Paul Krugman: Why the economy 'may be better for Democrats' than pundits think

01 January 2024

MAGA media outlets and pro-Donald Trump Republicans continue to claim that the U.S. economy is in terrible shape under President Joe Biden, but according to the U.S. Bureau of Labor Statistics (BLS), the United States' unemployment rate in November 2023 was only 3.7 percent.

Liberal economist and New York Times columnist Paul Krugman has had a lot to say about the "disconnect" between how the U.S. economy is doing and how American voters think it's doing — a theme he addresses in a conversation with his colleague Peter Coy.

During a discussion published in Q&A form in the Times' opinion section on December 31, Krugman argued that that U.S. economy "may be better for Democrats" than pundits think.

POLL: Should Trump be allowed to hold office again?

Coy told Krugman, "Paul, I think the economy is going to be a huge problem for President Biden in 2024. Voters are unhappy about the state of the economy, even though, by most measures, it's doing great. Imagine how much unhappier they'll be if things get worse heading into the election — which I, for one, think is quite likely to be the case…. Unemployment is close to its lowest point since the 1960s, and inflation has come way down. That's the big story of 2023, but 2024 is a whole 'nother thing."

Coy continued, "I think there will be two big stories in 2024. One, whether the good news continues and, two, how voters will react to whatever the economy looks like around election time."

Krugman noted, however, that economic analysts "are declaring that the soft landing has arrived" for the U.S. economy. The Times columnist pointed out that "lots of us have been worrying about the disconnect between good numbers and bad vibes," adding that public views on the economy may be much more positive when the 2024 presidential election takes place in November.

Krugman told Coy, "The Briefing Book estimates suggest that it takes something like two years or more for lower inflation to show up in improved consumer sentiment. This is one reason the economy may be better for Democrats than many think. If inflation really has been defeated, many people haven’t noticed it yet — but they may think differently a little over 10 months from now, even if the fundamentals are no better than they are currently."

Krugman continued, "I might add that the latest numbers on consumer sentiment from several surveys have shown surprising improvement. Not enough to eliminate the gap between the sentiment and what you might have expected from the macroeconomic numbers, but some movement in a positive direction."

Read Paul Krugman and Peter Coy's full conversation at this New York Times link (subscription required).

From Your Site Articles