Fed, what have you done?

Nobody is even thinking about the recession. But, perhaps, the Fed should? Before June's meeting, analysts were expressing their concerns about the strength of the world's largest economy, saying the Fed should slow down the pave of tapering or even take a pause. Nothing of that happened. This week's final GDP report showed the economy contracted in the first quarter by the most since the depths of the last recession, as the largest part of the economy cooled. 

A report from the Commerce Department unveiled the economic output shrank 2.9% annualized rate during first three months of 2014, significantly more than economists predicted and posted the worst reading since the same period in 2009. Moreover, it marks the biggest downward revisions from the second GDP estimates since records began in 1976. The main downside pressure came from households spending, a part which accounts for around 70% of the economy. Nonetheless, consumer have returned to stores and made huge purchases again, while companies have placed more orders for equipment as temperatures warmed, suggesting the setback will be only temporary and the economy will return to healthy growth in the second quarter. Last week the Fed said that growth should trend at around 3% over the next two years. However, should we put absolute trust in these forecasts?