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Economists Have Failed Middle-Class Americans

The U.S. can’t endure an endless economic spiral in which the middle-class family is perpetually made poorer.

By Philip Cornell and Eugene Ludwig | January 30, 2023 at 03:30 PM
Inflation, dollar hyperinflation with black background. One dollar bill is sprayed in the hand of a man on a black background. The concept of decreasing purchasing power, inflation Source: AdobeStock.

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.

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