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Assessment of the "official" economic forecasts

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  • Stephen K. McNees

Abstract

While many studies have evaluated the accuracy of "official" economic forecasts, this study may be the first published analysis of the Federal Open Market Committee's "Humphrey- Hawkins" forecasts. In this article, the "official" forecasts generated by the Council of Economic Advisers (CEA), the Congressional Budget Office (CBO), and the Federal Open Market Committee (FOMC) are analyzed and compared to each other as well as to forecasts made by the private sector. The findings for the one-year-ahead forecasts reconfirm that the CEA, CBO, and private sector forecasts are about equally accurate while more accurate than simple rules of thumb. For the multiyear real GNP forecasts, however, evidence indicates that the forecasts of prominent commercial forecasters and the CBO are more accurate than those of the CEA, owing to an optimistic bias. In addition, the midpoints of the FOMC's longest forecasts outperform one standard private sector counterpart.

Suggested Citation

  • Stephen K. McNees, 1995. "Assessment of the "official" economic forecasts," New England Economic Review, Federal Reserve Bank of Boston, issue Jul, pages 13-23.
  • Handle: RePEc:fip:fedbne:y:1995:i:jul:p:13-23
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    File URL: http://www.bostonfed.org/economic/neer/neer1995/neer495b.htm
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    Cited by:

    1. Palle S. Andersen, 1997. "Forecast errors and financial developments," BIS Working Papers 51, Bank for International Settlements.
    2. Eric T. Swanson, 2000. "On signal extraction and non-certainty-equivalence in optimal monetary policy rules," Proceedings, Federal Reserve Bank of San Francisco.
    3. Sheng, Xuguang (Simon), 2015. "Evaluating the economic forecasts of FOMC members," International Journal of Forecasting, Elsevier, vol. 31(1), pages 165-175.

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    Keywords

    Forecasting;

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