Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

It’s a legitimate possibility that we’ve just made the wrong call on GDP growth. Maybe we’ll look back through a series of data revisions and maybe a strong fourth quarter or first quarter and will average through this and say, “In this period, growth really didn’t slow to the 1½ percent pace that we thought was there.” You may look back and say, “Gee, you should have given more weight to the labor market— it was giving you the better signal.” In recent years, the labor market has not been as reliable a predictor of GDP growth as it was from the mid-1980s to the mid-1990s, when we could, in fact, use the labor market indicators and forecast GDP better than the advance estimate of the GDP that the BEA put out. That relationship has been broken down from the mid-1990s to now, when there has just been so much more movement on the supply side of the economy and in productivity that it has been more difficult to use the labor market to project. That’s one reason that we have leaned in the direction of the production and spending data.

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