Business ForecastingSkills needed to become a business & economic forecasterEconomic knowledgeStatistics Computer applicationsCommunication Forecasting as an art, as well as a science

Decision MakingThe goal of the forecaster is to provide information for decision makingPurpose is to reduce the range of uncertainty about the futureDemand for forecasters is derived based on their final useThree elements in common are (1) time, (2) uncertainty, and (3) reliance on statistical analysis, primarily of historical data.Planning and forecasting are complementary, not substitutes

The Forecasting ProcessDetermine the purpose or objective of the forecastSelect the relevant theoretical model (identify influences, classify as internal or external, and identify possible constraints)Collect dataAnalyze data (Data analysis often determines model choice.)Estimate the original model (You may initially select for comparison more than one technique.)Evaluate the model and revisePresent initial forecast to decision makersMake the final revisionDistribute the forecastEstablish monitoring procedures

Business Cycle: Past and PresentTheories of the business cycleWesley Clair Mitchell and the NBER http://www.nber.org/cycles.html/NBER recession dating procedure http://www.nber.org/cycles/recessions.htmlRecent U.S. economic performance http://rfe.wustl.edu/EconFAQ.html

Forecasting TipsConsensus forecasts are nothing more than averages. Study extremely optimistic and pessimistic forecasts for information.Forecasts are always wrong, be able to explain why.Focus a forecast on a range rather than a single point.Develop tools to monitor forecast performance over time.Simple models are preferred over complex models (cost/benefit analysis).Understand and be able to explain your forecast procedure to decision makers.Be especially on the lookout for exogenous forces that influence your forecasts and even lead to turning point errors.Be humble; your forecast is to help decision makers and is not an end in itself.