Professional Forecasters’ Past Performance and the 2025 Economic Outlook

December 31, 2024
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Measuring the current state of the economy is difficult because data are backward-looking and often revised. As a result, economic forecasts are frequently wrong. For example, the U.S. economy has consistently surprised to the upside over the past two years. In December 2023, the Blue Chip survey reported that professional forecasters expected real gross domestic product (GDP) to grow by 1.3% over 2024, though their latest report suggests growth will be around 2.7%.

The outlook for 2025 economic growth is comparatively stronger than forecasters have predicted in recent years, though it represents a slight slowing of activity. Real GDP is expected to grow 2.1% over the year, the unemployment rate is expected to average 4.3%, and consumer price index (CPI) inflation is expected to cool slightly to 2.4%. So how likely is it that the economy in 2025 will be in line with professional forecasts? And if (or rather, when) forecasts are wrong, how wrong will they be?

Forecasts of 2025 Economic Activity

The Blue Chip survey of about 50 professional economic forecasters reports one-year-ahead projections. Each forecaster’s projections are reported, but it is the “consensus,” or average among all forecasters, that garners the most attention.

The first three rows of the table below report the Blue Chip projections for 2025 for real GDP growth, CPI inflation, the unemployment rate, and the 10-year Treasury yield, as reported in December 2024. As mentioned previously, the consensus outlook shows activity slowing, but it seems that forecasters have factored in more room for economic resilience, as reflected in the following:The top 10 and bottom 10 average forecasts do not necessarily provide the range of all forecasted values. They are only the average of the 10 highest and 10 lowest forecasted values for each indicator. For 2025 real GDP growth, the highest forecasted value is 2.7% and the lowest is 1.5%.

  • The average of the top 10 forecasts for GDP growth (most optimistic) is 2.5% while the average of the bottom 10 (most pessimistic) is only 1.9%.
  • The average of the top 10 forecasts for inflation is 2.8% while the bottom 10 average is 2.1%.
  • The average of the top 10 forecasts for the unemployment rate is 4.5% while the bottom 10 average is 4.0%.
  • The average of the top 10 forecasts for the 10-year yield is 4.5% while the bottom 10 average is 3.8%.
Blue Chip Survey of Professional Forecasters: 2025
Real GDP Growth CPI Inflation Rate Unemployment Rate 10-Year Treasury Yield
Consensus (Average) 2.1% 2.4% 4.3% 4.1%
Average of Top 10 Forecasts 2.5% 2.8% 4.5% 4.5%
Average of Bottom 10 Forecasts 1.9% 2.1% 4.0% 3.8%
SOURCES: Blue Chip Economic Indicators (Dec. 10, 2024).
NOTES: Real GDP and CPI inflation are percent change from 2024 to 2025. Unemployment rate and 10-year Treasury yield are the averages for 2025.

How Likely Is 2025 to Unfold as Expected?

The next table summarizes historical performance over the period 1993 to 2024.

Blue Chip Survey of Professional Forecasters: Historical Forecast Performance, 1993-2024
Real GDP Growth CPI Inflation Rate Unemployment Rate 10-Year Treasury Yield
Accuracy (Percentage of Years Actual Data Were within Average Top/Bottom Ranges) 44% 56% 47% 47%
Accuracy (MAFE, Consensus Forecast) 1.0 0.7 0.5 0.6
Bias (MFE, Consensus Forecast) 0.1 0.2 -0.1 -0.4
SOURCES: Blue Chip Economic Indicators (Dec. 10, 2024) and authors’ calculations.
NOTES: The 2024 observed values were calculated with data through the third quarter of 2024. Mean absolute forecast error (MAFE) and mean forecast error (MFE) were calculated using the consensus forecast; their values are in percentage points.

The first measure is the percentage of years in which the actual data fell within the range of the average bottom 10 and average top 10 forecasts. As the table shows, the actual values of real GDP growth, unemployment and interest rates were within this range of forecasts less than half the time. Forecasts of CPI inflation have been a little more accurate (56%). Based on historical performance, it is essentially a coin toss as to whether observed real GDP growth in 2025 will fall within the range of 1.9% to 2.5%.

The second measure of performance is the mean absolute forecast error (MAFE). The MAFE helps us understand how far the actual values fall from the forecasted values, when the forecasted values are incorrect.

The MAFE for the real GDP growth forecast is 1 percentage point. This suggests that if the consensus forecast of real GDP growth for 2025 is incorrect, the actual real GDP growth value will be, on average, within a range of 1.1% to 3.1%.

The final measure, mean forecast error (MFE), indicates whether the consensus forecast is biased—that is, whether it has historically missed in a certain direction. For most indicators, the MFE is near zero, indicating little to no forecast bias toward either overshooting or undershooting. However, the MFE on the 10-year Treasury yield forecast is -0.4 percentage points, indicating that forecasters have typically predicted higher interest rates by an average of 40 basis points.

Note

  1. The top 10 and bottom 10 average forecasts do not necessarily provide the range of all forecasted values. They are only the average of the 10 highest and 10 lowest forecasted values for each indicator. For 2025 real GDP growth, the highest forecasted value is 2.7% and the lowest is 1.5%.
ABOUT THE AUTHORS
Charles S. Gascon

Charles Gascon is a research officer at the Federal Reserve Bank of St. Louis. His focus is national and regional economic analysis. He joined the St. Louis Fed in 2006. Read more about the author and his research.

Charles S. Gascon

Charles Gascon is a research officer at the Federal Reserve Bank of St. Louis. His focus is national and regional economic analysis. He joined the St. Louis Fed in 2006. Read more about the author and his research.

Joseph Martorana

Joseph Martorana is a research associate at the Federal Reserve Bank of St. Louis.

Joseph Martorana

Joseph Martorana is a research associate at the Federal Reserve Bank of St. Louis.

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This blog offers commentary, analysis and data from our economists and experts. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.


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