. How should a company include information for their forecastthat indicates the economy is headed for recession? How, if at all,should that information impact time-series forecastinginformation?
Expert Answer
For including the information for their forecast that indicatesthe company is headed for recession, the company should use eithera seasonal adjustment or a cyclical adjustment to the forecast. Incase when hard data is available from the previous recession, thatdata has to be incorporated in the forecasting model. Opinion heremay depend upon the company. Prime interest rates can be used as amechanism for accounting for inflation.