The results are in. The Commerce Department recently issued its first estimate of the nation’s economic performance for the second quarter ending June 30, 2011. While the data was rather sobering – economic output grew an estimated 1.3% from the previous quarter – a number of Kendall College students were anxiously awaiting the release of the Department’s report to learn how their forecasts would stack up to the real thing. After comparing the official announcement with their forecasts, nine Kendall College students learned that their estimates were very close to the posted actual numbers, with four of the students registering exact matches. Such a performance puts these students in the elite company of many Blue chip economists!
Why were the students challenged to do this? This was the essay question for 60 students enrolled in Kendall’s Global Economics course, taught by School of Business faculty member John Frech, for the spring quarter – to forecast the USA’s GDP for the second quarter of 2011. To support their forecast and final exam, they were encouraged to use the information they studied during the term: basic macro-economic theories and practices, as well as recent economic activity reported within many of the major components of the U.S. economy that contribute to the Gross Domestic Product.
While the student’s overall accuracy in forecasting was impressive, their commentary and concerns about the state of the US economy were just as powerful. In particular, many of the students expressed concerns about the overhang of large numbers of long-term unemployed Americans, and the recent measures of consumer attitudes published by the Conference Board and the University of Michigan that appear to suggest that American consumers are less hopeful about their employment and economic situations. In addition, the students were hopeful that the recent dip downward in industrial production in the second quarter should be temporary as the supply imbalances caused by the earthquake in Japan are being appropriately resolved. Finally, most of the students were hopeful for increased economic activity in the second half of 2011.