Business Forecasting.

Press, Volume LXIII, Issue 19163, 21 November 1927, Page 8

Business Forecasting.

We said the other day that it is not possible to form more than the vaguest notion of the prices our primary produce will be bringing in five or ten yean—if for no other reason than be-

cause New Zealand does not control those prices. But it is only a little less certain that we are inexactly the same position with regard to secondary produce. No one, at the present stage of economic knowledge—and it is difficult to be sure that it will ever be different—knows, or can pretend to know, how soon the next slump will come, or the next boom, how long each will last, or how far it will bend the course of prices above or below their normal level (if there is such a thing as a normal level of prices). And yet it has been one of the interesting byproducts of the economic struggle of the last two or three years that it has started men searching again for a "science of forecasting." And we do not mean foolish men, or men with no special equipment. Two books appeared recently in England, and a few days later two more in America, the authors of which are men of the highest academic or business standing, or both, and the object of which is to settle how far and how accurately the fluctuations of business in the past are a guide to the fluctuations that lie ahead. We are all familiar with the theory of rhythmic or wave-like fluctuations at more or less (but never quite) regular intervals of time from crest to crest, and one of these books especially (by Professor A. C. Pigou, of Cambridge) strengthens and almost establishes that theory beyond further question. But what we really want to know is how to level down the crests and level up the hollows, so that risks will be regularised and industry present no more pitfalls than can be avoided with active diligence and intelligence. The most we can do in that direction at present is to accept fluctuations as inevitable, and make every possible effort to adapt the course of business to them when and after they come —a mere mitigation of the evil which does not carry us far. But the significance of the books to which we have just referred—perhaps we should say the significance of their appearance—is the fact that they could not have been written at all, either in the Universities, as two of them were, or out of the experience of two great business houses, if business forecasting were not beginning to be a really serious experiment. The Economist, in a note on one of these volumes, points out that there are regular forecasting "services" in America, all of which "send regular "letters of advice to their subscribers, "and find the practice commercially "profitable." The actual application of the advice to a particular market or industry is left to the client himself, the agency " sitting in the f oretop "and telegraphing down its general "impressions." To be more precise, it works out something like this:

Given the liability of trade to periodic cyclical fluctuations, at what point are we standing in, the "cycle" now in progress? What happened in the past when each constituent item assumed approximately the position it holds at present? Of the various factors whose existence is revealed, which will, pool most heavily in the general tug-of : war? Are movements in one field likely to follow those in another as the night follows the day, \and if so, at what interval of time?

General questions like those are asked, and general answers supplied, and it is at least interesting that the Economist is able to say that " the evi- " dence is conclusive that the .American "business man, walking by this dim "and uncertain light, has lately picked "his way better than if he had had "no light whatever."