Table of Contents
I. INTRODUCTION / PURPOSE: 3
II FORECASTING INSTITUTIONS 4
III COMPARE MACROECONOMIC FORECASTS 5
IV ORGANIZATION RECOMMENDATIONS / CONCLUSION 8
V REFERENCES 9
I. Introduction / Purpose:
Macroeconomic forecasts are traditionally stated as point estimates for one or several periods ahead. They are used extensively in industry and government.
The purpose of this paper is to compare and contrast macroeconomic forecasts prepared by the following financial institutions.
* Congressional Budget Office (CBO)
* Office of the Management and Budget (OMB)
* Research Department - Federal Reserve Bank of Philadelphia
The following individual forecasts are compared:
* Nominal GDP
* Real GDP (Percentage Change)
* GDP Price Index (Percentage Change)
* Consumer Price Index (Percentage Change)
* Unemployment Rate (Percent)
* Three Month Treasury Bill Rate (Percent)
* Ten Year Treasury Note Rate (Percent)
II Forecasting Institutions
Congressional Budget Office (CBO)
The Congressional Budget and Impoundment Control Act of 1974 created the Congressional Budget Office (CBO).
CBO's mission is to provide the Congress with the objective, timely, nonpartisan analyses needed for economic and budget decisions and with the information and estimates required for the Congressional budget process.
CBO is the only part of the legislative branch whose mandate includes making economic forecasts and projections. Its forecasts cover 18 to 24 months and involve the major economic variables--gross domestic product (GDP), unemployment, inflation, and interest rates. Further projections are extended out to 10 years. CBO does not attempt to forecast cyclical fluctuations in the economy more than two years ahead; its longer-term projections are based on trends in the labor force, productivity, and saving. In preparing its forecasts, CBO examines and analyzes recent economic developments and consults the major econometric models and commercial economic forecasting services. It also relies on the advice of a distinguished panel of...