STEPHEN MOORE: Economists Got 2025 All Wrong
Well, Donald Trump has done it again! He stumped the chumps. The “chumps” in this case were the “blue chip” academic and financial economists whose consensus forecast this time last year was for high inflation and low…
Well, Donald Trump has done it again!
He stumped the chumps. The “chumps” in this case were the “blue chip” academic and financial economists whose consensus forecast this time last year was for high inflation and low economic growth. Wrong on both counts.
As you’ve probably heard, the GDP growth for Q3 came in at a red hot 4.3% following 3.5% for the second quarter. Some 90% of the professional economists got it wrong — all underestimating the strength of the Trump economy. QED: these weren’t random errors. These were “hate Trump” errors.
They also predicted inflation of above 3% for 2025. It’s going to come in at closer to 2.7% with the last two months trending down to the Fed inflation target of 2%.
Starting in the second quarter, GDP has been nearly twice as high as predicted.
To quote the inimitable special agent Maxwell Smart: “Missed it by that much.”
This isn’t the first time the whiz kids whiffed on the Trump economy. These are the same Keynesian economists who warned at the start of Trump’s first term that we would see a stock market crash. (The stock market is today at record highs on all three indices. Paul Krugman, who won a Nobel prize in economics, and wrote regularly for the New York Times for years, famously feared a second Great Depression if Trump policies took hold).
Krugman and others all thought Trump’s tariffs would ignite runaway inflation. There’s no doubt tariffs did cause a rise in aluminum, coffee and beef prices – commodities that got hit by tariffs as high as 50%. But the economic pundits failed to take account of the disinflationary effect of pro-growth policies like deregulation, Trump tax rate cuts, and pro-America energy policies. These counteracted the impact of tariffs on prices overall.
One would have thought that the academics and media would have learned from their mistakes of always underestimating Trump on the economy. But they seem incapable of self-correcting. They keep doubling-down on dire predictions about Trumponomics.