Mark Thoma has the story, from Volker Wieland and Maik Wolters. Basically, the forecasts made in the latter part of 2008 failed to anticipate the severity of the recession.

Here are some implications that come to mind:

1. The mainstream analysis of the recession will include factors, such as balance-sheet considerations, that are introduced ex post. I have an essay forthcoming that talks more about this.

2. It is very likely that the Fed based its policy decisions on similarly incorrect forecasts. Of course, subsequently forecasts have come into better alignment with the dismal reality, and yet the Fed has seemingly been willing to live with that reality.