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A CBO Report: CBO's Economic Forecasting Record. A Supplement to the Budget and Economic Outlook: An Update [i] (November 2002)

handle is hein.congrec/cbo0727 and id is 1 raw text is: A CBO REPORT CBO's Economic Forecasting Record A Supplement to The Budget and Economic Outlook: An Update November 2002 Since publishing its first macroeconomic forecast in 1976, the Congressional Budget Office (CBO) h compiled a forecasting track record comparable in quality with those of a sizable sample of private- sector forecasters as well as five Administrations. CBO's errors for two-year forecasts made between 1982 and 2000 did not differ markedly either from those of the Administration or from the average of 50 or so forecasts that have made up the Blue Chip survey over the years. Comparing CBO's forecasts with those of the Blue Chip consensus suggests that when CBO's economic predictions missed the ma by a margin wide enough to contribute to sizable errors of the surplus or deficit, those inaccuracies probably reflected limitations that confronted all forecasters. That result is not surprising because all forecasters, when making their predictions, have the same basic information available about the state the economy, which they may then interpret differently. Moreover, CBO examines other forecasts wh constructing its own; in turn, CBO's forecast may affect others in a similar way. Overview For forecasts looking two years ahead--those that are most important for the budget year being considered by the Congress--CBO's accuracy is essentially the same as that of the various Administrations over the past two and a half decades. Even though CBO and the Administration usual make different policy assumptions--CBO assumes a continuation of current policy and the Administration normally incorporates the projected economic effects of its policy proposals--the differences between the two forecasters are small, especially when compared with the size of the fore( errors. Also, CBO's forecasts have been about as accurate as the Blue Chip's average forecasts, in gen( (see Table 1). Table 1. Summary Measures of Forecast Performance (In percentage points) CBO Administration Blue Chip Two-Year Averages Growth Rate for Real Output (1982-2000) Mean error -0.6 -0.4 -0.6

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