I'm not an economist, but I did own and run a factory in the US for 20 years, and I see another problem with trump's tariffs. Bringing manufacturing jobs back to the US is a positive goal, and putting tariffs on imported goods supposedly forwards that goal. But my understanding is that the tariffs trump has imposed are kind of random and arbitrary, and subject to change by him or a new administration. So if I were considering investing in a new factory or a factory expansion, I would certainly wait until the tariff situation was more permanent.
253
Re: an “inverted yield curve” .... predicted six of the last six recessions.
Question to a Nobel prize winner in the dismal science, as The Economist is wont to call your trade: does PRECEDE coincide with PREDICT?
As a rule always inspiring to read you,
with greetz from EH Furnee PhD @ Delft Univ.of Technology
11
Elect a clown, expect a circus!
76
You wish.
4
I thought it was an Obama economy? Oh thats right, economy and unemployment numbers great is a result of "Obama policies" then as soon as there is a downturn it's "Trumponomics." Next week when things rebound it's once again an Obama economy. You can't have it both ways and twist numbers to suit your ridiculously biased reporting.
8
Republicans are like macho alcoholics who like to go on wild irrational binges , have brawls , shootouts, and have hallucinations..and then get deathly sick..and then comes along the Doctor, serious, rational and compassionate who fixes up the alcoholic only so that he can start the next binge...and the cycle continues.
51
Mr. Krugman writes
"the Federal Reserve basically controls short-term rates, but not long-term rates"
Mr. Krugman is shockingly ignorant about monetary theory - should not write about subjects he does not understand
From the Brooking Institution
"The Federal Reserve bought trillions of dollars of bonds and other securities from 2008 to 2014 in what’s been dubbed “quantitative easing” (QE). Economists from the Fed and elsewhere have estimated that the asset purchases lowered long-term interest rates by about 1.5 percentage points. "
Sage Belz and David Wessel December 3, 2018
That is "owered long-term interest rates by about 1.5 percentage points. "
================
Sage Belz
Senior Research Assistant - Hutchins Center on Fiscal & Monetary Policy, The Brookings Institution
David Wessel
Director - The Hutchins Center on Fiscal and Monetary Policy Senior Fellow - Economic Studies
4
white power is more important to most American voters than increasing their wealth.
27
Trump is without doubt economically challenged.
24
Like most people in the Blue States, we didn’t see a tax cut but actually received a tax increase. Which is a little startling for a retired couple in their 70s.
None of our friends anywhere in the United States have benefit in any significant positive way from Trump policies and are in fact distressed at the broadly negative effects, including a vast increase in the deficit and debt.
Which might be more tolerable if that deficit had been used for something productive, infrastructure instead of gigantic tax cuts for the 1 percent.
Our roads are worse. Mass Transit is worse. Student debt is worse. But Trump and company. Committed the nation to 28 billion dollars in guaranteed aid to Israel, was that support or a bribe.
We were in Ireland recently where they groan with a negative view of the stupid right in London with its plans for Brexit and Trump’s rah rah for it. There’s no fondness for Trump there, having stiffed the Irish for security during his visit that was a waste.
He never went anywhere but Shannon Airport and his golf club, that by helicopter, so securing the roads were a 12 million Euro expense to a country that can’t afford it.
We’ve never seen a president so widely disliked and disrespected everywhere. No one deserves the distaste than Trump. His supporters are deluded if they think he’s good for the economy or the nation in any way.
88
Is it really a surprise??? Republicans simply don't know how to make the economy work for any one but the top 1%. They think American workers should be proud to do their respective parts in making millionaires billionaires with a smile on their faces. Did anyone really think an egomaniacal dimwit that likes to pretend he wasn't born rich but is instead a "self-made man" who's made a living off of using and abusing would be any different??? Any and everything Trump does is bound to be anti-productive at best, but likely pro-destructive for many years to come. The worst thing about this eerie real life Twilight Zone is that we've been here before and it took two terms in office by the last two Democrat presidents to pull us out of recessions hone by their irresponsible Republican predecessors.
45
I'm sorry, was there a "boom"? Or did you mean the sound this thing makes blowing stuff up?
23
How could Trumponomics be a failure? He’s got some of the greatest economic minds advising him. Peter Navarro, Fox commentator and self-proclaimed “Tariff Man”; Wilbur Ross, over-the-hill corporate titan who falls asleep at meetings; Lawrence Kudlow, another past-his-prime TV commentator; Arthur Laffer, the father of the failed “trickle-down” economics theory who Trump recently gave a Medal of Freedom; Steve Mnuchin, who apparently has little or no sway at all with Trump; Robert Lighthizer, his lead trade negotiator who has hated China for decades; and Mike Pompeo, fresh off his rousing success with North Korea. Not to mention the even-handed, well-reasoned counsel of Mick Mulvaney, Stephen Miller and, of course, Jared Kushner.
It’s a Dream Team of business excellence!
What could go wrong?
59
Let the Good Times Roll -The Cars
if the illusion is real
let them give you a ride
if they got thunder appeal
let them be on your side
let them leave you up in the air
let them brush your rock and roll hair
lets let the good times roll-oll
7
It would be so helpful if you could do a grade school language version of this with lots of simple diagrams, maybe in color and send it to the White House. That is the only possible way he might ever get it. And even that is stretching it a lot.
28
There was no Trump boom. The man is an idiot on every level except the one that involves destroying just about everything. I think most of us can agree that before Trump took office the country faced serious problems previous administrations either couldn't or wouldn't tackle, inequality and climate change the major ones. Obama was a decent man, but his missteps were big ones: not passing a bigger stimulus, not doing enough for Main Street, supporting natural gas as a transitional fuel, trying for a bipartisanship that was never going to happen. And now we are hostages to stupidity, corruption, and what looks more and more like a dictatorial White House.
28
Ha! Ha! You can't fool me. There is no sanity clause.
5
Given that most of trading is done by quants through algorithms, I am wondering if the inversion in yield curves can really be ascribed to ‘Smart Money!’
1
Lets ask the corn and soybean farmers here, who we've had to bail out TWICE, how they feel about the "Tariff president". The market for their products is WAY down,as China "opts out" of buying from them. Than there's the "Chinese hoax" that's caused ever greater rainfall and flooding, which will only get worse. The climate doesn't care about the fool in the WH. We should. Deficit spending has been the hallmark of the repubs since at least Reagan (who set records, only to be surpassed by w. and the current dolt, along with his "tax cut" for the richest and corporations ONLY).
We're teetering now, and it won't take much to push us into a recession. GE, anyone?
22
When will people get tired of being led around by a person with mental problems that color his whole life and in turn color the lives of everyone who depend upon him and everyone whose life touches his influence? Is there some sane reason to let a blind man lead the ones blinded by him and those he is trying to blind? Has the world turned toward to head in sand? Is this all a refusal to face the future and a fear of the future? It looks like it. This fearful mind set is a self fulfilling prophecy. Only concrete positive action will help. A good leader matters a great deal. Elect one.
25
This is one of the best comments I have ever read that explains why anyone would support Trump: "Trump is about emotionally indulging those with someone to blame."
Thanks, JeffB
JeffB
Plano, Tx3h ago
@stu freeman How many of Trump's MAGA peanut gallery actually have personal savings to even worry about? There is a nihilistic and self-inflicted harm streak to populism. When you have nothing and live paycheck to paycheck, what do you have to lose? Trump is about emotionally indulging those with someone to blame. It feels so good to have a president "like them", they don't even mind (in fact, they cheer) as his administration picks their pockets.
26
My goodness, this column didn't age well:
"At the close in NYSE, the Dow Jones Industrial Average gained 1.20%, while the S&P 500 index climbed 1.44%, and the NASDAQ Composite index climbed 1.67%."
16 Aug 2019
Dr. Krugman hasn't had a very good track record over the past couple of years:
"It really does now look like President Donald J. Trump, and markets are plunging. When might we expect them to recover? If the question is when markets will recover, a first-pass answer is never."
Paul Krugman, 'The New York Times', 9 Nov 2016
"
4
There was NEVER a Trump boom. There were racists sitting on the sidelines for Obama’s entire tenure to show their hatred, they got back into the game after Trump took office. That’s not a sign of a good or functioning economy.
27
We can all thank the deplorables for entrusting our economy to a man who declared bankruptcy six times.
39
No economic expansion has ever lasted forever. This one, already the longest in history, will end, too. It will not matter who is president when the end comes, and unfortunately for Trump, it looks like the end will come on his watch. Voters will blame Trump and make him a one-term president. GW Bush was a one-term president partly because a short nasty recession occurred during his bid for a second term. Voters don't like recessions.
Trump's ineptitude and erratic conduct accelerated the onset of a recession that was already due, and he has made it much harder for policy to lessen the damage it will do. The Fed has only a few bullets left in its sixshooter, and an unneeded tax cut for the very wealthy and corporations weakened the fiscal position of the government. If we don't elect another Republican, Mitch McConnell will make the recession worse.I don't know how we will get out of the next one.
152
For the first time in my life, economic collapse has a silver lining but only if it happens before the election.
35
I read up to the sentence where the author states raising the fed funds rate last year was wrong. Well, I am for raising them further to reflect the true cost of borrowing. Currencies are like commodities and they should have value. I and millions of savers have been robbed of real returns from lending our money to the USA Treasury or the banks. Originally in 2008 interest rates were reduced to zero to bail out the robber bankers . So, the Fed set up a system where banks can get all the money they need for capitalization and use the depositors funds for loans while paying practically zero interest to us and then charging borrowers five times or higher of what they paid their depositors. Investment bankers got truck loads of cash to run up the stock market because supposedly that is the real economy and the best way for economic growth. Only they stuffed their pockets again and again with commissions, fees, carried interest etc.
Personally and I am sick and tired of funding other peoples greedy and wasteful lifestyles. In 2018 GDP was six times of what it was in the fifties and sixties but the majority of people are worse off because all the growth went to the very top mainly to the lord of wall street and stock markets in general.
30
If - as I learned too darned many years ago - there are only three ways to grow the economy (population growth, fiscal policy and monetary policy), then there is no dry powder left. We're an aging population with entitlements canted towards the elderly, the government can't run a larger deficit without the bond market boycotting the subsequent paper and we're already dealing with a liquidity trap. On top of that, stimulus historically led to greater demand for goods. But we're now a service economy and our goods are sourced from overseas...which doesn't really help create employment or higher income. The capital markets for years have functioned solely to provide outsized returns to executives and initial stage investors of companies with dubious social value and proven negative political value...or to merely generate unwarranted compensation for the financial services industry.
McGiver couldn't fix this.
15
If the Democrats are smart they won't rescind the tax cuts if they win the presidency (and Senate?) in 2020. Instead they will pass legislation to refocus the cuts on the middle-class.
The Republican will feel pressured to go along even if their big donors don't like it.
That would help stimulate the economy if it is doing poorly.
10
Krugman is as guilty as the Republicans in not understanding the ramifications of tax cuts to a Federal debt level that, without a recession, is already projected by the Congressional Budget Office to continue to rise as a percent of GDP, and was projected to rise well before the Trump tax cuts. The 2008 collapse hit economists like Krugman and Larry Summers like a 2x6 to the face because they didn't understand debt. They still don't. Before Trump landed in our laps, Krugman kept saying that government spending should continue to increase, since interest rates were so low. He doesn't understand that debt-driven growth, on the private or public side, has a dark downside which is there comes a point when any strategy to stop its rise, actually accelerates its rise. Cut taxes in a heavy deficit profile and you just increase the deficit because everyone sees through the self-defeating strategy and nobody wants to spend the tax cuts. Cut Federal spending and you take the air out of the economy, which depresses tax revenues even more. When we hit a full-blown recession, and we will, headlines will begin to focus on the impact on Federal deficits and an accelerating increase in debt. People, maybe even economists, will begin to realize that we've run out of options. Then see what happens to the stock market, bond market, consumer confidence and business investment, to say nothing of Social Security and Medicare payments.
