Economic forecast is a prediction of how prosperous different sectors of the economy are likely to be, such as employment and Gross Domestic Product (GDP). A wide range of methods for economic forecasting exist, from simple time-series models to complex econometric modeling.
For many businesses and governments, the ability to accurately forecast the economy is a vital tool for planning and policymaking. Government officials rely on economic forecasts to create successful fiscal and monetary policies, while business leaders use them to make informed business decisions about investment and spending.
As a result, a number of methods have been developed to improve the accuracy of economic forecasting. These methods can include anything from traditional econometric models to machine learning and even human behavioral studies.
Regardless of the method used, most economists try to convey their reasoning and assumptions in the reports that accompany the final forecast. In addition, they typically offer commentary and data visualization tools to help readers understand the results of their analysis.
A key indicator of the state of the economy is GDP, which represents the monetary value of all finished goods and services produced within the borders of an economy. Other important indicators include unemployment and inflation rates. A decline in GDP usually signals a recession, while an increase indicates economic growth. Economic forecasters also track a number of other variables, including housing starts and retail sales. The latter indicate how much consumers are willing and able to spend, which can be an indicator of their financial health.