Forecasts play a crucial role in the economy. Businesses won't hire workers as readily if they think the economy may go into a recession soon. Long-term interest rates will rise if people in the financial markets expect inflation to increase. And firms are less likely to borrow money for new investment spending today if they think interest rates will soon decline.

Forecasts are important for many decisions, but not many people have the knowledge and experience to forecast economic variables well. It makes sense, therefore, for people to rely on the forecasts of experts. One easy way to get these forecasts is to subscribe to a survey of forecasts, such as the Survey of Professional Forecasters.

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Copyright © 1993 Federal Reserve Bank of Philadelphia. This article first appeared in Business Review - Federal Reserve Bank of Philadelphia 3 (November/December 1993): 3-15.

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