How We Crunched the Numbers in Ranking Top Economic Forecasters
We identified the top forecasters using estimates from the Bloomberg ECO survey for economic indicators in the euro zone and 10 countries. These nations, which were among the top 25 in GDP, had to have a minimum of two ranked forecasters making predictions for at least three indicators, including GDP, to qualify for our list.
The U.S. ranking was based on 15 indicators: GDP, consumer price index, durable goods orders, existing home sales, housing starts, industrial production, the Institute for Supply Management’s manufacturing index and nonmanufacturing index, new home sales, nonfarm payrolls, personal income, personal spending, producer price index, retail sales and unemployment.
The euro zone ranking incorporated 11 indicators: GDP, consumer confidence, consumer price index, economic sentiment, industrial confidence, industrial production, Markit Eurozone Manufacturing PMI, Markit Eurozone Services PMI, M3 money supply, producer price index and unemployment. For all countries, forecasters had to make estimates for GDP and CPI.
The latest two years of data reported by Oct. 1 were used. To qualify for a ranking on a monthly indicator, forecasters had to have made estimates for at least 15 of the 24 months and two consecutive forecasts within the last six periods. For quarterly indicators, forecasters had to have made at least five calls and two consecutive estimates within the last eight periods. Forecasters who didn’t provide any estimates in the latest three periods were excluded.
The forecasts and actual reported numbers were compared, and individuals received a score of zero to 100 based on the accuracy of their historical forecasts for each indicator. Economists with fewer forecast errors relative to other forecasters received higher scores. The scores received for each indicator were averaged to determine each forecaster’s rank in a country or region.
The top forecasting firms were identified by averaging the overall scores their forecasters received in all regions. A firm had to have ranked forecasters in the U.S. or the euro zone and in at least three of the nine remaining geographical areas to qualify for one of the five top firms.
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