Economy Matters

Around the Federal Reserve Bank of Atlanta, Patrick Higgins is known as the math whiz who brought GDPNow into being.

GDPNow is a tracking tool that provides real-time forecasts of U.S. gross domestic product (GDP). While not claiming to be a perfect predictor of GDP, it has garnered media attention for its accuracy since the Atlanta Fed introduced it in 2014.

Photo by David Fine

The measure, known as a nowcasting model, incorporates the performance of 13 elements that comprise GDP. The forecast is updated publicly about seven times a month, as the latest reports on construction spending, manufacturing shipments, and other economic statistics are released.

Higgins started the project in 2010. Seven years later, he's received a lot of kudos and acclaim, and the tool has become a staple during the Atlanta Fed's preparations for meetings of the policymaking Federal Open Market Committee (FOMC). Higgins is part of the small, select team of economists who advise the Bank's president on monetary policy.

"Pat's a unique combination of technical skill and practical insight, and that's what's made him so valuable to the Atlanta Fed," says David Altig, the Atlanta Fed's executive vice president and director of research. Altig and Higgins both worked at the Federal Reserve Bank of Cleveland before arriving in Atlanta.

Search for truth

Higgins is a natural number cruncher. The policy adviser and economist, who has been employed in the Federal Reserve System for about 15 years, says working with data is his sweet spot. Updating the GDPNow forecasts involves gathering and analyzing copious data, just the sort of tasks Higgins delights in. During a typical work day, Higgins is deepening his understanding of the economy—reading papers, writing programs, making charts.

He finds economic data more intriguing than theory. "It's probably the other way around for a lot of economists," Higgins notes. "I think the theory part [of economics] is most interesting for most of them."

He sweats the small stuff, whether he's working on his own projects or helping others.

"What drives Pat is searching for the truth, searching for the correct answer," says Brent Meyer, an Atlanta Fed associate policy adviser and economist who works with Higgins on FOMC policy matters. "Every once in a while, I'll email him a question and I'll get back 10 times more than I needed just because he was interested in the same question."

When he isn't poring over data, Higgins reads history and biographies. He also likes sports such as professional basketball; he's a Los Angeles Lakers fan. "Pat has a good sense of humor," Altig says, "and it can be fun to chat with him about noneconomics topics."

Perhaps not surprisingly, Higgins loves math. His father and stepmother are both mathematicians. His father teaches math at Wittenberg University in Springfield, Ohio. One of his three brothers is a PhD student in math.

A Columbus, Ohio, native, he earned a bachelor's degree in economics and mathematics from Oberlin College, just southwest of Cleveland. His interest in studying the economy was stoked when he took a macroeconomics class in college. "Economics uses a fair amount of math," Higgins says.

The visiting professor who taught that course, Owen Humpage, works at the Federal Reserve Bank of Cleveland. Higgins was one of three Oberlin students Humpage eventually recruited to the Cleveland Fed.

'Gears moving' in his head

"I knew that he was a really smart kid," Humpage notes, recalling that Higgins asked questions about the mathematics involved in a task during class. "You could see the gears moving in Pat's head" as he was thinking through a problem, Humpage adds.

Once at the Cleveland Fed, Higgins gained a following among researchers because of his skill in programming computable general equilibrium models, which are used to assess the effects of changes in various measures on the overall economy. "He started doing that for people, and they all realized his value," Humpage says. "He seemed to love what he was doing so much."

At the Atlanta Fed, Higgins is seen as special for what he contributes to others, too. "He brings such a unique perspective that has helped my thinking on a variety of things," says Meyer, who also worked at the Cleveland Fed earlier in his career. "He's really changed the way I operate."

Higgins began as a research assistant at the Cleveland Reserve Bank and later was promoted to other positions. He moved to the Atlanta Fed as an economist in 2007.

A major life change occurred in 2009, when an accident left Higgins in a wheelchair. The disability didn't stop him from being productive, or interfere with his ability to work full-time. In that sense, he considers himself lucky. "I can still do the job I had with pretty much no limitations," Higgins says.

The early version of GDPNow began generating forecasts in 2011, he says. Over the next few years, Higgins tweaked the calculations. "A lot of the work involves just running the programs every day, updating the data," he adds.

Since its release to the public, GDPNow has been written about and followed by major U.S. financial media such as the CNBC network, the Wall Street Journal, and Forbes magazine, as well as economists at Wall Street securities firms. Today, news organizations regularly report on GDPNow's updated forecasts.

"We had some sense that it would be valuable to a certain part of the public, but it vastly exceeded my expectations in terms of how useful people find it," says Altig.

For his work on GDPNow, Higgins earned the Atlanta Fed's highest employee honor, the President's Award. At the awards presentation, one of his superiors noted the favorable worldwide attention the forecasting tool has brought to the Bank, noting that one media personality called it "GDPWow."

Higgins says GDPNow is his most fulfilling work assignment. It was "sort of the perfect thing: a project that started from scratch, something that was achievable, a project where you feel you accomplished something."

Karen Jacobs

Staff writer for Economy Matters