O'Reilly logo

Inside the Crystal Ball: How to Make and Use Forecasts by Maury Harris

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Chapter 9Forecasting Fickle Consumers

When men are employed, they are best contented; for on the days they worked they are good-natured and cheerful, and, with the consciousness of having done a good day's work, they spent the evening jollily; but on our idle days they were mutinous and quarrelsome.

—Benjamin Franklin, Autobiography, 1793, Chapter X

Consumer spending is perhaps the most important of all business forecasts. The consumption of goods and services accounts for approximately two-thirds of gross domestic product (GDP), and it is typically the first topic that my investor clients wish to discuss. A national consumer spending projection is a key starting point for most marketing studies and, during my career, expected consumer spending has generally been the issue separating optimists from pessimists.

I am usually optimistic about consumer spending. I agree with pessimists that the American consumer should be saving more for rainy days and retirement. However, when forecasting I always distinguish how I believe households and firms should behave versus what they are likely to actually do. Moreover, I often disagree with pessimists about potential purchasing power and the American standard of living. For instance, although some observers fret about the domestic jobs lost to outsourcing, I focus more on what the accompanying cheap imports mean for purchasing power.

In this chapter, the challenge of making accurate consumer spending forecasts is approached from both the ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required