^For sure, I don't disagree with that. But leaders tend to surround themselves with those on roughly the same planet of economic theory. The inflation spike was a real test of kahunas, yet Biden invested in the future nonetheless.
Below are some rough notes explaining my view.
I've been on Krugman's side the whole way through the economic debate because pandemic supply disruption and Putin's blackmail were in my view more than enough to explain the inflation spike. And there wasn't any obvious evidence that it was caused by excitement or over-optimism; on the contrary, as the articles above and below say, the public economic sentiment is far below real economic performance by historical standards, which is the real mystery. FWIW, I think the grim sentiment is due to political instability caused by Toxic Terry Trump, the long string of GOP failures (two lost wars, a GFC, and a mismanaged pandemic) and Americans generally struggling with not being able to control the world as they once did, disorienting sentiment. But they can't admit or say that.
Even Krugman wavered a bit when giant ego Summers went all 1970s on inflation as it peaked, treating it as some sort of mystical 1970s ghost raised from the dead and beyond control. It does sometimes a bit like that because it's such an abstract metric, but three-quarters of it was the fear in people's heads based on past stories (1970s oil inflation; Weimar hyperinflation, Argentina, etc.). However, rationally, that fear wasn't going to stop supply chains recovering from the pandemic and alternatives to Russian blackmail being found. So, Biden's assumption was correct.
The future is always a product of investment now, so you can't panic and stop investing just to avoid being attacked by the usual libertarian inflation halfwits even if two weeks of news seems to support them. Sure, runaway inflation can happen, but in this case the pandemic and Putin's blackmail efforts were clearly the cause.
So, however it came about, Krugman was right, and so was Biden's policy. For me, it's not as hard as people keep claiming because I take the view that both inflation and deflation (recession, job losses, etc.) are equally harmful, meaning I have no incentive to overreact either way. But the far right is always looking to discipline and punish the public, and see the need for it in every other tea leaf, smashing growth and undermining progress more than required just to prove people are lazy or whatever.
Yet, at the same time, they persistently overlook the undoubted fact that tomorrow is a product of today, and standards of living tomorrow on the productivity improvements that come from infrastructure, technology and skills investment, so investment simply can't stop, ever. You may have to stop some forms of wasteful investment, but it's never a choice between no investment and investment, unless you want to be perpetually behind, much like the UK economy post-GFC. Moreover, in an advanced economy, health, education and general social stability and quality are never ever wasteful because they improve the workforce and businesses of tomorrow.
Of course, I don't rate all market news and every investment, but a lot of market news is actually about the future because much investment is future-oriented by definition, unlike news cycles, something completely misunderstood by the far-left and far-right. The green transition and green infrastructure (Biden's policies) and AI (the current driver of business investment and share prices) are nothing if not upbeat investments in the future (unless you're an AI dystopian or still denying climate change or happy to for Putin or some other loon to keep weaponising energy prices), and that gives people something to strive for.
A run of strong economic data appears to have finally punctured consumers’ sour mood about the U.S. economy, blasting away recession fears and potentially aiding President Biden in his re-election campaign.
Mr. Biden has struggled to sell voters on the positive signs in the economy under his watch, including rapid job gains, low unemployment and the fastest rebound in economic growth from the pandemic recession of any wealthy country.
For much of Mr. Biden’s term, forecasters warned of imminent recession. Consumers remained glum, and voters told pollsters they were angry with the president for the other big economic development of his tenure: a surge of inflation that peaked in 2022, with the fastest rate of price growth in four decades.
Much of that narrative appears to be changing. After lagging price growth early in Mr. Biden’s term, wages are now rising faster than inflation. The economy grew 3.1 percent from the end of 2022 to the end of 2023, defying expectations, including robust growth at the end of the year. The inflation rate is falling toward historically normal levels. U.S. stock markets are recording record highs.
https://www.nytimes.com/2024/02/02/us/p ... onomy.html
That said, one would never ever claim triumph because a hell of a lot of things that impact markets are not predictable or controllable, such as a pandemic or that deranged fruitbat Putin. And I fear that investments in AI won't deliver because only top-tier companies will have the skills to make good of it. But as I keep saying, I'm happy with 10% improvement, which is what seems to have been delivered here through a combination of sensible industrial policy and sensible central banking. Biden or whoever in his admin gets credit for that.
Remember, Summers was going old school inflation panic demanding a severity of interest rate tightening that would drive major job losses as per a classical recession. Krugman said that such an analysis didn't apply to something largely driven by a one-off pandemic, and amounted to an unnecessary sadism. Biden backed the right horse, which happened to be my own view, and I reckon it took kahunas given the baked-in popular obsession with and fear of inflation.
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