Uncertainty and macroeconomic forecasts: Evidence from survey data

This paper examines the effects of macroeconomic and financial uncertainty on professional economic forecasts. Using the predictions of four variables sourced from the Bloomberg survey, we find that macroeconomic uncertainty, a proxy for the complexity of the forecasting task, is associated with high disagreement and low accuracy. By contrast, the results show that financial uncertainty is associated with low disagreement and high accuracy, which suggests that financial uncertainty encourages forecasters to adhere to the consensus to avoid large forecast errors. Furthermore, we find that the forecaster rank moderates the effect of macroeconomic uncertainty, indicating that high-ability forecasters can better navigate periods of high uncertainty. This study advances the understanding of forecasting behavior under uncertainty.