Forecasting Intelligence

A Bakers Dozen Free

Sources of Economic Forecasts
by Roy Pearson

The numbers must be for months or

INTRODUCTION
quarters, not just years.
In the Summer 2009 issue of Foresight, I
described Short-Term Energy Outlook, I gave preference to sources where the
a report prepared by the U.S. Energy Inforecasters describe the views or assumpformation Administration and found at
tions underlying their numbers. Even
http://www.eia.doe.gov/emeu/steo/pub/
large macroeconomic models contain excontents.html, as a source for free nationogenous variables that must be estimated
al and census-division economic forecasts,
by the forecaster, such as future fiscal polavailable through their Custom Table
icy or monetary policy estimates which
Builder at monthly, quarterly, and annual
can steer the course of the forecast.
frequencies.
Where else on the Web might a business Nine of the sources are financial instituforecaster go for a free professional as- tions, six of which are based in the U.S.
sessment of the future course of the U.S. and three in Canada. The other four are
economy? A Google search using the tar- a Federal Reserveadministered survey, a
geted search [US economic outlook OR trade association, a private company, and a
US economic forecast 2010 filetype:pdf ] university. Perusing this set provides a variety of views and approaches from expeyields over 1,500 possibilities.
rienced professionals. All contain forecasts
THE BAKERS DOZEN
for real GDP and some measures of inflaTo save you some precious
tion and employment or unemployment,
forecasting time, I offer here a
and 12 have interest-rate forecasts. Some
bakers dozen of websites I visit
give projections for all the major GDP secregularly. This is hardly a comtors, and most include some housing- and
prehensive or unbiased list.
auto-industry series. The additional variHowever, I did apply the following five cri- ables and level of detail vary considerably,
teria in narrowing my selection.
often reflecting differences in the focus of
Th
 e forecast must be free on the Web, the institution or forecaster.
eliminating subscription services from
You can use the first 12 sources to quickly
the list.
scan a range of current thinking and quan I t must be timely, updated monthly or titative forecasts for the U. S. economy in
quarterly.
the coming six to 10 quarters, and the only
I t must contain numerical forecasts for cost to you is your time. If none of them
key economic variables. I believe a fore- has a key variable or scenario of interest to
caster needs to see numbers, whether for you, then the thirteenth one, the Fairmoduse in regression models or for evaluat- el, may be a way to meet your needs, but
ing the size of a judgmental adjustment it could require a bit more effort on your
to time-series forecasts.
part.

12

FORESIGHT Winter 2010 Issue

These sources can be very helpful and can

improve your forecast accuracy, regardless
of the forecasting methods you use. Think
of them as 13 experienced professionals
sitting around a table with you, who spend
most of their time analyzing and forecasting the macroeconomic environment that
influences your customers and sales. Their
views can help you decide the need for and
amount of judgmental adjustment in your
company forecasts. If youre uncertain
about which views are most likely to be
accurate, you can combine or average several of them consensus forecasts can be
quite accurate. In more formal modeling,
you might use such sources to formulate
constraints for top-down forecasting with
time-series methods, or for forecasted values for the independent variables in multivariate models.

pages of a bulleted executive summary of

recent developments, a table with numerical forecasts for levels and/or changes for
10 variables, and supporting commentary
and charts. One unique feature is forecasts
for the Case-Shiller Home Price Index.
The Outlook is the responsibility of Stuart Hoffman, also a fellow and past president of the National Association for Business Economics, who has been cited many
times for being among the most accurate
U.S. economic forecasters.