6
Makes sense to say that investors flee to the relative safety of long term bonds if they think a recession will tank the stock market.
However, I just read that the need to fund the massive deficit with short term debt faces a liquidity problem- not enough demand for new short term issues. It appears that situation can cause short term rates to elevate even more in relation to long term rates,
Ironically, maybe DT is relying on tariffs as a substitute for the tax revenue lost from the tax cut. What a mess!
5
Some day, we'll know if anyone in the Trump family or White House has been placing what amount to side bets on any of dozens of markets that could be affected by one of the levers Mr. Trump can pull.
Who'd be surprised if one or more of them felt entitled to do just that?
It's not as if Mr. Trump is into the nuances of either economics or ethics. Even worse, he doesn't understand why he should listen to advisers who warn against trashing the country's, and world's, economic machinery.
24
We are entering the twilight zone, well known in Japan, where DEFLATION is the norm.
Why is nobody using that well known term?
It takes about 15 years to get out of the zone ...
4
Could it be that most of the economic rules based on a unique historical period post WWII do not apply to modern world. What is different today compared to rosy period of 20 years after WWII?
1. We had full employment as we were building Europe that was destroyed. That us unlikely to repeat I hope.
2. We transferred wealth to top 1%, taking for the 90% of the consumers.
3. Consumer demand was tied not to income but ability to borrow which is not sustainable
and Most important
4. Our corporations that were used to outsourcing for lower labor costs areas that were generally within USA, was now the rest of the world. This is not going to change.
So jobs are going to go outside to 100s of countries with lower wages as they begin to learn to produce what we need.
We know this because US corporations had 2 Trillion dollar before Trump tax cut. The US corporation were not bring jobs before Trump Tax cut nor after the tax cut. The primary thing they have done is "mergers and Acquisitions" which do not bring back the jobs only reduce them further.
What I am hoping is that the economist look at Germany and Japan to see what they are doing to maintain a larger portion of manufacturing jobs at higher wages and competing with low wage countries.
We need Industrial policies and new economic theories. Old theories are obsolete.
12
This much we know:
Obama Stimulus Package - long term growth
Trump Tax cuts for the wealthy - short term growth
32
@F In Texas if that’s the case, why is Obama the only president in history with 0 years of 3% GDP growth? The fact is that the Obama stimulus was a total failure. Cash for clunkers, Solyndra, electric cars, high speed rail, shovel ready jobs that weren’t shovel ready... the Obama “stimulus“ was a complete failure that slowed economic growth
2
Mr. Krugman has been wrong every time he has written a rebuttal to the president's policy actions, yet he keeps right on.
4
You saying that he's been wrong doesn't make it so.
14
Economists are starting to accurately predict the tenth out of the last five recessions.
6
Once the average Joe/Jo can comfortably pay for the basics (food, clothing, shelter, healthcare, commuting), every extra dollar of income tends to get spent on extras. As such a person becomes more and more wealthy, more and more extra income tends to get hoarded. The wealthiest people tend to hoard the most, net worth becoming a number to crow about rather than money that gets rotated back into the economy. Society has become more and more accepting of more and more hoarding at the top and more and more dire straits over the basics at the bottom, while the middle tends to favor policies that will allow them to be part of the hoarders if they're lucky, as long as they can avoid the bottom, even if those policies work to make it harder for them to move up.
Basically, the "greed is good" of the 80's never left, it just became subsumed into the general zeitgeist so that we can think we're not greedy when we get very wealthy. Combined with the short-sightedness of humans, it makes trickle down economics subconsciously attractive enough that the top keeps getting away with trying it, even though time and again the evidence is clear that it doesn't work for any but the top. The trickle dies before it reaches the very bottom, and the middle gets a transitory bump until things go south, which always happens, and only the top easily weather this cycle.
The Fed controls one knob of the economy. If it was as powerful as Trump thinks, there would never be recessions.
17
@Barry Williams
Right. The wealthy have been accumulating mattresses and coffee cans to stuff with money.
Where do the wealthy have their money? In things they buy, people they employ, in banks where it can be loaned, in venture capital to invest in start up companies.
No one got or stayed wealthy by "hoarding" money.
4
And yet we have voluminous data showing that the Trump tax cuts have not been reinvested
20
Real Estate that remains unoccupied but serves to launder money. Betsy DeVois and her dozen yachts. Bezos's space company plaything. Waste
8
Usually it takes more than 1yr to prove the GOP tax cut scams are not working. It took 7yrs for the economy to collapse under W's tax cuts and spend policies. The fact that it is clear that tax cuts did nothing already is a very bad sign (the Dow had it's worst yr in 10yrs 2018 --the year tax cut enacted) and forebodes significant economic decline ahead. Let's not give Trump 4 more yrs to ruin us like he has every business he touches.
16
@EPMD
"It took seven years for the economy to collapse..."
Nope.
Study rational expectations to understand economics.
The traders on Wall Street make their billions by more accurately predicting the economic future a nanosecond before their competitors.
In 2008, Wall Street traders predicted that Obama would:
1) become president;
2) enact a huge tax increase on small business by forcing the Bush2 tax cuts to expire;
3) socialize medicine, increasing its cost by $1 trillion;
4) increase federal regulation to over 190,000 pages.
Easy predictions to make, Obama was promising to do these things starting in 2007 when he declared for president.
When Obama’s probability of becoming president went to 50% (Iowa Political Markets), the stock market crashed $2.5 trillion. As it went to 100%, traders crashed the market by $8.2 trillion.
Those predictions? All correct.
Obama's policies resulted in only 13% growth. The lowest growth of any two term president in U.S. history.
There will always be shocks like the housing market - a $6.2 trillion shock. In 1987, Black Monday hit Reagan with a 22% hit to the stock market, the modern day equivalent of a $7 trillion shock.
2
There's a lot of drama in the news, but our country is the richest we've ever been and we're near full employment.
We've got two main problems: Inequality and an aging population, both causing slower growth and big deficits.
So what is a rational person to do?
Raise taxes on the rich, and transfer the money to the middle class via universal healthcare, a fully-funded Social Security program, and tuition reimbursement. Raise the Federal minimum wage. Forgive undergraduate student loans.
All of which will happen when Democrats get back in control.
22
@David Doney
"...raise taxes on the rich..."
Trump just did that.
In 2018, Trump cut the taxes of all families of four making $53,000 or less to zero. A 100% tax cut.
Despite this 14% tax cut, personal income tax revenues in 2018 were higher than personal income tax revenues in 2016.
That means that the "rich" (meaning successful small businesses) paid more, much much more in taxes in 2018 than in 2016.
2
How will America (and the world) pay for exponentially more disastrous climate damage?
And feed itself on reduced and depleted agricultural land, as refugees skyrocket?
These are the things which will collapse our economic system, and soon.
12
Economists are very good in the analysis of what happened and not in predicting what would happen. This is in part due to uncertainty associated with politics. They need to provide a solution of how to deal with unfair trade practices of China which is going on for decades. If you loose your land, you can fight it and get it back. How would you get back if you loose your intellectual property? Trump trying tariffs, may work or may not. Let us see.
@Kodali
Hate to be the bearer of bad news, but Trump has already lost the trade war with China. Trump made the huge mistake of going alone against the world's largest country, and 2nd largest economy. China, who has been planning their economy for decades, is going to wait until Trump is out of office to renegotiate. They don't mind waiting. They've been waiting for a long long time, and 2 more years is just a blip to them.
23
The 2017 tax cuts??? You mean the hand outs to the wealthy paid for by the average taxpayer, who paid more than ever before? https://finance.yahoo.com/news/american-taxpayers-paid-nearly-100-billion-more-to-irs-under-trump-tax-law-194900782.html
18
@RCJCHC a few indisputable facts for you: everyone who pays taxes got a tax cut. The only people who didn’t get tax cuts are those who pay no taxes. The top 50% pay all income taxes collected by Big Government, the bottom 50% pay nothing or even less than nothing. Those in the bottom got no tax cuts because they pay nothing in income taxes.
1
Your list was accurate and incomplete. How many corporations paid no taxes, keeping money in countries so they don’t have to support the country that made them so successful?
10
@RCJCHC
Yep, the 2017 tax rate (emphasize rate) cuts.
All families of four making $53,000 or less to zero. 100% tax cut.
3
Paul you use the soapbox given to you by the New York Times to do as much damage to Trump as posable.One way is to spread a doomsday message which can be a self fulfilling prophecy .It is the current democratic policy to damage Trump even if it costs the country as a whole.
Unemployment down,401 K up ,inflation well controlled,US is energy self sufficient, military is stronger,borders more secure, trade deficit issue addressed.Paul meet Goldilocks
5
@GDK
Correct, trumponomics is not real economic expertise; it is an oxymoron and can’t possibly be a flop, except as Halloween merchandise.
3
@GDK
Meet the inverted yield curve. Or are you arguing that Krugman’s responsible for that as well?
10
@Matt
Yes, he is the leader of the zombie cult.
The cult's essential belief, chanted relentlessly, is that tax rates have no effect on economic growth.
Tell that to Europe which grew $210 billion while we grew $680 billion real in 2018.
“Neither I nor anyone else is predicting a replay of the 2008 crisis. It’s not even clear whether we’re heading for recession.“
Pretending the US economy recovered from the crash of 2008 for most workers, as Krugman does here, only further helps Trump.
It's like Obama going around in 2014-16 pretending the US economy “great”.
Right, Trump has made matters worse for all but the very wealthy.
But simply put, the massive recession of 2008 never really ended.
Submitted Aug 16th 4:27 PM
5
It feels like deja-vu all over again... republicans destroy the economy, then a democrat is (hopefully) elected by the people, fixes it, only to have another republican elected (by the electoral college) to destroy it... the beauty of oscillating systems!
32
@Ruben Diaz
"...fixes it..."
In 2013, Obama put a huge tax increase in place by forcing an end to the Bush tax cuts. These are the federal government tax growth numbers for the following calendar years:
2013; 12%
2014: 8%
2015: 4%
2016: negative 1%
Trump's tax cut stopped a death spiral
2
Yet another in the too-clever continuing series parodying legitimate financial reports. I confess to having taken this long to see I've completely missed the joke. You go, Paul and NYT - you've fooled many of us all this time into thinking we were being given real economic expertise, when all along it was this now hilarious ruse. Haha. Good one!
6
@JBC
Correct, trumponomics is not real economic expertise; it is an oxymoron and can’t possibly be a flop, except as Halloween merchandise.
After your election day + 1 predication, I would say your credibility is questionable.
8
what a surprise.
I am working many extra hours just to make up the deficit in my take home pay caused by the alleged tax cut. It is coming to almost $1000/month different to pay last year's, and withhold enough for next year's taxes. And yes my total tax bill was in 4 digits higher than last year, it wasn't just rearranging of when I paid the taxes.
Already am spending less than I used to, and will continue to cut back. travel, eating out, new clothes....what does trickle down economics say about that?
20
@marsha zellner
Since all families of four making $53,000 or less had their personal income taxes reduced to zero.
This is what we can say about that:
1) You aren't married and you don't have children
2) because your current tax and unpaid 2018 liabilities are over $12000 higher than your tax liabilities for last year.
You have a large mortgage and a high income both of which means that you can't deduct large amounts of mortgage interest and Connecticut taxes.
By any world standard, you are rich but don't feel rich. You feel pinched and want someone to continue to subsidize your expensive state taxes and your expensive home.
1
@marsha zellner
To make the numbers work, you must by single, your mortgage has to be over $500,000 and you have to be making over $150,000.
In other words, you are rich and are being taxed more by Trump to give a 100% break to the middle class and poor families.
