The answer, of course, is yes: they are after all, economists (who somehow, with no real world experience, determine the daily fate of billions of productive and capital-allocation decisions every day). But it is one thing for everyone to discuss the obvious anecdotally by the water cooler. It is something else for this verbal heresy to be printed in a "serious" publication. Such as Reuters [18], which today asks if "the Federal Reserve has watched the U.S. recession and painfully slow recovery through rose-colored glasses?" And answers: "A look at the U.S. central bank's economic forecasts over the past five years suggest it has." It then explains: "Since October 2007, when the Fed's policy committee began giving quarterly predictions for GDP growth and the jobless rate, the central bank has downgraded its nearer-term forecasts almost two-and-a-half times as often as it upgraded them. The gap between Wall Street's expectations for 2012 growth and the Fed's own current view points to yet another downgrade on Thursday, when policymakers wrap up a two-day meeting that has world financial markets rapt." It concludes: "The trend of back-pedaling shows how poorly the central bank has fared at reading the economic tea leaves, with the Fed's optimism a likely factor in policy decisions through the Great Recession and its fallout, economists say." In summary: the world's most ebullient and permabullish forecasters, who incidentally happen to constantly be wrong in their desperate attempts to affect the only thing that matters: consumer and investor sentiment and confidence via the increasingly irrelevant myth that are asset prices, happen to run the monetary world and "determine" just what the future looks like. Needless to say, if the Fed's presidents were actually employed in the private sector, they would have been fired ages ago. Only in a fiat world do they not only keep their jobs, but keep on running the world.
A more detailed [18]look at the constant failure of the central planners to see beyond the horizon:
"The Fed has been kind of consistently overestimating where growth should be ... it has expected too much," said Eric Stein, a portfolio manager at Eaton Vance.
When the forecast proves too optimistic, the central bank trims its expectations, building the case for further policy easing, he said.
"I'm not saying they are intentionally lowering forecasts to try to ease; they are lowering them because that's the reality of the situation," Stein said. "But if they want to ease, having that as justification, particularly with the upcoming political election, is helpful."
In what is often described as an aggressive response, the Fed has kept short-term interest rates near zero for nearly four years and launched two rounds of so-called quantitative easing in a bid to push down longer-term borrowing costs. It has also said it will keep rates low until at least late 2014.
Despite those unprecedented moves, the recovery has been choppy, several times revving up just enough to raise hopes before slowing down again to spark a new round of action by Fed Chairman Ben Bernanke and his colleagues.
This week, most economists expect the Fed will take steps to decisively ease policy again with a third round of bond purchases to give the recovery another kick start.
It will also offer a fresh batch of forecasts for growth, unemployment and inflation - as well as projections for when interest rates will finally rise - this time stretching them over four years into 2015. Previously, the Fed waited until November to add a fourth year.
Looking back at both 2010 and 2011, Fed policymakers bumped up their forecasts for jobs early in the year, only to backtrack later.
And in numbers:
All told, disappointed policymakers had to ratchet down GDP growth estimates for the current year and the following year, or lower their unemployment estimates, a total of 53 times over the past five years. That compares to 22 forecast upgrades.
Officials left their estimates unchanged only five times.
Many of the upgrades were clustered from late 2009 to the spring of 2010, as the nation first began emerging from its worst recession in decades. But when job growth faltered and inflation began heading perilously low, policymakers turned more pessimistic and announced a new round of stimulus.
Last year, the Fed's optimism on unemployment was quashed after a springtime slowdown - first attributed to temporary factors like Japan's tsunami and earthquake and a spike in oil prices - dragged into the summer, signaling deeper problems.
The Fed responded by saying it would likely keep interest rates ultra-low through mid-2013 - and then, this past January, through at least late 2014.
Optimism over jobs had risen again by early this year. But then the euro zone crisis deepened, raising new worries over the U.S. economy, and in June the central bank downgraded its forecasts once more.
Of course, officials at the U.S. central bank have been far from alone.
"The shocks and surprises have definitely been coming from one direction the last few years," said Peter Hooper, chief U.S. economist at Deutsche Bank Securities in New York. "Everyone was expecting the usual bounce after the recession, but that didn't happen."
Of course, the reason for that is, as we wrote some time ago [19], it is the Fed itself, with its ceaseless meddling and micromanagement of everything from the housing market, to the S&P500, that has broken the business cycle. In fact, in a normal world, 3 years after the last recession "ended" the time to prepare for the advent of a new recession would be soon coming. In the New Normal nobody cares about that, because in reality nobody believes that the Great Depression 2.0 is anywhere close to over.
Except the Fed of course.