(FORTUNE Magazine) – Encouraged by a recent string of stronger economic data, forecasters are growing more confident that 1993 will produce a solid expansion. Can we count on them to be right? Most failed to foresee either the recession that began in July 1990 or the swoon of late 1991, and they were forced to lower their initial 1992 prediction of 2.5% GNP growth to a meager 1.6%. The December announcement by the experts who date business cycles that the slump hit bottom way back in March 1991 seemed like a bad joke to the many Americans who felt as if the country was still in recession. What went wrong? First, the Commerce Department's 11 leading indicators, which supposedly anticipate economic activity three to six months ahead, gave little warning that the economy was headed toward a slump before Iraq's invasion of Kuwait in August 1990. Then, contradictory 1992 employment readings from the Bureau of Labor Statistics' national surveys and local offices compounded forecasters' problems (see story). Finally, the economists had to wrestle with both the peculiarities of this recession, including historically high debt loads and corporate downsizing (i.e., gross layoffs), and the structural changes that government data don't measure adequately. To their credit, the forecasters saw that job losses and the debt workout would sap the recovery's vitality. But their reading of the slump might have been sharper had the Bureau of Economic Analysis continued to publish some important measures of these big structural shifts. Alas, budget cuts claimed many, such as the employment layoff rate, which tracked announced corporate payroll reductions. University of Chicago economist Victor Zarnowitz, a business cycle expert, thinks the agency has been pound foolish: ''The savings have been negligible, but the losses of information are huge.'' Similarly, economists can no longer find how much consumer credit banks extended in the previous month and how much was repaid. In an effort to reduce paperwork burdens, the Fed now asks only for the net change in credit outstanding. Here the savings seem less than negligible: The banks generate the data anyway. Most forecasts have tracked the economy reasonably well during expansions. From 1983 through 1989, the average of the 51 private forecasters' year-ahead predictions compiled in Blue Chip Economic Indicators newsletter fell within seven-tenths of a percentage point of the actual growth. But as the quality and relevance of the official data continue to deteriorate, the job will only get harder.

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