3
It is not obvious to non economist readers why the wealthy sitting on piles of cash would cause interest rates on long term bonds which the Fed does not control to go beneath the rates on short term bonds which the Fed does control. Many readers probably do understand that.
@tomster03: It is anticipation of deflation, such as occurred in the Great Depression.
1
When does Trump start shifting part and eventually all of the blame for a faltering economy away from the Fed and in the direction of people like George Soros and other bogeymen? Isn't the market rigged against the small guy? Aren't hidden forces manipulating markets not only to line their own pockets and to foment some nefarious scheme but to harm Trump? That will be a hop, skip and a jump away from what many fine people in Charlottesville know anyway.
7
@Steve: The "Dual mandate" to the Fed doesn't keep the value of money the same over time. It fluctuates with interest rates.
The worst lie is not that China pays the tariffs, that are actually paid by American consumers. The even worse lie, that is being accepted by many in the media, is that the pain to American consumers and farmers is worth it because in the long-run we will be eventually better off because of the tariffs now.
The exact opposite is the case. Tariffs make the country that imposes them poorer as their protected businesses become less efficient and noncompetitive.
. Gandhi was a great statesman but a horrible economist. Just as the ignorant argue that American workers who earn $15 per hour should not have to compete with Chinese workers who make $2 per hour, Gandhi thought that Indian workers should not have to compete with American and European workers who have the benefit of modern machines. As a result, India adopted protectionism. In 1947, the per capita income of India was similar to those of countries such South Korea. By 1977, the per capita income and standard of living in South Korea was many times that of India. India has since largely abandoned protectionism and has benefited immensely from free trade. Just as David Ricardo proved would be the case when he developed the concept of comparative advantage. https://seekingalpha.com/article/4164735
7
@Lance Brofman. You sound knowledgeable, but what about the remarkable resurrection of Harley Davidson, which came about only because of Reagan’s instituting huge tariffs on foreign motorcycles? (True, Willie G’s brilliance in design was also necessary .)
So far anything that Trump does is a flop.
For instance six businesses that went bankrupt, a 25 million settlement for his Trump University fraud, the closing of the Trump Foundation.
Why would anyone take this man seriously when it comes to the economy? He cannot manage his personal economic life except by cheating.
And I thought at least Wall Street and the Fed were smarter than that
I guess I was fooled, just like all of Trump’s voters.
13
@Jean
"...anything that Trump does is a flop..."
Maybe not...
1 Economic growth in 2018 $630 billion versus $300 billion in 2016 versus Europe’s 210 billion
2 Full-time jobs up 3.1 million in 2018, 200% of the 1.56 million increase in 2016.
3 Manufacturing jobs up 500,000 under Trump. 2016? Down 7,000.
4 Total job openings 7.3 million up 25% from 2016’s peak 5.8 million jobs
5 Unemployed 6.0 million in 2018 versus 7.5 million in 2016
6 Stock market: $33 trillion, up $9 trillion since the 2016 election
7 Mortgage delinquency rate down 26% from 2016
8 Combined Black and Hispanic jobs set ten all-time records in 2018 at higher wages than in 2016
9 Consumer confidence highest in 20 years, up sharply from 2015 and 2016.
10 Unemployment 3.8% lowest since 1969.
11 Initial Public Offerings up 250% from 2016 to $46.8 billion in 2018
12 Real disposable personal income up $597 billion in 2018 versus $244 billion in 2016
13 Total wealth $108 trillion up $13 trillion since the 2016 election.
14 Business investment growth up $334 billion in 2018 versus $52 in 2016
15 Total federal revenues increased 3% from 2016 to 2018 after negative 1% in 2016
16 Adults with $400 to cover an emergency: 2016? 137 million. 2017? 147 million, 7% increase.
18 1.6% inflation in 2018
19 5.7 million have escaped food stamp welfare since December 2016
20 Murder down 6.3% since Dec 2016
21 Debt service on federal debt is 1.6%, less than half of peak
2
Poor Paul - the market is back up today. Now what? No inflation, low unemployment, more people working, consumer confidence and spending up - it must be tough to write a column of gloom.
5
Maybe the sixth bankruptcy Trump files will be on behalf of the United States.
11
Massive tax cuts for super-wealthy billionaires and chaotic trade wars are Trump's classic display of ignorance and incompetence about economic matters. Short term gains followed by long term financial disaster is the pattern of Trump's lifelong history of business failure. It is now the legacy of the Republican leadership who, by placing Trump in the Oval Office, are destroying not only our economy but our reputation in the world. They have no shame whatsoever.
10
@Jefflz
"Massive tax cuts for super-wealthy..."
Nope.
Trump cut personal income taxes for all families of four making $53,000 per year to zero. Despite this huge 14% tax rate cut, personal income tax revenues in 2018 were larger than in 2016. Amazing. This means that the "rich" (meaning successful small businesses) are paying much more, much much more in taxes.
"...billionaires..."
Nope.
Clinton and the Democrats long ago made sure that Bezos, Buffet, Zuckerberg and the Google boys pay zero in taxes.
3
"The smart money thinks Trumponomics is a flop."
So you and your mates have it all figured out, eh ?
May I remind you, that "the amsrt money" brought us the financial crisis of 2007-2008 which precipitated the market collapse of 2008-2009.
Ant "the smart money" brought us the Long Term Capial Management failure of 1998.
Maybe you and the rest of "the smart money" elitists should leave the economics to people who are not convinced that they know it all, and take up a new career, making doughnuts or something like that.
4
It seems Krugman has given up on economic theory and is simply playing the odds aka "even a broke clock is right twice a day"...Eventually there will be another recession and PK wants to have predicted it even if he has to predict 10 fake ones before he's finally right.
5
There's no such thing as "Trumponomics" - that idea implies that Trump has a plan or plans about the American economy. That idea is ridiculous because Trump is an idiot and he has no interest in the American economy. The only thing that troubles Trump's fevered brain is what's good for him.
So let's be clear about this - the only thing Trump ever thinks about is what he wants for himself. At the moment, the thing that is taking up all of Trump's limited mental effort is thinking about how he can get himself re-elected next year and avoid being charged, prosecuted and sent to prison.
There is nothing - NOTHING! - Trump won't do to avoid going to prison and that means there is nothing - NOTHING! - Trump won't do to win in 2020. The huge problem with that is Trump has shown again and again that he thinks the best strategy to win next year is to start a "re-election war".
In 2011 Trump repeatedly tweeted that he expected Obama to start a re-election war with Iran. Trump has picked up that running as a "war president" - like Dubya in 2004 - is the single strategy with the best chance of getting him re-elected, so next year he is starting a war with Iran.
Apparently nobody in the mainstream news media has ever considered this possibility. Talk about "Trumponomics" is going to look pretty stupid when Iran is sinking any ship that tries to navigate the Strait of Hormuz and Iranian agents are shooting down passenger jets outside Heathrow and JFK.
Trump's Winter really is coming.
7
@Colin McKerlie
Trumponomics is very straightforward three parts: 1) reduce taxes for all families of four making $53,000 or less to zero.
2) restrict immigration to create to labor shortage both driving up wages for low income workers and creating a demand for workers who would otherwise be cut out of opportunity.
3) increase military spending to act a labor force training mechanism.
It's worked. In 2018, the economy set ten all-time records for combined employment of Blacks and Hispanics driving their unemployment rates down to the lowest ever recorded.
Also, in 2018, the lowest quartile of wage earners had the highest increase of wages of any quartile.
Full-time job growth in 2018 was 100% higher 3.1 million than the 1.56 million in 2016.
4
The economy simply continued on the upward trajectory that began in the Obama administration. Goosed a bit and temporarily by the tax cut and resulting huge deficits, which are unconscionable during periods of expansion and will cause problems down the road.
13
@John Huppenthal - Funny how Obama started this train eight years earlier.
How do Republicans continue to miss the glaring, blaring success he created - and Trump continues to ride?
John, say it with me: Thanks, Obama!
13
In Krugman la la land, any statistic that makes Trump look good is irrelevant and any statistic that makes him look bad is representative. Economics is not a science!
3
@Eric
Neither is tright alt.right talk-radio rhetoric that glorifies Trump since he happens to be a raving lunatic.
At least Dr. Krugman knows what logic is.
4
For Jan 20, 2021: What if... it's Jan 20, 2009 all over again. Maybe worse?
Where do all the great plans and hopes go? As the new Prez tries to put Humpty back together again, and fast.
Like Obama, si, se puede becomes all hands on deck, SOS.
Let's take that a step further: What if some players in The Great Game, knowing no one likes the Ugly American regime we have, decide it is time to knock the dollar off its throne? No more "reserve currency". And since our greatest export since Raygun days has been $$$ there is a real weakness to exploit...the ability of Wall Street to sponge up loose dollars is not endless...
Well, if there is crisis, perhaps including shooting conflicts, the human race turns to...
Men (exceptions for Israel and India). Big point.
Having the best sounding proposals in a dissertation at an Ivy League is always iffy, given Dems on The Hill are notorious for fading come vote time...
& remember, no one "out there" wants the Ugly American again.
Trump University-what a calamity. Along with his Trump Charity. He should actually be in jail, along with his family.
Trump Airline never got off the ground, an overpriced shuttle that ended up scuttled.
Trump Vodka, more drunken misadventures, the only use it has now is to soak his dentures.
Trump Mortgage, trust Trump with financing?? Launched in 2006 just before the bubble burst (admit it - Trump is just the worst.)
Trump Magazine – A live Bizzaro World Comic Book, featuring Trump and the family of this narcissistic crook.
Trump Ice – Well, don’t ask him twice! A self-proclaimed “genius” overharging for water. How "brilliant" - how nice.
The New Jersey Generals folded within a year – Trump claimed the players just couldn’t get it into gear.
Tour de Trump – a K-mart Tour de France – a scaled down Bike Race reflecting Trump’s tastes - ie, the taste for bankruptcy as they raced.
Trump On the Ocean – Come dine outside on Jone’s beach! The weather there made it out of Trumple-Twit’s reach.
Trump the Game turned out to be lame, no strategy involved hence yet another business dissolved.
The Trump Network – the Twit couldn’t succeed. Now he's settled for his rancid Twitter feed..
Trump Steaks? Goodness sakes that was not well done. He now eats McDonalds. The failed meat market salesman says it had a good run.
So many messes, I haven’t named them all. But he claims he’s a “great” businessman.
What ____ing gall.
10
Trump has an actual economic plan for America? Are you sure? It looks far more like he shoots from the hip, often hitting his feet. Meanwhile, his economic wishy-washiness is harming the country. The only that will come from this is that Trump has less chance of winning another term if the country has an economic downturn before the 2020 elections.
7
If Trumponomics is a Flop because of what the U.S. bond market is suggesting then Paul must REALLY think that economic policies in those social democratic European nations where bond markets have plunged their yields way into negative territory are beyond abysmal.
2
We all know the 2017 Ryan / McConnell / Trump tax cut has increased the deficit from $600 Billion to $1 Trillion.
This is after 8 years of Republicans relentlessly railing against the debt during Obama.
Every Republican senator voted for the 2017 increase in deficit.
Not one Democratic senator voted for the 2017 increase in deficit.
When will voters learn?
The problem is that most voters don't know these details.
18
The smart money was complicit up until now. What changed?
2
But Paul, you may have a Nobel Prize in Economics, Trump has had at least six bankruptcies. Paul, I know your Nobel Prize medal is proudly displayed on your fireplace mantle, Trump lost over $1 BILLION dollars in a ten-year period. Paul, I know you are a Professor of Economics at Princeton University, Trump is in hock to the Russians for hundreds of millions of dollars! I think I will trust Professor Krugman’s economic ideas versus the worst president in American history!