J.W. Coons Advisors, LLC at http://

www.jwcoonsadvisors.com
headed, not surprisingly, by James
W. Coons is an investment advisory and
asset-management company that publishes a two-page economic forecast each
month with brief commentary, charts, and
numerical forecasts for 22 variables, 11 of
which are interest-rate series. For four of
Forecasts from Six U.S.
the variables real GDP, nominal GDP,
Financial Institutions
corporate profits, and employment he
Themes on the Economy, available monthincludes the projected levels as well as perly at Mesirow Financial at http://www.mesirowfinancial.com/economics/swonk/ cent changes.
themes/default.jsp, has three pages of Monthly Outlook at http://www.wellsfarcommentary and a page with quarterly go.com/com/research/economics previforecasts for 34 variables for the coming ously was the Wachovia product of John
year, including 12 for GDP and its compo- Silvia and Mark Vitner. Half of the pubnents. There are nine vehicle-sales series, lication is the U.S. outlook, the other half
more detail than in any of the other sourc- the international outlook. The U.S. forecast
es. Themes is prepared by Diane Swonk, a table gives forecasts two years out by quarfellow and past president of the National ters for 40 variables, including 11 for GDP
Association for Business Economics; she is and its sectors, five inflation indicators,
one of the best-known and most respected and nine interest rates. Wells Fargo Securibusiness economists in the nation.
ties now publishes the Monthly Outlook.
Northern Trusts monthly U.S. Economic
Outlook and Interest Rate Outlook, at
http://www.northerntrust.com, has topical commentary and quarterly forecasts
for 15 variables. Paul Kasriel, their chief
economist, is noted for his forecasting accuracy, and he frequently offers a nonconsensual view.

MFC Global Investment Management seasonally publishes

several economic outlooks,
available at http://www.mfcglobal.com/resources.html, with periodic
updates between times. The fall U.S. Economic Outlook by Bill Cheney and Oscar
Gonzalez is nine pages, with extensive
PNC publishes a monthly National Eco- commentary for the U.S. economy and finomic Outlook at http://www.pnc.com/ nancial markets. A feature I like is the page
economicreports, which usually is four of Risks to the Forecasts, with probability
www.forecasters.org/foresight FORESIGHT

13

estimates for the five risks. There are numerical forecasts for 26 variables, including eight for real GDP. There are 10 interest-rate series, six of which are interest-rate
spreads.

Forecasts from Three Canadian

Financial Institutions
I find it very worthwhile to examine U.S.
forecasts made by analysts in other countries. They can be very accurate and often
provide a different point of view that helps
to uncover missing pieces of the puzzle.
Here I have selected three Canadian sites
that provide monthly commentary
and numerical forecasts by quarters
for a variety of U.S. series.
BMO Capital Markets Economics (http://www.bmonesbittburns.com/
Economics) publishes a monthly North
American Outlook with extensive commentary about the U.S. economy as well
as the Canadian economy and includes a
selection of U.S. numerical forecasts. Separately, you can download a U.S. Economic
Outlook page, updated regularly with the
full U.S. forecasts by quarters for the next
two years. The page contains forty-four
variables, with eighteen U.S. GDP series. It
also has forecasts for the current account
balance and its merchandise and nonmerchandise components.
Scotiabank publishes a Global Forecast
Update and a Foreign Exchange Outlook
at
http://www.scotiabank.com/cda/
content/0,1608,CID8339_LIDen,00.html.
Most of the Global Forecast Update economic projections for the U.S. are by calendar years, but in the financial-markets
tables you will find quarterly U.S. GDP
forecasts and a dozen U.S. interest-rate and
spreads series. The Foreign Exchange outlook contains more commentary about the
U.S. economy and monetary policy, along
with exchange-rate forecasts for the next
three, six, and 12 months.
The Royal Bank of Canada, in RBC Economic Research at http://www.rbc.com/

14

FORESIGHT Winter 2010 Issue

economics/forecasts.html, publishes Financial Markets Monthly and a quarterly

Economic and Financial Market Outlook
with economic and financial market forecasts for Canada, the United States, and
other key countries. Financial Markets
Monthly has financial and economic commentary relating to the U.S. and gives U.S.
interest-rate, inflation, and real GDP forecasts. The quarterly Economic and Financial Market Outlook includes discussion of
the U.S. economy and provides quarterly
forecasts for 35 U.S. series, including 14 for
GDP and its components and 12 for interest rates and spreads. If you are in a rush to
get only numbers, there are tabs for jumping directly to the tables with the U.S. economic forecasts and the interest rates and
exchange rates.

