"There Will Be Growth in the Spring": How credible are forecasts of recovery?

Prakash Loungani

Published: March 2002

Forecasters are currently echoing Chauncey Gardner’s words that “There will be growth in the spring”. Or certainly by the summer. Are such forecasts credible? Yes. This article presents evidence that private sector forecasters have done a reasonably good job of forecasting recoveries in industrialised countries over the 1990s. Since recessions in these countries have tended to last under a year, forecasting a recovery in the following year has turned out to be a pretty good bet. However, a few recessions do end up lasting longer than a year: when that happens, the evidence suggests that forecasters are caught flat-footed.