Focus: What happened to the 1982 recovery?

In June 1981 we forecast that output would grow in 1982 by 2.8 per cent. Our current forecast suggests that growth this year will be 0.3 per cent. On the face of it that is a very large error and in this Focus we examine what has gone wrong. Economists (and especially forecasters) are experts at explaining away their past mistakes. In this case a fair analysis does suggest that we were closer to the mark than a crude comparison between our earlier fore‐ cast and the (estimated) outcome suggests. Our mistakes (which we admit) also provide some interesting comments on the recent performance of the economy.