Four More Forecast Sources

The National Association of Realtors publishes a monthly forecast table, available
at http://www.realtor.org/research/research/reportsstatistics, without any accompanying commentary. I go there regularly for the detailed forecasts of housing
sales and starts by type and housing prices.
The table also includes GDP, employment,
income, inflation and interest-rate forecasts, which I compare to those at other
sources when deciding how to use the
housing forecasts. One interesting feature
is that the table includes quarterly forecasts for consumer confidence, a driver for
household spending.
The Financial Forecast Center,
at
http://www.forecasts.org/
index.htm, is unique among the
bakers dozen because its forecasts
are obtained using artificial intelligence
neural network models without any
judgmental inputs or adjustments. There
are several dozen financial and economic
series to choose from, including many you
will not find forecasted anywhere else, as
well as many of the interest-rate, exchangerate, and general-economy series found at
the other sites. Six-month-ahead forecasts

are available for free, which meets our selection criterion; you can also pay $29.95
to have access to the 36-month forecasts. I
do, for the fun of it as well as to
have an interesting alternative.
The Federal Reserve Bank of
Philadelphia administers and
publishes the quarterly Survey of Professional Forecasters, obtainable at http://
www.phil.frb.org/research-and-data/ .
The text of the report gives the quarterly
consensus forecasts for a few key variables,
along with probability distributions for
the forecasts by years. The tables attached
to the report give the median forecasts by
quarters and annually for 22 variables, including nine for GDP and its components.
Each issue also includes the respondents
estimated probabilities for a negative
quarter for real GDP in each of the coming quarters and their answers to special
questions.
The final selection is Ray Fairs Fairmodel site at Yale University, online at http://
fairmodel.econ.yale.edu/. The U.S. model
is a large-scale econometric model, reestimated each quarter, with the quarterly
forecasts for the next several years and the
model itself freely available to everyone.
The quarterly U.S. Forecast Memo, over
20 pages, provides a full explanation of the
values selected for the exogenous variables
(such as fiscal policy), and includes tables
with the recent history and forecasts for
selected variables, with levels and percent
changes. There are dozens of variables in
the Memo, with both nominal and 2005
dollar values for the GDP components.
If you do not see the variables you want,
you can run the full model, on their site
or downloaded and run in EViews, and
extract the historical data and forecasts for
any variable in the model. For example, the
U.S. Model contains flow-of-funds variables; I download and run the model in
EViews to access household flow-of-funds
variables to use in my Virginia retail-sales
models. Furthermore, if you happen to

disagree with Fairs assumptions about the

timing or level for an exogenous variable,
such as spending related to the stimulus
package, you can change it and rerun the
model to get forecasts consistent with your
views.
RECOMMENDATION
My advice is to spend a morning reading through this group of sources, even if
youre already using some of them. This
enables you to see their similarities and
differences and if and how you might use
them in your forecasting process. Also, take
particular note of those forecast sites that
contain commentary, since they give you
examples of well-regarded forecasters explaining their views to a general audience.
Some of those views and commentaries
differ markedly, one from another. Since
you, too, have to explain your forecasts in
a clear and credible way, these sources may
give you some ideas for improving your
approach.
I search the surface Web and deep Web
regularly for good, free forecasting sites
that meet the criteria Ive described here.
Im sure there are some good ones used by
Foresight readers that I may have missed.
If you have any to suggest (as long as you
dont pay to access them as, for example,
a member of an association or as a subscriber), please send me an e-mail with the
website addresses, and I will compile them
for a follow-up article in the future.

Roy Pearson is Chancellor Professor

Emeritus at the Mason School of Business

of the College of William and Mary, where
for three decades he taught forecasting
in the MBA program and still teaches a
seminar course. He continues to be an
active forecaster of the Virginia economy and its businesses. Another of Roys
specialties is efficient Internet searching,
and he has given presentations at several professional meetings and conducted
corporate workshops on using the Internet in forecasting.
Roy.Pearson@mason.wm.edu
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