An Assessment of the "Official" Economic Forecasts
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.
About the Authors
Stephen K. McNees
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