Economic forecasting is a difficult task to accomplish. The key is being right a higher percentage of time than getting it wrong. When you get it right you are a hero. When you get it wrong you lose credibility.
With the recent discovery of Emerald Ash Borer in Boulder we are becoming inundated with forecasts and predictions. Who is right? As with any type of forecasting, there are extremely knowledgeable experts on each side of the argument relative to taking action.
Comparatively, it is similar to investing in a particular stock. The ultimate decision and associated risk is on the buyer. Perhaps the principles of economic forecasting could apply. Build models based on low, medium and high exposure to gains and losses. Study empirical data. The old adage holds true, if you don’t learn from history you are doomed to repeat it. Make preparations for change. There are no perfect forecasts and unexpected circumstances are certain to force corrections. Determine policy guidelines. Every prediction is based on rules that are applied to make your models work to your advantage. Implement your strategy based on these principles. Avoid making impulsive decisions.
Finally, keep it simple, practical and don’t over analyze. We are certain to hear more and more about Emerald Ash Borer in Colorado. Stay tuned.