20
Worse president was Obama
1
Confession: I derive sick pleasure watching President Trump standing before his adoring "marks," lapping up their shouted approval. You can see his insatiable ego mentally ingesting the adulation. Trump, of course, lacks comprehension that no amount of his patsies' shouting ever will or can satisfy his insatiable need. This is all broadcast on his face. Just observe.
10
@Paul Trump's strategy in every area of life is to deny, deny, deny!
Deny climate change!
Deny the possibility of a recession!
Deny that your tax cut favors the rich!
Deny charges by women who accuse you of groping them -- and deny charges you slept with women whom you paid to keep silent!
Deny that you're in financial trouble -- and deny Americans access to your tax returns.
Deny that you said things we can see on videotape!
Deny that you're a racist!
Trump doesn't make deals. He makes denials.
He doesn't know a thing about "The Art of the Deal." His expertise is "The Art of the Denial"!
19
"The most powerful country in the world is being run by a sundowning demagogue whose oceanic ignorance is matched only by his gargantuan ego"
24
From the NY Times
"How much influence does the occupant of the White House have on the economy, anyway? The standard answer among economists, at least when they aren’t being political hacks, is: not much. "
" serious analyses ....emphasize instead the role of the Federal Reserve, which sets monetary policy and is largely independent of the political process. "
Presidents and the Economy
NY Times Paul Krugman, Jan 4, 2015
6
@Carol,
I have no doubt that Prof. Krugman would still argue that in ordinary times this is still true...however we are not in ordinary times. If we think about how a president could have an effect by looking at presidential powers it becomes clear that there are actually relatively few ways for them to have a major effect. Congress holds the power of the purse, So the president is dependent on their help to affect spending. the Fed control the interest rates so the president is not very involved beyond selecting the Fed Chair. The direct power that he has that is major effect on the economy is international trade. here the president can negotiate trade deals, which would have to be very large to have a major impact on the economy, or can levy tariffs again which would have to be large. Since no president has engaged in an all out trade war in a very long time (and it was almost universally agreed that this would be a bad idea). So it was generally accepted that there was relatively little that a president could do to improve the economy and that using the powers he had would be damaging to it (thus most economist thought presidents would not take these actions) Trump does not appear to understand economics and thus has little sense of the consequences of his actions. He used his tariff powers and has placed huge tariffs on one of out largest trading partners. This is literally one of the only ways that he can have a major influence and it is for the worse.
3
@Carol
LOL, PK was right for once (called himself a political hack).
3
@Carol
Perhaps, perhaps not.
The entire culture enshrining the feds as economic gods revolves around Milton Friedman's Nobel Prize winning thesis that the Great Depression was caused by the fed allowing money supply to shrink.
Friedman hypothesized that money injection would have been accompanied by a positive relationship between money supply and money velocity. Thus the economy would have powered out of the depression.
The Great Recession has proven Friedman horribly wrong. Velocity is at the lowest level in recorded history, far below the previous low set in the 60s.
No. Economic growth is a function of tax rates, welfare policy and regulatory policy.
See Prescott and Richards work on labor supply.
It wasn’t 6 months ago I read this was Obama’s economy.
7
When was the last time krugman got something right other than his name and day of the week?
9
See: last 10 years. Everything Kaufman said came to pass. Everything the right wing entertainers and republican politic should said turned out to be lies.
3
Sorry, but these are the same people who were telling y'all to head for the exits back in January when the Dow was 4,000 points lower
When the real crash happens, don't count on the Times to give you warning
My advice: buy now, and sell when the Op-Eds are gushing about how the trade war was "won"
2
Are you following your own advice? Last week, one big news was
Berkshire Hathaway head honcho is sitting on lot of cash!
You think you are smarter than Warren Buffet!
Trump has a plan if the economy tanks and it appears that he will lose the election. Declare a national emergency and suspend the election until until we can find out what's going on. He will let us know via tweet.
We already know what's going on, it is a fascist coup d'etat. Trump cannot afford to leave office or Speaker Polosi will get her wish.
8
Um, other than blaming the Fed, Trump can also blame any non-white (group or congresswoman), the deep state, Obama, either Clinton (take your pick), the failing NYT, Jeff Bezos, Canada, Mexico, China - the list would go on and on.
To quote the great early-20th century philosopher, Ray Bloger, I think it'll get darker before it gets lighter.
8
I think you're right on the money
keep up the good work
Thank you
2
The essence of Trumponomics is anything that makes money for Trump.
11
Including declaring bankruptcy!
1
"Investors were clearly far too optimistic last fall, but they may be too pessimistic now."
To be fair, not all investors are alike. Those who were optimistic last fall invested in stocks. Those who are pessimistic now are investing in 10 year treasury bonds in the secondary market. The latter group is confined to the wealthy, but not the former. They're different folks.
Joseph in Missoula
1
What can the government do if there is a recession?
We already know that Fed rates are low and not much room there.
And with the 2017 tax cut, the deficit is approaching $1 Trillion so hard to come up with a fiscal stimulus.
Reagan made mess by cutting taxes for the rich that Clinton cleaned up.
W Bush made a mess by cutting taxes for the rich that Obama cleaned up.
Looks like it is happening again.
When will voters learn?
16
@Independent
"Reagan made mess by cutting taxes for the rich that Clinton cleaned up."
Nope.
Reagan reduced the 70% tax rate down to the 39.6% tax rate that was in effect during the Clinton term.
The economic growth in the 1990s was Reagan growth.
In 1999 and 2000, the economy slammed into the 39.6% tax rate proving it too high to quote Clinton.
Ask President Al Gore about this. Gore had to stand for election 6 months after the burden of personal income taxes hit an all-time record and bills for over a hundred billion dollars came due
1
If they haven’t seen the pattern, they don’t process information as it comes in. So the answer to your question is, NEVER.
Dr. Krugman, please prognosticate on what is it going to take for a major, explosive stock market correction to happen? This is the only thing propping up this disastrous demagogue and his enablers. We've seen Trump and Pump--when is it time for Dump? The crash will come when the pundits don't expect it--but WHY don't they expect it when so many problems are so apparent to those with objective sight? As you've said, "the economy" and the stock market exist on different planes of reality. We are no longer in "normal" times, and the past (except for the Dark Ages) is no longer a reliable predictor of the future. All rules of reason, rationality, and objectivity have been flushed down the toilet, draining into the proverbial drinking water system of society and our planet.
4
@JCX
"...why don't they expect it...reliable predictor of the future..."
Nope
Tax rates aren't so high as to be destructive of economic growth. So we will keep on growing.
By comparison, in 2000, the burden of personal income tax on the economy hit an all-time record and we've struggled ever since.
Trump reduced personal income taxes for all families of four making $53,000 or less to zero. Such families worldwide are subject to tens of thousands of dollars. As a result, the number of families organizing to move to the U.S. worldwide has increased from 150 million to over 300 million.
The number of illegal immigrants successfully crossing the border is going to jump from the current 1 million per year to an avalanche of over 10 million per year. That alone will keep economic growth increasing a couple of percentage points.
2
So many of your comments seem to indicate that you are a strong believer of Trickle down theory and Supply side economics. However, there is no data to support these theories. All they do is Borrow and Spend. Republicans use this trick each time there is a Republican Pres and deny it when there is a Democrat in office. Valid Theories should not depend on who is in WH!
1
Remember when the markets were freaking out over the possibility of Greece leaving the EU with debts unpaid? Greece's economy is tiny compared to that of Britain, but somehow everyone so far seems to be ignoring the threat of a no-deal Brexit. Brace yourselves for the day when the market wakes up to that reality, it will be ugly.
8
"No, the administration’s only plan if things go wrong seems to be to blame the Fed..."
This statement captures the Trump modus operandi, and it infuriates this tax-payer. The buck never stops with Trump. Economic problems can be blamed on the Fed or any of the countries that Trump believes is taking advantage of us. When it comes to national security and immigration issues, Trump attributes any failures to Obama administration policies. The list of those Trump blames for any perceived failures is endless, and he is a master in diverting our attention away from his incompetence.
The bottom line is that we have an occupant in the Oval Office that does not know what he is doing and has a learning disability that he tries to cover-up with multiple lies daily--12,019 false or misleading claims as of August 5.
10
Maybe the Wall Street fat cats are looking at Trump’s poll numbers and realizing that Sanders is going to literally eat their lunches.
The shift from capitalism to socialism will not go down without a nasty brawl and the retirees are going to be clobbered.
3
Of course there is no “socialism” in the US...at most Sanders promotes taxing the rich to pay for needed social programs. That is not socialism. Even “Medicare for all” would only be socialized insurance, not socialized health care. Medicare pays mostly private hospitals.
8
"The bond market, which is the best indicator we have, is declaring that Trumponomics was a flop."
I second that. But....
Are gutting environmental, health, and fiscal regulations worth more to the big money (as opposed to smart money) than a couple of years of stagnant overall growth?
No matter.
This is up to We the People to get this so called man out of the White House and it is beginning to look like We might just pull it off.
5
Everything about Trump is a flop. Warnings about another US recession abound now, and here in the UK too. How suprising is it, though, with leaders, if you can call them that, like Trump and Boris Johnson?
10
How many times will Mr. Krugman be wrong during the Trump presidency? I have gotten tired of counting. He seems to be hoping for a total world economic collapse so he can save face after so many misses and faux pas. I know he has egg all over his face for the dire predictions he has made that have never come to fruition, but c'mon Mr. Krugman, what you are doing is not patriotic and is plain wrong.
5
Tell us when he was wrong. So far the score in the real world has Krugman scoring home runs at Will and trump and his right wing entertainers scoring zero. Note I said he real world, not the world of ultra right wing delusion.
4
@Joe Rock bottom
The real world might include quotes that were published, might they not?
Paul Krugman 11/09/2016
“It really does now look like President Donald J. Trump, and markets are plunging. When might we expect them to recover?” Krugman said in his post. “If the question is when markets will recover, a first-pass answer is never. So we are very probably looking at a global recession, with no end in sight. I suppose we could get lucky somehow. But on economics, as on everything else, a terrible thing has just happened."
1
@Joe Rock bottom
"...home runs at will..."
Krugman's essential hypothesis is that tax rates have no effect on economic growth.
Tell that to the countries of the EU which grew $210 billion in 2018 while we grew $680 billion.
Tell that to Poland and Indonesia which grew at 5% with even lower taxes than the U.S.
Tell that to Vietnam which grew over 13% with lower personal income taxes than ours.
Tell that to Brazil which has had no growth over the last five years.
1
Funny how the voters in the USA didnt have the critical thinking skills to take into consideration this man bankrupted 6 businesses including 2 casinos before voting for him? A man that called himself the "king of debt"?
If he has his way he will bankrupt the US Treasury too.
How does that sit with the fake deficit hawks that the GOP used to be?
15
Erratic behavior and decision making...
...any economist will tell you these are the enemies of the market.
So, it it any surprise where we find our economy?
Trump is doing what leaders motivated by power, rather than serving the people, have done for centuries...fomenting fear, anger, chaos, prejudice and instability. That's how you keep people in line.
Funny, I don't recall any leaders of this ilk across history who have left a robust economy in their wake.
7
Mark my words. Trump will run for president again only to secure it for the republican party. He'll resign term two less than 1 year in and hand it to Pence. Trump's going to want some playtime in the private sector with all the riches he pushed that way as president.
Let Pence do all that faux-emoting at mass shootings.
1
@Mark - He won't get much play time when he's fending off criminal investigations.
3
Ummm... I must have missed this in my grad school economics classes: please remind me, why/how is the bond market "smart money"?!
And, if bond markets are indeed smart money, and low interest rates imply policy stupidity, how much more stupid are the EU and Japanese politicians and regulators, compared to the US?
3
Your record of predictions over the past three years has not been stellar. Can I take this one to the bank?
