AI, markets, and power: A conversation with Paul Krugman (2025 re-run)

We need to talk about the economy in 2025 and what's going on.

I know you've got opinions, so why don't you start with your view of where we are in 2025, a sort of short-term horizon, headwinds or tailwinds, and then I'll respond to that.

Okay.

So, I mean, we are very close to a Goldilocks economy in the United States.

Unemployment is low historically.

Inflation is low historically.

It's a little bit above the, you know, we have an official target of 2% inflation.

And if you look at probably the better measures, it's more like 2.5. And if you think that's really important, maybe you should have a drink or two and calm down.

We're really in good shape.

This is about as good a moment as we've seen for a very, very long time.

And the question is, there's always going to be something.

Some stuff happens, as the bumper stickers don't quite say.

And there's really two kinds of stuff that can happen.

One of them is politics.

And, you know, I'm reading whether there's now, it's possible that my president is about to impose 25% tariffs on Canada and Mexico tonight, or then again, maybe not.

And that's a big deal.

And We have a bunch of potential political shocks to the system.

I've just been doing some work.

And if you look at tech stock valuations, it really has that sort of end of 1999 feeling.

And are we going to be facing a sort of financial bubble burst? It's, you know, and so they really calm good times never last.

And in this case, I think it's unusual that we have at least two obvious threats to the times we're in.

But all of this would take time to unwind.

So the numbers will continue to look good for the next two months at least.

Yeah, I mean, it's interesting that we head into this with such a strong American economy.

I'm sitting here in North London, and there's a particularly depressing series of charts which show OECD growth rate.