Back in March, I posted about how Summit is approaching our forecasts for the U.S. economy during the COVID-19 pandemic and how we are creating reactive and flexible models that overweight new or recent data compared to traditional models. In the six and a half months since then, the volatility in many economic measures proven remarkably persistent. Or, to put it more bluntly: the economy is still a wild ride. As such, I am sharing a few notes on the key factors that are driving the current state of the economy, as well as the indicators that I am watching closely to understand what might come next.

The COVID-19 outbreak reminds us that low-probability, high-risk events are inevitable. Therefore, responsible organizations must be prepared for any event, even if their form is hard to predict.

Dr. Albert Lee, Founding Partner of Summit Consulting, talks with Dr. Mark Hutson, Summit’s Manager of Data Science and Modeling & Statistics about his recent paper Predictive Analytics: the New Tool to Combat Fraud, Waste and Abuse.

At Summit, we provide our clients with data-driven insights, typically basing our results on readily available historical data. We use these data to build models for assessing policy decisions and understanding economic impacts based on what we know has happened and what we think will happen next. Then we combine our judgement with historical information to predict the magnitude of these results. Yet today, many of our clients are scrambling to understand the most likely impacts of COVID-19 on their respective portfolios of business, despite it being an event with few (or any) historical parallels. The question becomes, how do we use historical data and existing tools to determine anything better than a wild guess?

**Note: This post was written in September 2017.**

The hurricanes that hit Texas, Florida, Puerto Rico, and the U.S. Virgin Islands in 2017 left devastating destruction in their wake, resulting in untold costs and disruptions to millions of people, businesses, and the government. The necessary response effort to address the immediate damages, related negative economic impact, and subsequent rebuilding, will use tremendous resources and exceptional diligence. This includes costs and long-run impacts that will not be realized for several years, compounded by the uncertainty around how large the impact will be on individuals, businesses, and government agencies operating in or around the affected areas.

Our recent two posts about the Estate Tax talked about some problems with calculating income, but focused primarily on capital gains. Today, we’ll run through an example of how other assets are subject to similar problems, such as how rents and usage charges can be complicated to assess.

Take, for example, rents on an apartment. Let’s assume that you lease an apartment and agree to pay $1,000 each month, which in DuPont Circle means that you’ll have about 700 square feet and 11 roommates. Each time you make a payment, the landlord has to pay taxes on that rent, right?

We recently covered the idea of unrealized income and why people suddenly see a bunch of income when they die. Today, we’ll discuss how the Estate Tax actually makes life easier for heirs.

With Congress currently drafting a tax bill, there have been all kinds of proposed changes and modifications to the income tax system. Whether it is changing the marginal tax brackets, the corporate tax rate, or eliminating deductions for state and local taxes, all of these are fundamentally changing how the IRS treats income. All, that is, except for one proposal: eliminating the Estate Tax.

At Summit, we strive to develop staff knowledge and enhance the intellectual capital we provide to our clients. As part of this effort, Summit is holding the first session of an eight-week course on Dynamic Forecasting on September 28th.