Economic forecast is a broad field, ranging from the study of historical empirical regularities in economic data to the use of models guided by a theoretical understanding of economic processes. The goal of the forecaster is to identify patterns that can be expected to recur in future data, so that a model can be used to predict the economy.
The forecaster also makes a series of assumptions about the economy. These can range from the number of people who will be of working age to the rate at which productivity (output per worker) is expected to grow over the long term. The forecaster must also make assumptions about war or peace, taxes and government spending, the pace of technological discovery, and other factors that may influence economic activity.
As the economy has grown since World War II, a number of important trends have emerged. In addition to the usual stresses of aging and population changes, new economic policies have added to uncertainty about the future. The rise of trade barriers has shaken global growth prospects and contributed to the reversal of gains in poverty reduction and prosperity worldwide.
Good economic forecasting begins with a thorough analysis of general economic conditions. Afterward, an analyst must take into account the particular factors that are most important to his or her own industry. For example, a company that produces durable goods such as cars and industrial equipment must make projections about the demand for those products. Often, sales of such goods correlate fairly directly with the elements of the national income and product accounts–lumber sales with housing construction, for example, or sales of nondurable consumer goods with total consumer spending.