Franck Robichon/Reuters
The bad vibes spreading through the economy are unwarranted, according to Paul Krugman.
Grocery prices soared in 2023, but inflation isn’t nearly as bad as it feels, the Nobel economist said.
Krugman has been trolled for his inflation views in the past.
The “vibecession” in the economy isn’t to be trusted, as Americans are making inflation out to be much worse than it seems, according to Nobel economist Paul Krugman.
In an op-ed this week, he pointed to the overarching sense of negativity about the economy — something that was dubbed as a “vibecession” in 2022, the year inflation notched a 23-year-high and dampened Americans’ mood, particularly when it came to buying everyday items at the grocery store.
But the economy has avoided an official recession so far — and your grocery bill isn’t a good way to gauge the success of the economy anyway, Krugman argued. He pointed to egg prices, which spiked nearly to $5 a carton in mid-2023 before plunging in the back half of the year.
US Bureau of Labor Statistics/Federal Reserve
But that price spike was spurred by an outbreak of avian flu, which killed millions of chickens and crimped supply.
“Grocery prices are a terrible way to assess either the state of the economy or the success of economic policy, because they’re often driven by special factors outside any government’s control,” Krugman said, adding that “vibeflation” — inflating the prevalence of inflation due to high grocery bills — was a “bad idea.
“This roller coaster ride had nothing to do with Bidenomics,” he added of egg prices.
Inflation has cooled dramatically from its highs in 2022, with prices growing 3.1% year-per-year in January.
But while the pace of growth has decreased, Americans are still feeling the pain of accumulated price growth over the past few years, economists say. Food now costs over three times what it did in the early 1980s, according to the Bureau of Labor Statistics, though prices have seen a more shallow rise over the last few months.
Food inflation over the last five years
US Bureau of Labor Statistics/Federal Reserve
Consumers spent 11.3% of their disposable income on food in 2022, the most since 1991, according to the Department of Agriculture.
Krugman has been trolled for his inflation views in the past. Last year, he posted on X that the war on inflation was over, if you exclude food, energy, shelter, and used cars — areas in which Americans spend a lot of their money — from the official inflation numbers.
“Look, don’t trust your feelings,” Krugman added. “Don’t dismiss the careful work of statistical agencies because you were feeling angry yesterday on the checkout line, or because you don’t like the current president.”