Paul Krugman

Paul Krugman @paulkrugman

Lots of people pointing out that August's sharp decline in the job openings/unemployment ratio still leaves us well above pre pandemic level. But how many months like August would it take to eliminate the gap? Two. 4/ https://t.co/FSnDwziiwK — PolitiTweet.org

Paul Krugman @paulkrugman

Say the lag is 6 months, which I think is conservative. Here's the 10-year rate lagged 6 months. We're just at the beginning of a large Fed-induced cooling/contraction 3/ https://t.co/tCmBpPvN82 — PolitiTweet.org

Paul Krugman @paulkrugman

Effective monetary tightening began around the beginning of this year, as long-term rates started rising in anticipation of Fed hikes. But even long rates affect the real economy with a lag 2/ — PolitiTweet.org

Paul Krugman @paulkrugman

I don't think many people appreciate how fast the economy — both labor markets and inflation — may be turning 1/ — PolitiTweet.org

Paul Krugman @paulkrugman

Why I think 2025 will look like 2019 https://t.co/y5cHCPeCwK — PolitiTweet.org

Paul Krugman @paulkrugman

Yes, one month's data, don't count your chickens etc. But this was the best economic news I've seen for a long time 8/ — PolitiTweet.org

Paul Krugman @paulkrugman

But as you can see, the August data brought us well below that line, and fast. In fact, 2 more months like that (unlikely, but still) would restore the old V/U. This suggests that the disruptions in the labor market may be healing 7/ — PolitiTweet.org

Paul Krugman @paulkrugman

The red line is the approximate relationship since we more or less emerged from lockdown — eyeball econometrics, as I said. The dotted green line is what it would take to restore 2019 vacancies/unemployment ratio — apparently around 5 percent unemployment, which is grim 6/ — PolitiTweet.org

Paul Krugman @paulkrugman

In that case, as Blanchard/Domash/Summers argue, recent data suggest a substantial worsening from pre pandemic tradeoffs. Here's the historical Beveridge curve, truncated to exclude the intense lockdown period 5/ https://t.co/Jz4c0SwMjb — PolitiTweet.org

Paul Krugman @paulkrugman

There is, however, an argument that the economy is much more overheated than you would conclude just from the unemployment rate. Some economists arguing that the best measure isn't unemployment but the ratio of vacancies to unemployment, which is very high. 4/ — PolitiTweet.org

Paul Krugman @paulkrugman

This could in principle be caused by self-fulfilling expectations of higher inflation — but there's no evidence, from surveys or market data, that this is the story 3/ — PolitiTweet.org

Paul Krugman @paulkrugman

Here's the puzzle: the unemployment rate is currently about what it was on the eve of the pandemic, but underlying inflation, by whatever measure you choose, is much higher than it was then 2/ — PolitiTweet.org

Paul Krugman @paulkrugman

OK, a few notes — and some eyeball econometrics — on why some of us are very happy about today's JOLTS report 1/ — PolitiTweet.org

Paul Krugman @paulkrugman

Mike Konczal has done the math 4/ https://t.co/jkbMhJVK7K — PolitiTweet.org

Paul Krugman @paulkrugman

This is actually good news — strengthens the case that we might get inflation down without a large rise in unemployment 3/ — PolitiTweet.org

Paul Krugman @paulkrugman

Quits rate well down from earlier this year 2/ https://t.co/FKbeOTj4DA — PolitiTweet.org

Paul Krugman @paulkrugman

Well, the labor market is cooling. Vacancy to unemployment rate down substantially 1/ https://t.co/0Txq54Wxwk — PolitiTweet.org

Paul Krugman @paulkrugman

The economic policy equivalent of "I'm sorry that you feel that way" — PolitiTweet.org

Paul Krugman @paulkrugman

I know some Wall Street and City economists are also talking about a liquidity squeeze. Britain's gilts crisis isn't driving this, but it may be a harbinger. Don't want to go all Dr. Doom, but I am worried that we may be about to see substantial de facto financial tightening 4/ — PolitiTweet.org

Paul Krugman @paulkrugman

And this latest drop, although much smaller, has been associated with widening spreads in general 3/ https://t.co/kcueYt8Mw9 — PolitiTweet.org

Paul Krugman @paulkrugman

Historically, big drops in breakevens have been associated not so much with fears of deflation as with market breakdowns — the TIPS markets are relatively thin, so Lehman and early pandemic stress drove prices down 2/ https://t.co/bp6BTlTwWF — PolitiTweet.org

Paul Krugman @paulkrugman

Having some second thoughts about this — it may be a liquidity issue as much or more than an expectations issue 1/ — PolitiTweet.org

Paul Krugman @paulkrugman

Market expectations of inflation are collapsing. Looks as if investors believe the Fed may indeed be braking too hard https://t.co/VQSvfbOpk2 — PolitiTweet.org

Paul Krugman @paulkrugman

Just an impression, but it seems as if the U.S. right is getting frantic as Putin's non-woke military advances from defeat to defeat — PolitiTweet.org

Paul Krugman @paulkrugman

This aged relatively well — PolitiTweet.org

Paul Krugman @paulkrugman

Slightly reassuring: the Fed is aware of the global risks, and also of the possibility of overdoing it. https://t.co/FsQBk2MBBb — PolitiTweet.org

Paul Krugman @paulkrugman

Hmm. Core inflation, excluding food and energy, was supposed to be useful because it was less volatile than headline. But it's gotten pretty volatile lately. Unclear what to make of monthly changes https://t.co/qh8shOvcQp — PolitiTweet.org

Paul Krugman @paulkrugman

RT @nytopinion: “I’m hearing growing buzz,” @paulkrugman writes, “that the Federal Reserve — which clearly kept its foot on the gas too lon… — PolitiTweet.org

Paul Krugman @paulkrugman

Yes, yes, yes. The big problem with the ECB was that it was designed only to fight inflation; the greatness of Draghi is that he found a way to do whatever it took anyway. BoE is doing a Bagehot, and rightly so — PolitiTweet.org

Paul Krugman @paulkrugman

I assume other people get that this is a Draghi "whatever it takes" intervention to calm a gilts panic. It doesn't mean that the BoE will accommodate inflation https://t.co/r94AL9y4CY — PolitiTweet.org