Fed's Williams: "We Got It Wrong"

Tyler Durden's picture

In late 2014 and early 2015, we tried to warn anyone who cared to listen time and time and time again that crashing crude prices are unambiguously bad for the economy and the market, contrary to what every Keynesian hack, tenured economist, Larry Kudlow and, naturally, central banker repeated - like a broken - record day after day: that the glorious benefits of the "gas savings tax cut" would unveil themselves any minute now, and unleash a new golden ago economic prosperity and push the US economy into 3%+ growth.

Indeed, it was less than a year ago, on January 30 2015, when St. Louis Fed president Jim Bullard told Bloomberg TV that the oil price drop is unambiguously positive for the US.

It wasn't, and the predicted spending surge never happened. 

However, while that outcome was not surprising at all, what we were shocked by is that on Friday, following a speech to the California Bankers Association in Santa Barbara, during the subsequent Q&A, San Fran Fed president John Williams actually admitted the truth.

The Fed got it wrong when it predicted a drop in oil prices would be a big boon for the economy. It turned out the world had changed; the US has a lot of jobs connected to the oil industry.

And there you have it: these are the people micromanaging not only the S&P500 but the US, and thus, the global economy - by implication they have to be the smartest people not only in the room, but in the world. As it turns out, they are about as clueless as it gets because the single biggest alleged positive driver of the US economy, as defined by the Fed, ended up being the single biggest drag to the economy, as a "doom and gloomish conspiracy blog" repeatedly said, and as the Fed subsequently admitted.

At this point we would have been the first to give Williams, and the Fed, props for admitting what in retrospect amounts to an epic mistake, and perhaps cheer a Fed which has changed its mind as the facts changed... and then we listened a little further into the interview only to find that not only has the Fed not learned anything at all, but is now openly lying to justify its mistake. To wit:

I would argue that we are seeing [the benefits of lower oil]. We are seeing them where we would expect to see them: consumer spending has been growing faster than you would otherwise expect.

Actually John, no, you are not seeing consumer spending growing faster at all; you are seeing consumer spending collapse as a cursory 5 second check at your very own St. Louis Fed chart depository will reveal:

But the absolute cherry on top proving once and for all just how clueless the Fed remains despite its alleged epiphany, was Wiliams "conclusion" that consumers will finally change their behavior because having expected the gas drop to be temporary, now that gas prices have been low for "over a year" when responding to surveys, US consumers now expect oil to remain here, and as a result will splurge. So what Williams is saying is... short every energy company and prepare for mass defaults because oil will not rebound contrary to what the equity market is discounting.

We can't wait for Williams to explain in January 2017 how he was wrong - again - that a tsunami of energy defaults would be "unambiguously good" for the US economy.

Full audio recording below.

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Truther's picture

Maybe you should not be a Fed President retard. I have a couple of marbles for you to play with instead, you scum.

Mr.Sono's picture

No shit, the whole world runs on oil. Morons

johngaltfla's picture

We? Hell, you pinheads haven't gotten it RIGHT in 25 years!

Those of in the hinterland hope you asshats choke on  your bullcrap.

Scooby Dooby Doo's picture

Clueless bitches driving the bus, bitchez. And they've all got Hitler mustaches!

knukles's picture

Buncha Retarded, Clueless Central Planners, SWJ heros, Diverse, Loving, Inclusive, Progressives inside of whom are Totalitarians Trying to Get Out, aka, Fucking Blind, Deaf and Dumb


                                                SO WHADDYA GONNA DO NOW TO FIX IT?

wee-weed up's picture



"We Got It Wrong"

 Unfortunately, you dumb shits - You just don't get it...

It's not a ONE TIME thing with you...

You ALWAYS get it wrong...

When are you going to start learning from your mistakes?

TeamDepends's picture

Screwing you for a century now, we're the Federal Reserve!

espirit's picture

All I got to say is...

"No Shit!"

Boris Alatovkrap's picture

"Fed is get it wrong"... Please to wait while Boris is form facial expression of genuine surprise and bewilder.

Serious, now Fed Williams is get wrong AGAIN because energy is industrial input and low price for industrial input is LEADING indicator. Please, someone is buy central bankster spokespussy a brain!

Occident Mortal's picture

They can do whatever the fuck they like because NOBODY in America is going to stand up to them.

