GENERAL ASSUMPTIONS AND METHODS
INVOLVED IN FORECASTING BUSINESS
It will be helpful to begin our study by recognizing the nature of certain assumptions that underlie all attempts at forecasting business conditions. Two positions may be clearly distinguished among students of forecasting. One group believes that the observed sequence of certain changes in past fluctuations of business activity is sufficiently regular to justify the expectation that such regularity will persist during the near future. This view stresses the rhythm of business activity. Adherents of the second position place little confidence in such an established rhythm, and emphasize the factors which make each situation essentially different from all preceding ones. In their view the prediction of economic events is possible only to the extent that we can reason from known causes to anticipated effects. Specific forecasts can be justified only on the assumption that the important forces operating in a given situation can be identified and each given its correct interpretation and proper weight.
Again, among adherents of the first theory two viewpoints may be distinguished. The first of