New York Times columnist and Nobel Prize–winning economist Paul Krugman declared the war on inflation over Thursday, but other economists are saying, “Not so fast.”
In a post on X, the social-media platform better known as Twitter, Krugman said, “We won, at very little cost.”
The post seemed designed to spark reactions, and it did.
Some people, like Tim Murtaugh, who served as communications director for Donald Trump’s unsuccessful 2020 campaign, were quick to note that Krugman had used a measure of consumer inflation that excludes the prices of food, energy, shelter and used cars.
When food, energy, shelter and used cars are not excluded, the data looks OK but not great.
Others thought Krugman was simply out of touch.
Olivier Blanchard, former chief economist at the International Monetary Fund, likened Krugman’s assertion to a message famously emblazoned over President George W. Bush’s appearance on an aircraft carrier during the war against Iraq.
The Labor Department reported early Thursday that consumer inflation had increased 3.7% over the past 12 months. That’s down from a peak of 9.1% in June 2022 but still a long way from the Fed’s target of 2%.
The last time CPI was under a 2% annual rate was in February 2021.
Most economists use the 12-month rate for inflation trends. But the three-month rate is also a popular gauge.
The three-month core inflation rate rose to 3.1% in September from 2.4% the previous month.
Federal Reserve officials are sounding cautious notes. Minutes of the Fed’s September policy meeting showed that the data over the past several months suggested inflation was slowing in the U.S., but most meeting participants continued to see risks that inflation could turn higher again.
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