Two – count 'em – two opinion pieces today in which people pronounce them astounded at how the Not-So-Great-After-All Recession played out:
Économie: le syndrome A(H1N1): Une analyse récente de la récession, dans le dernier numéro de l'Observateur économique de Statistique Canada, montre à quel point économistes, politiciens et médias se sont mis le doigt dans l'oeil…
Un premier élément d'explication tient aux limites de la science économique, dont les modèles, aussi sophistiqués soient-ils, ont le plus grand mal à pressentir les revirements. Les spécialistes, et les gouvernements qui leur faisaient confiance, ont péché par optimisme en croyait jusqu'à la fin 2008 qu'on s'en tirerait avec un ralentissement. Ils n'ont pas davantage vu venir la reprise, parce que c'est aussi un revirement. Cette erreur d'appréciation a sans doute renforcé par la peur de se tromper encore et par le réflexe de mimétisme qu'on appelle le consensus des économistes. Personne n'osait dire que la récession était modérée, même si les données permettaient de le conclure.
and
What's behind Canada's economic miracle? Housing: Looking back to last year, it would have been inconceivable to talk about a Canadian economic miracle; however, that is exactly what we have on our hands today.
Um, no. Once again, I'm forced – against my will! honestly! – to point out that there were economists who were predicting a short, mild recession. In fact, a short, mild recession was the consensus forecast in December 2008. This is apparently not a well-known fact, but it would have been if enough people had read (or reported on) what I've been saying here on WCI for the past 18 months or so:
- "The most severe recession since the last one!" Or, how Canadian economic forecasters got it right
- Ex ante and ex post comparisons of the Canadian and US employment recessions
Gotta say I'd be a lot more modest about this if the people who had twisted themselves into such a fantod early last year weren't so keen to assure each other that everyone got the narrative for the recession and recovery wrong.
Worthwhile Canadian Initiative 
Yep. This persuaded me to look back over our 2009 forecasts:
http://worthwhile.typepad.com/worthwhile_canadian_initi/2009/01/canadian-economic-forecasts-2009-make-yours-now.html
And how they turned out:
http://worthwhile.typepad.com/worthwhile_canadian_initi/2010/01/canadian-economic-forecasts-2009-revisited-and-2010-make-yours-now.html
You (and Andrew) came very close.
I can’t think why my own forecast for unemployment was so overly optimistic (7.5%! for November 2009). I don’t remember feeling that optimistic. Generally, I thought I felt more worried than you. most of the time.
But what about the Eurozone!? Doesn’t that worry you now?
Yes – but I’m going to have to work through some orders of magnitude to put things in perspective.
I’d be more convinced if you’d seen the changes in the housing market coming…
Short yes, but can we really call it mild? Also, we would have been looking at a much more severe recession if not for some really heroic policy decisions by the Government and especially the BoC – but perhaps that is why you thought it the recession wouldn’t be as bad as initially perceived?
I think we get transfixed on the US economy, unconsciously extrapolate from the US experience to the Canadian experience, or simply forget to explicitly make the distinction sometimes. Then economic fortunes varied from one region of the country to the other with commmodity-dependent regions faring much better.
The US recession started in December 2007 and probably ended in August 2009 or thereabouts. That’s long.
Maybe there is something to be said for a coordinated response of pedal-to-the-metal monetary policy stimulus? In Canada’s case, I’ll bet the public gives Harper’s fiscal stimulation more than a reasonable share of credit. Curiously enough, I believe fiscal policy did play some role in the recovery of the Canadian economy — China’s fiscal policy.