Price Expectations

Alongside the extremely silly commentary, the latest National Federation of Independent Businesses release (PDF) has some interesting data. This one checks the gap between what business operators expect to charge and actual prices:

There’s basically always a gap (elsewhere the report shows a persistent optimism bias about future sales volume that’s probably related) but you can see that the recession was associated with a huge increase in the size of the gap. Prices plummeted, not just relative to where they were but relative to expectations. That’s a huge failure of central banking.