Economic Performance and Forecasts
Discussion
https://www.bbc.co.uk/news/business-67943106
It seems to be a common theme these days. Oh look the economy did better than expected after everyone says we will be in recession. This has been going on now for 18 months or so.
Do forecasters have a mission to denigrate? Would a positive view help everyone? Reality is always better than the forecasts, I can't think of any they got right.
It seems to be a common theme these days. Oh look the economy did better than expected after everyone says we will be in recession. This has been going on now for 18 months or so.
Do forecasters have a mission to denigrate? Would a positive view help everyone? Reality is always better than the forecasts, I can't think of any they got right.
Check out Sasha Yanshin on The YouTube.
While some may disagree with him / his style. I think it’s a refreshing take on the forecasting and numbers that get released and provides some decent insight into why these forecasts are so reliably wrong.
He’s pretty scathing on the powers that be and the press when he looks into the detail behind the monthly numbers.
While some may disagree with him / his style. I think it’s a refreshing take on the forecasting and numbers that get released and provides some decent insight into why these forecasts are so reliably wrong.
He’s pretty scathing on the powers that be and the press when he looks into the detail behind the monthly numbers.
fat80b said:
Check out Sasha Yanshin on The YouTube.
While some may disagree with him / his style. I think it’s a refreshing take on the forecasting and numbers that get released and provides some decent insight into why these forecasts are so reliably wrong.
He’s pretty scathing on the powers that be and the press when he looks into the detail behind the monthly numbers.
Second this. While some may disagree with him / his style. I think it’s a refreshing take on the forecasting and numbers that get released and provides some decent insight into why these forecasts are so reliably wrong.
He’s pretty scathing on the powers that be and the press when he looks into the detail behind the monthly numbers.
His style can be off putting for sure.
But the substance is why one should watch.
Tom8 said:
I'll have a look thanks. Your point that the only certainty is the forecasters will be wrong is so true and if so why give them so much coverage? So many ills of the country are due to rolling news. If we could all just turn it off I think our lives would be so much better.
Depends on what you mean by "wrong". Forecasts are predictions. The take existing data, apply different models to it, and publish the figures that most models indicate will occur.
They're going to be wrong because it would take multiple models correctly prediciting the right outcomes to get a perfectly accurate forecast.
But that's not why forecasts are reliably wrong. Are the forecasts as wrong as you think they are?
Do you look into the underlying data, or do you just accept the trash journalists parroting the HM Treasury press release on economic figures, and so just hear whatever spin the Government has put on.
In all cases, the Government has an incentive to push a narrative that the economy is doing better than forecasted.
Rivenink said:
Tom8 said:
I'll have a look thanks. Your point that the only certainty is the forecasters will be wrong is so true and if so why give them so much coverage? So many ills of the country are due to rolling news. If we could all just turn it off I think our lives would be so much better.
Depends on what you mean by "wrong". Forecasts are predictions. The take existing data, apply different models to it, and publish the figures that most models indicate will occur.
They're going to be wrong because it would take multiple models correctly prediciting the right outcomes to get a perfectly accurate forecast.
But that's not why forecasts are reliably wrong. Are the forecasts as wrong as you think they are?
Do you look into the underlying data, or do you just accept the trash journalists parroting the HM Treasury press release on economic figures, and so just hear whatever spin the Government has put on.
In all cases, the Government has an incentive to push a narrative that the economy is doing better than forecasted.
I used to work for a Europe division of a global manufacturing company. Part of my job was to provide annual budgets for my division. This was a painstaking task which took about 3-4 months of my work creating budgets from scratch (bottoms up cost budgeting).
Forecasts were based on a variation of those budgets using the latest known data.
Invariably, budgets and forecasts are never the same as the actual performance results. We then spend time on monthly variance reports of the causes for the differences.
All this sounds like a waste of time to the casual observer so why do it?
The whole point is to provide a back bone for management decision-making based on the best estimate of forecasts using the information that you had at the time. Without this, the company cannot focus on a direction or have a vision of where it is going.
TLDR: budgets are always wrong because they are estimates but they are still needed so that leaders have some data to go on for making decisions going forward.
Forecasts were based on a variation of those budgets using the latest known data.
Invariably, budgets and forecasts are never the same as the actual performance results. We then spend time on monthly variance reports of the causes for the differences.
All this sounds like a waste of time to the casual observer so why do it?
The whole point is to provide a back bone for management decision-making based on the best estimate of forecasts using the information that you had at the time. Without this, the company cannot focus on a direction or have a vision of where it is going.
TLDR: budgets are always wrong because they are estimates but they are still needed so that leaders have some data to go on for making decisions going forward.
And it’s always better to be slightly generous with the forecasting to ensure you d have room to be wrong, so you can come in under budge or better than the forecast. A good metaphor is, no one remembers the time they took an umbrella and it didn’t rain. Everyone remembers when the forecast was sun and they got wet.
Electro1980 said:
And it’s always better to be slightly generous with the forecasting to ensure you d have room to be wrong, so you can come in under budge or better than the forecast. A good metaphor is, no one remembers the time they took an umbrella and it didn’t rain. Everyone remembers when the forecast was sun and they got wet.
