Macroeconomic Forecasting Starting from Survey Nowcasts

We explore the use of nowcasts from the Philadelphia Survey of Professional Forecasters as a starting point for macroeconomic forecasting. Specifically, survey nowcasts are treated as an additional observation of the time series of interest. This simple approach delivers enhanced model performance through the straightforward use of timely information. Important gains in forecast accuracy are observed for multiple methods/models, especially at shorter horizons. Still, given that survey nowcasts are very hard to beat, this approach proves most useful as a means of developing a sharper forecasting routine for longer-term predictions.