In a year defined by economic chaos, most analysts focused on the numbers; Joeri Schasfoort focused on the blind spots. His retrospective on 2022 doesn't just tally the losses—it dissects why the world's most sophisticated forecasters missed the mark on inflation, energy, and geopolitical shock. For the busy reader, the value lies not in the data itself, but in the admission that macroeconomic models often crumble when faced with the unpredictable whims of autocrats and the sudden fracture of global supply chains.
The Transitory Trap
Schasfoort begins by confronting his own professional misstep: the belief that inflation would be a fleeting anomaly. He recalls a massive video produced in late 2021 where he weighed in on the debate between those who saw a permanent price spiral and those who saw a temporary bump. "We backed team transitory in our opinion," he writes, "with a condition that the pandemic is actually over." That condition, he admits, was immediately shattered by the Delta variant and subsequent geopolitical events.
The author's analysis of why the "transitory" thesis failed is particularly sharp. He notes that the usual suspects—money printing arguments championed by figures like Peter Schiff—were undermined by the fact that the United States, despite printing the most currency, ended up with the strongest dollar and lower inflation than Europe. The real driver, Schasfoort argues, was an unforeseen energy shock. "Nobody saw that coming," he states regarding the Russian invasion of Ukraine and the subsequent cutoff of gas supplies to Europe. This is a crucial distinction for the reader: the failure wasn't necessarily in the economic models, but in the inability to forecast the irrational actions of world leaders.
Critics might argue that an economist should account for geopolitical risk premiums in their baseline models, but Schasfoort's point stands that the sheer scale of the energy disruption was an outlier event that defied standard forecasting. He notes, "As a microeconomist you can make these predictions but you are dependent on so many factors including the whims of individual people." This framing shifts the blame from economic incompetence to the inherent unpredictability of global politics.
Nobody saw that coming. As a macroeconomic forecaster, you should also be able to forecast what individuals that are super influential like the chairman of the Fed maybe somewhat easier to do, but also these world leaders.
The Sanctions Paradox
Moving to the war in Ukraine, Schasfoort revisits his controversial prediction that Russia had amassed a "war chest" of foreign reserves that would make it immune to sanctions. Initially, this seemed like a hyperbolic take when the ruble collapsed. However, he explains how the narrative shifted once Western policymakers froze those reserves—a move he calls "absolutely unheard of, absolutely crazy." This unprecedented freeze forced Russia to rely on capital controls and a massive current account surplus driven by high energy prices.
The author draws a critical lesson from the aftermath: financial sanctions were less effective than trade sanctions. "The export import sanctions of real goods seem to be hurting way more than the financial sanctions," Schasfoort observes. While the financial sector was shielded by Russia's surplus, the industrial sector began to crumble, forced to scale back to "much more inferior technology." He points to the absurdity of Russian tanks and airplanes relying on "cheap consumer grade GPS's" from the West as evidence of this degradation.
This analysis holds up against the broader data, which shows Russia's real GDP shrinking by 4% while allied economies grew. The author's conclusion is that while the West succeeded in isolating Russia financially, the real damage came from cutting off access to high-quality goods and technology. "It's a huge precedent in my opinion," he adds regarding the freezing of central bank reserves, suggesting a fundamental shift in how global finance operates during conflict.
The Global Housing and China Slowdown
The commentary then pivots to domestic bubbles, specifically the housing markets in Canada, New Zealand, and Australia. Schasfoort references an IMF report warning that these nations, which have never experienced a proper housing bust, are now at significant risk. "Housing is nuts in Canada," he notes, acknowledging the severity of the situation even as prices begin to slow. He contrasts this with his own move from the Netherlands to Belgium, observing that while Dutch prices were "extremely crazy," Belgium was "luckily for me, a bit less so."
Finally, he touches on the Chinese property sector, describing it as a bubble where prices reached Western levels despite incomes remaining far lower. The government's attempt to deflate this bubble by tightening credit to developers has led to a slowdown that threatens to drag down the broader economy. Schasfoort admits the difficulty in getting accurate data from within China, noting that while some "ghost cities" have seen residents move in, others remain empty. The core risk, he suggests, is that the property bubble was "super big" and the government's intervention, while necessary, is painful.
The Chinese property bubble is or was super big. Given that they had property prices on western levels whereas incomes are not on those levels, that's hugely expensive relative to income.
Bottom Line
Schasfoort's review succeeds because it prioritizes the "why" over the "what," offering a candid look at how even the best economic models struggle against geopolitical volatility and structural housing imbalances. The strongest part of his argument is the distinction between financial and trade sanctions, a nuance often lost in headlines about frozen assets. However, the piece's biggest vulnerability is its reliance on the assumption that energy prices will eventually stabilize, a variable that remains dangerously fluid. Readers should watch for how the West's reliance on consumer-grade technology in conflict zones reshapes future defense industrial policies.