Why did forecasters fail to predict the 1990 recession?

This paper examines the forecasts that were prepared prior to and during the early stages of the recession that occurred in 1990 in the United States. It examines the characteristics of those forecasts, the data that were available and attempts to determine why the forecast errors occurred. Private sector and public sector predictions are compared and the possibility of rational forecast bias is investigated. We conclude that data problems might have contributed to the forecast errors and suggest that individuals might have been able to predict this recession. (C) 1999 Elsevier Science B.V. All rights reserved.