Hence, as difficult as it is, we must arrive at some judgment about the most probable direction of the economy and the distribution of risks around that expectation. Fortunately, economic events are not wholly random and unforecastable. There are certain principles, and certain empirical regularities in behavioral relations, that we can follow with some degree of confidence.
For example, capital investment responds in a predictable way to the rate of growth of the economy, expected profitability, and the cost of capital. Similarly, housing activity, with some qualifications, moves inversely with mortgage rates. And the largest component of final demand, personal consumption expenditures, generally follows income over time.