The Jerome Levy Forecasting Center, LLC

The Jerome Levy Forecasting Center, LLC is a macroeconomic consulting firm that provides services to a wide range of clients, including institutional investors and large corporations. The forecasting center also produces The Levy Forecast, the oldest continuous publication in the nation devoted exclusively to analyzing and forecasting U.S. business conditions. Its financially-oriented approach to forecasting is centered on analyzing the flows of funds that determine corporate profits. It provides clients with broad insights into major economic phenomena that have a direct bearing on their activities—phenomena ranging from turns in the business cycle to instability in the financial system to the long-term evolution of the economy.

History

The Jerome Levy Forecasting Center represents three generations of Levy family economic analysis and forecasting. Jerome Levy developed the profits approach at the beginning of the twentieth century. Today, David A. Levy, with over a quarter century of experience, is chairman of the Levy Forecasting Center, and S Jay Levy, with over six decades of experience, remains involved in the research effort as senior counsel.

The profits equation (profits identity) was derived independently by two men a generation apart, Jerome Levy and Michal Kalecki. The first was Jerome Levy, a physicist turned businessman, who sought to explain and solve the unemployment problem. He began his study of economics in 1908 by examining the sources of profits. By 1914, he had derived the profits equation, along the way creating an entire accounting system for the U.S. economy decades before the development of the national income and product accounts and the concept of gross domestic product.

In 1949, Jerome and Jay began publishing a monthly analysis of the economy, Industry Forecast. Jerome largely turned over the analysis to Jay, but remained involved until his death in 1967. In 1976 Jay’s son David became involved in the forecasting operation, joining it full time in 1978. In 1986 The Jerome Levy Economics Institute of Bard College was established as an independent, not-for-profit, nonpartisan economic policy research organization, and in 1991 the forecasting operation ended as a private business becoming, for the next ten years, the Levy Institute Forecasting Center.

In 2000, the Forecasting Center shifted its business to focus entirely on consulting and research services for major clients and by 2001, its growing focus on consulting and financial markets had led to a return to the for-profit sector. It separated from Bard College to become the Jerome Levy Forecasting Center, LLC.

The Profits Perspective

The profits perspective is a view of the operation of the economy that focuses on the specific transactions and corresponding flows of funds that determine total business profits. Profits are the motivation for business activity, the reward for success, and ultimately the means through which firms can continue to exist and grow. Therefore, changes in profitability are keys to understanding decisions that the business sector will make on employment, output, and investment in the future.