The reality of economic slow downs is not that hard to actually predict when you think about it. They go in cycles much like everything else in life. Calculating when that cycle will hit is the magic no one has been able to figure out yet and how deep, long and hard it will hit..
Early last year, the Bank of Canada forecast the country's economy would grow by 2.8 per cent in 2009; predictions that $200 (U.S.)-a-barrel oil was in view seemed plausible; and subprime mortgage losses in the U.S. were widely expected to cause little more than a temporary slowdown.
Needless to say, things haven't turned out that way.
Canada's central bank now sees the economy shrinking by 1.2 per cent this year. Oil prices have plunged below $40 (U.S.) a barrel, after peaking last summer at around $147. And the insidious effects of the subprime mortgage crisis have raced around the world, triggering what many are calling the worst economic crisis since the Great Depression.
It hasn't been a good year for those who make their living predicting the economy. As Bank of Canada governor Mark Carney wryly noted in a speech in December: "Few forecast these events, although in an outbreak of retrospective foresight, an increasing number now claim they saw it coming. The reality is that among all the banks, investors, academics and policy-makers, only a handful were able to identify ahead of time the causes and potential scale of the crisis."