Towson University’s Outreach Blog

Thomas

One of the recurring RESI projects is the production of economic forecasts for different institutions.  One of my responsibilities is to forecast economic conditions for Maryland, Baltimore County, and Anne-Arundel County periodically.  Economic forecasting is not a straight-line science, so there can be some marginal errors in predictions.  Nevertheless, governmental institutions and businesses use economic forecasting to make policy and business decisions.

To produce a forecast, a lot of factors are needed; I have to rely on data coming from different sources, such as governmental agencies and some data that could provide a more accurate forecast is just not available.  Economists are often compared to meteorologists.

• However, economic forecasts are frequently regarding outcomes that will occur several months in the future!
• On the other hand, meteorologists only produce forecast for the next several days and they can still get the outcome wrong.

How many times have I planned my weekend based on meteorologist forecasts and found that the weather ended up being quite different?  Still, RESI utilizes an economic model forecast to accurately predict forecasts that our clients can reliably use for their projects and planning.

Example: Personal Income Forecast

RESI has been forecasting personal income for the State of Maryland for many years.  The graphic below shows the accuracy of our economic model by comparing actual to forecasted quarterly growth rate.  The forecast is a complicated process that requires the use of different government data, statistical program software and statistical equations.  For this model, I use data from the Bureau of Labor Statistics, Bureau of Economic Analysis, Maryland Association of Realtors, Maryland State agencies, and other sources as needed.  While I do not pretend that our economic forecast is perfect, I believe that our model does provide an estimated outlook for our clients.

This entry was posted on Monday, September 28th, 2009 at 11:15 am and is filed under Business Analysis, Economic Analysis, TU Faculty & Staff. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.