Krugman: "Put these five reports together, and they tell us two things."
Put these five reports together, and they tell us two things.
First, weve won the war on inflation and we did it without a recession or a large rise in unemployment. The pessimists and prophets of stagflation were completely wrong.
Second, the Biden boom and yes, it was a boom, with remarkable growth in both G.D.P. and employment is losing steam. Things had to level off eventually, but the deceleration is striking. The Fed has been trying to steer between two risks: the risk of cutting too fast and reigniting inflation and the risk of cutting too slowly and allowing the economy to slide into recession. Well, the balance of risks has clearly shifted: Theres now much more danger of doing too little than of doing too much.
So the Fed should do the full half-point cut. Weve achieved our soft landing; dont ruin it by moving too slowly to pull the planes nose up.
https://www.nytimes.com/2024/09/03/opinion/krugman-fed-interest-rates.html?smid=url-share
https://www.nytimes.com/live/2024/09/03/opinion/thepoint?unlocked_article_code=1.I04.Cr07.ZOZskNcFkxb9&smid=url-share