Real-time model improves economic forecasting accuracy and inflation correlation.
The article presents a method to track the US economy in real-time by analyzing trends in output potential, output gap, inflation, and unemployment. Two models are compared: one with basic assumptions and one incorporating an official output gap measure. The second model shows smoother output potential and less correlation between inflation and real variables, but is less accurate for long-term forecasts. This approach helps monitor and assess official trend and gap estimates efficiently.