The Fed and the US Economy in 2023

My first job out of graduate school, in the early 1990s, was as the consumer economist for the economic consulting firm of DRI/McGraw-Hill, in Lexington, Massachusetts.  One weekend each month, we would run a U.S. macroeconomic forecast.  (It always had to be over the weekend, as this was the only time when we could get our own clients off our mainframe computer.)  Anyway, on Saturday afternoon, having produced some preliminary numbers, we would gather around a huge conference-room table and discuss how the forecast was shaping up. 

My colleagues were smart and seasoned economists and very patient with someone clearly just waking up to how forecasts are constructed in the real world.   However, I believe they did somewhat resent my position as “the consumer guy”.  Because then, as now, consumer spending accounted for roughly two-thirds of GDP and they would spend much of the weekend vainly trying to offset what they saw as my undue optimism by hacking away at their forecasts for investment, trade and government spending.