Keynesian darling Paul Krugman has a message for the American people: Does it really matter if everyone describes the US economy as being in a recession? Krugman is on tour to dispel the notion that the United States is in the middle of an economic downturn. However, with the data struggling to fit his narrative, the Nobel Laureate has adopted the Bidenomics approach to explaining away so many underlying issues: shrug and blame everyone else.
Feeling Paul Krugman’s Ire
You heard it from the disciple of John Maynard Keynes: The US economy is not in a recession and the term no longer matters. That is unless the Republicans possess the trifecta of power in Washington. Then, according to the stalwarts of the truth, the whole truth, and nothing but the truth, the United States is on the brink of the worst financial crisis in world history.
In a recent New York Times column, Krugman presented the case that the conventional recession definition needs to be redefined, taking a page out of the White House's playbook. While he accidentally supported the Austrian case that the gross domestic product is a worthless metric, Krugman is playing politics and choosing to abandon the establishment textbook when it does not suit his narrative.
"Two quarters of economic contraction — a downturn sustained enough that it probably isn’t a statistical blip — seems, on the surface, like a reasonable criterion. But it’s not hard to see how it could be deeply misleading, even if the data are correct," he wrote.
He doubled down on this belief on CNN, telling host Brian Stelter that the standard criteria do not show a nation on the brink of a recession. “None of the usual criteria that real experts use says we’re in a recession right now. And what does it matter? You know, the state of the economy is what it is. Jobs are abundant although maybe the job market is weakening. Inflation is high, although maybe inflation is coming down. What does it matter whether you use the 'r' word or not?"
The left-leaning economist thinks the debate over the recession definition – typically two consecutive quarters of negative GDP prints – has turned “vitriolic.” And he is blaming the Fourth Estate for painting a morose portrait of the world’s largest economy, accusing the press of emphasizing the negative and hoping that rumors of the Biden recession are true. He told the cable news network:
"I’ve never seen anything as bad as this, the determination of a lot of people to say it’s a recession is above and beyond anything I’ve ever seen … There’s been a kind of negativity bias in coverage. The press should be giving people – people have their own personal experience. And if you ask people how are you doing, they’re pretty upbeat. If you ask people how is your financial situation, it’s pretty favorable. If you ask them how is the economy, oh, it’s terrible. That’s a media failing. Somehow we’re failing to convey the realities of what's going on to people."
Krugman thinks the labor market is one specific component of the economy that generates only negative attention. However, everyone in the mainstream media – from economic commentators to reporters – continually spotlights that this is the best part of the US economy. The country is about to return all the jobs that were lost during the COVID-19 public health crisis, wage growth remains high (although eaten away by inflation), and the unemployment rate is 3.6%. Market analysts do note, however, the jobs arena is beginning to experience a slowdown. Perhaps an honest discussion of the data is what is bothering the leader of Krugnation.
In addition, are his assertions that Americans giving their financial situations high marks and the economy a bad grade correct? Not quite. Many surveys show the same thing: US households think the Biden economy is dreadful, and their current conditions are not sublime.
For example, according to a recent Gallup poll, only 46% of US adults rate their finances as "good" or "excellent," down from 57% a year ago. The latest Federal Reserve Bank of New York's (FRBNY) Survey of Consumer Expectations shows that nearly half of households think their financial situations will be worse off one year from now. At the same time, the University of Michigan's Consumer Sentiment, Consumer Expectations, and Current Conditions Indexes are hovering near all-time lows. A recent Liberty Nation poll found that an overwhelming number of respondents think the US is in a recession. Put simply, Americans are contradicting Krugman's supposition.
Paul Krugman (Photo by Ricardo Rubio/Europa Press via Getty Images)
Do We Care About Paul Krugman?
In the stock market community, there is a joke that investors trade opposite to what CNBC personality Jim Cramer suggests based on his poor prediction skills. The same might apply to Krugman. He warned that the internet would be inconsequential to the global economy. The New York Times blogger purported that rampant price inflation would not materialize, and, if it did, it would impact only the wealthy. Krugman suggested that the United States would not slip into a recession under a Biden administration.
It is often quipped that Paul Krugman is tired of reasoning with you people. At this stage of his career, it is safe to say that most Americans are fed up with his incorrect and politically motivated writings, statements, and analyses. Whether the GDP and recession definitions are reliable indicators or not can be debated, but the about-face on these terms – the very ones that had been accepted for decades – is nothing more than a Project Mockingbird campaign. Men can get pregnant, Oceania had always been at war with Eastasia, and a recession is actually growth.
