Forecasting economic output is one of the main tasks of private and government forecasters. The forecasts are used to inform monetary and fiscal decisions by central banks, governments and private sector agents. The methods for producing forecasts are diverse and range from judgmental approaches relying on expert judgement to adjust output forecasts produced by a suite of models up to dynamic stochastic general equilibrium (DSGE) models using modern economic theory.
Among the large number of models and methodologies available to economists, there is much debate about which is best for estimating the accuracy of economic forecasts. One issue is that the evaluation of a forecast involves assessing its overall qualitative characteristics and relative quantitative accuracy, which are difficult to quantify.
Another complexity is that, for many economic variables, data revisions can cause large changes in the estimated value of the forecast. This makes comparing the performance of alternative forecasts more challenging.
The forecasts published by the Blue Chip Indicators consist of a monthly survey of around 50 forecasters from major investment and commercial banks, manufacturing firms, brokerage firms, universities and economic consulting companies. They provide a range of macroeconomic forecasts including real GDP growth. The results are published on the tenth of each month before official GDP growth observations for each quarter are released. The survey provides the average forecast, a diffusion index that measures the spread of expectations around the consensus and an individual forecast for each member.