In February 2009, back when columnists were confidently writing stuff like this, I wrote a post with the title "Why forecasters are predicting a short Canadian recession" explaining the narrative behind the consensus forecast. I think it's fair to say that the OMGWTFBBQ!1!!1!!! narrative doesn't look so good now – although I defy you to find anyone who will allow that in retrospect, their extreme pessimism was mistaken. But what about the consensus view?

Here is a graph comparing the forecasts discussed in this post (written before the 2008Q4 GDP numbers were out) and the data available as of the 2009Q4 release:

In the broadest terms, the consensus got it right: the economy bottomed out in 2009Q2 and bounced back. Yes, everyone missed the severity of the trough. But then again, everyone also missed the strength of the rebound – I'll be updating this over the next few quarters to see if and when the data re-enter the range of forecasts.

Probably the most important question for policy purposes is "If we had known then what we had known now, would we have done anything differently?" Clearly, if we could time-travel back to August 2008, we could tell everyone about the upcoming financial market meltdown, its consequences, and what we had learned since then. But suppose that our time machine only went back to February 2009 and we were armed with the above graph. Would we have done anything differently?

I don't think so, at least as far as the broad policy strokes go. The Bank of Canada was already well on its way to the ZIRB, and it later announced that interest rates wouldn't rise before July 2010. The federal government announced a two-year stimulus package in the 2009 budget. You might have wanted to tweak some elements of this package, but it's hard to conclude that poor forecasts led Ottawa to make regrettable policy errors.