Yesterday I noted G. Elliott Morris’s argument that extremely poor consumer sentiment in the U.S. is no mystery once you look properly at what Americans mean when they talk about prices and inflation. In short, just because prices stopped going up in the second half of Joe Biden’s presidency didn’t mean the public stopped being mad about them going up (and staying up) in the first half of his term. I’m pretty certain that this explains a lot about what sank Biden’s presidency and the dynamics of the 2024 election. But does it explain what’s happening now? When I wrote yesterday’s post, TPM Reader SB agreed, but argued that it went beyond that — that the still-declining consumer sentiment, the extremely sour public mood goes beyond the post-COVID inflation shock. It’s also about extreme wealth inequality, SB argued. Then, this morning, Paul Krugman began what he says will be a series of posts on his Substack in which he argues that while he agrees with the “excess price” framework, he’s not sure it’s a sufficient explanation.
Krugman didn’t really get into what exactly he thinks it is. As I said, he said he’ll address it in a series of posts. But the gist is that there’s a larger politico-economic explanation that goes beyond how long people stay mad about prices. Krugman says he thinks the deepening sense of economic gloom is driven by the fact that the public was upset about inflation, voted to move in a direction and then had the new guy do basically everything he could to stoke more inflation into the economy and generally whipsaw the economy in 20 different directions for a series of bizarre and obscure ideological fascinations.