Economic forecasts can be a very effective tool during an interest arbitration hearing. They provide insights as to where the economy is headed, which is very important when a multi-year contract is to be awarded. However, if not used properly, they can be discredited which will result in a weaker case.
Each forecaster uses different data, models, and assumptions. Therefore, every forecaster will produce a different projection. Some will project a very favorable outlook, while others will project the opposite. So which forecast should be used? Clearly a very favorable outlook will support your unit’s position, but you also run the risk of being accused of cherry-picking information. Ultimately this can work against your unit.
A way around this problem is to use Consensus Estimates, which are a collection of multiple forecasts that are aggregated into one. They provide insight as to what most economists are expecting and help to remove the bias that an individual forecaster may have. Moreover, historical tests have shown that consensus estimates tend to be more accurate which adds credibility to your unit’s case.
Individual forecasts can still be used, but should be accompanied by justification as to why that particular estimate is superior. Perhaps the data are more reliable or the model used has been shown to be more accurate. At a minimum, include the projections of other forecasters as well to show that you didn’t cherry-pick information.
Using economic forecasts can strengthen your position. But if used improperly, they can discredit your case.
