Krugman: Latest numbers show it’s time to put a pork in it

By Paul Krugman / The New York Times

The data keep telling us that inflation is basically over as a problem.

We got the report on producer prices Tuesday, and it was “soft.” That’s a good indicator for the much more widely watched consumer price index, which Wednesday reported core inflation at 2.9 percent. More important, the details in the report were especially encouraging for yet another price index, personal consumption expenditures, which won’t be released until later this month but which the Federal Reserve prefers as a basis for monetary policy.

This report follows some good news about inflation expectations.

Economists generally believe that the stagflation of the 1970s was so hard to end, requiring years of high unemployment, because expectations of continuing high inflation had become entrenched among businesses and consumers. Two years ago, when inflation was near its recent peak, I argued that disinflation would be much easier this time because it wasn’t similarly entrenched.

I was right. In fact, the widely followed New York Fed survey of consumer expectations, released Monday, found that expected inflation over the next three years has fallen to its lowest level since the survey began in 2013.

Still, some people are having a hard time letting go of the narrative that the U.S. is suffering from runaway inflation. Among those people, of course, is former President Donald Trump, who ranted about consumer prices in his conversation Monday with Elon Musk.

I continue to be especially struck by Trump’s odd obsession with the price of bacon, which he insists costs “four or five times more than it did a few years ago.” This simply isn’t true. Indeed, while bacon prices are up, most workers’ wages have risen considerably more.

Honestly, I find Trump’s delusions about smoked pork harder to understand than his conspiracy theories about crowd sizes. After all, grocery prices are part of everyday experience, and easy to check. Why haven’t some big, strong men with tears in their eyes come up to him to say, “Sir, you’re wrong about bacon”?

This article originally appeared in The New York Times.