A practical guide to understanding economic forecasts
In Inside the Crystal Ball: How to Make and Use Forecasts, UBS Chief U.S. Economist Maury Harris helps readers improve their own forecasting abilities by examining the elements and processes that characterize successful and failed forecasts. The book:
Provides insights from Maury Harris, named among Bloomberg's 50 Most Influential People in Global Finance.
Demonstrates "best practices" in the assembly and evaluation of forecasts. Harris walks readers through the real-life steps he and other successful forecasters take in preparing their projections. These valuable procedures can help forecast users evaluate forecasts and forecasters as inputs for making their own specific business and investment decisions.
Emphasizes the critical role of judgment in improving projections derived from purely statistical methodologies. Harris explores the prerequisites for sound forecasting judgment—a good sense of history and an understanding of contemporary theoretical frameworks—in readable and illuminating detail.
Addresses everyday forecasting issues, including the credibility of government statistics and analyses, fickle consumers, and volatile business spirits. Harris also offers procedural guidelines for special circumstances, such as natural disasters, terrorist threats, gyrating oil and stock prices, and international economic crises.
Evaluates major contemporary forecasting issues—including the now commonplace hypothesis of sustained economic sluggishness, possible inflation outcomes in an environment of falling unemployment, and projecting interest rates when central banks implement unprecedented low interest rate and quantitative easing (QE) policies.
Brings to life Harris's own experiences and those of other leading economists in his almost four-decade career as a professional economist and forecaster. Dr. Harris presents his personal recipes for long-term credibility and commercial success to anyone offering advice about the future.
Table of Contents
- Title Page
- Introduction: What You Need to Know about Forecasting
- Chapter 1: What Makes a Successful Forecaster?
- Chapter 2: The Art and Science of Making and Using Forecasts
Chapter 3: What Can We Learn from History?
- It's Never Normal
- Some Key Characteristics of Business Cycles
- National versus State Business Cycles: Does a Rising Tide Lift All Boats?
- U.S. Monetary Policy and the Great Depression
- The Great Inflation Is Hard to Forget
- The Great Moderation: Why It's Still Relevant
- Why Was There Reduced Growth Volatility during the Great Moderation?
Chapter 4: When Forecasters Get It Wrong
- The Granddaddy of Forecasting Debacles: The Great Depression
- The Great Recession: Grandchild of the Granddaddy
- The Great Recession: Lessons Learned
- The Productivity Miracle and the “New Economy”
- Productivity: Lessons Learned
- Y2K: The Disaster That Wasn't
- The Tech Crash Was Not Okay
- Forecasters at Cyclical Turning Points: How to Evaluate Them
- Forecasting Recessions
- Forecasting Recessions: Lessons Learned
Chapter 5: Can We Believe What Washington, D.C. Tells Us?
- Does the U.S. Government “Cook the Books” on Economic Data Reports?
- To What Extent Are Government Forecasts Politically Motivated?
- Can You Trust the Government's Analyses of Its Policies' Benefits?
- The Beltway's Multiplier Mania
- Multiplier Effects: How Real Are They?
- Why Government Statistics Keep “Changing Their Mind”
- Living with Revisions
- Chapter 6: Four Gurus of Economics: Whom to Follow?
- Chapter 7: The “New Normal”: Time to Curb Your Enthusiasm?
- Chapter 8: Animal Spirits: The Intangibles behind Business Spending
Chapter 9: Forecasting Fickle Consumers
- Making and Spending Money
- How Do Americans Make Their Money?
- Will We Ever Start to Save More Money?
- Why Don't Americans Save More?
- More Wealth = Less Saving
- Do More Confident Consumers Save Less and Spend More?
- Does Income Distribution Make a Difference for Saving and Consumer Spending?
- Pent-Up Demand and Household Formation
Chapter 10: What Will It Cost to Live in the Future?
- Whose Prices Are You Forecasting?
- Humans Cannot Live on Just Core Goods and Services
- Sound Judgment Trumps Complexity in Forecasting Inflation
- Should We Forecast Inflation by Money Supply or Phillips Curve?
- Hitting Professor Phillips' Curve
- A Statistical Lesson from Reviewing Phillips Curve Research
Chapter 11: Interest Rates: Forecasters' Toughest Challenge
- Figuring the Fed
- Federal Open Market Committee
- What Is the Fed's “Reaction Function”?
- Is the Fed “Behind the Curve”?
- Can the Fed “Talk Down” Interest Rates?
- Bond Yields: How Reliable Are “Rules of Thumb”?
- Professor Bernanke's Expectations-Oriented Explanation of Long-Term Interest Rate Determinants
- Supply and Demand Models of Interest Rate Determination
- When Will OPEC, Japan, and China Stop Buying Our Bonds?
- What Will Be the Legacy of QE for Interest Rates?
- What Is the Effect of Fed MBS Purchases on Mortgage Rates?
- Will Projected Future Budget Deficits Raise Interest Rates?
- Chapter 12: Forecasting in Troubled Times
- Chapter 13: How to Survive and Thrive in Forecasting
- About the Author
- End User License Agreement
- Title: Inside the Crystal Ball: How to Make and Use Forecasts
- Release date: December 2014
- Publisher(s): Wiley
- ISBN: 9781118865071