Thank you, Bobby [Jenkins]. It is an honor to speak at the 2012 Economic Forecast Luncheon. I am a poor substitute for the last of my Federal Reserve brethren to appear before this chamber—Ben Bernanke. The chairman would have enjoyed congratulating the brave souls from four of our leading universities who ventured forth last year to make their winning forecasts, which you have celebrated here today.
It is noteworthy that even the winners of this year’s forecasting sweepstakes were not insignificantly off the mark of what actually occurred in the national economy, with the exception of Dr. Gardner’s and Dr. Gilligan’s spot-on forecast for the prime rate. We know from our experience on the Federal Open Market Committee (FOMC) that forecasting the economy these days has become difficult. During the course of the year, we saw large shifts in the outlook for growth, inflation and unemployment, reflecting the obvious fact that we are in an unfamiliar and rapidly changing economic environment. My undergraduate economics professor, John Kenneth Galbraith, used to chide that “the only function of economic forecasting is to make astrology look respectable.” Even though they were not spot-on, today’s forecast winners make economists look respectable, and I thank them for it.
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