The media has been very slow to pick up on the fact that price inflation in the U.S. has been about 2 percent on an annual basis over the last six months of 2022. Basically, prices have been increasing at the Fed’s target rate for a half a year now. Thankfully, many business economists have noticed, and Wall Street has definitely noticed, with 10 year Treasury rates now a full percentage point below short term rates. Whether that will be enough to stop the Fed from making a grave miscalculation and causing an unnecessary recession remains an open question, however. Here’s a gift link to Paul Krugman’s column today, entitled “Will Americans Even Notice an Improving Economy?” and below are some key quotes from that article (please follow the link and read the whole thing)!
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?
He goes on to explain the great economic news of late 2022, which has been widely ignored by the press.
...the overall inflation rate in the second half of 2022 was around 2 percent, which has been normal for the past few decades, while the unemployment rate in December, at 3.5 percent, was at a 50-year low. Oh, and inflation-adjusted wages, which fell in the face of supply-chain problems and the Ukraine shock, have been rising again.
If there were a Republican president, even a baboon, positive news stories about the economy would be everywhere. Krugman concludes:
Some of my colleagues get upset about any suggestion that economic reporting has had a negativity bias that affects public perceptions. Yet there’s actually hard evidence to that effect. The Michigan Survey asks respondents about what news they’ve heard about specific business conditions; all through 2022 — as the economy added 4.5 million jobs — more people reported hearing negative than positive news about employment.
Yes, the global economy still has problems with food prices, mostly due to Putin’s invasion of Ukraine. However, the economic resilience of the U.S. and Europe has been heartening. The Biden plan is working, and in a fairer media world, the Biden team would be getting a lot of credit.