ABSTRACT
To cross the conceptual bridge between predicting and forecasting, we cannot do better than consider the question of economic growth. Future changes in gross domestic product (GDP) are probably the paramount concern that private and public decision makers share. An army of analysts is constantly telling them what to expect, information that they use to set capital and operating budgets for the next fiscal period. Nearly all the analysts’ predictions are derived from scientific models that use historical data, and the estimates vary widely. For example, initial predictions for 2012 GDP growth in the United States ranged from around +2% to +4%. Subsequent data suggest that the actual rate at year’s end was approximately +2.2%, a figure near the bottom of the range. In other words, most of the predictions were wrong.
