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A few months ago I created an ARIMA forecast for 2010’s 4th quarter and 2011’s first quarter GDP numbers.   My forecast proved to be very accurate in predicting the growth of the economy for the last 6 months.  Please see my previous post for the 4th quarter evaluation.

Evaluation of Actual vs. My Forecast of GDP for 4th Quarter 2010

http://espin086.wordpress.com/2011/02/03/evaluation-of-previous-posts-gdp-forecast-off-by-15-of-1/

My Forecast for 1st Quarter 2011 GDP

http://espin086.wordpress.com/2011/01/16/gdp-forecast-for-2010q4-and-2011q1-box-jenkins-methodology-and-arima-forecast-model/http://espin086.wordpress.com/2011/01/16/gdp-forecast-for-2010q4-and-2011q1-box-jenkins-methodology-and-arima-forecast-model/

Actual 1st Quarter 2011 GDP

http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

In the 4th quarter my forecast for US GDP were off by 1/5 of 1%. The first quarter forecast was just as accurate, missing by only 1/3 of 1%. I forecasted that GDP in the first quarter of 2011 would be at 15,062 billion dollars and actual GDP came in at 15,006 billion dollars. Actual GDP grew by 1.9% in the first quarter of 2011 compared to estimate of 1.8%.

Although these forecast are extremely accurate, I believe that a multivariate approach such as a Vector Autoregressive process would provide even greater accuracy.  Given the uncertainty of the current economic environment, accurate forecast can aid in better planning and risk mitigation for both governments and corporations.

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