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CBO's Revenue Forecasting Record 1 (November 2015)

handle is hein.congrec/cbo2647 and id is 1 raw text is: NOVEMBER 2015 CBO's Revenue Forecasting Record Provided as a convenience, this screen-friendly version is identical in content to the principal (printer-friendly) version of the report. Any tables, figures, and boxes appear at the end of this document; click the hyperlinked references in the text to view them. Summary To prepare the baseline budget projections on which much of its analysis is based, the Congressional Budget Office must regularly produce revenue forecasts. As a part of that process, the agency assesses the accuracy of its past projections and continually refines its methods for projecting revenues to attempt to make them more accurate. This report examines the accuracy of CBO's revenue projections since 1982, the earliest year for which the information necessary to assess the forecasts is available. On average, the agency's projections have been a bit too high-more so for projections spanning six years than for those spanning two-owing mostly to the difficulty of predicting when economic downturns will occur. The overall accuracy of CBO's revenue projections has been similar to that of the projections of other government agencies. How Accurate Have CBO's Two-Year Revenue Projections Been? On average, CBO has overestimated total revenues by 1 .1 percent in its two-year projections-those that provide estimates of revenues for the fiscal year following the year in which they are released. A misestimate of that size in its January 2015 baseline projection, for example, would amount to $37 billion out of the roughly $3.5 trillion in total revenues that CBO projected for fiscal year 2016.1 Overestimates 1. See Congressional Budget Office, The Budget and Economic Outlook: 2015 to 2025 (January 2015), www.cbo.gov/publication/49892. Notes: Unless otherwise indicated, all years referred to are federal fiscal years, which run from October 1 to September 30 and are designated by the calendar year in which they end. Numbers in the text and tables may not add up to totals because of rounding. Some figures have vertical bars that indicate the duration of recessions. (A recession extends from the peak of a business cycle to its trough.)The historical data on revenues and gross domestic product used in this report are based on information available as of January 2015. Incorporating more recent data into this analysis would have only a very minor effect on the results. Supplemental data for this analysis are posted along with this report on CBO's website (www.cbo.gov/ publication/50831). I

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