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The Evolution of Disagreement About Long-Run Inflation, 2007–24

Author

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  • Jonas D. M. Fisher
  • Kavitya Sarma

Abstract

In this article, we examine disagreement about long-run U.S. inflation in two closely watched surveys over the period 2007–24.1 This was a tumultuous period. The economy was hit by two very large shocks: the Global Financial Crisis (GFC) in 2007–08 and the Covid-19 pandemic in 2020–21. Unemployment soared from 5% to 10% over the 2008–09 period and took six years to reach pre-crisis levels. In March 2020, unemployment surged to 10% from historically low levels, but it returned to pre-pandemic levels in the second half of 2021. Inflation ran below 2% from early 2008 until early 2021, but it soared to historically high levels in 2021–23. Over the period 2007–24 there were developments in the Federal Reserve's communications about its long-run inflation objective and unprecedented policy actions. How did disagreement about long-run inflation evolve within this context?

Suggested Citation

  • Jonas D. M. Fisher & Kavitya Sarma, 2024. "The Evolution of Disagreement About Long-Run Inflation, 2007–24," Chicago Fed Letter, Federal Reserve Bank of Chicago, vol. 502, October.
    • Handle: RePEc:fip:fedhle:99307
    DOI: 10.21033/cfl-2024-502
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    Keywords

    Macroeconomics; monetary economics;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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