Will Economists Keep Making the Same Mistake?

Michael LebowitzAdvisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

The following headline from a July 2020 CNBC article is stunning: Here's why economists don't expect trillions of dollars in economic stimulus to create inflation.

In hindsight, economists could not have been more wrong in 2020 about the path of inflation. Despite their inconsistent track record, scores of economists exude confidence in their forecasts for a sustained rate of higher-than-average inflation and a soft economic landing.

Given their terrible forecasting errors in 2020, let's review the CNBC article and find the flaw in its logic. The value of this exercise is not to put economists down. Instead, it helps us better appreciate their logic and how much credence we should put on their projections.

Background July 2020

The fiscal and monetary responses to the COVID pandemic were enormous. The economy was shut down and collapsing at a speed unwitnessed in American history. Even three and half years removed from the onset of COVID, the New York Times headline and graphic below, detailing the unprecedented loss of jobs, is still remarkable.:

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