Introduction and Economic Background
"Forecasting" is seeing in advance, or anticipating, future trends.1 It differs widely both in the degree of anticipation and in definiteness. Sometimes the problem of the forecaster is to anticipate day-to-day changes in the market for some commodity, such as cotton; again, it may be to foretell the course of commodity prices in general during the next decade. In one case it may be sufficient to indicate merely whether the trend will be up or down, while in another case it is essential to decide how sharp the anticipated movement will be. Again, the forecaster may be asked to express an opinion as to the duration of a movement or even its probable extent.
Often it is enough for the business forecaster to know accurately what are the existing conditions and trends. At any given time, misinformation and misunderstanding of the current situation are generally so prevalent that to know the truth, the whole truth, and nothing but the truth about the existing condition of business is equivalent to making a forecast. Certainly, it is knowing in advance of others! How many business men recognized that a general recession in business was under way in the early part of 1927? How many knew that a downward trend in a business cycle had already begun in June, 1929?____________________