US inflation mystery made economists look bad in 2017

Washington

A YEAR AGO, Bloomberg asked economists to predict how 2017 would unfurl. With the year almost over, we've compared those forecasts to actual performance and, well, the results weren't pretty.

This was the year that the textbook connection between inflation and unemployment broke down, bedeviling forecasters. So much so that our survey respondents pulled off a rare feat: missing to the upside their forecasts for both inflation and the jobless rate. Typically a miss in one direction for one of those measures accompanies a miss in the opposite direction for the other. Not so in 2017.