ABSTRACT
Blue Chip has been compiling forecasts for a decade and thus offers a unique opportunity to highlight some of its successes and note some of its shortcomings as well. Blue Chip Economic Indicators also makes quarterly gross national product (GNP) forecasts. Perhaps the most important indicator for an economy is its inflation rate; and arguably the best measure of inflation is the GNP implicit price deflator, as the figure takes into account price changes in all sectors of the economy. Even more discouraging for the Blue Chip economists was the result obtained using the simplistic trend method. Note that the trend forecast produced an average error of only one percentage point for predicting inflation. One might also argue that accurate forecasting will help make economic decision making more efficient—whether it is government’s projecting future revenues and expenditures, or profit-seeking businesses utilizing forecasts to make informed investment decisions.
