Yes, Christina Romer and Jared Bernstein Were Far on the Pessimistic (and Correct) Side of Forecast Consensus in December 2008. Why Do You Ask?

One of the many, many interesting things in the Federal Reserve’s 2008 transcripts is the staff briefing materials for the mid-December FOMC meeting, which include:

The Federal Reserve’s forecasts as of mid-December surely assume some boost to the economy from a Recovery Act program, but one in the $300 billion-over-three-years rather than the–enacted–$800 billion-over-three-years program. Their forecasts see the unemployment rate peaking at 8.2% at the end of 2009. Arithmetic suggests that had they included the actual Recovery Act their peak forecast unemployment rate would have been 6.7% or so.

In this context, the Romer-Bernstein forecast of a peak unemployment rate of 8% with an $800 billion Recovery Act was a very alarmist and pessimistic forecast–and, of course, one much closer to a correct picture of the economy than Bernanke’s staff was churning out at the time: