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Presentation to: FDIC Economic Outlook Panel. Art of Forecasting: The Financial Economy. John Silvia – Chief Economist December 12, 2003. Blue Chip Consensus performs better than any individual forecaster. Average of forecasts reduces noise/bias of individual forecasters
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Presentation to: FDIC Economic Outlook Panel Art of Forecasting: The Financial Economy John Silvia – Chief Economist December 12, 2003
Blue Chip Consensus performs better than any individual forecaster. Average of forecasts reduces noise/bias of individual forecasters Access to independent information Auto, Housing, Sectors Regional Influences *Forecast Evaluation with Cross-Sectional Data: The Blue Chip Surveys, Bauer et. Al., FRB-Atlanta Economic Review, Second Quarter 2003
Error Persistence second Half of 1990s* GDP, Unemployment Rate, Inflation Underreported GDP when inflation, Interest Rates Low Inefficient Forecasts * Scott Schuh, An Evaluation of Recent Macroeconomic Forecast Errors, Forecasts Unbiased but Inefficient Structural Change: Inflation, Unemployment and Nominal Interest Rate Error Correlated. New England Economic Review, Jan/Feb 2001
Second Half of 1990s Forecast Errors Persist: GDP, Unemployment Rate Errors biased over short periods Inflation: Underpredict 1970s On Track 1990s Inefficient Forecasts Data on Inflation, Nominal Interest Rate Improves, GDP forecast Not All Information on Inflation and Interest Rates are Incorporated into Average GDP Forecasts.
