Bernanke’s Forecasts Scrutinized Over Accuracy

Many Americans are aware of the so-called Beige Book, a report of anecdotal information compiled by the Federal Reserve eight times each year and released just before FOMC meetings. But what about the Teal Book, a confidential compilation of forecasts “for Fed eyes only?”

Bloomberg reports the Teal Book is now the focus of intense scrutiny, which has heightened in recent weeks with revelations that a weak economy may be getting weaker.

“Chairman Ben S. Bernanke and his Federal Reserve colleagues are preparing to meet next week as two-year Treasury yields near a record low signal a U.S. economy on the knife’s edge between growth and contraction,” according to Bloomberg. “Guiding their assessment of the outlook for the world’s largest economy will be forecasts contained in the so-called Teal Book, a confidential staff report with a blue-green cover. Policy makers’ confidence in those forecasts may be tempered as the course of the expansion has confounded their expectations.”

Bloomberg, citing the minutes of FOMC meetings, notes that of 12 Fed staff forecasts since the beginning of 2010, seven have been downward revisions to the near-term outlook. This year alone, the outlook was raised in January and lowered three times, putting increased pressure on Bernanke and his staff over the effectiveness of their economic models.