.0 for someone who's almost completely right. A zero score indicates someone who's right (and wrong) half the time.

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Doves Janet Yellen, the Fed's vice chairwoman, and William Dudley, New York Fed president, topped the rankings, with a 0.52 for Yellen and a 0.45 for Dudley. Both have forecast weak growth and low inflation over the past four years.

Heading up the rear were hawk Charles Plosser, Philadelphia Fed president, and centrist James Bullard, St. Louis Fed president. Plosser scored negative 0.01, and Bullard scored zero. Next worst was hawk Jeffery Lacker, Richmond Fed president, who scored 0.05.

The Journal notes that in the summer of 2009, Janet Yellen, said, "I expect the pace of the recovery will be frustratingly slow." She was right.

Meanwhile, in December 2009, Plosser cautioned that "the inflation rate is likely to rise to levels that most would consider unacceptable." He was wrong.

Meanwhile, President Obama is expected to name either Yellen or former White House economic adviser Lawrence Summers as the next Fed chairman.

Both represent "a pretty sorry choice," Steve Forbes, chairman of Forbes Media, told Newsmax TV in an exclusive interview.

"Neither understands that money comes from people doing things with each other: transactions with each other, being innovative, entrepreneurial. They still think it's just printing pieces of paper."

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