Nobel economist Paul Krugman defends Bidenomics, touting the US’s success in taming inflation

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Paul Krugman defended President Joe Biden’s economic track record Wednesday, pointing out that inflation has fallen more quickly in the US than in other countries.

“A while back, some economists were using higher US inflation to argue that Bidenomics, especially the American Rescue Plan, was the major culprit in inflation,” the Nobel Prize-winning economist wrote on Twitter, referring to the coronavirus stimulus package the White House rolled out in 2021.

“But now the upper hand is on the other foot: America now stands out as having been much more successful than other major economies in bringing inflation down, even though employment growth has remained strong,” he added.

US inflation has started to rapidly fall in recent months, cooling from its mid-2022 highs of above 9% to just 4% in May.

Meanwhile, the labor market has remained resilient despite the Federal Reserve’s aggressive interest-rate hikes, with the US economy adding 339,000 jobs in May with unemployment sitting at just 3.7%.

Prices have also carried on soaring elsewhere – with both the UK and Sweden dealt nasty inflation surprises last week.

Krugman did concede that there have been some issues with “Bidenomics” – noting that the pandemic relief program may have unnecessarily boosted American spending, which in turn drove up prices.

The Fed probably also acted too slowly to raise interest rates based on chair Jerome Powell’s repeated assertion that inflation would prove to be “transitory”, he added.

“But overall, although saying this drives some people crazy, US policy under Biden has been pretty good,” Krugman said.