Paul KrugmanWe're coming up on the 2nd anniversary of Biden's inauguration, and I have a few (not very original) thoughts about his economic policy 1/
The opening salvo was the American Rescue Plan, which came in for immense criticism as "the most irresponsible fiscal policy in 50 years". Soaring inflation seemed to vindicate the critics 2/
But now inflation seems to be coming down as fast as it went up. The new Team Transitory warns that this improvement won't last — but it's getting harder to make that case 3/
Here's "supercore" inflation — ex food, energy, shelter (which we know is very lagged) and used cars 4/
And here's average hourly earnings, skipping the period when pandemic compositional effects caused huge distortions 5/
Meanwhile, we seem to have avoided the "scarring" many feared, with the labor market recovering to pre-crisis levels far faster than it did after the financial crisis 6/
Maybe new data will make the picture look worse in a few months. But right now it looks as if we achieved rapid recovery at the cost of maybe 20 months of elevated inflation. 7/
Obviously we've had problems, and would do things differently with the benefit of hindsight. But does this outcome really look like a catastrophe? 8/
CartyBoston@pkrugman well ... and we substantially helped millions of Americans, right?
I get it's not the thrust of the piece.
caseyjonesed@CartyBoston @pkrugman it put dollars in pockets to help people. that’s why GOP hates it.
hope Jerome Powell quits raising rates.
we are headed in the right direction so let it ride!
hope Jerome Powell quits raising rates.
we are headed in the right direction so let it ride!
WhoMeWorried?@caseyjonesed @CartyBoston @pkrugman Fed Chair should have started raising rates slowly in Trump's last year, but was bullied by Trump.
Incognitim@SpikedU235
It's ridiculous that none of the talking heads ever bring this up. He harangued Powell to keep dropping interest rates to zero (or below), all because he was trying to "compete" with Obama's economy. What a f🤬cking clown.
@caseyjonesed @CartyBoston @pkrugman
It's ridiculous that none of the talking heads ever bring this up. He harangued Powell to keep dropping interest rates to zero (or below), all because he was trying to "compete" with Obama's economy. What a f🤬cking clown.
@caseyjonesed @CartyBoston @pkrugman
Zelmo Ziggy@SpikedU235 @caseyjonesed @CartyBoston @pkrugman Not in his last year—the US was in the worst part of the pandemic—but he shouldn’t have cut them in the first place.
սահակ@pkrugman things would have looked a lot worse if Manchin didn't block Biden's original spending bill. I think you should be intellectually honest and address the fact that Manchin and other Republicans saved Biden from making bigger catastrophic mistakes.
Defend Democracy 🦋🌊
Jake Legg
Catherine is not complacent
Sid Wishes@CatDragon @sahak @pkrugman This is the major Republican fallacy - insisting that the source of the inflation is public spending and ignoring that this inflation is global and stems from supply side disturbances causes by the pandemic.
SupposeNot@sid_wishes don’t forget price gouging opportunists. Lot of that going on too.
@sid_wishes here’s a great example: https://masto.ai/@rbreich/109694502034267225
Robert Reich (@[email protected])
Moderna is planning to charge $130 for its COVID vaccine, but the vaccine only costs $2.85 to make. Meanwhile, over the last two years, the company made over $19 billion in profits off the vaccine. Folks, this is what corporate greed looks like.
Sergio
TomGregory@sahak You state with high confidence something of which you have no way of knowing. It sounds like a religion.
Mike B@sahak
Hahaha "Manchin and the other Republicans". That was the only intellectually honest thought in your entire response, because, yes, we all know Manchin is really nothing but a Republican. Your economics, not so much.
Hahaha "Manchin and the other Republicans". That was the only intellectually honest thought in your entire response, because, yes, we all know Manchin is really nothing but a Republican. Your economics, not so much.
commchfKrugman is wrong, fiscal spending didn't cause inflation except at the margins. Inflation has been a worldwide phenomenon caused by pandemic and the resulting fragile supply chains failures.
Sanders $6T plan would have meant universal HC (which would be deflationary, huge numbers if Insurance industry jobs would be lost.)
Daniel Brockman
GTinNC@pkrugman Why is there no mention of corporate greed? “54% of inflationary pressure can be attributed to corporate profits.” Why blame the government trying to help people while corporations are forcing people into poverty while lining their own pockets? https://www.baystatebanner.com/2022/07/20/corporate-profits-climb-as-inflation-rises/
Corporate profits climb as inflation rises - The Bay State Banner
Corporations are reporting record profits while inflation rates are running at the fastest pace in decades. Small businesses and low-income workers, meanwhile, are bearing the brunt of the crisis even as access to safety net programs becomes increasingly tenuous. That was the assessment of a group of economists who joined Ethnic Media Services for a […]
crasher35@pkrugman
The thing I've been saying is that this wasn't typical inflation. Normally we get inflation because general supply can't meet general demand due to high demand.
But with all the "supply shocks" the pandemic caused, it seemed obvious to me that this was a situation caused by a lack of supply. Which has different characteristics and needs to be handled differently.
