Consensus and Uncertainty in Economic Prediction

''Consensus'' is defined as the degree of agreement among point predictions aimed at the same target by different individuals, while ''uncertainty'' is the diffuseness of the corresponding probability distributions attached by the same individuals to their predictions. This distinction is made operational with the aid of the American Statistical Association and the National Bureau of Economic Research survey data on matched point and probabilistic forecasts of inflation and the rate of change in gross national product. During 1968-1981, there were 192 respondents to any of the 51 quarterly surveys conducted, with 80 of the respondents participating in at least 12 surveys. The evidence for the present analysis is drawn mainly from the latter subset. The matched mean point forecasts and mean probability forecasts are found to agree strongly. In addition, evidence is provided that expectations of higher inflation tend to generate greater uncertainty about inflation. Tests also support the hypothesis that an increase in inflation uncertainty has an adverse impact on real growth.