The economic, financial and political chaos of 2022 has exposed the limits of forecasting.

Recall the outlook from mid-2021, when very few observers were worried about inflation (I was among the small minority that was). The “Blue Chip” consensus — reflecting the views of 50 private-sector forecasters — was that the U.S. consumer price index would rise by just 2.5% in 2022. Yet over the last 12 months, “core” CPI, which excludes volatile food and energy prices, has risen by 6%. Similarly, the U.S. Federal Reserve’s preferred measure — the core personal consumption expenditures index — was expected to rise by just 2.7%; it is up 5%.

Then, when inflation did begin to surge, many insisted that it would be “transitory.” The Fed’s historically rapid tightening of monetary policy — repeatedly raising its policy rate by 75 basis points, before tempering its hikes with an increase of 50 basis points this month — was hardly on Fed watchers’ radar screens. In mid-2021, the three-month U.S. Treasury bill yielded just 0.1%. just recently, the yield was at 4.23%.