Paul Krugman Profile picture
Nobel laureate. Op-Ed columnist, @nytopinion. Author, “The Return of Depression Economics,” “The Great Unraveling,” "Arguing With Zombies," + more.
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May 20 10 tweets 2 min read
I wrote about the unexpected success of economic sanctions against Putin — unexpected both in degree and in kind. Which adds to my puzzlement at the weird aversion much of the foreign-policy commentariat seems to have to success 1/… I'm seeing more and more pieces that seem weirdly distressed, even panicked, by the possibility that Ukraine will win a clear military victory. Not my usual arena, but I have a guess about what's going on 2/
May 15 20 tweets 4 min read
OK, settled in with internet access and not riding 40 miles a day over hills and gravel. Column resumes tomorrow; but I want to weigh in today with a very long thread on inflation, especially the weirdly ugly debate over price-gouging 1/ First, where are we on inflation? As I read it, we probably have underlying inflation of 3.5-4 percent, with a higher headline rate reflecting probably temporary factors like supply chain disruptions and Ukraine fallout 2/
May 4 6 tweets 2 min read
Yes, I'm in a different time zone. And yes, given everything else going on, cryptocurrency isn't a priority. But this is still interesting: a status report on El Salvador's attempt to become a crypto republic 1/ Bitcoin was introduced 13 years ago — an eternity in tech time. It has attracted a fanatical evangelical base, despite constant sniping from skeptics wondering what problem, exactly, it solves. The skeptics are constantly told that they're just dinosaurs who don't get it 2/
Apr 24 4 tweets 1 min read
Hmm. An interesting data puzzle. Jason Furman — a very serious guy — has been arguing that US inflation has accelerated much more than Euro area inflation, suggesting a strong role for fiscal policy. I've been accepting that analysis. But ... 1/ Menzie Chinn, also a very serious guy, working with much the same data, finds that the rise in relative US inflation is fairly small and not statistically significant 2/…
Apr 23 4 tweets 1 min read
Yesterday I wrote about how a recession is possible but not inevitable, and that policy could err in either direction 1/… I argued that because inflation isn't yet entrenched, there is a "Goldilocks path" for policy, but staying on it will be tricky 2/
Apr 22 5 tweets 1 min read
I've been wondering about Florida's rejection of math textbooks, which are hardly hotbeds of critical race theory; the state has been very unwilling to explain its decisions. This Times analysis helps, but I think still misses two important points 1/… The textbooks do make use of social-emotional learning, which conservatives disparage even though it has been shown to be an effective pedagogical tool; their claim is that SEL is a sort of gateway drug to CRT. But do they really believe that? 2/
Apr 19 4 tweets 1 min read
Typing one-handed, with the other cupped to protect ... but anyway, important to understand that this kind of thing is actually at the core of right-wing crazy 1/… As Rick Perlstein explained a decade ago, the U.S. radical right has always been closely linked to the marketing of medical as well as political snake oil 2/…
Apr 17 7 tweets 2 min read
A brief thread on current inflation thinking — by the markets, consumers, and yours truly. I keep seeing people saying that we have inflationary psychology — but that's not really true, at least so far 1/ Here's what the market says. The top line is the 1-year interest rate minus the yield on index bonds coming due in a year — the implicit 1-year inflation forecast. The bottom line is the 5-year forecast 2/
Apr 11 4 tweets 1 min read
Yesterday I warned that we may be about to see a drop-off in inflation because of the bullwhip effect, which will *not* mean that the underlying problem of an overheated economy is over 1/ Sure enough, people close to the data are seeing signs of a rather drastic turn in freight rates, and — possibly — making too much of them 2/
Apr 10 9 tweets 2 min read
This is part of a very thoughtful thread about stagflation risks, but this particular point is one I disagree with 1/ To start with what *does* worry me, it's mainly labor markets. High wages are good, but unsustainably high wage growth isn't 2/
Apr 8 4 tweets 2 min read
