An Evaluation of Advertising Budgets of the Top 100 Advertisers as an Economic Forcaster

The purpose of this paper is to review economic forecasting techniques, the reliability of those methods and evaluate whether the push of consumerism through advertising, can contribute to economic forecasting. After the Great Depression, the public, business community and politicians were wary about the future and were determined not to have to survive another devastating era: thus, economic forecasting was born. In Chapter One, we review the evolution of economic forecasting, the acceptance of certain economic theory and the occurrences when those theories were proven to be myths. In this chapter, we also review economic indicators, how they\u27re defined, who defines them and why. In Chapter Two, we take another look at history but at a different area: advertising. The review provides an inside look at the growth of consumerism and how advertising has affected it. From these two historical perspectives, a hypothesis can be formed that advertising (and thus advertising budgets), because they are so closely linked to consumer spending, can be an economic indicator. Once the foundation and history were established, we submitted advertising budgets to the economic indicator test criteria in Chapter Three. Also a comparison between advertising budget trends versus GNP and the Consumer Confidence Index was submitted to research if a correlation exists. The final chapter evaluates all the data and reveals whether advertising budgets can be an economic forecaster. After reading this paper, I hope the reader will have a better understanding about economic forecasting. It is my intention that the most important idea to come out of this paper is that history has proven that no theory is infallible and, in order to keep pace with the changing world, we must be open to new ideas