2017-02 How did forecasters respond to the American growth slowdown since the mid-2000s?

Byrne et al. (2016) found that worldwide growth slowed down in the mid-2000s. This paper both confirms this result for the United States and looks at how forecasters responded to this slowdown in GDP growth. GDP is unambiguously and consistently below its forecasted level and so forecasts errors are persistently positive, consistent with a growth slowdown that is not forecasted in advance. In response to this slowdown, IMF and CBO forecasters adjusted their forecasts downwards while the Survey of Professional Forecasters made overoptimistic forecasts. We discuss the recent recession and its potential contribution to the current secular stagnation.