3.B: Trends
Develop and present accurate long-range demographic, fiscal and economic trends each year in coordination with the Treasury
and the Council of Economic Advisors (CEA).
Other Information:
Relationship to Annual Performance Goals: The accuracy of economic and technical assumptions is measurable through comparison
to actual economic data. A difficulty with such measurement is the time lag that occurs between the development of the assumption
and the availability of data with which to measure its accuracy. For example, it may be a number of years before the accuracy
of default rate assumptions for longer-term loans can be measured. Means and Strategies: The "Troika" consultation with Treasury
and CEA, which develops the major economic assumptions for the President's Budget, is based on analysis of the historical
trends and relationships among economic indicators, assisted by a macroeconomic model. However, considerable judgement is
required to assess incomplete data, and to identify changes and discontinuities in economic relationships. Technical assumptions
for the programs are made by the responsible agencies, with OMB exercising some quality control. Because of the nature of
government programs, many of these assumptions are extremely difficult to estimate; in these cases, the strategy is experimentation
with alternative methods and specifications with a goal of improving the estimates over time. External Factors: The economic
and technical assumptions on which the Budget is based represent the Administration's estimates of what is most likely to
occur if the President's policies are enacted and implemented. Thus, they may not match the "actual" data if some of the President's
policies are not enacted and implemented, if understanding of the effects of policies or the underlying relationships is less
than perfect, or if unexpected events occur. Economic assumptions are affected by the quality of economic statistics, such
as the measurement of productivity and prices. Technical assumptions are affected by the quality of agencies' program data,
their accessibility, and the quality of analysis of the factors that influence them.
Indicator(s):
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