Silly, but did inspire me to do some family-related research 1/ My grandmother, who was from Ukraine, made borscht. She also made a green cold soup I remembered as "pschav", but could never find described anywhere. But now I know: it was Schav borscht, made with sorrel 2/…
Apr 5 5 tweets 2 min read
Straw man alert. Nobody is saying that voters are silly to be concerned about inflation. The question is why the bad news on inflation isn't at all offset by the good news on jobs 1/ And one possible explanation is that they haven't heard that good news. According to the Navigator Survey, a plurality of Americans believe that the economy has LOST jobs over the past year 2/…
Apr 3 11 tweets 3 min read
The war isn't over, but Ukraine has won an epic victory over vastly superior Russian forces. And yet ... 1/… For now, at least, ordinary Russians appear to be rallying behind Putin and the war. The usual caveats about what people are willing to say under an authoritarian regime, but this seems to be real. It's also not surprising 2/…
Apr 1 6 tweets 2 min read
This is seriously a big deal. The decline of unions has been central to a lot of what has gone wrong in America this past half century 1/… Hard for Americans of recent generations to understand how big a factor unions used to be in this country (data from Unionstats) 2/
Mar 27 6 tweets 2 min read
So, this really is a very tight labor market. Yesterday in New Jersey 1/ But with all the talk about being behind the curve on inflation, I wonder whether people are now getting behind the curve on a likely slowdown in aggregate demand. The real interest rates that matter for investment are rising fast 2/
Mar 25 5 tweets 2 min read
People keep telling me about rising medium-term breakevens as evidence that inflation expectations are getting unanchored. But I do not think this picture means what they think it means 1/ Most of the rise in 5-year expected inflation reflects a surge in expected inflation over the very near term, which investors don't expect to continue. A picture that needs some explaining 2/
Mar 24 4 tweets 1 min read
People worrying about a return to 70s-type stagflation should look beyond the macro series and look at what wage- and price-setters were doing. From the Feb. 1980 Monthly Labor Review: 1/ Image Employers were locking in large, multi-year cost increases because everyone expected high inflation to continue indefinitely, so their competitors would be in the same position. That was why disinflation — which came as a big surprise — was so costly 2/
Mar 18 4 tweets 1 min read
No, I don't think those forecasts make sense. The US economy is clearly overheated, and needs a period of sub-potential growth, which the Fed needs to let happen 1/ But it's not clear that this will require a drastic, Volcker-type monetary tightening. Fiscal drag as the ARP fades in the rear-view mirror plus gradual rate rises may be enough to bring growth down and allow a modest rise in unemployment ... 2/
Mar 17 15 tweets 3 min read
People won't be surprised that I agree with Brad here. The Fed might be behind the curve, but people who think it's obvious are making what I consider careless parallels with the 70s 1/ The big difference between now and the big disinflation of the 1980s is that back then everyone expected high inflation to be more or less permanent. Now you get ridiculed if you say "transitory", but every measure we have says people expect inflation to be ... transitory 2/
Mar 16 14 tweets 3 min read
Jason is right to talk about real interest rates, but I think we need to be especially cautious in interpreting them right now. Longish, wonkish thread, with obvious bearing on policy debates, but for now I want to stress the analytical issues 1/ The key point right now is that inflation expectations are very front-loaded — that is, both markets and consumers expect high inflation for the next 1-2 years, but much lower inflation after that. And real interest rates are low mainly bc of short-run inf expectations 2/
Mar 15 4 tweets 1 min read
I keep seeing alarmed articles about rising medium-term inflation expectations. For some reason, very few mention what seems an obvious point: these numbers are being driven mainly by expected inflation over the next year. Here's the NY Fed survey: 1/ Expected inflation over the next year is ~3 points higher than it was pre-pandemic, which makes sense given events. Expected inflation over 3 years is up ~1 point, or 3 points cumulative. That is, it's all about year one 2/