Judgment in macroeconomic output growth predictions: Efficiency, accuracy and persistence

The present study applies observations of individual predictions of the first three releases of the US output growth rate to evaluate how the applied judgment affects prediction efficiency and accuracy as well as if judgment is persistent. While the first two issues have been assessed in other studies, there is little evidence on the formation of judgment in macroeconomic projections. Most of the forecasters produce unbiased predictions, but employing the median Bloomberg projection as baseline, it turns out that judgment generally does not improve accuracy. There seems to be persistence in the judgment applied by forecasters in the sense that the sign of the adjustment in the first release prediction carries over to the projections of the two following revisions. One possible explanation is that forecasters use some kind of anchor-and-adjustment heuristic.