Economists Have Failed Middle-Class Americans
We need new ways to understand and interpret data that better reflect the realities of people’s financial lives.
The problem isn’t just the prices.
Photographer: Michael M. Santiago/Getty Images
When inflation finally comes under control, everyone will rightfully celebrate. But even as Washington and Wall Street collectively exhale, policymakers will need to take some time to understand why 2021’s prevailing economic wisdom proved so wrong.
Recall that, while some raised red flags, the popular view among those steering the economy was that rising costs would abate upon repair of the global supply chain. That notion spurred the Federal Reserve to make more measured interest rate hikes than they might have done with the benefit of hindsight. The reflection is less an indictment than an insight: It’s time for Washington to revise the way it interprets time-honored economic indicators.