Forecasting USA GDP Base on ARIMA Model

Abstract

Since the international tendency is more serious and complex today, GDP as the standard of evaluating economic final output has been paid more attention. GDP is the market value of all final goods and services produced within a country in a given period of time. In this paper, Box-Jenkins method is used to build ARIMA model for forecasting American GDP from 2000 to 2010. The most appropriate model for USA GDP is ARIMA (1, 1, 2). At last, this paper uses the model to forecast American GDP for next a few years. According to the forecasting plot, the trend decreases slowly, which means that GDP will decrease in several future years. In the case, America can take action like increasing job opportunities, encouraging consumption immediately to prevent the decreasing trend. The significant meaning of forecasting GDP is to let countries notice the possible future trend of the whole country’s economy and change policies in time to make the situation better instead of being unprepared to face problems.