Policymakers are overlooking a useful forecasting metric, research suggests. That metric: aggregate earnings.
When US policymakers are assessing or projecting economic conditions, they often use data collected and reported by government agencies. But Yaniv Konchitchki and Panos N. Patatoukas, both of the University of California, Berkeley, find that the forecasting accuracy of gross domestic product growth improves when macroeconomic models include an aggregate of the earnings that companies report each quarter.