CBO assesses its two-year and five-year economic forecasts from as early as 1976 and compares them with those of the Administration, the Survey of Professional Forecasters, and the Blue Chip consensus.
In this report, the Congressional Budget Office assesses its economic forecasts over the first two years and five years of each baseline period from as early as 1976. (The baseline period is the time frame covered by the agency's annual baseline projections of the federal budget.) CBO then compares its forecasts with those of the Administration, the Survey of Professional Forecasters (SPF), and the Blue Chip consensus.
CBO's forecasts of important economic variables (output growth, the unemployment rate, inflation, interest rates, and wages and salaries) tend to be more accurate than those of the Administration and the Blue Chip consensus, and roughly half of CBO's two-year forecasts are more accurate than those produced by the SPF.
On average, CBO's forecasts are too high by small amounts, and the accuracy of the agency's two-year and five-year forecasts is similar.
Forecasts from all four sources failed to anticipate certain key economic developments, resulting in significant forecast errors. The main sources of those errors are turning points in the cycle of economic activity, changes in labor productivity trends and crude oil prices, the downward trend in interest rates, the decline in labor income as a share of output, data revisions, and effects of the coronavirus pandemic.
