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Compare and Contrast GDP Forecasts

This is part of a paper I'm doing on six different economic indicators, I just need help with the Real GDP part.

1.Compare and contrast the two different forecasts for REAL GDP (attached)

2. Include a reconciliation of the differences between the forecasts and a rationalization for which forecasts you believe are most accurate.

3. Please provide reasoning, and references if any used.

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Solution Preview

First of all, you need to notice that the second chart isn't a forecast. It's real time data. So it doesn't go out into the future, like the other one does. We can compare the different values for the last two quarters, though, and see how they differ.

First let's calculate the percent change in GDP for each quarter for the forecast.org chart, so this graph will be in the same terms as the other. We do this by dividing the increase in value by the previous value. From December 2005 to March 2006, GDP began at about 12750 and ended at 13000. This is a change of 250. 250/12750= 2.0 percent. From March to June 2006, GDP began at 13000 and ended at about 13500. This is a change of 500. 500/13000 = 3.8 percent.

We also need to convert the monthly figures in the real time GDP chart into quarterly figures. This can be done ...

Solution Summary

Analysis of different real GDP forecasts found on the the Internet.