If you want to know where inflation is going, ask someone over 60, not a computer.
April 17, 2026
Original Paper
Who Saw It Coming? Historical Experience and the 2021 Inflation Forecast Failure
arXiv · 2604.14467
The Takeaway
The massive failure to predict the 2021 inflation spike wasn't a failure of math, but a failure of memory. While experts relied on complex models built during decades of low inflation, people over 60—who actually lived through the 1970s—saw it coming a mile away. The study shows that lived experience was a more accurate predictor than the sophisticated tools used by the brightest minds in economics. It suggests that our 'modern' economy is still governed by cycles that are longer than the careers of the people managing them. For regular people, it’s a reminder that sometimes history is a better teacher than an algorithm.
From the abstract
This paper studies the 2021 U.S. inflation forecasting failure. I show that the failure was primarily driven by sample composition rather than functional-form misspecification: estimation samples dominated by the Great Moderation underweight supply-shock regimes, and expectations anchored to that regime were slow to recognize the shift. Three historically informed adjustments, an intercept correction, a similarity re-estimation on 1970s data, and a kernel-weighted estimator, substantially close