How (many) economists missed the big disinflation

IN ECONOMICS, as in life, it’s really important to learn from your mistakes. The learning process begins when you say the magic words “I was wrong”, which sets you free to ask why you were wrong and do better next time.

Those of us who failed to predict the big run-up of inflation in 2021 and 2022 are, I think it’s fair to say, well along on that process.

But it’s not clear to me that economists who had predicted that getting inflation under control – it’s down a lot, although not all the way – would require years of very high unemployment are engaging in a similar reckoning. They should. In particular, they should ask themselves whether inflation pessimism was in part caused by a form of bias that has had negative effects on a lot of economic policymaking – not partisan bias, but the urge to sound serious by calling for hard choices and sacrifice.