The Correlation of Laughter at FOMC Meetings

By Kyle Akin


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