An economic forecast is a prediction of the performance of an economy. Historically, the term has generally been used to refer to predictions of individual prices or a wide range of other individual economic variables; beginning with the work in the later 1930s by Jan Tinbergen on the first macroeconometric models, however, the prediction of entire economies started to take center stage.
A range of methodologies can be applied to the task of making economic forecasts, with a wide variety of statistical techniques employed. At one end of the spectrum are judgmental methods relying on the expertise of individual forecasters to fine-tune forecasts generated by a set of models, and at the other is the use of cutting-edge time series models, such as factor models or mixed frequency models, to predict the behavior of economic variables.
In general, the most important economic variable being predicted by an economic forecast is gross domestic product (or national income if the country concerned uses this term). In addition to GDP, other commonly reported economic indicators are real growth rate of an economy, inflation, interest rates and unemployment. An additional important variable is the state of an economy, as indicated by the perceptions and expectations of individual citizens and businesses. If the beliefs and anticipations of governments, consumers or business people are changed by a particular economic forecast, the resulting actual outcome will also change. The fact that a particular forecast may have such an effect is what makes the concept of economic forecast so fascinating.