{"id":630,"date":"2018-05-18T16:34:26","date_gmt":"2018-05-18T15:34:26","guid":{"rendered":"https:\/\/evolvemyretirement.com\/blog\/?p=630"},"modified":"2018-05-19T11:06:51","modified_gmt":"2018-05-19T10:06:51","slug":"whats-the-difference-between-forecast-and-projection","status":"publish","type":"post","link":"https:\/\/evolvemyretirement.com\/blog\/whats-the-difference-between-forecast-and-projection\/","title":{"rendered":"What\u2019s the Difference Between Forecast and Projection?"},"content":{"rendered":"

Most people wouldn\u2019t be concerned about the distinction in meaning between the words forecast<\/em> and projection<\/em>. It may seem purely academic, or of interest only to statisticians or economists. For us at EvolveMyRetirement, it\u2019s crucial, as it\u2019s what sets our financial calculator apart from others.<\/p>\n

Forecast: Trying To Predict The Future<\/h2>\n

I\u2019ve often wondered why politicians quote economic forecasts. The fact is that any forecast they make is invariably proven later to be either too optimistic or too pessimistic. Usually too optimistic!<\/p>\n

In order to make a forecast, you need to make average assumptions about the factors that could influence the result. Then, once you’ve fixed these assumptions, you apply some rules and calculations. These might tell you, for example, that the economy will grow by 1.6% over the following year. Of course, in reality we\u2019d be amazed if, a year later, we saw that the forecast had been exact. Typically forecasters need to revise their forecasts as time ticks by.<\/p>\n

Weather Forecasting<\/h2>\n

\"weather-forecast\"<\/p>\n

One type of forecast that most of us deal with on a regular basis is the weather forecast. Seeing how accurate or inaccurate the weather forecast is can be instructive. Usually, but not always, the forecast for the next 24 hours is reasonably accurate. But just try to plan a barbecue around a predicted sunny day a week ahead, when it\u2019s forecast to rain on most of the other days. Chances are that the predicted sunny day will be earlier or later than forecast \u2013 or it won\u2019t come at all!<\/p>\n

The accuracy of weather forecasting has improved greatly in recent years. But the further ahead the forecast, the less reliable it is.<\/p>\n

What Use Is A Forecast?<\/h2>\n

We need to understand what a forecast is and what it isn\u2019t.<\/p>\n

A forecast\u00a0is<\/em>:<\/p>\n