WE HAVE ALWAYS KNOWN that the views of economic forecasters are best taken with a barrel of salt. Now it turns out that not only don’t economists have a clear view as to where the economy is headed, they can’t even tell with any accuracy where it’s been. In Britain, analysts were shocked when the Office of National Statistics (ONS) decided that the economy has been growing twice as fast as it previously thought. It seems that someone in the until-now merely useless Department of Trade and Industry had lowered it to downright dangerous by badly misestimating the level of construction activity. The revision raised from impossible to probable the prospect that the Treasury’s prediction that the nation’s finances would come right would prove spot on, rather than miserably off the mark.

In America, economists are trying to decide not only whether the current 5+ percent growth rate is a mere spurt, due to peter out when consumers have finished disposing of the tax rebates they have been getting in the mail, or is the start of another long-term period of above-trend growth. Some, like economists at Goldman Sachs, see danger ahead: “Conditions are ripe for setbacks in homebuilding and consumer purchases of durable goods. . . . Mortgage loan refinancing, one of two key drivers, has already plunged; the tax cut–the other driver–is having its biggest impact . . . in the third quarter.”