we were talking and catching up on what we’ve been doing

Question

A: Well, we were talking and catching up on what we've been doing, talking about work and family, when all of a sudden, Matt saw a mouse run under his chair and he completely lost it! He started freaking out, and screaming...

B: Ha ha, really?

A: Yeah, and the funniest thing was, that he jumped on to his chair and started shrieking like a girl. You should have been there! Everyone was staring and laughing... it was hilarious!

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For present tense, we say: We are talking and catching up on what we've been doing.

So, for past tense, we should say: We were talking and catching up on what we'd been doing.

Here, the speaker was talking about a past event. Why did he say "We were talking and catching up on what we've been doing"?

Answer 1

It depends on what A was talking about. Say that the two were talking about projects that are still in progress. In this case,

We were talking and catching up on what we've been doing,

the "what we've been doing" could be directed at the listener, B, and refers to something that he's still working on. However, especially if this anecdote happened long ago, it's likely that he's referring to things already done in the past, and I agree that we'd been doing is the proper choice.

But having said that, when storytelling, people often step into the moment and tell it as though it was in the present. You might hear some people tell the story like this:

Well there we are, we're talking and catching up on what we've been doing, talking about work and family, when all of a sudden, Matt sees a mouse run under his chair, and he completely loses it! He's freaking out, and screaming...