Need to guard against wishful thinking, but there do seem to be straws in the wind suggesting that supply-chain issues are getting less serious. Here's the Baltic Dry Index of shipping costs 1/
Big retailers seem to be doing fine on inventory for the holidays 2/…
Given the way these things typically work, I wouldn't be surprised if we hit peak inflation panic just as actual inflation is fading away 3/
Supply chains gradually getting unkinked 4/…

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More from @paulkrugman

18 Nov
Some further thoughts on inflation and what to do next. Inflation has of course come in much higher than Team Transitory predicted — the Fed was predicting only 2.4% PCE growth as late as March. So the inflation worriers have in a way been vindicated, but ... 1/
The details of what's happened are very different from what they predicted early this year. 2/
Olivier Blanchard offered an admirably clear exposition: stimulus would lead to a huge surge in demand above capacity 3/…
Read 15 tweets
14 Nov
Trying to clarify my own thoughts on inflation. I got inflation wrong; I didn't see the current surge coming. But why? I didn't think the fiscal stimulus early this year would boost demand as much as Summers et al predicted ... and, in fact, so far it hasn't 1/
Real final demand (excluding inventories) is up 2.6% over the past two years. That's well short of normal growth in potential output 2/
What's happened, however, is that we've faced supply constraints, both supply-chain issues in meeting huge demand for durable goods and withdrawal of workers from the labor force, i.e. Great Resignation 3/
Read 5 tweets
6 Nov
Question: Why was "infrastructure week" a joke under Trump, who could have gotten the votes at any time, only to become reality now despite razor-thin Dem majority? It wasn't just incompetence, although that too 1/
I think two factors. 1st, the McConnell wing of the GOP doesn't want a successful spending program, even under an R president, because that might help legitimize an increased govt role in general. That is, they opposed infra not bc it might fail but bc it might succeed 2/
2nd, Trump team was addicted to crony capitalism. They couldn't do a clean bill; it had to offer privatized stuff that would mean big bucks for their friends 3/…
Read 4 tweets
5 Nov
A week of terrible political news for Democrats has also been a week of good news on the economy and Covid. But will the objectively good news move public sentiment? A few thoughts 1/
The employment report was almost all good news, confirming surveys suggesting that the third-quarter air pocket was behind us. Labor force participation still low, but overall recovery very much on track 2/
Aside from Delta receding, good news on the effectiveness of vaccine mandates. NYC at 91 percent compliance, not facing the crunch widely predicted 2/…
Read 8 tweets
28 Oct
What's actually happening on Democratic plans? I have no idea. We still seem to have a standoff between corporate Dems who won't say unambiguously that they'll vote for Build Back Better and progressives who won't vote for infrastructure without that assurance 1/
Assuming Dems get past this, one remaining question is whether the pay-fors will actually work — whether tax hikes and improved enforcement will actually cover the cost of new spending. But the key point here is that *it doesn't matter* 2/
The main reason Dems want a deficit-neutral bill — whereas Rs have no qualms about unfunded tax cuts — is that Joe Manchin seems to think deficits are important. But they aren't, in a world of negative real interest rates 3/
Read 4 tweets
27 Oct
As Joe says: we aren't having stagflation, we're having a (temporarily?) inflationary boom 1/
We talk a lot about supply-chain disruptions, but mostly what we have is supply chains delivering more than ever, but unable to keep up with demand 2/
That's what's happening at the Port of LA 3/…
Read 4 tweets

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