“Forecasts are always wrong,” said Robert Chote, chairman of the Office for Budget Responsibility, this week (having said similar things in the past). This is a brave line to take when your organisation produces the economic forecasts used by the government, but it is also true.
In anything that involves human behaviour, the best a forecaster can do is assess the situation in the recent past and at present, note the rates of change, then take a view on whether things will continue to change at those rates or if there are good reasons otherwise. It makes sense to say how confident you are in the prediction or provide a range of possibilities. Continue reading