Causal Forecasting

Causal forecasting involves predicting future outcomes based on understanding how certain factors or variables influence those outcomes. It identifies cause-and-effect relationships—like how advertising spend impacts sales or weather conditions affect crop yields—and uses these relationships to make informed predictions. This approach helps organizations plan by accounting for the underlying reasons behind trends, rather than just past data patterns. Essentially, causal forecasting aims to understand "why" something happens so forecasts can be more accurate and adaptable to changing conditions.