This Great Graphic was tweeted by Pawel Morski, who got it from Deutsche Bank Research compilation of data from the Federal Reserve Board. It shows the Fed's Gross Domestic Product (GDP) forecasts made for June over the last four years and the forecasts made in March this year. The solid black line is the actual economic performance.
This is a way to illustrate a point that many observers, including ourselves, have made. Namely, that the Federal Reserve has shown a persistent pattern of exaggerating the strength of the economy. Private sector economists' forecasts have tended to be lower than the Fed's forecasts.
We recognize that Q1 GDP is likely to be revised to show a contraction rather than stagnation. Without changing its forecasts for Q2-Q4, the weakness in Q1 GDP alone will require the Fed to cut its 2014 GDP forecasts, which stands at 2.9%. This is the accounting function of economic forecasts. Note that the Fed's forecast for 2015 GDP is identical with the Bloomberg consensus of 3.1%.