That's not how people forecast or estimate in the real world.Percentage over or under forecast is exactly the same in terms of it's impact on a business.
You might give a wider range on an early estimate because of uncertainty, but you still wouldn't bias the forecast over or under.
Tom8 said:
https://www.bbc.co.uk/news/business-67943106
It seems to be a common theme these days. Oh look the economy did better than expected after everyone says we will be in recession. This has been going on now for 18 months or so.
Do forecasters have a mission to denigrate? Would a positive view help everyone? Reality is always better than the forecasts, I can't think of any they got right.
Economic consensus was for 0.2% growth in November - it was 0.3%. Given that actually means the difference between 100.2% and 100.3%, I'd say that's pretty accurate.It seems to be a common theme these days. Oh look the economy did better than expected after everyone says we will be in recession. This has been going on now for 18 months or so.
Do forecasters have a mission to denigrate? Would a positive view help everyone? Reality is always better than the forecasts, I can't think of any they got right.
PS. Who said we would be in recession? Almost all the previous forecasts were of flatlining growth rather than recession.
leef44 said:
I used to work for a Europe division of a global manufacturing company. Part of my job was to provide annual budgets for my division. This was a painstaking task which took about 3-4 months of my work creating budgets from scratch (bottoms up cost budgeting).
Forecasts were based on a variation of those budgets using the latest known data.
Invariably, budgets and forecasts are never the same as the actual performance results. We then spend time on monthly variance reports of the causes for the differences.
All this sounds like a waste of time to the casual observer so why do it?
The whole point is to provide a back bone for management decision-making based on the best estimate of forecasts using the information that you had at the time. Without this, the company cannot focus on a direction or have a vision of where it is going.
TLDR: budgets are always wrong because they are estimates but they are still needed so that leaders have some data to go on for making decisions going forward.
Precisely, they're almost guaranteed to be wrong because they're an estimate but they're not always worse than reality.Forecasts were based on a variation of those budgets using the latest known data.
Invariably, budgets and forecasts are never the same as the actual performance results. We then spend time on monthly variance reports of the causes for the differences.
All this sounds like a waste of time to the casual observer so why do it?
The whole point is to provide a back bone for management decision-making based on the best estimate of forecasts using the information that you had at the time. Without this, the company cannot focus on a direction or have a vision of where it is going.
TLDR: budgets are always wrong because they are estimates but they are still needed so that leaders have some data to go on for making decisions going forward.
I'm nowhere near your level of expertise by the sounds of it or down in that level of detail and I don't work in the same area but I do have to make business plans based on other's estimates/forecasts. I know the forecasts are wrong and the further out they are the more wrong they're likely to be so. But they're informed forecasts.
When it gets political it annoys me as much as the next person. Politicians and media can choose timescales to suit narratives. Headlines can ignore margins of error on estimates. Sometimes it all just looks like a game with a scorecard rather than any of them addressing why the forecasts were negative in the first place. So an estimate was wrong, so what? Whether the estimate incorrect due to preventative action having been taken, due to unforeseen circumstances, or nobody's sure why and are thanking their luck always gets ignored in short term headlines.
Mortarboard said:
oyster said:
That's not how people forecast or estimate in the real world.
In business, it is. Always gotta outperform the projection. It's a poor manager that sets a target they might not beat 
In publicly owned companies, this is repeated every quarter...
M.
I can assure you, the CEO and CFO are not making plans based on under-estimated or over-target numbers.
oyster said:
That's not forecasting, that's goal-setting - a very different thing.
True, fair enough.oyster said:
I can assure you, the CEO and CFO are not making plans based on under-estimated or over-target numbers.
Every bloody publicly quoted company I ever wished for did!They're not supposed to, but "management by quarter" is far more common than "strategic planning".
Which is what happens when stock options firm the bulk of pay...
M.
Anyone who's got anything optimistic to say at the moment is almost certainly a Tory politician praying for a miracle at the next election.
UK is in deep doo-doo and it doesn't make the blindest difference whether the technical definition of recession has or has not been achieved. One millimetre above the line is for practical purposes exactly the same place as one millimetre below the line.
Stagflation is what's happening in UK right now. High inflation with stagnant demand. And just look at the state of public services - roads disintegrating and NHS continuing down the slippery slope. Education in turmoil. Social care a disaster area.
The only companies coming to do business in UK or staying to do business in UK are ones who've been bribed by the government. UK has, for practical purposes, no competitive advantage on the global stage.
Nissan - £100m government subsidy for new EV battery factory.
Tata steel - £500m government subsidy to continue steel making.
UK is in deep doo-doo and it doesn't make the blindest difference whether the technical definition of recession has or has not been achieved. One millimetre above the line is for practical purposes exactly the same place as one millimetre below the line.
Stagflation is what's happening in UK right now. High inflation with stagnant demand. And just look at the state of public services - roads disintegrating and NHS continuing down the slippery slope. Education in turmoil. Social care a disaster area.
The only companies coming to do business in UK or staying to do business in UK are ones who've been bribed by the government. UK has, for practical purposes, no competitive advantage on the global stage.
Nissan - £100m government subsidy for new EV battery factory.
Tata steel - £500m government subsidy to continue steel making.
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