6
Funny, the opinion section on Fox News - which I rarely deign to view - says that Democrats are manufacturing a recession to up their electoral hopes in 2020. Per their view, consumer spending is 2/3 of the economy and "gosh darn it, the middle class is spending at Walmart in droves" - almost verbatim quote form one of their columnists. Wonder who is going to be surprised by any impacts of an economic downturn?
2
Dr. Krugman does not have a very good track record of predicting the impact of Trump’s economic policies on the stock markets and the bond markets. Why should we believe him when he writes, “The smart money thinks Trumponomics is a flop?"
9
I am an immigrant from another (albeit poor) democracy.
How could this country, armed to the teeth, keep electing such eggheads?
The answer isn't the said eggheads. Unless we manage to educate the masses, there is little hope. The people of the world are must be praying we get our act together.
4
Looks like the latest hot trend is to talk the economy into a recession.
6
To all those “hard working people” out there, the one thing you can do today is see him much leverage (debt) the company you work for has. The more they have, the greater chance you will have for losing your job.
3
SO now. you're admitting there was a Trump boom?
6
@Mattbk
Hacks like PK will never admit anything of the sort. They will claim everything up until the first negative growth quarter was Obama and then Trump is responsible for the recession and if there is a strong recovery they will find someway to give credit to Democrats even if they aren't in power.
4
Coining the word “Trumponomics” is a misfortune, suggesting some theory or plan is at work, however misguided. In fact, there is none. The “plan” very simply is to benefit the 1/4 percent, and any blather to disguise that is transparent balderdash. As for Trump, suggesting some thought process attaches to him also is balderdash — he is simply a marionette controlled by a small cabal of billionaires out to create advantage for themselves by generating chaos and government collapse.
7
I always believed a Con Man will get caught eventually. So many lies so much dissonance. It has to catch up to you somehow, doesn't it? Somehow Don the Con always makes it thru. Could he be the greatest Con Artist in History? Me thinks he will pull another fast one by late 2019 just to pull him thru the election. And sadly for America and it's soul I think he will win again.
3
In the old days, people worked hard to educate themselves. Read newspaper, attended night classes and held down two or three jobs.
Today we still have two and three jobs, to make ends meet but no one appears to have any interest in furthering their understanding of the world. This is not a scientific study at all but just interacting with people on a daily basis. We have a president who has issues with everyone and he his flair for English is reduced to telling untruths.
I suppose so many of us realize that the American dream doesn't exist anymore unless your rich, so why bother to understand the world you cant afford to go any further than your own block, nothing will change.
We can thank Ronald Regan for the start of the downward spiral of democracy and the standards of living.
7
If the economy goes south, Trump will blame the democrats. And most of his base will agree with that.
9
No doubt Don will start blaming President Obama or, heck, maybe even Hillary Clinton in addition to blaming the Fed when our economy starts to officially tank. Oh, wait. Maybe the numbers won't be "real" anymore when they turn south. Newsflash people: Don Trump just lies 'till the cows come home and then some. He will make up any story to cover his sorry performance. Folks would have to be fools to believe anything he says. The guy has ZERO credibility.
9
"So everyone is sitting on piles of cash, waiting to see what an erratic president will do"
Maybe. Or maybe those in the WH who know a little early when a tariff will be announced, or when it will be withdrawn or postponed, are moving money into and out of affected industries. Wash, rinse, sock away another fortune, repeat.
3
"How many voters even know what the Fed is or what it does?"
Unfortunately, it may not matter. As long as they have a boogeyman and it has a name (the fed, Powell, the squad, immigrants, Clinton, what-have-you), it will do what it is meant to do: provide cover for reckless economic policies and a target for his glowering base.
3
Well, we knew taht Trump was a terrible business man and we elected him to run the country anyway. I mean, if you can't run a succesful gambling casino, how can you think you're a good business man?
7
Blame the Fed? Paul Ryan must feel so slighted.
3
I would gladly lose a few bucks in my 401K and have a lower Dow Jones to be rid of the insanity that is the Trump presidency.
8
The Trump"team" is now focused on who else to blame. Thats the big policy push now.
4
If the economy is slowing we’d better spend $100 trillion on preparing for an alien invasion, right?
1
This has been inevitable since the 2016 elections and we haven't sen anything near the worst of Trump's damage.
Our children will, though!!
7
“From Trump Boom to Trump Gloom
The smart money thinks Trumponomics is a flop.”
“So what accounts for this wave of gloom? Much though not all of it is a vote of no confidence in Donald Trump’s economic policies.”
The question of a Recession coming in the next year is up in the air. But, what is certain right now is that the Trump Tariffs and his rejection of our Trade Deals is raising the cost of living for all of us on the products we have to buy every week.
On today’s Washington Post is this:
"Trump aides look into U.S. purchasing Greenland after directives from president The request has bewildered staffers, some of whom continue to believe it isn’t serious. But President Trump has mentioned it for weeks."
https://www.washingtonpost.com/business/2019/08/16/america-first-greenland-second-is-trumps-latest-white-house-directive/
Maybe Trump wants to have a modern day version of the Louisiana Purchase. Or, is Trump looking for something "Good" for the future history books to write about him?
3
Is this the same Krugman who predicted on Trump’s election night that the stock market would crash and NEVER recover. I’m certain though Krugman is pining for a complete economic Trumpian collapse so that he can pronounce himself an economic genius yet again.
BTW I’m no Trump fan but you Kruger’s that so blindly follow his sage advice are no better than the Trumpster’s you are always railing about.
Krugman’s columns should just start and end with I despise ALL things Trump and save lots of print space.
4
The old adage ' If you put enough monkeys in front of keyboards one of them will eventually printout the works of Shakespeare ' applies to Republican economic theories and especially Trumponomics (whatever that may be).
4
"So everyone is sitting on piles of cash, waiting to see what an erratic president will do."
"Consumerism" sitting on piles of cash??? No demand...no investment???? Sounds like a logjam of dollars.
@DHR
Keynes referred to "stagnant pools of money" in the 1930s.
Friedman said his theories banked on a positive relationship between money supply and money velocity (the frequency of money being spent).
Friedman was horribly wrong.
Velocity is at the lowest level ever recorded in history.
By far.
The fed can damage us but not help us.
Taxation policies, regulatory policies and welfare policies determine our fate. The economists are quibbling bystanders, not the gods they make themselves out to be.
See Prescott's and Richard's work.
3
Republican Never Trumpers, Loyal Democrats, and all MSM/Hollywood power elitists, UNITE!
A good, stout and deep recession is now needed to defeat the evil Donald J. Trump. Let’s hope that we all get exactly what we deserve next year.
1
@Packard
Yes, we need to keep all 12 million of those young adults in their basements hooked on drugs and dreaming horrible fantasies of revenge on society.
That's what will be good for society!
Paul’s predicting again.
Remember, do the inverse. History is on your side.
Tip of the day.
If, by "smart money", you mean you -- and you do -- you told the world immediately upon DT's election that the markets would never recover. Have you ever admitted your error?
That said, there is certainly one element of "Trumpanomics" which should worry everyone: massive deficits produced by obscene spending. Over the objections of virtually all conservatives, and with the enthusiastic backing of virtually all Democrats, the POTUS signed off on a deal to blow spending -- mostly on handouts, freebies, and giveaways -- through the roof. If there is to be a major downturn, it may result from the fact that we are borrowing and spending ourselves into catastrophe.
The solution, obviously, is to massively cut spending. To make America-hating leftists happy, some of this can be done by bringing the troops home from the myriad places they presently hang out. But most of the cuts will, perforce, come from eliminating many federal programs and departments. Getting spending down to the level Bill Clinton considered adequate would instantly solve our most pressing problems.
Who needs the bond market to tell us this administration is a flop?
3
To know what Trump will do, watch Maduro. He thinks highly of himself also.
2
it's a giant "short play".......it's been their plan from the start. the prez and his "associates" will ride this one down and make billions.
3
You can always expect a negative comment from a professor like Paul who has never worked in the private sector. Not to mention the fact that no one would hire him accept maybe academia. Lowest unemployment in US history. Give me a break!
3
One would correctly believe that chaos in our economy, and that of Germany and China, would be just what Dr. Putin ordered, wouldn't one?
Aren't you the guy who said that Trump's election would plunge America and the world intio a Great Depression?
YES YOU WERE!
And these pages have published your continuous and inaccurate assaults ever since.
There is something really quite odiferous about the Left's calls for calamity to strike America. From Bill Maher to Krugman we read of pundits rather hoping for financial and social pain to be inflicted upon us all as long as the deplorables get hit.
What matter the ills they seek to inflict upon America? I suspect that, given the power, they would call down upon us the Ten Plagues of Egypt. They seem to think it a small price to pay because HRC lost an election.
Disgust is too mild a term. By far.
4
But, Paul, you left out the part of The Trump Stable Genius Economic Plan where all those tariffs on imports cause US industry to bring all their factories back home and hire hundreds of thousand new workers! Plus, nobody in the US is paying any of those tariffs anyway, China is paying them all and billions of dollars are flowing into the Treasury, so you don't know what you're talking about.
Also, I'm not quite sure, but if Donald Trump is an economics moron, and if all the economists who knew anything have left his administration, and if HE'S the guy who picked Jerome Powell to lead the Fed.... see where I'm going with this? On the other hand, maybe, in some perverse universe the equivalent of a Trump inverted yield curve, his selection of a truly competent man is the only thing he's done right, which is why he thinks it was such a mistake.
Anyway, in TrumpWorld the stock market is the economy, tariffs mean we'll be producing really clean coal any day now, and we're winning the trade war with China.
Coming soon: Trump pushes the Fed to cut rates below zero and start paying investors to borrow money, because that's a surefire way to get the economy booming bigly. Just imagine how many people will be lining up at banks to take out those better-than-free loans! It would be just like those rebates you get from credit card companies for spending more money than you've got!
3
@Jim
"...bring all their factories back home and hire hundreds of thousand new workers!"
Manufacturing employment is up 500,000 since Trump took office after being down 7,000 in 2016.
That's more than a few factories.
@John Huppenthal Yeah, I saw the same Forbes opinion piece where you got those stats, written by John DeVore, VP at the Texas Public Policy Institute, a conservative think tank that pushes the oil industry agenda and is skeptical of climate change.
Conveniently, you left out the part where the vast majority of those "manufacturing" jobs took place in oil drilling and refineries. Top 10 states with manufacturing job increases: Nevada, Wyoming, South Dakota, Arizona, Idaho, Utah, North Dakota, South Carolina, Texas, Iowa. While I do see a definite pattern here, I'm not really seeing any of those factories you referred to.
Plus, all of that growth took place before the tariffs. Try this instead: https://truthout.org/articles/under-trump-manufacturing-job-growth-slows-to-a-trickle/
1
The opportunity costs of the Trump tax cuts are absolutely reprehensible. They were sold as the basis for growth long into the future when in fact the tax cuts were thrown together to pay off GOP political supporters. In fact most of Trump's deregulation has thrown major industries into perpetual legal war with confusion for consumers and producers. The Trump Administration is one of the most crony dominated Administrations in recent history. And to Krugman's point, Trump doesn't do economic corrections. He goes right off the cliff.
425
All of Trump's tariffs are illegal. They would be legal only in case of an emergency.
Why does anyone in government enforce them?
The only emergency is Trump's imposition of tariffs itself.
3
"OK, despite what we predicted, this tax cut didn't pay for itself. Bush's tax cuts didn't pay for themselves. Reagan's tax cuts didn't pay for themselves. But boy, just you wait until the NEXT Trump tax cut!"
8
@Bruce87036
"Reagan's tax cuts didn't pay for themselves."
You've been drinking Krugman's Koolaid. In 1988 and 1989, combined corporate and personal income tax revenues set all-time records.
In 1980, the countries of the European Union had a much bigger economy than ours. Today? Now it is much smaller than ours.
