NY Times: Will Americans Even Notice an Improving Economy? By Paul Krugman
Imagine that your picture of the U.S. economy came entirely from headlines and cable news chyrons. Would you know that real gross domestic product has risen 6.7 percent under President Biden, that America gained 4.5 million jobs in 2022 and that inflation over the past six months, which was indeed very high last winter, was less than 2 percent at an annual rate?
5 comments:
Krugman says: "inflation was indeed very high last winter, but in the second half of 2022 was around 2 percent, which has been normal for the past few decades"
Here's what I know. The staples I buy in bulk from my local natural foods store (flours, grains, seeds, nuts, beans) are all up 35-75% from one year ago. When food and utilities are up A LOT it is naturally hard to see that the economy may be doing better.
Krugman needs to address his own disconnect. He is responding to comments on this article saying "inflation really has slowed a lot." "the surge in prices seems to have ended around June or July."
So if the surge in prices have ended, then costs are still way up. This new normal is a challenge for many.
Yes the inflation brought the prices up, the prices stayed at that level. So let's say eggs are $10, very expensive, instead of going up even more to $20 at the older rate of inflation, they stayed at the regular rate and so now they are 10.40 let's say. What you are talking about are consumer prices dropping to pre-inflation levels. This is from me not Krugman, certain things are dropping. The price of used cars is one. Certain rent rates in some areas similarly are down. Part of the point Krugman is making is that we're not seeing that $20 for eggs price. It's a one step at a time thing. You curb inflation, you re-establish the way goods and food are handled and moved - the supply lines were incredibly disrupted by Covid, you re-establish jobs, and this has occurred, and hopefully there will be some easing of prices. But remember a lot of corporations raised prices not because of inflation but because they are ripping us off. Oil companies are recording record profits, that means they are profiting more than ever off of high prices. We are being gouged. That's a fact. If it costs twice as much to ship eggs to Upstate NY because gas is twice as expensive, that expense is passed onto to us, consumers. The fingers need to be pointed at corporate America and if you think they are doing this with no political motivation, you would be wrong. There is great interest in corporate oil America to get Trump-like people in the White House. - Tax cuts, no SSI, no pensions, obscene minimum wages, no alternative energy, and on and on.
Corporate greed is real and Covid provided extra gouging opportunity.
But the items from my natural food store I’ve been buying for 30 years are from the same suppliers through the same retailer. It’s obvious the farmers and distributors are passing costs on to consumers. For these pantry staples it’s not corporate greed. 30-75% jumps in one year are unprecedented in my lifetime. It would be nice to float towards pre-pandemic costs but that is unrealistic.
I do hope your and Krugman’s optimism are on target.
Mark, the optimism is that the high rate of inflation is not continuing now. The brakes are on. It's the first step that has to occur. That 30 to 75% increase is not moving up to 60 to 150%, at least right now. It's not optimistic, that's just pointing out what's going on.
I do understand your & Krugmans position. I appreciate your levelheadedness and patience.
The new normal is still difficult. We are not at Argentine inflation levels by any means. But one reason “grievance candidates” are elected is that “Krugman style” candidates come off as minimizing real day to day concerns. I’m having a hard time accepting 30-75% is better than what it could be. Krugman’s glass half full plea needs to be said and I do hear it but it presents as out of touch.
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