Analytical Rigor

Everything we do at Macroeconomic Advisers is built on a foundation of expertise as macroeconomic modelers. Over the past thirty years we have developed and refinedMA/US, our structural econometric model of the U.S. economy. Within MA/US, we have sub-models to help explain:

  • Consumer behavior and the saving rate
  • Investment spending
  • Labor market dynamics
  • Inflation dynamics
  • Interest rates
  • Equity valuations
  • …and much more

Our macro model enforces discipline on our thinking and forecasts and gives our team and clients the ability to quickly and rigorously consider the effects of alternative scenarios on the U.S. economic outlook. For instance, what would be the effect on real GDP and interest rates of alternative future paths for home prices?

Learn more about the structure of MA/US and the benefits of a model-based approach to forecasting.

Our analytical approach is also reflected in a range of other tools we use regularly:

  • No-arbitrage term structure model
  • Recession probability models
  • Backward and forward looking Taylor-like policy rules
  • Model of a time-varying equilibrium real funds rate
  • Econometric studies of the impact of data and communication surprises on interest rates
  • Econometric studies of the FOMC’s large scale asset purchase programs on longer term rates and the implication for the yield curve of being at or expecting to be at the zero nominal bound.

Seasoned Judgment

When we develop our forecast, we do not simply push the “run” button on the computer and let the computer make the forecast. We know it takes more than using a state-of-the-art model to make good forecasts. It takes judgment. At MA, judgment comes from understanding the limits of models and from the experience of forecasting for over a quarter of a century. It takes judgment to effectively use the model and to take into account influences that the model cannot explicitly incorporate. You are not born with good judgment. You accumulate it over time, refine it by experience, and learn when and when not to override the predictions from your model. The forecast is the outcome of a process of skillfully balancing the message from the model against our judgment and intuition.

Independent and Unbiased Analysis

Our research is the only thing that we sell. Macroeconomic Advisers has no other agenda other than to produce the most accurate forecasts and insightful analysis for our clients. We never produce research to fit a sales strategy, nor do we manage any capital or take any market positions. Our research is independent with no loyalty to any political ideology. We are well within the mainstream of the economics profession, but among the very few skilled in the art of truly useful macro modeling. While we rely heavily on theory, we never let slavish devotion to any particular theory get in the way of finding the right answer for our clients.

Client Focus

We recognize that our clients require concise, thought-provoking research supported by thorough analysis. Every commentary that we publish combines easy to understand summaries that allow busy professionals to quickly digest the key points, while also providing a detailed, well argued defense of our methodology and results.

Our client focus means extraordinary access to the Macroeconomic Advisers team through email, phone calls, client visits, and our quarterly conferences. It also means that clients play an important role in driving OUR research agenda–both by commissioning bespoke work and suggesting topics.

Most importantly, we approach forecasting with humility. Alternative simulations and frequent discussions of opposing viewpoints allow clients to substitute their own judgment when they disagree with MA.

A Proven Track Record

Our forecast track record is unmatched. The most recent comprehensive study of economics forecasters conducted by the Federal Reserve Bank of Atlanta. That study found that Macroeconomic Advisers outperformed all other private sector forecasters over a 19-year period, and was the only team more accurate than the consensus forecast for the year ahead.* When it comes to the main economic issues of the day, Macroeconomic Advisers has a well-deserved reputation for getting “the story” right.

*A. Bauer, R.A. Eisenbeis, D.F. Waggoner, T. Zha “Transparency, Expectations, and Forecasts,” . Economic Review 91 (First Quarter 2006), Appendix 1 and 2, pp. 23-24.