Macroeconomic Forecast

Macroeconomic Forecast

Introduction

Forecasts and historical data are obtained from financial institutions, investment firms and forecasting groups. The historical data can indicate trends to help support the forecasts. The individual forecasts will be related to real Gross Domestic Product, the Consumer Price Index, Unemployment in the US, 10 Year Treasury Notes, and Disposable Personal Income.

The economy of a country can be stimulated to grow if disposable income is increased, but only if the population actually uses the funds to consume. This instills confidence in businesses to produce and the gross domestic product for the country will increase. Increasing consumption risk inflation and a rising consumer price index.

Gross Domestic Product

The Gross Domestic Product (GDP) for the US has grown every year since 1949. GDP is a measure of product produced by US citizens. Increases are a reflection of increased production efficiencies and sales. A continual improving GDP indicates a country with an expanding production base.

As a measure, GDP makes no distinction between products and services. Over time, American industry has become more service based. In addition, the population of the US has grown. Therefore, increases in GDP are also a product of greater labor capacity.

Chart 1.0. Gross Domestic Product History and Forecasts

The change in GDP measured in percentages varies from years to year. The past ten years has seen a high of 6.2 percent in 1994 and a low of 2.9 percent in 2001. The variations for the past ten years are depicted on Chart 1.0.

Included on chart 1.0 are three projections for future GDP. The individual projections are identified as Banker (The Mortgage Bankers Association), Congress (Congressional Budget Office Projections for Calendar years 2004 through 2014) and Conference (The Conference Board).

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