Georgia State University's Economic Forecasting Center - Economics At Work
Founded in 1973, the Economic Forecasting Center is celebrating its 30th anniversary this year! We have survived for so long in the business of economic forecasting not by just being accurate, but by also being an important go-to resource for the national and local media, regional companies, nonprofit organizations, and state and local governments. Our location helps, too. Located in the heart of downtown Atlanta--a city that grew tremendously in the last two decades to become the star of the modern South--the Economic Forecasting Center at Georgia State University's J. Mack Robinson College of Business is one of the few university-based forecasting centers in the United States that does a national, regional, and local metropolitan area forecast on a quarterly basis. Thus, the Center provides its subscribers with economic information and analysis on a regular basis, which gives them the tools to make smart, strategic business decisions and to keep their competitive edge.
We achieve our goal by producing quarterly forecast reports for the nation, the state of Georgia, and the Atlanta metro area. Also, we produce a biannual report on the state of economic indicators for the Southeastern states. These are released to our subscribers at the quarterly forecast conferences, which are open to both the public and the media. Additionally, we hold a private meeting three times a year for our corporate sponsors. These seminars are held a month after the forecast conference. They provide a forecast update and handle any interesting special topics that are suitable for a small audience in an interactive setting.
In terms of its core mission, the Economic Forecasting Center is significantly different from its Wall Street forecasting counterparts. This mission is to be the liaison between the university and the community, but more so from the business school's perspective. Our regular economic forecast publications and conferences not only get us media coverage, but also provide information to the business community and to state and local officials. Both the business school and the university get the added benefit of brand-name recognition through this event, a pleasant externality. At times this can be more important than the perceived accuracy of the forecasts!
Business leaders and the media consider the Economic Forecasting Center to be one of the most reliable and accessible sources for economic information. Luckily, the media calls us on both national and local issues to get an independent opinion. When it comes to media coverage, being a very small shop plays to our comparative advantage, reinforcing the independence of our economic thought and forecast pronouncements. To begin with, being a university-sponsored entity earns us a good platform to be independent by definition, which gives the media greater confidence in seeking our opinion, thus giving us greater exposure and perpetuating our independent growth. Independence is a big advantage of being in academia, and it more than makes up for the few negatives! Nothing, however, is fully independent. Wall Street research shops are pure cost centers for the firms' investment banking, brokerage, or fixed-income divisions. The recent stock market scandals and the bursting of the bubble have tainted their reputations. The support for my salary and the Center's staff comes from state coffers via the university, but the day-to-day running expenses have to be generated by selling our quarterly forecast publications, conference tickets, and sponsorships of the Center. In a way, we too, are a cost center to the university, but our compensation (no bonuses, no revenue or profit sharing) is not directly tied to the university's performance.
Unlike Wall Street firms, we don't release a daily update, or for that matter a weekly update, a web cast, or press release whenever something happens. We stick to our quarterly routine of forecast booklet releases. We just can't compete with them on these matters as our resources are limited. So our interaction with the media is the garden variety type: to provide commentary on economic news and data releases when asked.
The Center's marquee public activity is a quarterly forecast conference held during the third week of February, May, August, and November. Each half-day conference features four to five expert speakers chosen from the pool of our own business school faculty, local business executives, money managers, Federal Reserve Bank economists, or other industry practitioners. The conference ends with me giving a lengthy forecast presentation. The program topics may range from stock market performance and international events to real estate conditions and local growth. The conference manages to attract more than 250 business professionals from various industries and has become an excellent networking opportunity. Both TV and print media carry reports about the conference. It's a fee-based forum and an important source of soft funds (non-state or non-university-based revenue) for the Center.
The major source of our soft money comes from corporate sponsors who pay an annual fee for the privilege of being able to contact us for their specific research needs. Depending upon the level of sponsorship, the Center offers custom economic research services, impact analysis studies, customized data delivery, and board consultancy services. For example, the local regional transit authority, MARTA, needs an annual 30-year forecast of sales tax revenue collections for the Atlanta metro region for their budgeting purposes. On our website (www.robinson.gsu.edu/efc) we state that "Sponsoring organizations are the backbone of the Economic Forecasting Center's research efforts." While to a large extent this is true financially, the economic philosophy and direction of the Center is totally under our control.
What an Economist Does at the Center
The Center is a stand-alone unit and, from an organizational perspective, almost like a department in the business college. As its director, I report to the dean of the college. The Center is in full charge of what is said to the media and at the conference, the tone of the forecast reports, the public forums in which it participates, and the choice of issues and economic topics. However, the administration does exercise a final say on critical administrative matters, as is true in any private firm.
Apart from me, the Center's only full-time economic forecaster, I have an assistant director who helps me manage the day-to-day running of the Center with the help of an office manager. My assistant director is very valuable for the Center's growth, as she is responsible for brainstorming marketing strategies, managing our databases, researching specialized topics, and preparing the forecast booklets with the help of a team of four graduate research assistants.
As my dean once remarked, "You're like the CEO of a company and have to take the plusses and minuses of being in those shoes." However, running a small shop, I end up wearing multiple hats. I have to do strategic planning for our growth, manage the staff, be the Chief Economist for the Center, and represent the university and the school at events in the city and across the county. This is in addition to handling the media's economic news reports and requests for an analysis of the economic implications of recent events. While I love this aspect of my job, at times it intrudes upon my ability to perform the basic functions of a forecaster.
As an economist, I produce the forecasts for the nation, state of Georgia, and Atlanta metro area using the typical strain of current macro-models. The national forecast model is a variant of neo-Keynesian model of the variety pioneered by Lawrence Klein, and the regional models are based on the top-down forecasting philosophy that takes the national forecast as exogenous drivers for the regional one. Our national forecast regularly contributes to the prestigious Blue Chip Economic Indicators, and we are only one of three university-based Centers out of 50 entities invited to contribute to the survey. Other surveys which regularly seek our national forecast are the Bank One Economic Outlook Survey, the Federal Reserve Bank of Philadelphia's Livingston Survey, the Professional Forecaster's Survey, NABE, USA Today, and the Consensus Economics forecast panel in the UK.