efficientforecast.com has the only data the FOMC needs
Justin Ivring did it! With some help from his body Kenneth D’Amica he has set up a new website efficientforecast.com, which shows a real-time forecast for next year's expected US NGDP growth. The forecast is based on financial market data. I think it is tremendously promising and look very much forward to start to follow the data on the website. I certainly looking forward to following efficientforecast.com during this week's FOMC policy announcement. We will know in real-time whether or not monetary policy has been tightened or not. This is really the only data the FOMC would need to look at in the future. I am not kidding. The FOMC should announce that it would like to see a market forecast of 6% or 7% NGDP growth next year and that it will conduct monetary policy in such a fashion as to ensure this target until a certain level for NGDP is hit. Thereafter after it should be made clear that the FOMC will keep market expectations for NGDP at 4 or 5%. Finally, I strongly recommend to financial market reporters and commentators to get acquainted with efficientforecast.com. It will make your reporting on fed comments much easier. Just imagine the following statement "Bernanke said blah, blah, blah...NGDP expectations dropped by XXbp indicating a tightening of monetary conditions on the back of Bernanke's statement. Fed policy is still overly tight compared with the objective of...Analysts said that the fed needs to communicate more aggressively to push back NGDP expectations to the fed target." Good job Justin and Kenneth! PS See more on the construction of the data and relevant links to Justin's work here.