Economic Forecasting: An Internet WebQuest

Economics is often called the "science of decision making." The decisions that economists analyze range from personal decisions such as how big a pizza to order or whether to buy or lease a new car to the decisions the federal government makes about things like the size of our military. Economists use information about these, and other decisions, to develop indicators that can be used to determine the health of our economy. Just as a physician relies on indicators such as temperature, blood pressure and heart rate to determine the health of a patient, economists use indicators like gross domestic product growth, the unemployment rate and the rate of inflation to predict our nation’s economic health.

How do economists make their forecasts about the United States economy? In this lesson you will use the Web to retrieve up-to-date key economic statistics which will provide valuable hints about the state of the future economy. When the lesson is complete, you will have a new or better understanding of how economists predict our economic future.

Pretend you are a partner in an economic forecasting firm called Acme Economic Forecasters (AEF). You and your partners have just received a letter from a business woman in Australia who is interested in moving her guava jelly business to the United States. She has asked you to prepare a report on the expected economic health of the United States economy for the next year.

You and your AEF partners will need to do the following:

1. Make certain you can explain the three leading economic indicators: GDP, inflation rate, unemployment rate.

2. Gather data on the current state of the three leading economic indicators for the United States economy.

3. Prepare a report for your client that includes:

   • at least one graph/chart for each of the three indicators.

   • a brief explanation of the status of that indicator.

   • a prediction for the health of the United States economy over the next 12 months.

Use the following links to resources that may help you and your AEF partners prepare your report to your client:

• A Pedestrian's Guide to the economy
• Current Key Economic Indicators
• https://www.usatoday.com/money/

In order to complete your client's report, you will need to complete the following tasks:

1. Briefly (one-two sentences) describe each of the three leading economic indicators: GDP, inflation rate, and unemployment rate. Include a description of the impact of each indicator on the nation's economic health.
    
2. Briefly describe the trends in each indicator over the past 12 months (e.g., is GDP up? By how much?).
    
3. Print out a graph/chart for each indicator that shows the trend of that indicator over the last 12 months. (Record the URL, too.)
    
4. Compile these pieces into a coherent recommendation to Ms. Jones. Should she bring her guava jelly business to the United States? What is the outlook for the economic health of the nation?

Send your recommendation to EconEdLink and have it posted on this page.

Evaluating the accuracy of your forecast will take time. Over the next few months, various predictions about the future health of our economy will emerge. Often economists are surveyed to determine their beliefs. Here is an example of such a survey, https://usatoday30.usatoday.com/money/economy/econ0051.htm . Watch the newspaper and listen to financial news reports to compare your firm's forecast with that of professional forecasters. Were you right in your advice to Ms. Jones?

Based on the popular "WebQuest" WWW activity format developed by Bernie Dodge. For more information on WebQuests, see

• WebQuest
• Economics WebQuest