A recent report from the Cleveland Fed by Michael F. Bryan and Lindsey Molloy confirm older results that consensus forecasts do better than any one forecaster. (Hat tip to Macroblog.) That’s one reason I pay close attention to consensus forecasts, such as in this post from earlier this week.
However, the Bryan and Molloy report concludes with this caution:
suggests that the median economist’s
prediction is as good a bet
about the future as any other opinion,
but remember, the confidence interval
around that median forecast includes a very wide range of outcomes.
My advice: try not to rely on an economic forecast. Be flexible, watch the current data closely, and respond quickly. That, incidentally, is the theme of Businomics.