Contents
- The Fed’s Foggy Crystal Ball
- Emotional Quicksand Surveys
- The Fed’s Track Record
- Reporters Sell Doom
- The ‘Wait and See’ Cop-Out
- Watch Your Wallet
- Resources
Jerome Powell stepped up to the mic armed with the Federal Reserve’s latest Summary of Economic Projections (SEP) and a press conference full of cautious platitudes.
The economy’s solid, he says. But tariffs and a new administration’s policies have him squinting to read the tea leaves.
Jittery surveys tell us more about what newspaper respondents read than about the actual state of the economy.
Reporters all the while are trying to figure out what doom angles get the most clicks.
Amid all this, Powell’s “wait and see” approach looks like weakness and dodging the tough calls.
The Fed’s Foggy Crystal Ball
Powell’s got a problem: he’s trying to predict 2025 while admitting, “Uncertainty is unusually elevated.”
Sure, the new administration is tossing trade, immigration, and fiscal curveballs.
Yet the SEP boldly claims GDP will hit 1.7% and inflation 2.7% next year.
Really?
“It’s really hard to know how this is going to work out,” Powell confesses. If he’s lost, why trust these numbers?
Table 2 in the SEP shows a 70% chance GDP could swing ±1.5 points, meaning 0.2% to 3.2% is in play. That’s not a forecast. It’s a shrug.
Truth demands we look past the charts to what’s actually happening.
Emotional Quicksand Surveys
Powell nods to “heightened uncertainty” in surveys with consumers and businesses fretting over tariffs. He brushes it off: “The relationship between survey data and actual economic activity hasn’t been very tight.”
Meaning people moan, then buy a car anyway.
So why does the Fed keep clutching these polls like a lifeline?
Well, the press love it.
The SEP’s 2% inflation goal by 2027 ignores the panic surveys scream about now.
Back in 2007, consumer confidence was sky-high—right before the crash.
Feelings aren’t facts. “Surveys amplify fear or hype,” economist John Williams once quipped, and he’s right. Relying on them is like confessing your sins to a mood ring: vague and pointless.
Transparency means sticking to hard data, not chasing vibes.
The Fed’s Track Record
The Fed’s forecasting rap sheet is a comedy of errors.
The 2008 recession? Missed it.
The 1970s stagflation? Fumbled it.
2021’s “transitory” inflation? Oops.
Powell hedges, “We think it’s a good place where we can move in the direction we need to.”
The SEP admits past forecasts were imperfect. Unemployment could be ±0.8 points in 2025. Not that unemployment is a real measure anyway.
Imperfect? Try unreliable.
Brace for surprises.
Reporters Sell Doom
The Q&A is a circus.
Howard Schneider (Reuters) probes, “How much of the higher inflation forecast is due to tariffs?”
Michael McKee (Bloomberg) frets, “Are you behind the curve?”
Matt from CNN asks about a slowdown.
It’s all gloom, all the time. Reporters are fishing for a crash to splash across headlines.
Powell’s calm. “Hard data are still solid,” but that gets buried under their drama.
Doom sells papers.
The SEP’s modest growth dip (2.1% to 1.7%) and steady rate path don’t fit their end-times script, so they poke till he squirms.
The ‘Wait and See’ Cop-Out
Powell’s “we’re well positioned to wait for greater clarity” mantra is a dodge.
The SEP sticks to two rate cuts (3.9% by 2025) despite inflation ticking up. “We’re not in any hurry to move,” he says, as if sitting pretty is a virtue.
But chaotic times demand action, not paralysis.
Paul Volcker didn’t “wait and see” in the ‘80s. He crushed inflation with gutsy hikes.
Milton Friedman once warned, “Inaction is a policy too,” and it’s riskier than picking a lane.
With tariffs and uncertainty swirling, freezing isn’t prudent, it’s timid.
Watch Your Wallet
Powell’s press conference and the SEP paint a picture of a Fed lost in the fog, clutching shaky surveys, ignoring history’s warnings, and dodging tough calls while reporters spin doom for clicks.
Seek truth where it lives: in the real world, not Fed charts or headline hype.
We are living in probably the least predictable economic climate the world has ever seen.
Tariffs could tank growth or propel it to levels unseen before. Consumers might spend, but they might hoard. AI might suddenly knock out 10 million jobs in 6 months.
Whatever the case, the fed doesn’t have any special insight. Their numbers and surveys are mostly fiction. And the reporters had their stories written before ever seeing the projections.
This is the fake science of economics in 2025.