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Forecasting Inflation During the Pandemic: Who Got It Right?

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Abstract

The sudden rise in inflation that started in 2021 was the largest in 40 years for the United States. The rapidity, size, and persistence of this increase took most observers by surprise. In this article, we conduct a retrospective analysis and compare the accuracy of inflation projections made before, during, and after the Covid-19 pandemic by three groups of people: individual households, professional forecasters, and policymakers on the Federal Open Market Committee (FOMC) of the Federal Reserve System.

Suggested Citation

  • François Gourio & Kavitya Sarma, 2025. "Forecasting Inflation During the Pandemic: Who Got It Right?," Chicago Fed Letter, Federal Reserve Bank of Chicago, vol. 513, pages 1-11, September.
    • Handle: RePEc:fip:fedhle:102247
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    File URL: https://www.chicagofed.org/-/media/publications/chicago-fed-letter/2025/cfl513.pdf?sc_lang=en
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    Keywords

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    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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