(p. B1) Many economists spent early 2023 predicting a painful downturn, a view so widely held that some commentators started to treat it as a given. Inflation had spiked to the highest level in decades, and a range of forecasters thought that it would take a drop in demand and a prolonged jump in unemployment to wrestle it down.
Instead, the economy grew 3.1 percent last year, up from less than 1 percent in 2022 and faster than the average for the five years leading up to the pandemic.
. . .
(p. B3) . . . what is clear is that old models of how growth and inflation relate did not serve as accurate guides.
. . .
“It’s not like we understood the macro economy perfectly before, and this was a pretty unique time,” said Jason Furman, a Harvard economist and former Obama administration economic official who thought that lowering inflation would require higher unemployment. “Economists can learn a huge, healthy dose of humility.”
. . .
Many economists previously thought that a more marked slowdown was likely to be necessary to fully stamp out rapid inflation. Mr. Summers, for instance, predicted that it would take years of joblessness above 5 percent to wrestle price increases back under control.
“I was of the view that soft landings” were “the triumph of hope over experience,” Mr. Summers said. “This is looking like a case where hope has triumphed over experience.”
. . .
“I would have thought that it was an iron law that disinflation is painful,” said Laurence M. Ball, a Johns Hopkins economist who was an author of an influential 2022 paper that argued bringing down inflation would probably require driving up unemployment. “The broad lesson, which we never seem to completely learn, is that it’s very hard to forecast things and we shouldn’t be too confident, and especially when there’s a very weird, historic event like Covid.”
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(Note: ellipses, and bracketed date, added.)
(Note: the online version of the story has the date Jan. 26, 2024, and has the title “Economists Predicted a Recession. So Far They’ve Been Wrong.”)