This graph shows how bad the Fed is at predicting the future

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/06/19/this-graph-shows-how-bad-the-fed-is-at-predicting-the-future/

It’s hard to get too enthused about these projections, and not just because 5.8 percent unemployment — well above the rate we’d have if we had full employment — eight years after the recession started in December 2007 is really embarrassing. But the bigger reason not to get too excited is that the Fed is wrong all the time.

As you can see above, in 2009 the Fed was predicting 4.2 percent growth in 2011. Awesome! But then in 2010 it revised that down to 3.85 percent growth. And in 2011 they revised it further to 2.8 percent growth. And when all was said and done, the economy only grew about 2.4 percent that year. The Fed projected growth almost twice as fast as what actually happened.

Same deal for 2012. The Fed’s first forecast, in 2010, projected 4 percent growth. 2011′s projections reduced that to 3.5 percent growth. 2012 knocked it down to 2.15 percent growth. And the final number was about 2 percent.

As Andrew Fieldhouse and Josh Bivens at the Economic Policy Institute have noted, the CBO seems to always think that the economy will be back on track four years from whenever they happen to be making a projection.