On the Plausibility of Consumption Forecasts by Means of Input-Output Accounting

In the ifo Institute’s economic forecast, the analysis and prediction of economic activity by economic sector plays an important role. The reason for this is the detailed availability of business cycle indicators from the ifo Business Survey. For aggregates of use, such as private consumer spending, only a few indicators with sufficient forecasting quality are available, which makes it difficult to estimate future developments. This paper presents a plausibility approach for consumption forecasts based on the output calculation and input-output tables of the German Federal Statistical Office. Recent history shows that the plausibility approach generates growth rates for private consumer spending that are very close to those published by the German Federal Statistical Office. Thus, this approach can also be used to draw a consistent forecast picture between the output and expenditure accounts.