Prediction Tuesday - Play Along!

Washington's Office of Forecast Council released a preliminary June economic forecast package addressed to the Governor's Council of Economic Advisors. It includes a fun sheet for them to fill out, and thanks to the magic of the Internet, you can play along. Details further down in this post.

Strange and wonderful variations from my thinking are projected into this forecast, many apparently by Global Insight, the Forecast Council's macroeconomic consultant.

• Oil prices are expected to decline from 2006 through 2009
• Inflation (viewed through the CPI) is supposed to drop, from 3.2 percent in 2006 to half that in the next three years.
• Unemployment is predicted to stay low, at under 5.0 percent over the next three years.
  

Other notes of interest include:

• "During the first four months of 2006, core inflation in Seattle shot up at an annual rate of 6.0 percent, twice the 3.0 percent US rate."
• Housing permits fell 10,200 in Washington, about 20 percent from the fourth quarter of 2005 to the first quarter of 2006.
• Overall Washington construction employment will stay positive.
  

Oil prices declining is not something anybody ought to be predicting. Not only is the international situation, ah, unsettled, but demand is increasing for imports and will be for the indefinite future, unless we get a mega-project in alternatives going. Beyond this, the decline in the dollar means upward price pressure on those imports as measured in dollars. And if you think domestic oil producers are going to ignore that fact, you need a crash course in predatory corporate behavior.

I was not aware, until I saw this material, that anybody thought inflation was going to go away. As I posted just a few days ago, even the Wall Street Journal has predicted "Get Used to It: Inflation is Here to Stay."

Interest rates are supposed to stay up. Where is the decline in inflation going to come from?

But let's play the game. Here is the form that members the Council of Economic Advisors were given to fill out so as to "gauge the reasonableness of the preliminary economic forecast [and to serve] as the basis of an alternative economic and revenue forecast." (A bigger version is the back page of the first link above.)

Here's how to enter. In the thread for this post, enter whatever name you want to collect the prize (it will be a virtual prize), and then each category you want to enter, followed by the five numbers, each separated by a comma.

Here's a sample:

US
Real GDP 2.5, 2.5. 0.0, 3.0, 3.5
IPD 4.0, 4.5, 4.5, 5.0, 4.5
Mortgage Rate 6.5, 6.6, 6.8, 7.0, 7.2
Oil Price 71.0, 72.0, 76.0, 80.0, 85.0

Probability: 90%

WA
Real PI 2.6, 4.0, 3.0, 2.0, 2.0
Wage & cet. 2.6, 2.0, 1.5, 2.0, 2.5
Mfg 3.5, 3.5, 1.5, 4.0, 4.0
Const. Emp 6.0, 6.0 , -2.0, -2.0, -2.0
Permits 48.0, 45.0, 40.0, 40.0, 45.0
Avg. Wage 2.5, 2.5, 2.0, 1.5, 2.5

Please notice the column headings. The first is 2006:Q2, the quarter just past. The second is the current year.

We're closing this round on Sunday. For more tables, check out the Council's web site. If you don't want to do them all, pick and choose, you can still win! Winners will be notified and/or congratulated at each step (depending on whether they leave a contact address).

Come on. I bet we all do well against the house.