Nobel laureate Paul Krugman cites the 'misery index' as proof of the US's economic strength


Zinya Salfiti
Tue, July 4, 2023 

Nobel Prize-winning economist Paul Krugman.

Paul Krugman praised the US economy, citing a remarkable pullback in the so-called 'misery index.'


US inflation has started to cool in recent months, while the labor market still looks resilient.


"By most measures the economy is doing quite well," Krugman said Monday.

The falling "misery index" is another sign that President Joe Biden has succeeded in reviving the US economy, top economist Paul Krugman said Monday.

The Nobel laureate once again praised Biden's track record, citing the fact that the index – an economic indicator that measures both inflation and unemployment – has fallen to the level it was at when Biden took office in January 2021.

"The plunge in the misery index reflects both what didn't happen and what did," Krugman wrote in a New York Times op-ed. "What didn't happen, despite a drumbeat of dire warnings in the news media, was a recession. The U.S. economy added four million jobs over the past year, and the unemployment rate has remained near a 50-year low."

"What did happen was a rapid decline in inflation," he added.

The misery index, created in the 1970s by Lyndon B. Johnson's policy advisor Arthur Okun, gauges the strength of the economy by adding up the inflation and unemployment rates.

The economic indicator climbed as prices soared in 2021 and 2022, but has fallen over the past year in what Krugman called a "remarkable turnaround".

US inflation has started to cool in recent months, falling from its mid-2022 highs of over 9% to just 4% in May.

Meanwhile, the labor market has remained resilient in the face of the Federal Reserve's aggressive interest-rate hikes, with the US economy adding 339,000 jobs in May and unemployment holding steady at 3.7%.

"By most measures the economy is doing quite well," Krugman wrote.

The Nobel laureate has been optimistic about the US economy recently and said last month that he doesn't think a recession will come, even though America's GDP growth shrank to just 1.1% last quarter.

He has also repeatedly praised Biden's economic track record, noting that inflation has fallen much faster in the US than in other western countries.