‘2023 Was A Miraculous Year’

Nobel laureate Paul Krugman on Friday took exception to comments made by Republican presidential primary candidate Nikki Haley.

Haley offered a bleak take on the economy in a campaign speech in her home state of South Carolina on Wednesday. Criticizing her GOP rival Donald Trump for throwing a temper tantrum, Haley said, “He [Trump] didn’t talk about the American people once he talked about revenge. He didn’t talk about the fact that we’ve got an economy in shambles and an inflation that’s run out of control.”

Sharing excerpts of Haley’s comments from OK Magazine on X, Krugman said the economy grew 3% and core inflation was back at 2%. Haley repeated those claims on her Meet the Press interview on the Sunday January 28 program.

Krugman also said the six-month annualized rate of the core price consumption expenditure index should be considered as a more accurate inflation measure than the core annual inflation rate.

“Using annual core CPI puts you way behind the curve, for 2 reasons. First, annual: even core CPI was 4.6 in the first half of 2023, 3.2 in the second half. Second, known lags in official shelter prices lagging far behind market rents,” he said.

“So annual CPI creates a spurious impression of stubborn inflation, with a difficult last mile to cover.”

He observed that shelter receives a lower weight in the calculation of price consumption expenditure.

“The inflation battle is over. Now we need to worry that lagged effects of rate hikes will tip us into an unnecessary recession,” the economist said.