Listen now (62 mins) | Yascha Mounk and Jason Furman discuss how to guard against wishful thinking in economic forecasting and policy making.
Economics is the only science where you can get 100 scientists in a room with 100 different opinions based on 100 models and their work is still respected as science.
"Economists like to look at core inflation, they subtract food and energy."
I just spit out my coffee made from grocery-store purchased beans that are at least 40% more expensive than they were in 2019. Isn't that a convenient subtraction given the Biden Democrat "I will cancel fossil fuel" scarcity policies on traditional energy (the scary virus did it! Putin did it!) are primarily responsible? Does Trump have coffee beans I can buy?
The other item that US economist tend to leave out is housing prices. The BLS model for reporting the CPI uses estimated rents. This has three problems... one, it is impossible to find rental equivalents for user-owned homes... two, there is a long lag in their models to capture the data that fails to accurately account for a surging increase in property prices and rents. Lastly, their use of "average rents" fails to capture the then current rents being advertised. Existing long-term lease with rent increase limits skew the data down and away from the current market for rent.
When adding food, energy and correctly counting the cost of housing (the method used before 1980)... the ACTUAL rate of inflation over the last 2+ years, peaking in late 2022, is over 16%. And for most people, especially the non coastal and big city liberal professional elites, that 16% rate seems much more accurate.
Economists are able to describe and name every phenomenon, but they find explaining what has happened more difficult and predicting the future damn near impossible. However, if you get enough economists predicting the future, someone will get it right. (Sorry, I am feeling a little cynical today.)