How the Federal Reserve Board Staff Forecasts Business Investment Spending As background for my discussion of the recent and likely future behavior of business investment - and in recognition that my audience consists of the distinguished membership of the Forecasters Club - let me begin with a few words on how the Federal Reserve Board staff forecasts business spending on new capital goods.
For relatively short horizons, say this quarter and next, the forecasting of business fixed investment (like most other macroeconomic variables) is largely an exercise in applied data analysis. As an organizing principle, the Board staff tries to mimic the methodology used by the Bureau of Economic Analysis in creating the National Income and Product Accounts series for real business fixed investment.