Brian Easton: Fans For Forecasts

We are going into the budget season when economic forecasting becomes especially prominent. There is a huge gap between how professional forecasters think about the exercise and how the commentariat treats forecasts. Here are some insights into the way those forecasters think, even if it is boring compared to what is in the public rhetoric.

The usual forecast is a point estimate; say, ‘consumer prices are going to rise X percent in the next year’. However, the professional forecaster is thinking that there is actually a range with the X in its middle. The range is often large.