The economy is doing better than people think despite widespread recession fears, Paul Krugman said.
The top economist pointed to a strong labor market and falling inflation as signs of economic health.
“Those recession calls were clearly a false alarm,” he said.
Americans are still fretting over a potential recession, but the economy is actually faring much better than most people think, according to Nobel economist Paul Krugman.
In an op-ed for the New York Times on Monday, Krugman pointed to widespread pessimism about the US economy, despite indicators that show economic activity is fairly healthy.
And while inflation was a top concern for Americans in 2022, prices have been coming down for much of the past year, cooling to 4.9% in the April Consumer Price Index report. That’s over 500 basis-points lower from where prices where in June 2022, when inflation notched a 41-year-high of 9.1%.
“The interesting question now is why, at least according to some surveys, the public remains very negative on the economy – as negative as it has been in the past amid severe economic downturns – even though those recession calls were clearly a false alarm, and the economy is actually looking remarkably strong,” Krugman said.
Markets grew particularly skittish about recession risks last year when the US slipped into a technical recession defined by two straight quarters of negative GDP growth.
But official recessions are declared by the National Bureau of Economic Research, which uses other data to determine if the US is truly in a recession. So far, those other indicators say that it is not, Krugman said.
He speculated that the gloomy outlook on the economy stemmed from Americans who were assuming others were facing economic difficulties, though most people themselves are still dealing with upbeat personal fortunes. The odds of a future recession have also been widely publicized through media reports, which could be creating a negative bias.
“While many Americans tell surveys that things are terrible – which says something about how people respond to surveys and where they get their information, this doesn’t contradict positive assessment,” Krugman added.
Still, other experts have warned a downturn is still possible this year as the Fed signals it will keep interest rates high. Bank of America strategists said a downturn could start as soon as this quarter, judging by a notorious bond market indicator that predicted the recessions of 1990, 2001, and 2008.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
