This research was published on July 31, 2024

The U.S. economy grew at a robust 2.8% in the second quarter, far faster than economists’ predictions of just 2%. The miss is reminiscent of a long losing streak for doomsaying about the U.S. economy. 2023 stood in the shadow of the “inevitable recession,” a spectacular forecasting failure that persisted in the face of remarkable economic strength. In 2022, the economic narrative suggested that inflation would spiral into persistent 1970s-style inflation; and, in 2020, a “COVID depression,” a downturn worse than 2008 and perhaps as bad as the 1930s, was widely foreseen.

The recent pile-up of forecast failures is reminiscent of 2008, when the global financial crisis crushed the reputation of economics along with banks’ balance sheets. Then, the most stinging criticism of the discipline came from unexpected quarters. On a campus visit to the London School of Economics, the Queen asked a simple question that captured the global mood: “why did nobody see the crisis coming?”