Economic trend analysis is a predictive methodology which allows users to analyze current and historical data on economic factors by comparing and contrasting trends and patterns within this data to reduce uncertainty and form estimates about relevant events and situations. Missing or unreliable information, particularly from less-developed regions, tends to lower analytic confidence in the results of this methodology. While the analysis can project normal continuations of historical trends, it is unreliable in forecasting rare or “black swan” events.
- Useful for handling large amounts of data over time when comparing and contrasting different economic factors and their effects on each other.
- Useful in forecasting and creating a hypothetical trajectory of economic trends based on historical data.
- Can be used to translate unfamiliar or seemingly random data into sensible patterns based on past trends.
- Even in cases of unreliable or incomplete data, it can be used to produce a range or show general trends that can be helpful in reducing uncertainty.
- Information is often missing or incomplete on less-developed regions.
- Information reliability is vitally important to the utility of data for developing confident estimates - for example, high corruption in a region lowers the value of reports from any internal information sources.
- Unable to predict “black swan” events.
- Multiple sources may give different answers or inaccurate answers.
- Clearly identify the target of the methodology (a city/county/region/industry, etc).
- Select a time-period to examine and its granularity (data divided by day, month, year, etc).
- Select one or more economic indicators on which to collect data.
- Collect and organize economic data. Aggregation sites such as the following are often useful at this stage:
- World Bank
- Gap Minder
- Organization for Economic Co-operation and Development
- Google Public Data
- SIPRI Facts on International Relations and Security
- Analyze economic trends and patterns evident within the collected data, drawing conclusions and forming estimates based on the data’s content and reliability.
Google Tech Talk from “Mish” of above blog
US Department of Commerce: Bureau of Economic Analysis