Nobel Prize winner Edward Prescott found that the higher taxes of Europe caused them to start working later in life, retire earlier, take more sick leave, take more vacation, work less ambitiously, work less intensively, work less effectively in teams, have a lower ratio of second household incomes to first household incomes, grow less intelligent as adults and create companies worth less.
As a result, EU median household income is $40,000 while ours is $62,400. EU's stock market values are less than $10 trillion while ours is $31 trillion. And, the EU grew $210 billion in 2018 while we grew $680 billion.
2
@John Huppenthal
First, Reagan's tax cuts were in years 1981 and 1986, and federal revenues dropped by $200 billion from the first and $100 billion by the second. But revenues rose between 1986 and 1989 after Reagan's four tax increases.
Also, your numbers on everything else are enormously exaggerated. But I won't get into that because I'd rather address more distressing issues with your thesis.
Finally, it's true that as compared to our country, Europeans are heavily taxed. But their safety nets are much larger than ours, they die later than we do, and they all have universal and affordable health insurance. In addition, some also provide free college for all.
In the end, according to the UN's World Happiness Report for 2018, the US, despite its vast wealth, is 18th in the world on the score of well being and happiness, and behind almost every OECD Western European country. Part of the US problem is due to our working too hard and long.
In other words, the long & hard work that you glorify is destroying our joy in life. I don't know, but maybe that's why we're killing each other when they don't do that in other countries.
Joseph in Missoula
1
@Joseph
"...after Reagan's four tax increases..."
Only in a liberal's dream. Every single personal income tax rate was cut with each change and never increased. The top rate was cut from 70% to 28% and never increased.
And, yes, combined personal and corporate income tax revenues hit an all-time record in both 1988 and 1989.
We've been doing this for 40 years. Republican trickle down scam economics wrecks the economy, Democrats come in and fix the economy and make it, and the nation, healthy again, all in time for the electorate to get their usual case of mass amnesia and start the cycle all over again.
As a result, the top 1% (whom Republicans actually work for) have more wealth and income now than at any time in over a century. They make out like bandits (parasites, actually) when Republicans turn over the economy and the treasury to their interests, and then they scoop up assets at fire sale prices once the economy tanks. Rinse and repeat, and look at where our nation is now: gilded age wealth inequality, horrific healthcare, collapsing infrastructure, job insecurity, strained alliances, and an environment being killed by corporate interests.
This is what you get - every time- when you vote Republican.
16
@Dominic
When has supply side economics not worked?
Trump reduced tax rates in 2017, in 2018 we had real economic growth of $680 billion, up from $290 billion in 2016 and by comparison with Europe at $210 billion.
Reagan reduced tax rates from 70% to 50% in 1983, economic growth was a stunning 7.3% in 1984. The highest growth in the last 65 years.
Reagan reduced tax rates from 50% to 28% in 1986, economic growth was 4.9% and 3.6% in 1987 and 1988.
Reagan tax cuts combined created the highest six year period of growth, 31% since the Kennedy tax cuts in the 1960s (37%).
Congress overrode Truman’s veto and cut taxes in 1948, we had six quarters of highest growth in the history of the U.S. 16.4%, 12.7%,16.3%, 8%, 5.6%, and 7.1%
Calvin Coolidge and Warren Harding reduced income tax rates from 75% to 25%, economic growth in the 1920's was 37% as compared to Obama at 13%.
Kennedy reduced tax rates from 91% to 70%, economic growth was 6.5% and 6.6% in 1965 and 1966.
Clinton reduced capital gains taxes by 29%, economi c growth in 1998 and 1999 was 4.5% and 4.7%.
Bush2 reduced tax rates in 2001 and had economic growth of 18% compared to Obama’s 13%
Czech Republic reduced their personal income taxes to 13% and corporate income taxes to 19%, their civilian employment rate has climbed from 63.6% to 74.6% and their average growth has been 4% from 2013 to 2017.
England eliminated the personal income tax in 1815, they averaged over 4% GDP growth over the next 35 years.
3
@Dominic Obama added $10 TRILLION to the debt, never had one year of 3% GDP growth (only president in HISTORY to be that incompetent) and had record levels of people in poverty and on government benefits like welfare and food stamps, YEARS after the recession ended. EPIC FAILURE!!!
3
Persoally I think that the Federal Reserve and other Central Bankers around the world are responsible for our concerns about the stock and bond market. Who ever heard of negative interest rates until the PHD's at the Fed decided that dropping rates would be a panacea out of the last recession.
The Fed was planning on returning rates to "normal" 6 months ago. What is normal. My guess would be 5%. Would that have affected the sock market? Yes? as it is overpriced by at least 30%. Seems like the Fed has never met a bubble that it does not like. Not to mention the crazy prices of real estate . People cannot afford to live in most large US cities.
(but there is no inflation?).
Seniors trying to save for retirement (where is AARP on this?), young people trying to save for a first home?
These Central Bankers may have PHD's but for the most part from my experience they do not have a drop of common sense and cannot see the forest for the trees.
These Central Bankers are the cause of financial problems not the cure. However, I don't expect Paul Krugman to buy into my philosophy any time soon because he and his ilk are the reason we are in this mess.
2
... and for all that work, Krugman has yet to arrive at a happy ending, underscoring the difference between writing based on mathematics (economics) and writing based on imagination (broadly, literature). of course, the stories with endings, whether happy or not, have shape because they are mostly fiction; we only wish the epic about the economy under Trump were fiction. at least Trump can be said to be a colorful character in a way the players in a economic tale, up to their eyes in calculations, seldom are.
1
@Pottree
Since numbers are absolute,
I’ll settle for a chance to see the Dullwitted Donald’s financial statements he gave to Deutsche Bank for a loan compared to the financial statements he filed with the IRS during the same year.
"Colorful character"? Really? I call him a corrupt fraud.
5
So far the Trump economy has out preformed most of the World. Europe is faltering after a decade of stimulus, Chinas state run economy weakening. Brexit. The are problems on j horizon but as Krugman criticizes Trumps economy, people with money are bringing it to the US for safe keeping driving bonds upside down. Rich Chinese and Europeans seem to have more confidence in Trump than Krugman...
3
@Lane
Not true. REALITY CHECK: The highest level of growth under Trump's administration was at a 4.2% growth in the 2nd Quarter of 2018.
That is less than the 5.1% growth showin in the 2nd Quarter of 2014, during the presidency of former President Obama.
During Obama's prresidency, the stock market was shakey for about a year after a gigantic economic crash, then grew at a steady pace.
The opposite can be said about Trump. After he took over, the economy was growing steadily for a year. Then Trump's economy when viewed on a growth chart looks as wobbly as the way he walks when he has toilet paper stuck to his shoe.
And although it reached record highs, it's also seen record lows and is as volatile as his personality.
8
@Jbugko
Perhaps. Perhaps not.
Maybe the stock market finally hit a new high in 2010 because the Republicans took control of Congress.
Maybe we are wobbly now because, as the Dems took control of Congress with their 90% "marginal tax rate" ideas, the stock market tanked $5.5 trillion. Elections have consequences.
The stock market is now only down a trillion from peak but it is still at $31 trillion, up $7.5 trillion from when Trump took over.
The only quarters that count will be the first three quarters of 2020.
That stock market is saying that the economy will grow over 4% in those three quarters.
2
@John Huppenthal
Or maybe the Republican Toadies for Trump knew they were endorsing a fraud (or did they not even bother to look at the Trump University fraud cases filed against him) an inept fraud and are sycophantic short-sighted fools.
1
It took Bush and company nearly an entire 8 years to do what Trump and his cohorts are poised to do in less than 4 to the US economy. Finally it appears that Trump will finally be the best ever at something, unfortunately, that something will be quite costly.
10
Inverted yield curve on bonds suggest that recession is about 2 years away. That puts Trump on the Junior Bush’s bubble. Will the recession come before the election or after?
If it comes before his goose will be cooked, for sure.
Don’t think I’ve ever seen him sweat before. Losing the election, or even the perception that he won’t win will cause him all kinds of mayhem, some of which might lead to an orange jump suit. Ex billionaires don’t function well in the jailhouse.
11
I'm pretty sure that joke actually goes: "Economists have predicted 9 of the last 4 recessions".
8
Hundreds of thousands of people, some brilliant, are trying to figure out what the economy and/or some part of it will do, so they can position themselves to take individual advantage and avoid individual harm. To win in this game, each must try to do better than average, and the game requires losers who will do worse than average at the expense of those who do better.
If governments or central banks are trying to make the whole economy do better or not do worse, these hundreds of thousands are each trying to figure out how he or she can use these government or central bank actions to advantage, even if using these actions to advantage makes them less effective or even counterproductive for the whole economy.
It is wishful thinking to presume that this process, where government action is what happens when everybody tries to influence the action for their own benefit, will not occasionally jump the tracks or go off the road into a ditch or hit an iceberg.
1
As I understand it, the Fed is still selling long term bonds it purchased as part of QE. So the Fed is actually holding up long term interest rates to some, probably modest, extent, but still, without the Fed's "quantitative tightening", long term rates would be even lower. So I suppose that the Administration, besides wanting a lower Fed Funds rates, wants them to stop reducing their balance sheet at all or even to reinstitute QE. Has anyone read what the Administration is asking the Fed to do regarding QE?
3
@roseberry
Yes, money supply growth was flat as a pancake for the first three months of 2019. Now, it has taken off like a rocket again as evidently the fed has reversed course.
Gold has shot to $1500 as once again, the Fed malfeasance is encouraging investment in stagnant assets instead of productive assets.
2
If the long term yield indicates that interest rates will be low in the future as set by the Fed, that seems very likely regardless of a recession or not, because we are pushing into constant low rates set by the Fed.
Not enough explanation was given here, except that if the bond market thinks the Fed will have many rate cuts in the future it means a recession is likely the cause. What does this mean in our world? We will have negative rates in the future? At some point, these tools and parameters of the Fed no longer are viable to change the incentive for private investment and spending.
3
I figure a recession will hit in time for a Democratic president and I wonder what then? How will the next president (I'm thinking positively) bring us out of recession, or keep us from falling into one. We've had the tax-cut stimulus and interest rates are already low and going lower soon. Maybe government spending on infrastructure will get attention along with support for climate friendly energy projects. Like others here, I imagine that some positive changes can come about with a recession. The more pessimistic view, though is that we will still have a republican/libertarian senate that obstructs any attempts to stimulate the economy. All the more reason for people to vote for Democrats at all levels of government. Vote Blue!
16
Trump has little to do with the market or much else. Neither do most of the powers that be. Power is now lodged firmly where it has always been, in the collective consciousness that includes all there is, what we think we know and definitely do not know. The world's upswing and the general drift of the market is because the collective reality is evolving in exactly the direction Trump detests. His most significant contribution is as a spur to reaction that adds to positivity. If we defeat him we won't need a dismal economy -- we will have determined we are ready to implement what needs to be done. For my money Elizabeth Warren has the goods and seems well able to make a case that will flummox the one who continues to flummox us.
10
@Stephen C. Rose
Under normal circumstances I would largely agree.
However, trump repeatedly claimed that any and all good in the economy for over two years was solely because of his actions.
Such willingness to assume responsibility means to me that trump is responsible for any and all bad that comes to the economy as well.
He said he owned it all -- so he owns it all.
15
@Tom Clifford: But trump doesn't operate like that---logically. Malignant narcissists, pathological liars, and crooks are not fond of logic. trump takes responsibility for all good, even if someone else deserves that responsibility, and he denies responsibility for all bad, even when he has created it.
3
@Stephen C. Rose
"Trump has little to do with the market."
Maybe. Maybe not. Economies are all about consumer confidence which is why the consumer confidence index is such a good leading indicator.
Consumer confidence leaped on Trump's election day after trending down for the two previous years.
Right now, we are still dealing with the aftermath of the $5.5 trillion fall in the stock market after the Dems took control.
