Economists got the Great Recession wrong for the same reason the Recession was caused. They assumed that America has reach an "end of history" point where a large crisis is no longer possible. America would not have an external shock because it was the most powerful nation in the world and trade was becoming more free. They assumed that GDP growth of 2-3% was just natural. They assumed we learned how to manipulate inflation using the Federal Reserve. They forgot the most important thing though, the economy is made up of millions of people each with their own incentives. Consumers and borrowers are real people who if certain incentives present themselves can take on a previously unacceptable level of risk.

As Hayek would say, economists always rush to model the economy and better understand it, but in their rush, they often think their models mirror reality. The economic data we have is aggregated and we have no idea what is really going on across a nation of 300+ million people. A good macroeconomic theory should give us insight into how an economy works, not be predictive formula for how it will work. Economists such as Krugman thought that the faith in the US dollar was absolute and thus the Fed could save any bank needed. This might change now that the US is printing and borrowing absurd amounts of money. Yes, the US enjoys control of the world's reserve currency, but this doesn't negate the reality that increasing supply will eventually lower the "price"/value of the dollar.

Economists must accept they know very little when it comes to macroeconomics.