<P> The process of economic forecasting is similar to data analysis and results in estimated values for key economic variables in the future . An economist applies the techniques of econometrics in their forecasting process . Typical steps may include: </P> <Ol> <Li> Scope: Key economic variables and topics for forecast commentary are determined based on the needs of the forecast audience . </Li> <Li> Literature review: Commentary from sources with summary - level perspective, such as the IMF, OECD, U.S. Federal Reserve, and CBO helps with identifying key economic trends, issues and risks . Such commentary can also help the forecaster with their own assumptions while also giving them other forecasts to compare against . </Li> <Li> Obtain data inputs: Historical data is gathered on key economic variables . This data is contained in print as well as electronic sources such as the FRED database or Eurostat, which allow users to query historical values for variables of interest . </Li> <Li> Determine historical relationships: Historical data is used to determine the relationships between one or more independent variables and the dependent variable under study, often by using regression analysis . </Li> <Li> Model: Historical data inputs and assumptions are used to develop an econometric model . Models typically apply a computation to a series of inputs to generate an economic forecast for one or more variables . </Li> <Li> Report: The outputs of the model are included in reports that typically include information graphics and commentary to help the reader understand the forecast . </Li> </Ol> <Li> Scope: Key economic variables and topics for forecast commentary are determined based on the needs of the forecast audience . </Li> <Li> Literature review: Commentary from sources with summary - level perspective, such as the IMF, OECD, U.S. Federal Reserve, and CBO helps with identifying key economic trends, issues and risks . Such commentary can also help the forecaster with their own assumptions while also giving them other forecasts to compare against . </Li>

Need and methods of economic forecasting for national planning