The economy has had its share of false starts over the past few years, but this time things could really be improving, opines Paul Krugman. "There’s evidence that the two great problems at the root of our slump—the housing bust and excessive private debt—are finally easing," he notes in the New York Times. House prices have returned to where they were in 2003, in the middle of the bubble. And right now, the country is looking "seriously underprovided" on the housing front.
We may be en route to a "virtuous circle": a better economy means people buy more houses, which prompts more building, which means a better economy. "Something like that may be starting: home sales are up, unemployment claims are down, and builders’ confidence is rising," Krugman notes. Meanwhile, private debt has been dropping since 2008. We have President Obama and the Federal Reserve to thank: Had we slashed spending or "tightened money" as congressional Republicans wanted, we wouldn't be seeing this improvement. The Republicans want to "emulate Europe's failure"—so we'd better be careful at the polls in November, Krugman writes. (Read more Paul Krugman stories.)