Ignore the Federal Reserve’s dot plot. It’s a waste of your time, writes Josh Brown.
Trying to discern from the Fed’s diagram when rates will rise is an exercise in futility, Brown writes in his Reformed Broker blog. Every one of the 67 Fed-monitoring economists predicted that rate would rise in 2014. And then they didn’t. Moral of the story? Even the Fed doesn’t know when it’s going to raise rates. Writes Brown:
“The Fed’s own economic forecasts for GDP have been off by a factor of 50% during each of the last six years. The FOMC just slashed its 2015 GDP forecast from March by 24% yesterday! YESTERDAY!”
On the off chance that you can read the tea leaves of a dot plot and figure out when rates will rise, it’s highly unlikely you can also predict how the economy will react, says Brown.
“Anyone who thinks they know what will be going on in 2017 is a wacko from Disneyland. Adjust the attention you’re paying to that person accordingly.”
Photo: TheReformedBroker.