Case for inflation panic has 'died,' Paul Krugman argues

"The case for inflation panic" has "died," economist Paul Krugman argued in a Saturday morning Twitter thread.
Krugman writes that the fears stemmed in part from a belief that the Federal Reserve's "intellectual framework," which includes making a distinction between "volatile commodity prices" and "inertial core inflation," was wrong and the central bank was failing to consider that soaring lumber prices, for example, were "harbingers" rather than "transitory shocks." But Krugman pointed to a swift decline in lumber prices since they peaked in May as evidence to dismiss that theory, and highlighted a recent analysis from the White House Council of Economic Advisers that makes a similar case.
Krugman also believes that people who have been worried about a major fiscal stimulus overheating the economy while a passive Federal Reserve ignores warning signs should breathe a sigh of relief, pointing to a recent Federal Open Market Committee statement that he views as a sign that the central bank is an "institution aware that inflation might become a risk and [is] willing to act if necessary."
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Tim is a staff writer at The Week and has contributed to Bedford and Bowery and The New York Transatlantic. He is a graduate of Occidental College and NYU's journalism school. Tim enjoys writing about baseball, Europe, and extinct megafauna. He lives in New York City.
-
Book reviews: ‘Red Scare: Blacklists, McCarthyism, and the Making of Modern America’ and ‘How to End a Story: Collected Diaries, 1978–1998’
Feature A political ‘witch hunt’ and Helen Garner’s journal entries
By The Week US Published
-
The backlash against ChatGPT's Studio Ghibli filter
The Explainer The studio's charming style has become part of a nebulous social media trend
By Theara Coleman, The Week US Published
-
Why are student loan borrowers falling behind on payments?
Today's Big Question Delinquencies surge as the Trump administration upends the program
By Joel Mathis, The Week US Published
-
Markets notch worst quarter in years as new tariffs loom
Speed Read The S&P 500 is on track for its worst month since 2022 as investors brace for Trump's tariffs
By Peter Weber, The Week US Published
-
Tesla Cybertrucks recalled over dislodging panels
Speed Read Almost every Cybertruck in the US has been recalled over a stainless steel panel that could fall off
By Justin Klawans, The Week US Published
-
Crafting emporium Joann is going out of business
Speed Read The 82-year-old fabric and crafts store will be closing all 800 of its stores
By Peter Weber, The Week US Published
-
Trump's China tariffs start after Canada, Mexico pauses
Speed Read The president paused his tariffs on America's closest neighbors after speaking to their leaders, but his import tax on Chinese goods has taken effect
By Peter Weber, The Week US Published
-
Chinese AI chatbot's rise slams US tech stocks
Speed Read The sudden popularity of a new AI chatbot from Chinese startup DeepSeek has sent U.S. tech stocks tumbling
By Peter Weber, The Week US Published
-
US port strike averted with tentative labor deal
Speed Read The strike could have shut down major ports from Texas to Maine
By Peter Weber, The Week US Published
-
Biden expected to block Japanese bid for US Steel
Speed Read The president is blocking the $14 billion acquisition of U.S. Steel by Japan's Nippon Steel, citing national security concerns
By Peter Weber, The Week US Published
-
Judges block $25B Kroger-Albertsons merger
Speed Read The proposed merger between the supermarket giants was stalled when judges overseeing two separate cases blocked the deal
By Peter Weber, The Week US Published