Kudlow’s Money Politics

Wed, November 22nd – 11:40 AM

Noteworthy article on Bloomberg:

Inside the U.S. Federal Reserve headquarters, a small team is testing a forecasting program that does the work of hundreds of economists. Never before has the Fed been able to crunch in real time such a large mountain of data — as many as 150 indicators — to divine where the economy is headed.

Chairman Ben S. Bernanke is pushing the “factor model” program — so named because it reduces everything from home sales to mining capacity into a few weighted averages for making predictions. The Fed could use the help: Its gross domestic product forecasts, which influence its interest rate decisions, have missed the mark by an average of 1 percentage point since 2000….

Larry Kudlow is the author of JFK and the Reagan Revolution: A Secret History of American Prosperity, written with Brian Domitrovic.

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