Fed Has a Poor Record Forecasting Joblessness Around Downturns

The Federal Reserve’s forecasting track record over the past half-century suggests it may be overly optimistic when it predicts the US unemployment rate will rise in the coming year to 4.4% and hold there.

Fed officials have failed to correctly predict how high joblessness would increase during, or in the wake of, almost every recession over the past 50 years. In three cases -- 1975, 1982 and 2009 -- unemployment surpassed the central bank’s near-term projections by about a percentage point or more.

The undershoot happened time and again, partly because economic models have a hard time predicting how ...