Yet, consumer confidence is still higher than it was for the first six years of the Obama administration.
Blaming the Fed is a good political strategy precisely because the voters don't know what the Fed is and does. It may have nothing to do with the Fed but an agency with nebulous duties makes a good scapegoat.
3
Trump knows that most of his supporters are uneducated, and he loves them.
Million $ question is how the other 2/3 of the voters will behave in 2020.
Even if a Democrat wins in 2020, our Leader and his GOP enablers have done too much
damage to US reputation, for us to rebound quickly.
Greedy Republicans, British Lords and Trump family sold us to the Russians.
We have lost credibility with our allies. Of course, we won’t lose clients, but they will also shop
around for a better pay master. It may take generations, if ever, to recover from this self inflicted wound.
In the mean time, other cultures will move ahead.
2
The next recession will be more challenging with respect to any kind of government intervention with Both interest and tax rates are already at historic lows.
13
"To be fair, it’s now clear that the Fed was wrong to raise short-term rates last year."
That is not clear at all. Indeed, if the country, for whatever reasons, plunges into a deep recession, the fact that the Fed didn't allow rates to normalize during a 10-year upswing in the economy means they have precious little wiggle room to deal with future perturbations.
We reap what we sow. We have sown seeds of greed whose flowers expect to never wilt.
Best of luck with that, marketeers. Large or small, a recession is coming because it's due.
9
@Larry
"...coming because its due..."
Nope.
Leonardo da Vinci observed that waves vibrate, the earth vibrates and light vibrates and that there are causes to this vibration.
The economy vibrates a lot less since Reagan hugely reduced taxation in 1980.
There were 7 recessions in the 40 years before Reagan's tax cuts, only three afterwards. And, all of those three were driven by tax effects.
The stock market is up $428 billion today because Trump filled his stadium last night.
The Dems only hope to win is to create a rational expectation that both a Dem will win and that Dem will destroy the economy. This will cause the economy to implode before election day ensuring Trump's defeat.
It worked in 2008.
Fantasies of being King do not actually make a leader. It’s the fantasy part that destroy lives. Bankruptcy is a repeatable event. The popular vote did not want an expert in how to bankrupt an opportunity. Or an economy. Or farmers. Morally bankrupt as a phrase comes from our understanding of bankruptcy. Clarification of the full meaning of bankruptcy is beginning to happen now; for the country. And he was so hoping it wouldn’t happen, but it is in progress. Because a life of fantasy does not make a leader of American families who need to survive in a Really unforgiving world where “rescue” doesn’t happen often at all.
10
@Ray You put your finger on something important. Those fantasies are the toxic fumes rising from a stagnant, still undrained swamp. They are highly flammable. By now it is clear that those who thought and still think Trump is a fantastic president are incapable of self-preservation. They need rescuing because their condition is hazardous to us all. In 2020 we will give them not what they want but what they need.
3
Trump had built a business model on filing for bankruptcy.
Did we need a better warning than that to foresee that his stewardship of the American economy would be a disaster?
18
Using the word ‘Trumponomics’ suggests that such a thing actually exists, that there is some coherent thought. Of course, there is not. If Trump were coherent he’d be more dangerous than he is.
11
The president only has a small bit of control over a global economy. But he sure has been doing his level best to break free markets, free trade and freedom.
16
There will be no recession in 2020.
Why is that?
Because it would be the most predicted and banked upon recession in history.
Predicted by those in the 'dismal science' known as Economics, dismal because you get paid to be wrong every year.
And banked on by Democrats, as a lever to unseat Trump by.
So, yea, it's not going to happen.
And why is that again?
There are tidal waves of money out there.
This ocean of money has accumulated due to the continuing influences of the Internet, and the Post Cold War rush to Capitalism.
A paradigm that has not changed.
So where does Capitalism go from here?
My guess is that, if free markets prevail, the cost of products will get cheaper and cheaper. Demographics and productivity suggest that the scarcity of stuff in the past will be replaced by too much of everything.
Amazon should do well, and everything else will have to get along with very small profit margins.
Which is fine, cuz everything will be cheap. Everyone will have as much stuff as they want, freeing the mind to expand. Shangri-la.
2
With that consumption, the earth will move faster towards climate change and its disastrous effects.
Actually, we don’t have any money set aside for helping Americans in climatic extreme events.
It is all on credit cards. House of cards can not stand for a very long time.
3
@Rob - Fascinating. What exactly are your credentials when it comes to economics?
3
Uhhhh... what about tariffs imply free markets???
2
Why? The Federal Reserve basically controls short-term rates, but not long-term rates; low long-term yields mean that investors expect a weak
So does that mean that Trump essentially eliminates the Fed as they keep lowering the short term rate to zero? Is that a far fetched notion? Is it far fetched to think that as we go to zero, we pay the Treasury to hold our money?
3
Some Europeans are essentially paying banks to hold on to their money. Negative interest rates!
5
About that European recession that looks increasingly likely according to Krugman -- tell us more.
Europe's economic choices are very different from our own. One need only consider the Continent-wide August vacation to see that.
So what have they done that might bring on recession, and what might they do to get out of it, and how does that compare to American economic policy?
It is helpful to have a view of an alternative as it works.
4
@Mark Thomason
Europe has much higher taxation than the United States, particularly when you normalize their taxation.
In other words, if you applied Europe tax rates to the U.S. that would be an enormous tax increase, much larger than that implied by the difference in percent of GDP.
In other words, the European Union average taxation as a percentage of GDP might only be 10% higher than that of the U.S. but if you applied their tax rates to our economy, it would result in a 50% tax increase.
Why? Because they have annihilated their tax paying class. The people we regard as upper middle class they now regard as the rich to be taxed heavily while we are looking at giving them tax relief.
That's why we aren't going into recession even though Europe and China will be going into recession.
3
You mean the United States has never gone into a recession? It is recession proof?
2
I generally agree with this article, but to nit-pick, I'd say the linked chart shows inverted yield curves predicting 7 of the last 6 recessions, with a brief false signal in 1998.
5
That may have been saved by our fear of Y2K, which led to every governmental and private entity to spend a lot of money to strengthen cyber infrastructure! I am just wondering!
2
Of all the descriptions of President Trump that I've heard since his election, "Monkey with a Gun" is still the most apt.
27
@KC Haha, yes, perfect. Also, google John Mulvaney’s bit: Trump is like a horse loose in a hospital.
1
Message to the American people: You reap what you sow.
9
Has any economist ever been more wrong more often than Paul Krugman? He’s so wrong so often to call him an economist is a joke. This is a man that considered the Internet to be no more useful than a fax machine. He also predicted a worldwide recession with no end in sight upon Trump’s election. Only blind partisans at a newspaper that won’t print fair headlines would give him a voice.
5
Then there was his constant hand wringing about the toxic mortgage assets banks were holding in 2007 and 2008. What a scold!
3
@Registered Repub Dow headed down. No real spending power increase. Tax scam gave the rich free money. Deficit sky high. Plenty of low wage jobs. Yeah; thanks Trump.
5
As compared to who? Larry Kudlow and Peter Navarro? Mnuchin and Mulvaney? Mooch and Miller? Please.
This is more of the same drivel these useless PhDs peddle to low information subscribers. The globalist savants, who this columnist has served dutifully his entire sycophantic career, have won. The American middle class is dead and NEVER coming back. Anyone under 50 without advanced, specialized degrees and rock-solid dual household employment, will soon be living paycheck to paycheck. Soon after that, these tens of millions will have no access to credit -- poof! Lifestyle crushed. This is the harvest of several decades of our government owned and operated by globalist bankers, unseen and ungodly wealth and the deep state it finances. For the very few of us with remaining resources, no debt and secure locations, we will be able to ride out the sunset of the "American century". The VAST reminder? A world of Huxley/Golding reality. Yes, we are armed. You'll need to be as well.
4
@Lynn
The Democratic side of the globalist bankers thought that the system had to be managed and balanced so it would survive. For them, the globalist bankers had to accept limits on their individual power and inside deals, and share some of their wealth and power (but not too much) with other sectors of society.
The Republican side of the globalist bankers want as much money and power as each can individually get, and see any talk about the health of the global economy as a communist attack on their power and rights. They also see any independent wealth as targets to be exploited and brought under their control.
Huxley and Golding do not see the same reality at all.
The armed, warring gangs that arise when the global order collapses (the global Somalia) will come after any unaffiliated individual with resources; such individuals will have to form a gang of their own to survive, at which time they will no longer be individuals but rather gang leaders or followers or dead.
3
From Obama boom to Trump gloom.
There, I fixed the title for you.
22
Krugman has been writing the same story for 2 and a half years.
7
Mr. Friedman you also said if Donald Trump were elected President the economy would collapse. It's hard to separate your bias from facts.
2
In fairness, it may be getting ready to collapse.
3
@Julia It's Krugman, not Friedman.
1
Jobs created in 31 months:
Previous administration: 7,135,000
This administration: 5,988,000
Difference so far: 1,147,000 fewer jobs this administration
Source:
https://data.bls.gov/timeseries/CES0000000001?output_view=net_1mth
Projection for 48 months:
1,776,000 jobs (almost two million fewer jobs this administration)
With both chambers of congress and the Supreme Court on its side, this administration has not been able to match the previous administration’s job creation numbers.
A recession/depression before the election could be blamed on the Fed or and/on any increase in the likelihood of Senator Warren/VP Byden winning the election.
10
@Keynes
Full time jobs are the only jobs that count:
Full time job creation in 2016? 1.56 million
Full time job creation in 2018? 3.1 million, 100% increase
Trump's new Green Deal. Buy Greenland and rename it Trumplandia! Build a casino and some Trump hotels so that Trump can have his golf outings in Trumplandia on our dime for the next four years.
And more tax cuts!
For Trump!
18
I submit that once the Empire State succeeds at revealing Trump's taxes, we will all learn it is impossible to give him a tax cut as he already pays no income tax, and probably gets credits, which he bundles with borrowed air rights and takes to his Russian friends, who cut him loans through their patsy Deutche Bank. follow the IOUs.
3
He has also seen a swath of land to build Trump Hotel and Casino in Beautiful North Korea.
2
Oh, who cares about the economy...we get to call people names and make fun of them or, better yet, put them in horrible prisons without trial. THAT'S what's important. MAGA!!!
20
Only an "economist" would think that because a golfer made 6 pars in a row he would finish 18 holes at even par.
Still a better chance that golfer finishes with 18 pars than a golfer that starts with 6 bogeys.
Given trump’s propensity for taking Infinite Mulligans and just generally cheating on the links, are you sure this is a wise analogy for you to draw?
2
@Robert Trump playing golf has nothing to do with it. Krugman's view that an inverted yield curve has predicted 6 of the last 6 recessions can only be analogized to a golf course where every hole is different. The runup to the last 6 recessions has no self resembling characteristics. No two economies are ever the same. It is just as likely that a golfer will make something other than a par on the 7th hole, in fact more likely--a pro being more likely to make a birdie and an amateur more likely to make a bogey. That Krugman thinks he has found this correlation (even if it is correct) just reminds us of the statistical truth that a correlation is not causation and makes the golf analogy apt.
Hope Mr Krugman or someone at the NY Times reads the Dec 4, 2008 article by the late Floyd Norris long time financial writer for the Times. The gist of the article is Donald Trump sued by Deutsche Bank for a 40 million dollar payment responded by claiming the depression of 2008 was an Act of God and he should not have to pay it.
Or since the banks caused the worst depression since 1929 he should not be required to pay. Trump thanked Norris to the interview but reminded him if misquoted he would sue Norris and the Times. Fun reading.
9
For Trumpanics believers, it’s no thinking required. Only bombast.
