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Paul Krugman Profile picture
@paulkrugman
Aug 2, 2019 • 5 tweets • 2 min read • Read on X
So let's talk about the most pressing issue of the day: real bond yields (OK, not so pressing, but important). They have plunged dramatically; as of right now, just 0.19% 1/
These yields were already low last fall, but the plunge since then should basically be seen as investors capitulating, and admitting that Trumponomics won't give the economy any long-term boost 2/ nytimes.com/2019/08/01/opi…
These low, low rates are also far below anyone's estimate of the economy's long-run growth rate. And what this means is that the debt obsession that ruled policy discourse in 2010-2011 was totally wrong and destructive 3/ nytimes.com/2019/01/09/opi…
What this means looking forward is that if a Democrat wins next year, she or he should feel free to propose a major infrastructure investment program and NOT worry much about how to pay for it. Deficit-financed investment is good economics in a low-rate world 4/
No doubt the Very Serious People, who have been oddly quiet in the face of trillion-dollar Trump deficits, will once again get all worked up about fiscal responsibility when a Dem takes power. But they should be ignored 5/

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More from @paulkrugman

Paul Krugman Profile picture
Jun 13
This was a bit cryptic, so a quick explanation 1/
Imports are about 14 percent of US GDP. Federal income tax revenue (not including payroll taxes) is about 8 %. So you might think replacing it would require a tariff rate of 8/14 or around 57 percent. But ... 2/
Tariffs would raise the cost of imports to consumers, so we'd import less, which would mean you need a higher tariff rate. But this reduces imports further, meaning a still higher tariff, and so on 3/
Read 6 tweets
Paul Krugman Profile picture
May 21
The Fed survey of economic well-being is out; some changes at the margin, but the basic story remains that Americans say they're doing mostly OK, their local economy isn't too bad, but the national economy is terrible 1/ Image
Consistent with polling. Here's Quinnipiac on Wisconsin voters 2/ Image
And here's WSJ on swing states 3/ Image
Read 4 tweets
Paul Krugman Profile picture
Feb 17
With the recent rise in consumer sentiment, time to revisit this excellent Briefing Book paper. On reflection, I'd do it a bit differently; same basic conclusion, but I think partisan asymmetry explains even more of the remaining low numbers 1/ briefingbook.info/p/asymmetric-a…
The Michigan sentiment index has two components: current conditions and expectations. It's kind of legitimate to have partisan diffs on expectations, if you think your party has better policies. It's the gap on current conditions that's startling 2/ Image
Michigan doesn't provide partisan breakdowns every month until 2017 (hence the limited range of that chart). A quick and dirty approach is to use annual averages, with whatever months they do provide for each year, which lets us push back to 2006 3/
Read 7 tweets
Paul Krugman Profile picture
Feb 10
Recent economic news has been extremely good. But there's a strange meme among some D consultants that Biden shouldn't boast about it, because it seems out of touch — that people aren't feeling the good economy. But they are! 1/
The venerable Michigan survey has rocketed up lately 2/ Image
It's true that consumer sentiment is still weaker than you might expect given the economic numbers. But that's largely partisanship. Using Civiqs numbers, Democrats have more or less fully accepted the good news 3/ Image
Read 7 tweets
Paul Krugman Profile picture
Feb 2
Immigration is looming larger in the campaign, partly because it's becoming harder for Republicans to run against Biden on the economy. But there's a strong case that immigration has been a key part of Biden's economic success 1/
Inflation has come down so easily in part because of strong labor force growth. How much of that growth can be attributed to foreign-born workers? All of it 2/ Image
Some people might look at that and say that foreigners have stolen 3 million jobs from Americans. But we have full employment, indeed a very tight labor market. Look at what the Conference Board survey says 3/ Image
Read 6 tweets
Paul Krugman Profile picture
Jan 26
A tale of two inflation measures. Some analysts are still citing the blue line, when they should be citing the red line. This is professional malpractice 1/ Image
Using annual core CPI puts you way behind the curve, for 2 reasons. First, annual: even core CPI was 4.6 in the first half of 2023, 3.2 in the second half. Second, known lags in official shelter prices lagging far behind market rents 2/
So annual CPI creates a spurious impression of stubborn inflation, with a difficult last mile to cover. PCE puts a lower weight on shelter, and on a shorter-term basis tells us that we've already traveled that last mile 3/
Read 4 tweets

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