The Correlation of Laughter at FOMC Meetings

By Kyle Akin

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Five years on, the powers that be have just released the transcripts of the Fed's FOMC (Federal Open Market Committee) meetings from 2006.  Putting hindsight economic analysis aside, you quickly realize more than anything else: the committee is full of burgeoning comedians!

Commentators have already highlighted the "humor" of the FOMC meetings (WaPo, dealbreaker), but it is really over the top at times.  There are periods where Greenspan seems only capable of speaking in witty quips.  On that count, he was clearly at the top of his game at the top of the market. 

There is one incredible exchange at the January meeting - Greenspan's last as chairman - where after complaining about the "inexorable upward drift" in the minutes spent by each board member delivering his or her analysis of the economy, Greenspan is praised by then-Vice Chair Geithner:

CHAIRMAN GREENSPAN.  Vice Chair, [it's your turn to speak].

VICE CHAIRMAN GEITHNER.  Mr. Chairman, in the interest of crispness, I’ve removed 

a substantial tribute from my remarks.  [Laughter]

CHAIRMAN GREENSPAN.  I am most appreciative.  [Laughter]

VICE CHAIRMAN GEITHNER.  I’d like the record to show that I think you’re pretty terrific, too.  [Laughter]  And thinking in terms of probabilities, I think the risk that we decide in the future that you’re even better than we think is higher than the alternative.[Laughter] With that, the economy looks pretty good to us, perhaps a bit better than it did at the last meeting.  With the near-term monetary policy path that’s now priced into the markets, we think the economy is likely to grow slightly above trend in ’06 and close to trend in ’07...

Greenspan's other jibes and jokes are countless.  It makes for quite a fun read if you get past all the boring economic analysis parts.  In fact, if the stenographer was accurate, the Committee broke into laughter 45 times in just the January meeting! That's at least 45 jokes (some didn't get laughs - if only we knew the quality of each laughter!). I would have guessed that would be a lot relative to other meetings, right?   I mean how funny would it be if the top of the housing market was also when the FOMC was telling the most jokes in their meetings?

Well, being a data nerd with nothing better to do on a Thursday night, I looked into it.  To be precise, I went back for just the last six years (2001-06) and searched for how many times the stenographer's notation for laughter appeared in the released transcripts of each FOMC meeting.

Suffice it to say the data is funny...

The number of recorded laughs actually increased in frequency from 2000 to 2006.  In 2001, the FOMC erupted into laughter 16.5 times per meeting on average. In 2003, it was over 19. In 2005, 27.  And then in 2006, the FOMC burst into laughter nearly 44 times per meeting!  

And just in case you woke up from a 5-year coma this morning, the Case-Shiller 20-city Home Price Index also peaked in 2006.

 

That's right, the FOMC was laughing all the way to the top!  

Here's the data:

Date of FOMC Meeting	Recorded Laughs per Meeting
Feb-01	22
Mar-01	14
May-01	20
Jun-01	13
Aug-01	18
Oct-01	10
Nov-01	18
Dec-01	17
2000 average	16.5
Jan-01	29
Mar-01	16
May-01	11
Jun-01	17
Aug-01	9
Oct-01	7
Nov-01	13
Dec-01	21
2001 average	15.375
Jan-02	28
Mar-02	22
May-02	14
Jun-02	25
Aug-02	15
Sep-02	18
Oct-02	28
Dec-02	23
2002 average	21.625
Jan-03	24
Mar-03	14
May-03	16
Jun-03	32
Aug-03	12
Sep-03	13
Oct-03	26
Dec-03	17
2003 average	19.25
Jan-04	37
Mar-04	21
May-04	24
Jun-04	29
Aug-04	11
Sep-04	19
Nov-04	18
Dec-04	26
2004 average	23.125
Feb-05	32
Mar-05	30
May-05	24
Jun-05	28
Aug-05	19
Sep-05	21
Nov-05	36
Dec-05	28
2005 average	27.25
Jan-06	42
Mar-06	52
May-06	42
Jun-06	29
Aug-06	28
Sep-06	45
Oct-06	65
Dec-06	48
2006 average	43.875

Comments

[Teddy R]

This post is amazing.

[WallStreetRanter]

Now this is Funny!

[Max]

[Laughter]

[Vincent]

brilliant !
I love this kind of statistics.

[Carter]

Finally, a leading indicator of financial distress.

[Carl]

I think we can call this the complacency index.

[Alexis Madrigal]

So funny you could cry!

[Sania Khan]

This is the best article I've read all day!!!

[Kitty Ethridge]

Gotta love hard stats! Marie-Antoinette comes to mind for some reason

[ER]

what we need is more laughter are these FOMAC meetings to bring home prices back up.

[Eric]

Laughter right up to the point where the ship sank deep into the quagmire. Never having been a fan of Greenspan, I am still none the less shocked by his lack of command. Was he nervously acknowledging his lack of control or just the cosy relationship which cultivated the financial turmoil which 5 years on has yet to resolve itself?

[Mark]

This is a group of Economist in a Bank, not an embalmer’s Convention in a Funeral Home. Do you expect each meeting to begin with a North Korean style wailing?

[d]

utterly awesom

[Disastrogirl]

Can we do another graph charting the frequency of Greenspan-ass-kissing?

BTW, Geitner, you were so wrong.

[John Z]

Hi, great post. Would love to use your chart if you permit it. Also, wonder whether you have data after 2006. Thanks, John at MyPlanIQ.com

[StL Chrysalis]

Nero also comes to mind. I guess gallows humor transcends the ages.

[David A. Spitzley]

My question is what happened after 2006? Did the popping of the bubble result in the decline of laughter in the FOMC?