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An evaluation of professional forecasts of US corporate profits

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  • Hamid Baghestani

Abstract

We show that the one-year-ahead forecast of growth in US corporate profits from the Survey of Professional Forecasters, for 1983–2004, is unbiased and superior to the random walk forecast. Survey respondents, however, generally predicted positive growth and thus failed to accurately predict negative growth in corporate profits. This bias may be due to respondents assigning asymmetric costs to incorrect positive and negative growth predictions.

Suggested Citation

  • Hamid Baghestani, 2007. "An evaluation of professional forecasts of US corporate profits," Applied Financial Economics Letters, Taylor & Francis Journals, vol. 3(4), pages 247-250.
    • Handle: RePEc:taf:raflxx:v:3:y:2007:i:4:p:247-250
    DOI: 10.1080/17446540601018907
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