US Economic Forecast: Cloudy with a chance of a long slide to oblivion!

On Friday we discussed what forecasting is and how it is the underlying basis of all business decisions.  A quick recap, forecasting is the process of predicting a future event.  There are three types of forecasts used today; Economic, Technological, and Demand forecasts.   Now, when we think of forecasting as related in this class, we assume that only companies take part in forecasting to predict events such as product demand, product development, sales numbers etc.  What about the United States Government?  Do they forecast? The answer is yes! If you think about it governments are just like companies with internal departments, agencies and people that they employ.  Similar to companies, governments address business cycles or fiscal years in their case to mitigate any occurring or potential problems.  More often than not, the majority and most important forecasting a government will do is an economical one.  The strategic importance for a government to conduct an economic forecast is ensure that they are efficiently using their resources and operating at a capacity that they can maintain.  If only the United States government would  have taken this into consideration years ago.

Moreover, forecasting has time horizons such as short, medium and long range forecasting.  The U.S. Government has to submit an economic outlook or forecast to the Congressional Budget Office every year and it includes all forecasting time horizons.  However, these forecasts are not always accurate and some forecast might suggest that the system is stable and will continue as is.  It is safe to assume that the U.S. Government uses a quantitative method as a forecasting approach.  Mainly because it uses historical data and mathematical techniques to forecast the following fiscal year.

The United States Government faces daunting economic and budgetary challenges.  The economy has struggled to recover from the recession that was triggered by an enormous decline in house prices and a financial crisis that the country has never seen before. Now, with sharply lower revenue and elevated spending, it wouldn’t take a genius to forecast a not so bright upcoming year for the economy but I believe there is still hope in turning it around.  It won’t happen overnight but rather years from now.

Can you think of any other companies, governments, project managers etc, who use forecasting for their business decisions?  If so, what approach do you think they took?

 

5 thoughts on “US Economic Forecast: Cloudy with a chance of a long slide to oblivion!

  1. I think that mostly every company and government does some sort of forecasting. I think mostly all manufacturing, merchandise, and service companies do some type of demand forecasts. Also, I think manufacturing companies use technological forecasts as well. Lastly, as far as government conducting forecasts, I think mostly all structured governments follow some type of economic forecasts.

  2. I agree with the response above, I think that probably every company and even the government does some sort of forecasting to be successful. The government needs to use forecasting because they deal with Americas money and it is important for them to make sure the country has money, especially the past few years where we have been dealing with an economic crisis. Since we are saying that the government uses forecasting, why are in an economic crisis?

  3. To answer your question, I believe that the restaurant industry is another big user of some sort of forecasting technique. They must know their inventory at all times, and also forecast as to how much they will need each day, week, or even month. Since they do tend to get their things in bulk, they have to be very careful in their forecast, in terms of how much they should order. If they order too much, there is a possibility of it going bad, and if they order too little, they run the risk of turning customers away. As for what technique they use to forecast, I believe that depends on the type of restaurant as well as the management style.

  4. I’m having a hard time identifying any business/government that wouldn’t rely on forecasting. Nowadays, forecasting is often done using software that requires minimal maintenance. However, companies can find themselves at a point where they don’t have data to forecast and have to utilize their knowledge to make an estimated guess at how their product/service will perform. Government has a difficult time forecasting because there are numerous moving parts. Furthermore, I believe that government has to utilize all three forecasts because they forecast many different things ranging from economic growth to the demand for government services.

  5. I believe there are many entities that utilize various characteristics of forecasting. All institutions must maintain in their possession a balance sheet along with an income statement, these are crucial elements in determining future sales projections and goals as well. Even though I would agree that forecasting used in governmental issues is considerably much more difficult because there are various factors that come into play. I like how the response about points out the difficulties in implementing such a system.

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