The Performance of the BBER Forecast: Improving Accuracy.

• Author: Bridge, Brandon

Forecasts from the Bureau of Business and Economic Research have performed fairly well in recent years. Our 2018 forecast of 2.4 percent in inflation-adjusted nonfarm earnings for Montana was only slightly lower than the published actual growth of 2.5 percent. It appears that growth in 2019 will come in around 2.4 percent, higher than the 2.2 percent we projected for the year.

Recurring revisions of historical data on economic growth continue to adjust the accuracy of the BBER forecast. Particularly, in five out of the last six years of data these revisions have improved our projections of growth in inflation-corrected nonfarm earnings. Updates to the official data have reflected on average .25 percent higher growth in Montana than previously calculated in every year from 2013 through 2018.

These updates to the data have resulted in BBER's forecast predicting the continued economic recovery fairly well. Forecasted growth since 2002 has missed the mark by an average of 1.47 percentage points per year. This is lower than the 1.6 percentage point average historical deviation that was reported last year. Due in part to the data revisions, this is also a reflection of the more recent years' predictions falling closer to the published numbers. As the tumult of the Great Recession and its ensuing forecasting challenges lay further in the past, economic activity in the state has experienced less variance and hence less unpredictability on average.

If we look at the years after the...