The economy is doing well, albeit with problems

The Nobel Prize in Economics Paul Krugman has explained in The New York Times that the US economy is doing very well, although with some problems. But the sentiments of American consumers are more pessimistic, according to polls.

These and other apparent contradictions arouse debate and controversy among academics themselves, let alone politicians. The questions that Krugman asks himself from New York could be asked by any other professor from here, with the Spanish economy as a backdrop.

In both cases, positive data on employment have appeared, but not on inflation, which this year is rising more than it has in decades.

“There is no doubt that the rise in prices has been detrimental to the salary improvements of many workers, despite the fact that real individual income per capita remains above the pre-pandemic level even when the government no longer distributes lots of money . And my feeling is that, as income goes up, inflation has a corrosive effect on confidence, since it creates the perception that things are out of control, ”explains Krugman in his trademark colloquial language.

Not only is it happening in the US In Spain, there are also contradictory data on its economy, visible in an asynchrony according to which employment is on the rise and growth is on the decline. In fact, unemployment fell in November and chained nine months of falls for the first time in history, with unemployment levels in 2008 – which marked the end of an expansive cycle of the Spanish economy – but the Organization for Cooperation and the Economic Development (OECD) reduced the growth forecasts for Spain for 2021, from 6.8% to 4.5%, and for 2022, from 6.6% to 5.5%.

Contradictions occur, so that in Spain expectations arise with the recovery funds – there may also be opportunities in the battery of tax incentives of the new startup law for 2022 – and at the same time discouragement is observed in the face of inflation.

There are observers who believe that the Spanish economy has a good basis for improving workers’ working conditions, in view of the latest data, but this opinion, which is also shared by the Government, is far from unanimous, since it does not seem to be the case. gold all that glitters behind that data.

Given the asymmetry between the recovery of GDP (lower) and employment (higher), everything indicates that it has to do with the fall in the average number of hours worked, explains economics professor Albino Prada, who is convinced that Spain – immersed in the Temporality – moves away from the usual full-time permanent contract of the last century.

Exiting the crisis requires reforms in pensions, the labor market and taxation, as well as a maximum use of European funds so that, with private support, they contribute to laying the foundations of a new, sustainable economic model, as explained by the professor of economy María Cadaval at the presentation, in Madrid, of the book How to get out of this (II).

We may be facing the best economic recovery in decades, both in the US and in Spain. The difference is that, in the world’s leading economy, the same as in the great powers of the EU, they have already recovered everything lost in the pandemic, while in Spain they have not. The Stock Market is a faithful reflection.

@J_L_Gomez