Opinion

On inflation, we can learn from the mistakes of the past — or repeat them

A year ago I warned that “there is a chance that macroeconomic stimulus on a scale closer to World War II levels than normal recession levels will set off inflation pressures of a kind we have not seen in a generation.”

At the time, the much-greater optimism of the Biden administration and Federal Reserve were in line with the consensus views. The Survey of Professional Forecasters expected 2 percent inflation and essentially saw no possibility that core inflation would exceed 4 percent in 2021. It came in at 4.9 percent, and the consumer price index was up 7 percent — with huge consequences for consumer sentiment, President Biden’s approval rating and the sense that the country was on the right track.