Why Goldman Expects Inflation To Settle Down In 2022
If at first you don't succeed.
Around this time last year, Goldman's economic team projected core PCE inflation would exceed 2% in the spring of 2021, before ultimately receding in the back half of the year.
Needless to say, that call didn't pan out, even as most of the bank's other macro projections for this year proved to be a semblance of accurate.
Read more: How Goldman’s Inflation Call Went Wrong, According To Goldman
Goldman was hardly alone in getting the inflation call wrong. Virtu
If Goldman is correct then the FOMC saying they want to raise rates 3 times next year looks more aspirational than realistic. The reason so many forecasts did not pan out is the course of the virus. That is not something economists and forecasters can easily factor into macroeconomic forecasts. The range of possibilities is still elevated for 2022-23 as well.
The reason predictions don’t pan out is because the data being forecast all come from continuous distributions and the odds of “nailing” a prediction for a precise point in a continuous distribution is 1/infinity = 0. It’s just the math. Not COVID or inflation … just the math.
Range of possibility being Covid raping the virgin-like country of China. Supply lines anyone?