CRI Focus Areas


DEFAC Wanders

11/28/2018

The constraining influence of the Delaware Economic and Financial Advisory Committee (DEFAC) has been a major factor in maintaining the state of Delawares high bond ratings. Recently, however, DEFAC has drifted. Over the past decade the mean absolute percentage error in DEFACs one year ahead forecast of revenues has been 4.1% and the two year ahead error has been 6.7%. This is not stellar but is understandable given all the many factors that impact state revenues. And, DEFAC has typically erred on the low side (conservative forecasts). Unfortunately, going into the current recession, DEFACs forecasts suddenly became overly optimistic.




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