He could come out with a fucking pineapple on his head and his dick hanging out and still nobody would do anything.

They are mocking you.
Paulson: "No, we were making it wider! HAHAHHA!!"

What is it gonna take for someone to take a stand and say 'enough'?

Led into the dirt by feckless clowns and too fucking lazy to protest.

TeamDepends's picture

We'll see about that come April 15th. Things are simmering now, but by then we are forecasting a frothy boil.

Son of Loki's picture

There's a dark side to those delightfully low gas prices: Housing markets are slumping in communities that were recently flush from the U.S. shale oil fracking boom.


Home sales are down sharply this year in North Dakota and the West Texas cities of Midland and Odessa. Home sales have also slowed in El Paso, and, more recently, in Houston.





Son of Loki's picture

Oh yeah, I almost forgot this awesome news:



Houston home sales decline by double digits amid oil slump

Houston home sales fell 10.2 percent year over year in October, according to the latest monthly report from the Houston Association of Realtors.


Single-family home sales took a nosedive in all price categories. Houston’s townhome and condominium market saw the greatest hit in sales, tumbling 17.3 percent in October.




Keyser's picture

Fucking liar, he wants us to believe that the Fed is unaware of labor distribution by industry throughout the US... Moar bullshit deflection for inept decisions... Yeah dipshit, the US has lost TENS of THOUSANDS of O&G related jobs since 2008, but you don't give a shit, you've done Obama's bidding, which was to kill the O&G industry in the US... The only thing you didn't bet on was the oil tar industry and fracking boom... But not to worry, you got your buddies in Saudi Arabia to destablisze their own country in an attempt to take out Russia AND the US shale / oil tars industry with a price war... Fuckwits, all of you... A pox on your house... 

-.-'s picture

Junk this SF Fed muthaphukka.

Escrava Isaura's picture



John Williams:

when it predicted a drop in oil prices would be a big boon for the economy…..

the US has a lot of jobs connected to the oil


Well, Williams statements are both correct. So, what is missing? Why is not working?


Because the system is insolvent. We need more and more cheap oil, because the workers don’t earn enough. And the oil companies need higher and higher prices, and more labor, because the easiest oil is gone.


Problems (prices/debts) have solutions, predicaments (fuel/energy) have outcomes.

Handful of Dust's picture

Cheap gas does not help those fired from work, and there's over 200,000 of them now in the USA energy sector alone who have been axed. Add in the ripple effect of fewer of these jobless oil engineers eating out, buying clothes, going to the movies, buying a new car, etc and you have a huge impact on the economy. There's a multiplier effect downward.


Don't forget, the median salary of an oil an dgas engineer is $185k.

Luc X. Ifer's picture

Isn't that premium idiocy to have an economy tied to a comodity and economic strategies of the 19th century in 201X?!

Push a rock betwen their teeth - mouth closed.

Leknam's picture

Sorry but WE THE PEOPLE have got it wrong, these bought and paid for liar's know exactly what they are doing. They have got their own agenda and running an economy for the good of THE PEOPLE is not it 

Soul Glow's picture

Stop printing funny money maybe.  Pull their dicks outta their asses perhaps.

Boris Alatovkrap's picture

Pull who's dick out of who's ass? Only common citizenry is get screw.

Soul Glow's picture

So far, but if the SHTF people will want Bernanke's head on a silver platter.

ThroxxOfVron's picture

On a sharp wooden pike, please.

two hoots's picture

The Fed has proved no difference than any other wasteful, incompetent bureaucracy in Washington. 

Boris Alatovkrap's picture

Fed is not wasteful, incompetent bureaucracy in Washington. Is international cartel of legitimized ganster who is not bit incompetent at mission to rob, skim, embezzle, theft, and defalcation.

bagehot99's picture

I am personally reassured that The Fed took years longer than a guy in a diner to realize that the oil industry creates a lot of jobs in the USA.


Thank goodness they only mess with silly guessing games and miniscule unimportant details such as global interest rates.

Omen IV's picture

it wasnt a mistake - it was collective lie - even at year end 15' Barrons has a group of economists ALL of whom predict eveything is rosy and willl continue that way - these guys are not clueless  - they take orders - consulting contracts from the Fed are worth money  - so are professors empirical studies that yield a specific result.

