Economy

Getting It Wrong

What happens when the predictions are wrong? Is it time to panic? Is it time to ditch our strategy?

It's a fascinating question because it cuts right down to the question of what it means to live in an uncertain world.

Humans are wired to dislike uncertainty. (1)

And we’re used to a fair amount of (often unwarranted) certainty in the models and paradigms we use to make sense of the world around us. We’re so attracted to certainty that when economic forecasts and reports come back with “surprises” (also known as being wrong), we tend to freak out.

$50 burgers: Should we worry about inflation?

How much inflation can the country afford before we’re in trouble? Let’s discuss.

First, let’s get on the same page about some basics. If you’ve noticed the price of a thing increasing over time (say, your favorite candy bar or the cost of college tuition), that’s inflation in action. Economists use the broad increase (or decrease) in prices of goods and services across the country as a measure of economic health. When inflation is stable and predictable, it’s a sign of a basically healthy, growing economy.