Disinflation Continues

November 17, 2010, 11:16 am

Allan Meltzer wept (and so did Glenn Beck, but he always does):

As Catherine Rampell points out, this is the lowest level of core inflation ever.
But I have a question here: why do economic forecasters keep predicting a near-time rise in core inflation, even though they are also predicting high unemployment? The Survey of Professional Forecasters now predicts average unemployment of 8.7 percent in 2012, which would seem to be a recipe for continuing disinflation and quite possibly deflation; but the same forecasters predict a noticeable rise in core inflation over the next two years:

I don’t really understand this, except as a fundamental unwillingness to face up to the Nipponization of the US economy.
Update: Yes, they’ve been consistently overpredicting inflation. In 4th quarter 2008 they predicted 2010 core inflation of 2.0; in 4th quarter 2009 they said 1.4.