Trade Forecasts

Forecasters of a fifth school base their predictions upon the existence of periodicity in the fluctuations of business. They hold that the apparent irregularity of the business cycle is illu sory, and that, in reality, it is composed mainly of a number of series of cycles, each series having a constant wave length and amplitude.

Cycles having wave lengths averaging respectively z i+, and 3 years are held to be dominant. It is admitted, however, that other forces, either irregular or of unknown wave lengths and amplitudes, interfere very materially with forecasting based solely upon this method.

Some forecasters belong to the eclectic school, and make use of two or more of the methods mentioned above.

Development of Forecasting.

The extensive application of scientific methods to the field of business forecasting appears to have had its beginning in the United States in the first decade of the loth century.

During the period immediately following the World War, this movement met with general acclaim, and many persons believed that the art would soon be perfected.

Great institutions of learning such as the London School of Economics, the University of Cambridge, the University of Paris, the University of Padua, the University of Rome, and Harvard university sponsored attempts at forecasting.

In the United States, leading financial journals and statistical agencies published regularly business forecasts of one kind or another. Gradually, however, it became clear that despite the

great advance which had occurred in statistical technique and the tremendous increase in available statistical material, no one had yet succeeded in developing a really efficient system of forecast ing. For this reason there arose a marked tendency on the part of scientists to decry all attempts at forecasting.

Furthermore, universities and statistical organizations became chary of expressing any definite opinions about the future course of business, and tended to confine their activities in this field to the study of those relationships among economic variables which presumably might prove useful to forecasters. More and more, the publication of specific forecasts has come to be confined to individuals and organizations specializing in this line.

Nevertheless, despite the current tendency in scientific circles to avoid predictions concerning the future, it seems certain that attempts at forecasting will continue as long as business exists, for, consciously or unconsciously, the business executive must make a forecast every time that he decides to buy or sell any thing. Any assistance which science can give him in improving the accuracy of his forecasts is, therefore, welcome, for it helps to increase his profits.