It is well known that the "Green Book" forecasts, made by the Fed's understudies, have been consistently more accurate than their bosses at the FOMC. Which is why they are embargoed for five years.
Anyone looking at the Fed's prepared abstracts, will see that the Fed loves projecting out for the next 30 years, using various economic forecasting tools at their disposal. So how well do they do? Does anyone care about these 30 year forecasts?
So let's look at Bernanke's semi-annual testimony before Congress on July 18, 2007. Here's what he said:
Overall, the U.S. economy appears likely to expand at a moderate pace over the second half of 2007, with growth then strengthening a bit in 2008 to a rate close to the economy's underlying trend. Such an assessment was made around the time of the June meeting of the Federal Open Market Committee (FOMC) by the members of the Board of Governors and the presidents of the Reserve Banks, all of whom participate in deliberations on monetary policy. The central tendency of the growth forecasts, which are conditioned on the assumption of appropriate monetary policy, is for real GDP to expand roughly 2-1/4 to 2-1/2 percent this year and 2-1/2 to 2-3/4 percent in 2008. The forecasted performance for this year is about 1/4 percentage point below that projected in February, the difference being largely the result of weaker-than-expected residential construction activity this year. The unemployment rate is anticipated to edge up to between 4-1/2 and 4-3/4 percent over the balance of this year and about 4-3/4 percent in 2008, a trajectory about the same as the one expected in February.
Unemployment is now at 5%.
Apparently the Fed isn't using appropriate monetary policy.