Boil potatoes in their skins until tender.

Let potatoes cool slightly, then slice thinly.

Fry bacon in a skillet until crispy.

Remove bacon and drain on paper towels, reserving the bacon fat in the skillet.

Crumble the bacon.

Sauté chopped onion and celery in the bacon fat until softened and lightly browned.

Add flour, sugar, salt, pepper, dry mustard, and caraway seed to the skillet.

Cook over low heat, stirring constantly, until the mixture is smooth and bubbly.

Gradually stir in water and vinegar.

Bring the dressing to a boil and cook for 1 minute, stirring constantly.

Add the sliced potatoes and crumbled bacon to the dressing.

Gently toss to combine and coat the potatoes evenly.

Remove from heat, cover the skillet, and let the potato salad stand for 15 minutes to allow the flavors to meld.

Serve hot, warm, at room temperature, or cold.