Jun 9, 2022 - Economy
How inflation defied forecasts
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Americans are congenitally pessimistic when it comes to inflation — surveys of where consumers expect inflation to be in a year's time generally show levels a point or two above the broad market consensus.
Why it matters: Historically, inflation has almost always come in significantly lower than we expected. But when it finally did spike, it rose much higher than even the pessimists had predicted.
What's next: Markets expect that consumer prices in a year's time will be 3.6% higher than they are today, per the Cleveland Fed. Consumers expect they'll be 5.4% higher.
- Both numbers are well below the current rate of inflation, which means that for the first time in many years, America expects inflation to fall rather than rise.
