AN ASSESSMENT OF THE OFFICIAL ECONOMIC FORECASTS

While many studies have evaluated the accuracy of ''official'' economi c forecasts, this study may be the first published analysis of the Fed eral Open Market Committee's ''Humphrey-Hawkins'' forecasts. In this a rticle, the ''official'' forecasts generated by the Council of Economi c Advisers (CEA), the Congressional Budget Office (CBO), and the Feder al Open Market Committee (FOMC) are analyzed and compared to each othe r as well as to forecasts made by the private sector. The findings for the one-year-ahead forecasts reconfirm that the CEA, CBO, and private sector forecasts are about equally accurate while more accurate than simple rules of thumb. For the multiyear real GNP forecasts, however, evidence indicates that the forecasts of prominent commercial forecast ers and the CBO are more accurate than those of the CEA, owing to an o ptimistic bias. In addition, the midpoints of the FOMC's longest forec asts outperform one standard private sector counterpart.