Professional Forecasters’ Outlook for 2023 and Caveats Based on Past Performance

Abstract

future by looking at possible changes in the economy, including income, the labor market, and interest rates. They may also seek guidance from professional forecasters. Currently, there is much debate as to how the U.S. economy will perform in 2023. But the general consensus of professional forecasters and FOMC participants is that economic growth will be slow and inflation will come down from its elevated 2022 rates. Forecasters also expect that the hot labor market from the past few years will begin to cool. However, there are many risks to the outlook: elevated global inflation, slower growth in China, and a cooling domestic housing market, to name a few. The historical track record of forecasters indicates these economic projections are rarely fully correct, but they do contain useful information beyond what can be gained by simple projections. So how likely is it that the economy in 2023 will be in line with professional forecasts? And if they are wrong, as they have been in the past, how wrong will they be? I look at the one-year-ahead projections reported in the December Blue Chip survey of about fifty professional economic forecasters. Although these projections are updated monthly, I use data in the December report for Professional Forecasters’ Outlook for 2023 and Caveats Based on Past Performance