Nobel-winning economist Paul Krugman is sounding the alarm on Trump’s economy. He says things look okay on the surface, but for most workers, life is getting harder. Trump’s erratic moves, he warns, are making a tough situation even worse.
“Many economists—actually, all the economists I know—are worried about a potential downturn,” Krugman wrote, highlighting that the concern is widespread, not just his own.
Krugman calls it a “K-shaped expansion.” The rich are winning, while the rest of America struggles. Wages for middle and lower-income workers are barely moving, and inflation keeps biting. Meanwhile, tech and AI are booming, but other industries are freezing up because nobody knows what Trump will do next.
He points to Trump’s tariffs as one major problem. Krugman has said they hurt the country’s leverage in trade talks and are based on a “false picture” of U.S. relationships abroad. Businesses are hesitant to spend, invest, or hire because the White House keeps throwing curveballs.
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Hiring rates have dropped to levels last seen in the 2008 recession, though Krugman notes layoffs haven’t hit everyone yet. The big worry is long-term unemployment.
From May to July, Americans out of work for six months or more jumped from 1.4 million to 1.9 million. And with federal numbers stuck on pause since the government shutdown, the real picture could be worse.
The stock market might look healthy, but Krugman says it is misleading. Investors are pouring money into AI while ignoring the chaos caused by Trump’s trade policies. Most of the gains go to the top 10 percent of households, while the bottom half see almost nothing. Most Americans are not benefiting from the so-called rising market.
Krugman isn’t the only voice warning about trouble ahead. JPMorgan CEO Jamie Dimon also sounded the alarm. He told Bloomberg that the U.S. could hit a recession as soon as 2026. Dimon also warned employees after the collapse of subprime auto lender Tricolor Motors: “When you see one cockroach, there’s probably more. Everyone should be forewarned on this one.”
For ordinary Americans, things are getting rough. The economy is growing only for the wealthy. Jobs are uncertain. And Trump’s unpredictable policies make it even harder for people to plan their lives.
Featured image via YouTube screengrab
