A greater diversity of economic forecasts can lead to a richer discussion and help expose previously unseen risks and weaknesses.
When it comes to financial markets, nothing is certain. For much of the last few decades, however, it was easy to convince yourself otherwise: Interest rates mostly went in one direction, down, and high inflation was a thing of the past.
The pandemic economy, and the policies in response to it, changed all that. Not only did they bring back higher inflation and interest rates, they also altered expectations. And while the consensus is that the US economy will stick a soft landing, there is wide variation among investors, consumers and professional forecasters about future inflation rates and bond yields.
The upshot is an economy with more uncertainty — and a healthier relationship with risk.
Continue reading the entire piece here at Bloomberg Opinion (paywall)
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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.
Photo by Yuichiro Chino/Getty Images
