Paul Krugman sounded an optimistic note on the economy, saying recent news has been increasingly encouraging.
The Nobel Prize-winning economist referred to falling inflation and noted there are no signs of a recession.
He added, however, that naysayers will insist that officials inflation measures hold untrue.
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The US economy has been graced with good news of late, according to Nobel economist Paul Krugman.
“US economic news has been increasingly encouraging: falling inflation, no sign of a recession,” the economics professor at the City University of New York said in a Wednesday tweet.
But with encouraging signs comes the naysayers, Krugman warned. “And you know what that means: here come the truthers!” he said, referring to people who were sounding the alarm on inflation and saying that official measures were failing to reflect the reality of rising prices.
Krugman has been bullish about the US economy, recently saying the nation is in much better shape than people think. He noted a robust labor market – the strongest it’s been in decades – alongside falling unemployment levels and elevated job satisfaction rates.
On the inflation front, price pressures have significantly dropped from their 40-year highs hit last year. That’s been a relief for American consumers, with May’s Consumer Price Index report showing that the rate of price increases has cooled to 4.0%.
It’s largely thanks to the Federal Reserve’s aggressive monetary policy over the past year, where it’s hiked interest rates by 500 basis points to a range between 5%-5.25%.
With inflation cooling and the economy still holding up, it’s sparked chatter that the US economy could avoid recession. Krugman’s bold call that there are no signs of an economic downturn differ from previous forecasts, where the economist has consistently rang the alarm on a slowdown.
Recently, Krugman said any further interest rate hikes by the Fed to tame inflation down to its 2% target risks tipping the US into recession.
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