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What are Consensus
Forecasts?
A consensus forecast is a simple arithmetic average of all
of the individual predictions collected by Consensus Economics for a
single economic indicator in one of our monthly surveys. Each month
we ask the world's leading forecasters for their predictions for more
than 1,000 variables from over 70 countries in North America, Europe,
Asia Pacific and Latin America. Incoming survey responses are then processed
using proprietary software and checked for accuracy, completeness and
integrity. For the principal countries covered, our publications show
the forecasts of individual panellists for each economic indicator,
along with the average or 'consensus' estimate.
The table below shows a small sample of the data from
one of our surveys of forecasts for the United States (in this case,
from our July 9, 2007 survey).
Forecasters For
The United States
|
Gross
Domestic Product
|
Consumer
Price Inflation
|
|
% change over previous
year |
2007 |
2008 |
2007 |
2008 |
|
The Conference Board |
2.3 |
3.4 |
3.0 |
3.4 |
|
JP Morgan |
2.3 |
3.4 |
3.0 |
3.4 |
|
Eaton Corporation |
2.3 |
3.1 |
3.2 |
3.1 |
|
DuPont |
2.2 |
2.9 |
2.5 |
2.0 |
|
Bear Stearns |
2.2 |
2.9 |
2.9 |
3.1 |
|
Wachovia Corp |
2.2 |
3.2 |
2.5 |
2.3 |
|
Wells Capital |
2.2 |
2.8 |
3.0 |
2.9 |
|
Morgan Stanley |
2.2 |
2.9 |
2.9 |
2.6 |
|
Oxford Economics |
2.2 |
3.1 |
2.5 |
1.8 |
|
Lehman Brothers |
2.2 |
2.5 |
2.9 |
2.9 |
|
Standard & Poor's |
2.2 |
3.2 |
2.4 |
1.6 |
|
Fannie Mae |
2.1 |
2.9 |
2.8 |
2.5 |
|
Nat Assn of Home Builders |
2.1 |
2.9 |
2.6 |
2.6 |
|
Moody's Economy.com |
2.1 |
2.9 |
2.6 |
2.3 |
|
Macroeconomic Advisers |
2.1 |
2.8 |
2.8 |
2.4 |
|
Daimler Chrysler |
2.1 |
3.2 |
2.8 |
2.5 |
|
General Motors |
2.1 |
2.8 |
3.1 |
3.0 |
|
Global Insight |
2.1 |
2.8 |
2.5 |
1.8 |
|
Goldman Sachs |
2.1 |
2.6 |
2.8 |
2.2 |
|
Bank America Corp |
2.0 |
3.1 |
2.7 |
2.3 |
|
Swiss Re |
2.0 |
3.0 |
2.5 |
1.7 |
|
Ford Motor Corp |
2.0 |
2.8 |
2.0 |
2.0 |
|
Econ Intelligence Unit |
1.9 |
2.5 |
2.3 |
2.5 |
|
Inforum - Univ of Maryland |
1.9 |
2.7 |
3.0 |
3.0 |
|
Merrill Lynch |
1.9 |
2.3 |
2.8 |
2.0 |
|
United States Trust |
1.9 |
2.1 |
2.5 |
1.9 |
|
Univ of Michigan - RSQE |
1.9 |
3.0 |
2.5 |
2.1 |
|
Northern Trust |
1.8 |
2.2 |
2.7 |
2.0 |
|
Georgia State University |
1.8 |
2.8 |
2.4 |
1.9 |
|
Consensus (Average)
|
2.1 |
2.8 |
2.7 |
2.4 |
|
Last Month's Mean |
2.1 |
2.9 |
2.6 |
2.4 |
|
3 Months Ago |
2.3 |
2.9 |
2.1 |
2.2 |
|
High |
2.3 |
3.4 |
3.2 |
3.4 |
|
Low |
1.8 |
2.1 |
2.0 |
1.6 |
|
Standard Deviation |
0.1 |
0.3 |
0.3 |
0.5 |
How Accurate are Consensus
Forecasts?
A significant body of academic research (see below)
has concluded that consensus forecasts have a better track record than
most of the individual forecasts which make up the consensus, because
few, if any, individuals manage to consistently outperform the average.
While in any one year some forecasting panellists will probably do better
than the consensus in terms of predicting the correct outcome, these
'top performers' will vary from year to year and are very difficult
to identify in advance. Consequently, using a consensus prediction from
a group of expert forecasters can improve accuracy and enhance the work
of our subscribers, who include investment managers, treasury executives,
corporate planners, central bankers and government departments around
the world.
Academic
Research on Averaging Forecasts and Forecast Accuracy:
Roy Batchelor (City University Business School), "The
OECD and the IMF Versus Consensus Forecasts", August 2000. For further details see http://www.staff.city.ac.uk/r.a.batchelor/.
Alternatively, contact: Ms. Claire Abdul-Obitayo, City University Business
School, Frobisher Crescent, Barbican Centre, London EC2Y 8HB, United
Kingdom. Tel: (44) 20 7477 8733 Fax: (44) 20 7477 8881
Marten Blix, Joachim Wadefjord, Ulrika Wienecke and
Martin Adahl (Swedish Central Bank), "How Good is the Forecasting
Performance of Major Institutions?", Economic Review of the Swedish
Central Bank, Autumn 2001. The complete study is available as a PDF
download at www.riksbank.com under
Press and Published - Articles - Economic Review 2001:3.
Stephen K. McNees (Federal Reserve Bank of Boston),
"Consensus Forecasts: Tyranny of the Majority", New England
Economic Review, November 1987.
Victor Zarnowitz (University of Chicago and National
Bureau of Economic Research), "The Accuracy of Individual and Group
Forecasts from Business Outlook Surveys", Journal of Forecasting,
January 1984. |
