Evidence from 2023 shows that U.S. inflation fell roughly as much as, or more than, mainstream forecasters expected, despite only moderately strong and cooling wage growth, which contradicts Chamath’s contrarian claim that wage inflation would keep inflation from falling as much as expected.

Key points:

1. What forecasters expected for 2023 inflation (made before or around Chamath’s Jan 2023 prediction):

   • The Federal Reserve’s December 2022 Summary of Economic Projections put 2023 headline PCE inflation at 3.1% and core PCE at 3.5% (Q4/Q4). (federalreserve.gov)
   • The First Quarter 2023 Survey of Professional Forecasters (SPF), published Feb 10, 2023, projected 2023 Q4/Q4 headline PCE inflation at 2.8%, core PCE at 3.0%, and CPI at 3.1%, with those projections already revised down from late‑2022 values. (philadelphiafed.org)

2. What actually happened to U.S. inflation in 2023:

   • U.S. CPI inflation fell sharply: year‑over‑year CPI dropped from about 6.4% in January 2023 to 3.35% in December 2023. (inflation.eu) The average annual CPI rate for 2023 was about 4.1%, down from 8.0% in 2022. (officialdata.org)
   • On the Fed’s preferred PCE measure, inflation declined even more decisively: headline PCE fell from 4.4% in April 2023 to 2.6% by November–December 2023, and core PCE fell from 4.8% to 2.9% over the same period. (indiainfoline.com) By December 2023, headline PCE was 2.6% year‑over‑year, below both the Fed’s earlier 3.1% projection and the SPF’s 2.8% Q4/Q4 forecast, and core PCE (2.9%) was also a bit below the SPF’s 3.0% projection. (philadelphiafed.org)
   • At the global level, the IMF’s January 2024 World Economic Outlook Update explicitly notes that inflation was falling faster than expected in most regions, indicating that consensus forecasts in early 2023 had generally over‑estimated inflation’s persistence. (imf.org)

3. Wage inflation in 2023 did not stay so strong as to block this disinflation:

   • The Employment Cost Index shows 12‑month growth in employer compensation costs declining from a 2022 high of 5.1% to 4.2% in Q4 2023; wage and salary growth for private‑sector workers cooled, even though it remained above CPI. (ilr.cornell.edu)
   • The Atlanta Fed Wage Growth Tracker reports wage growth around 5.2% in September–October 2023, down from much higher peaks (around the mid‑6% range) in 2022, again indicating moderating, not accelerating, wage inflation. (atlantafed.org)

4. Reconciling the prediction with the data:

   • Chamath’s claim was that strong wage inflation in 2023 would prevent inflation from coming down as much as most forecasters expected. In reality, both headline and core inflation fell faster or to lower levels than key forecasters (Fed SEP, SPF) had penciled in, despite wage growth that was elevated but clearly decelerating.
   • The IMF’s later assessment that inflation fell faster than expected in most places reinforces that, ex post, the contrarian bet that inflation would prove too sticky relative to forecasts did not pay off. (imf.org)

Because realized 2023 inflation was at or below the levels forecast by mainstream economists and policymakers—rather than being held up by wage inflation—this prediction is best classified as wrong.