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The Case for Humility in Economics

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The Case for Humility in Economics

National Review Online August 17, 2022
EconomicsOther

Hubris, economic forecasting, and the road to ruin

The next time economists declare that they can project the economy’s performance far into the future, remember that the Federal Reserve recently failed to project even a current-year inflation rate within three percentage points.

Specifically, the Federal Open Market Committee (FOMC) forecasted in December 2020 that inflation (as measured by the PCE, the Fed’s preferred measure) would be 1.8 percent in 2021. The Fed hiked the current-year estimate during the course of 2021, but never above 4.2 percent. PCE inflation ended up at 5.8 percent for the year.

Continue reading the entire piece here at the National Review Online

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Brian M. Riedl is a senior fellow at the Manhattan Institute. Follow him on Twitter here

Photo by lechatnoir/iStock

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