The U.S. Economy in 1990 and 1991: Continued Expansion Likely

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Creator Series Issue number
  • Vol. 13, No. 4
Date created
  • 1989 Fall
Abstract

  • This paper reports an optimistic forecast of U.S. output and inflation trends in 1990–91. Generated by a Bayesian vector autoregression (BVAR) model of the U.S. economy using data available on November 30, 1989, the forecast is more optimistic than a consensus forecast. The key to the model's greater optimism for real growth is its outlook for strong consumer spending. The model's optimism is defended by examining historical precedents as well as comparing the track records of the model and consensus forecasts. The model's measures of forecast uncertainty, however, suggest that its predictions should be taken cautiously. An appendix explains how the model can be used to generate conditional forecasts.

Corporate Author
  • Federal Reserve Bank of Minneapolis. Research Department
Publisher
  • Federal Reserve Bank of Minneapolis
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