An economic forecast is a prediction of what future periods of economic activity will be in various categories. This could be a prediction of the overall economy through the gross domestic product (GDP), employment levels, inflation, interest rates, and numerous other subcategories. Economic forecasts are designed to help companies and investors allocate capital.
Recent economic data signals a modest improvement of economic activity and current economic forecasts going into 2015 have been increased. As is the case, however, when dealing with future events, unforeseen shocks can turn an economic forecast upside down very quickly.
The U.S. Federal Reserve has clearly indicated that it intends to increase short-term interest rates as soon as U.S. economic activity improves from its current level. The central bank’s economic forecast for economic activity and employment has improved for 2015, but it’s still unclear as to when the central bank will effect its first change in interest rates in a number of years.