Today Krugman on with Hubbard - CNN with endless positive bullshit on jobs with no analysis of details - nothing changes

amadeus39's picture

The FED does not have a monopoly on stupidity and wastefulness. I visited the Bakken boom area last summer. Local governments and blue collar oild field workers with their big trucks and free spending habits share those same traits.


skipjack's picture

History repeats...gold diggers during CA's gold rush ended up broke as well but the merchants got rich selling them things. As it ever was...

williambanzai7's picture

Unfortunately, the whole world is run by morons.

Demdere's picture

Too simple.

The world is run by an ordinary spectrum of relatively smart people who are told they are winners and so have unwarranted confidence in themselves.

These ordinary mortals have all of the usual susceptabilities and weaknesses, including groupthink, etc.

Some of those people are really intelligent, really understand social systems, are very excellent advisers.

An advisor is someone who is excellent at crafting what his boss wants to year and at convincing his boss to act in the advisor's interest.  Bureaucracies are full of them.

Some extraordinaryly intelligent and effective advisors form groups that have persisted over long periods, e.g. Israeli-Neocons now have wealth and influence enough in common to move the world as a result of their 100-year Zionist Cabal.

- - - - - -'s picture
- - - - - - (not verified) Demdere Jan 11, 2016 12:34 AM

shut up you muslim troll

amadeus39's picture

Wait a minute. I'm a moron and I don't run anything. I want to run a thread.

Hitlery_4_Dictator's picture

LOL another huge FED fail....it would be funny if what the FED did didn't directly ruin and kill many people in this world. 

JerrySpringer B All Over This Shiznit's picture

yea along with big fat crayons and white walls

Hal n back's picture

Let us not forget that the govt about a year ago decided to sell oil out of spr, so one again the govt sticks its fingers into a free economy to screw things up

Sir SpeaksALot's picture

it s not a mistake, it s a design.

OregonGrown's picture

EVERYTHING the government and their hired goons touch...... they ruin!


Wishing these idiots would just STAY THE FUCK OUT OF SHIT and let the market dictate how things should go....  you know, non manipulated free market capitalism!!!


Dont worry, we will still pay your sorry ass your 7 figure salary (plus all that you can steal), just leave everything alone and stop fucking things up for everyone else!

NotApplicable's picture

That's because order spontaneously arises from chaos, not from any centralized and/or collectivized control structure.

Well Hungarian's picture

Holy dumbfuck, Batman......

Seasmoke's picture

I like saving $20 every fill up.  But I promise you I ain't spending it you dumb motherfuckers. 

scintillator9's picture

Except for the "new and improved" (un)afforadable Care Act, or food, or power, or tuition, or any type of mandatory insurance one's state may require one to buy, or taxes, or fees..........

mademesmile's picture

I'm stacking my fuel savings, if you catch my drift.

Normalcy Bias's picture

Cut the guy some slack, I mean really. Who knew that the oil industry employed a SHIT-TON of people?

Cognitive Dissonance's picture

It's almost as if the Fed is deliberately trying to fuck things up just so they will be begged to turn the fiat printer up to 100 on a 1-10 scale.

KesselRunin12Parsecs's picture
KesselRunin12Parsecs (not verified) Jan 10, 2016 9:12 PM

Go suck on a kosher schlong u loser.

nmewn's picture

Decreased gasoline price HELPS everyone economically NOT connected to oil.

We can't help it you were long oil ;-)

nmewn's picture

Well they fucked around with the energy market and got themselves into a bind, not my problem. The oil is in the ground nice and safe. The tankers are sitting offshore full of oil, nice and safe (they should have come in two weeks ago and made moar money off it).

Again, fuck em.

In fact I'm lovin not paying three fiddy a gallon, I've cut back my health insurance premium to "catastrophic" (fuck them too) and moved up to Porterhouse steaks and Ron Zacapa.

Again fuck em. 

And according BLS (Bullshitting Lying Scoundrels) central planning created TWO HUNDRED & NINETY THOUSAND jobs last month which more than makes up for every SINGLE job in the oil industry itself.

So again, fuck em.


Employment   Data series Back
data Sep.
2015 Oct.
2015 Nov.
2015 Dec.

Employment (in thousands)


Employment, all employees (seasonally adjusted)

190.0 187.5 (P) 185.4 (P) 184.5

Employment, production and nonsupervisory employees

107.6 106.2 (P) 104.0  

(P) Preliminary