Blaming it on the stimulus and gov't spending seems maliciously obtuse.
TJ@crasher35 @pkrugman Think this is correct, but if so not only was government spending precisely the right call to overcome those supply shocks, but think we should nevertheless expect a long term rate of inflation above the baseline in sectors such as electronics, autos, manufacturing, etc, due to the 'homeshoring' that has been underway since the Trump Admin introduced its China Tariffs
@pkrugman no m @m@
JenX@pkrugman Don’t worry the Republicans will ensure that the economy catapults into a free fall and then they will blame it all on Brandon.🙄
TC Won't Give In To Lies@pkrugman
And would inflation truly have been so elevated if key markets weren't so consolidated, allowing "inflation" to provide cover for price gouging?
I don't think so.
DanFell@TCatInReality @pkrugman we don’t have an inflation problem as much as we have an excess corporate profit problem.
My Florida Native Garden@DanFell @TCatInReality @pkrugman
To be fair, I think we have both, with corporate profits riding on the (natural) inflation wave created by so many people having money to spend (thanks to the American Rescue plan, which helped so many millions of Americans) and not much to buy due to all the problems that we know: closure of production lines due to pandemic, supply chain disruptions, etc. It’s a classical high demand-low supply problem.
To be fair, I think we have both, with corporate profits riding on the (natural) inflation wave created by so many people having money to spend (thanks to the American Rescue plan, which helped so many millions of Americans) and not much to buy due to all the problems that we know: closure of production lines due to pandemic, supply chain disruptions, etc. It’s a classical high demand-low supply problem.
@DanFell @TCatInReality @pkrugman
I think prices of goods were marked with no faith in a quick recovery. I am from Venezuela originally, where currency was (still is) very volatile. Inflation 🔼 by merchants marking their prices taking into account that the currency would be devalued by the time they got their product sold, so on top of the regular margin of profit, an extra layer of future devaluation was added. I think something similar happened here.
I think prices of goods were marked with no faith in a quick recovery. I am from Venezuela originally, where currency was (still is) very volatile. Inflation 🔼 by merchants marking their prices taking into account that the currency would be devalued by the time they got their product sold, so on top of the regular margin of profit, an extra layer of future devaluation was added. I think something similar happened here.
@nathaliaassaad @DanFell @pkrugman
America has no history of devaluation. Why would that be a factor in the US economy?
While there were some supply line problems, they were generally brief.
A few areas (eg used cars) clearly were supply/demand mismatches. But food and energy had the sharpest inflation and their supply is more easily expandable.
With 2 years of corp earnings bragging about profit margins, it's pretty clear to me price gouging is the main driver
#InflationisPriceGouging.
@TCatInReality @DanFell @pkrugman
I am not saying that devaluation is the factor forcthe over-pricing. I was just giving that example of over-pricing for a diff reason than pure greed alone. I said that price gouging is embedded in other real factors, but it is not reasonable or healthy to think it’s the only reason.
I am not saying that devaluation is the factor forcthe over-pricing. I was just giving that example of over-pricing for a diff reason than pure greed alone. I said that price gouging is embedded in other real factors, but it is not reasonable or healthy to think it’s the only reason.
@nathaliaassaad @DanFell @pkrugman
Thanks for clarifying.
I don't think price gouging is the only reason, but that along with overall anticompetitive behavior are the majority of the reason in most cases.
People have to eat less? Oh well
Corporations reduce profits and stock buybacks? No way!!!!
@TCatInReality @DanFell
Yyyep- it wasn't like all the sudden us poors were out scooping up all the eggs (there was an avian flu) or driving twice as much or eating more bread (war in Ukraine) or buying three extra cars (chip shortage). Combine all the quirky inflationary causes with oligopical corporate greed (oh hey- they've all managed to squirrel away some pandemic cash, let's claw it back!), and here we are.
@pkrugman
Yyyep- it wasn't like all the sudden us poors were out scooping up all the eggs (there was an avian flu) or driving twice as much or eating more bread (war in Ukraine) or buying three extra cars (chip shortage). Combine all the quirky inflationary causes with oligopical corporate greed (oh hey- they've all managed to squirrel away some pandemic cash, let's claw it back!), and here we are.
@pkrugman
@Incognitim @DanFell @pkrugman
Market basics: prices rise to the highest level the market will allow.
@TCatInReality
Every so often, the 'market' allows for price fixing and/or gouging lol
@DanFell @pkrugman
Every so often, the 'market' allows for price fixing and/or gouging lol
@DanFell @pkrugman
Shawn Smith Peirce@pkrugman Only 20 months? Doesn’t that seem almost… what’s the word? Transitory!
BeckyBSF@pkrugman This is what happens when your Fed Chairman isn’t an Economist.
@pkrugman
Would you say this shows the correctness of John Maynard Keynes?
Would you say this shows the correctness of John Maynard Keynes?
DemocracyMatters 
@pkrugman So does this mean that Full Employment should be redefined, rather than set at 5% unemp?