Economist Paul Krugman: How the US avoided 'long-term scarring from a persistently depressed economy'

On January 5, the U.S. Bureau of Labor Statistics (BLS) reported that the United States' unemployment rate "was unchanged at 3.7 percent."

The U.S., under President Joe Biden, has had some of its lowest unemployment numbers in over half a century. But many of Biden's Republican detractors have been claiming that the U.S. economy is in bad shape, often noting post-pandemic inflation but failing to mention that inflation has been much worse in many other countries.

In a thread posted on X, formerly Twitter, on January 19, liberal economist and New York Times columnist Paul Krugman argues that thanks to "fiscal stimulus," the U.S. has dodged an economic bullet in the Biden era.

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"During the pandemic and early aftermath," Krugman explains, "we had a lot of fiscal stimulus. This sustained growth and employment despite an adverse supply shock, but doing so involved a temporary surge in inflation. Then the supply shock reversed, and we got immaculate disinflation."

Krugman continues, "Doing it this way avoided one risk — long-term scarring from a persistently depressed economy — while running another — inflation getting entrenched. Given how things have actually turned out, it seems obvious that policymakers made the right call."

In his New York Times column, Krugman has often stressed that inflation doesn't erase the fact that the U.S. has had very low unemployment in the Biden era — a theme he revisits in his X thread.

"If you believe that we should have kept unemployment high to avoid a temporary rise in inflation, OK," Krugman tweets. "But be explicit about that."