As the calendar ticks over to 2023, signalling a new phase in the months-long fight against record inflation, America's two leading left-of-center economists—Paul Krugman and Larry Summers—continue to debate the best way forward. For the past two years (as with much of the last two decades), they haven't agreed on much, but as the Nobel laureate Krugman told Bloomberg TV on Monday, "It really disturbs me to say this, but I think I agree with Larry."
The remarks are surprising in the sense that Krugman has staked out the inflation dove post over the past two years, first insisting it would be "transitory" and later admitting he was wrong, but still usually breaking with Summers' hawkish stance. Krugman has argued that U.S. inflation is cooler than official data suggest, helping give markets hope that the Federal Reserve will stop tightening monetary policy and raising interest rates. Summers, the Harvard professor and former Clinton and Obama administration official, has actually been sounding Krugman-like for a few weeks, warming to the idea that the U.S. might achieve its hoped-for "soft landing." What's clear is that the two long-time acquaintances increasingly agree that the U.S. economy is in a hard-to-understand place right now.
