This paper compares and contrasts forecasts of six macroeconomic indicators. Two forecasts are presented for each of the six economic indicators. The minimum acceptable forecast period is 18 months. The six macroeconomic indicators are as follows:
Real GDP: Real GDP is nominal GDP adjusted for price-level changes (inflation). Real GDP is calculated in relation to a base year. Nominal GDP is adjusted for price-level changes between the base year and the current year through the application of a GDP-deflator (the assumption is that price levels increase; should price levels decrease, the adjustment measure would be a GDP-inflator). GDP typically is measured in terns of rate of change for purposes of analysis. The rate of change is from immediate prior period to current period (Eun & Resnick, 2004).
Unemployment Rate: The unemployment rate reflects the percentage of the non-institutionalized workforce that is considered to be unofficially unemployed at a specified time. The United States government considers people to be officially unemployed if they are (a) classified as "insured" (eligible for federal unemployment benefits) and are actively seeking work. Thus, many persons who are among the long-term unemployed and have given up any hope of obtaining employment through state employment offices are not counted among the unemployed (Mastrianna & Hailstones, 1995).
Inflation Rate. The rate of inflation is defined in this paper as the Consumer Price Index (CPI) for all consumers in the United States economy. The CPI for all consumers is based on a basket of goods, the prices of which are measured periodically. The index value is an indicator of the difference in price level in a current period of measurement in relation to prices in a base period. The index value in the base period equals 100 (Colander, 2003). The index value for a current period is calculated by dividing 100 into the price level for the basket of go...