US: in 15 budgets of 17 the administration assumed more growth than private forecasters
US: GDP growth in the budget year, 2002–2023
It was closer to the outcome 4 times and farther 13. Equal to the private consensus 3 times. Against the Congressional Budget Office the difference is not significant: higher 10 times, lower 6.
More
Every US President’s budget is computed on economic assumptions by the Office of Management and Budget (OMB) with the Council of Economic Advisers and the Treasury: growth, inflation, unemployment and interest rates for this year and the next ones. Since 2002 OMB has printed the Congressional Budget Office’s and the Blue Chip consensus’s forecasts beside them.
By year: blue, the growth the administration assumed; orange, the outcome. The private forecasts are not drawn: they are proprietary data, so the card gives only the count from OMB’s tables.
- Above / below / equal to private forecasters
15 / 2 / 3
- Closer to the outcome / farther
4 / 13
- Above / below the Congressional Budget Office
10 / 6
- OMB on its forecast errors
«partly due to the assumption that Administration policy proposals contained in the Budget will be enacted»
The forecast comparison tables in the budgets’ Analytical Perspectives, 20 budgets for 2002–2023 (without 2020–2021): budget-year real GDP growth, annual average, of the administration, the Congressional Budget Office (CBO) and the Blue Chip consensus, as OMB printed them. “Above”: by more than 0.05 percentage points. Sign test: p = 0.002.
OMB itself writes that its growth forecasts were on average above the outcome, partly because they assume the President’s proposals are enacted. The private consensus makes no such assumption.
A question for this picture
If the government’s forecast sits above the private one again and again, whose forecast should a budget be judged by?