7
It is obvious even to those of us without PhDs in economics that salesmen succeed when they convince potential buyers - prospects - that the prospect will be happy, a winner. Trump's stance is 180° away from that. He sees himself as a winner, and anyone or any country he deals with is a loser, no matter what the terms of the 'deal' are.
You can't make money if you can't make friends, if you don't play well with others. In Pete Gent's book, "North Dallas Forty", he describes how a salesman convinced him to buy a car he didn't really want because that would make the salesman happy.
Who wants to make Trump happy? Melania? Jr? Mitch? It really has nothing to do with inverted yields or interest rates: those are the symptoms. When Trump chows down on a burger and ice cream in his bathrobe, tweeting ALONE, he is in his element. He's with all of his closest friends.
Think of the revolving door appearances and departures from his cabinet, from Rex to Michael to finally, finally, the Mooch.
He's not Hitler, or Mussolini...he is Lear, shouting "Blow, winds" alone on the moors.
12
@Nat Ehrlich
Trump may have made a few people happy:
1 Economic growth in 2018 $630 billion versus $300 billion in 2016 versus Europe’s 210 billion
2 Full-time jobs up 3.1 million in 2018, 200% of the 1.56 million increase in 2016
2 Real disposable personal income up 3.6% in 2017; 4.2% in 2018
3 Manufacturing jobs up 500,000 under Trump. 2016? Down 7,000
4 Total job openings 7.3 million up 25% from 2016’s peak 5.8 million jobs
5 Unemployed 6.0 million in 2018 versus 7.5 million in 2016
6 Stock market: $33 trillion, up $9 trillion since the 2016 election
7 Mortgage delinquency rate down 26% from 2016
8 Combined Black and Hispanic jobs set ten all-time records in 2018 at higher wages than in 2016
9 Consumer confidence highest in 20 years, up sharply from 2015 and 2016.
10 Unemployment 3.8% lowest since 1969.
11 Initial Public Offerings up 250% from 2016 to $46.8 billion in 2018
12 Real disposable personal income up $597 billion in 2018 versus $244 billion in 2016
13 Total wealth $108 trillion up $13 trillion since the 2016 election.
14 Business investment growth up $334 billion in 2018 versus $52 in 2016
15 Total federal revenues increased 3% from 2016 to 2018 after negative 1% in 2016
18 1.6% inflation in 2018
19 5.7 million have escaped food stamp welfare since December 2016
20 Murder down 6.3% since Dec 2016
21 Debt service on federal debt is 1.6%, less than half of peak
22 Households able to pay all bills 82% in 2018 up from 75.9% in 2016
1
The left decries "Trumpanomics" as a failure and embraces socialism?
2
@JDL
That is certainly a simplification, there is an in between. Time will tell about Trumponomics, but until both parties try and solve the real problems that would serve there constituents we will go
know where.
1
Trump loves to consider himself smart. Or street smart. Lou Dobbs appears the same way. Someone must convince Trump that Lou Dobbs "Idiots around Trump are undercutting his message" is actually not smart.
2
Trumponomics? That’s much too complicated a word for such a simple man.
8
Man, are we in deep doo-doo. This will not end pretty. Hold on to your hats, my fellow citizens. 2020 just may be a very interesting year.
1
Trump and his Posse make Kansas and Brownback look like Nobel Prize Winners.
No offense, Sir.
4
Can anyone explain what the photograph accompanying the article is supposed to mean? I haven't a clue.
2
Buying Greenland is actually the first good idea he’s ever had.
He could turn the whole place into a sort of a rest home for his bitter and disillusioned supporters, and take-up residence there with them as their permanent Emperor, where all of them would be protected against Americans and Congresswomen they fear and dislike.
Make Greenland Green Again!
I like it.
https://www.nytimes.com/2019/08/15/us/politics/trump-greenland.html?searchResultPosition=1
14
@A. Stanton: Yeah, I'd love them to all go to Greenland. I have no idea what possessed trump into having the desire to buy Greenland! It is so crazy (but I don't think like he does) that it smacks of bi-polar disorder. Those with bi-polar disease often get "colossal" ideas, and they also think that only THEY can do these "colossal" things, or implement these "pie-in-the-sky" schemes. I have often opined, that among trump's other psychiatric disorders, he is also bi-polar. I really think Greenland should be left alone, and if trump and his cruel minions are shipped off anywhere, let it be somewhere where they will be under putin's watch and his responsibility. He surely deserves them and vice verse. There must be some leftover, crumbling, tuberculosis sanitoriums from the late 1800's, and early 1900's, in the Crimea, where they can be housed...Of course, trump will never give up bright, warm, opulent, ostentatious mar-a-lago, and golf...The buying Greenland idea is definitely something bizarre. It is a great idea, though, A. Stanton, if trump intends to go there with his entire crew, and STAY THERE. Maybe he thinks the SDNY cannot extradite him from there...?????
2
Is Paul Krugman ever right ?
3
I'm of the opinion that Trump's comments have less to do with any long term plan for the USA and more to do with short term personal gain. Are his trade war and interest rate comments an attempt at market manipulation?
( https://www.providencejournal.com/opinion/20190615/my-turn-froma-harrop-is-trump-manipulating-market )
8
Paul Krugman for President. I love watching his brain work.
2
Once again Democrats will have to rescue the economy from right wing nut policies. VOTE DEMOCRATIC
14
Remember, any recession is Obama’s fault!
3
TRUMP A FLOP? That's not the half of it. Trump is a black hole! He sucks up everything, literally, and nothing comes back out. Except for toxic waste. Trumponomics = Dumponomics = Dumbonomics = CRASH!!!!! This summer, the shifting political dynamic is turning against GOPpers who are up for reelection. All of a sudden, a number of them who seemed to be firmly ensconced are going to have to fight for their political lives. As Trump faces more serious challenges and potential charges moving forward, those who support him are going to go down with him. Perhaps there is no such thing as social justice. However, getting the banks angry when loans are not repaid, is never a positive political move. Trump's shift of wealth from the 99% to the 1% to the tune of a debt of between $1.6 and $2.2 TRILLION over the next decade is undermining any support for his economic plan moving forward. Unlimited deficit spending is a fool's paradise. Trump may have found the ultimate way to cause his political life to be discontinued. I've heard a rumor that there's a vacancy in a prison cell in NYC--the one that had been occupied by Trump's pal, Epstein. I hope that Trump doesn't break his neck trying to rent that room permanently. (DISCLAIMER The expression "break his neck" is an allusion to the medical findings about Epstein exclusively. No harm is intended toward the person of the president.)
7
Buy now....contrarion signal from a political hack masquerading as an economist
Lol! thank God very few listened to him right after election predicting a depression....
POTuS......all Smoke and mirrors....nothing more.
Is what it isn’t.
1
No doubt, if the economy suddenly dies, it will be one more addition to the Clinton body count. Or the Chinese will be responsible. Or the Iranians. Or NATO. Or vaccines. Or Jeff Bezos. Or windmills. Or Pocahontas. Or the FBI. Or all the Democrats in Congress. Or all the Democrats in California. Or all the Democrats in the Fed. Or another Central American caravan. Or poor immigrants from other continents. Or the suddenly unreliable Fox News polling. Or Baltimore rats. Or the Deep State. Or a suddenly alive (!) Jeffrey Epstein from a bunker. Or a suddenly alive Sen. John McCain from a bunker. Or Obama. Or Obamacare. Or the Squad. Or Puerto Rico. Or the Mueller report.
Or, of course, all those hundreds of thousands of pink slips could just be fake news.
16
Don't worry Krugman, Trumpy, the Hater President, intends to grant another trillion dollar tax cut.
2
Isn't this for now wishful thinking on this columnist's part?
OK. Krugman, don’t you try to enter Israel in the next year and a half.
3
Stump Trump who pumps out and dumps humanists from America...
The only thing he can count...is money in his pocket!
Make America immi"Great" again!!!
1
As World War 2 spiraled to its close, the Third Reich considered implementing a strategy of guerrilla warfare, code named Operation Werewolf, to keep up the fight. The problem was, if anyone in the Reich brought up Operation Werewolf, it meant that they were entertaining the notion that Nazi Germany was going to lose the war, which left them open to charges of defeatism and treason. So it never got past the talking-about-it stage and never involved real planning.
If the Trump Administration lacks a plan for dealing with an economy gone sour, it's because true Trump believers can't allow themselves to admit that such a thing could happen because ... well, because Trump SAYS it can't happen. That's what happens when you start believing your own propaganda
10
We are headed toward a violent right-wing theocratic dictatorship. We are a dumb country. Dumb.
7
@Winston Smith: Not everyone is dumb. We have to pray that there are more Democrats than republicans....more people with decency, compassion, intellect, and integrity than there are people who are greed-and-hate-fueled. And lots of republicans who now realize that republican doctrine has been, and is, a scam, and a cancer, on this nation and her people. Resist. Resist and pray.
1
"Trumponomics" and "Smart" in the same sentence... Funny!
4
Larry Kudlow! Are you listening? Paul in referring to you, the poser. SAD!! Economic advice is not being a host on TV. You have to know something.
4
Here we go again… Every time Democrats get the economy on a strong footing [despite GOP tooth-and-nail resistance], Republicans come in and screw it up again. The next Democrat who comes in to clean up this mess will face complaints from Republicans that it's not fast enough.
10
In last night's rally in front of a small crowd the president said I should vote for him because my 401 is doing so well. Well I received the statement this morning, my 401k isn't doing all that well. I will survive the impending recession but am presently holding on to as much cash as I can. I don't need a booming economy I would rather have economic and market stability. The only vote this president is going to receive from me is a vote of no confidence.
16
That's what's really scary. In economics and finance as in foreign policy, the critical question is: how will this administration handle a serious crisis? particularly one that requires coordinating a complex multi-lateral response.
My old boss used to say "hope is not a strategy". Well, hope is all we have now!
10
On top of it, there have been critiques of the "boom" by others and in the New York Times, too. "The Devil is in the details" applies to this issue. Examples include that many of those wonderful, record-setting amount of jobs are low-paying, no benefit and even temps, not to mention that many jobless people have given up looking and are not even counted anymore. Potemkin village site-seeing anyone?
4
@akhenaten2
Is driving for Uber counted as a “job?”
How many “jobs” did Uber create last month?
Is an Uber driver counted as “Employed?”
Dow was $18+K when Trump was elected. About $26K now. Krugman predicted the stock market would collapse immediately after Trump took office. So he may be right, but he certainly has no credibility.
1
It’s not over yet. Where will the Dow be in the autumn of 2020, above 28K or below 18K?
We don’t know yet, but somehow I’m sceptical about those with rosy predictions. Trump sees economics as a zero sum game. He believes that the weakening of the Chinese and European economies makes the US economy stronger. He doesn’t realize that the US is a part of a global economy, and a slowdown in China and Europe can bring a slowdown in the US.
11
@Jack Shultz - true. But the point is that Krugman is not credible. Heis a a political pundit disguised as an economist.
However, your comment begs the question - does anything need to be done about the Chinese and our trade policies with them, stealing American technology, etc? In my view, something has to be done someday. If so, when do you do that - when our economy is weak or strong? If a recession is necessary to correct that problem, it will only help us in the long run.
@Straight thinker: Yes, and he said he was wrong, unlike Trump who never admits being wrong. If you compare the first 645 days of various administrations, going back to Reagan (it's on the NYT website), the increase in the stock market under Trump is middling, and worse than Obama and Clinton, and Bush-1.
3
Former Chairman of the Federal Reserve under Obama and Trump, Janice Yellen remarked in an interview on Wednesday that she doesn’t think the US economy is headed toward a recession. “I think the US economy has enough strength to avoid that." Surprising comment coming from a revered Obama appointee and someone who loathes the President. But there are those out there who can strip away the politics and deal strictly with the empirical data. Try it sometime Paul.
3
Dr. Krugman's points are, of course, correct. As for blaming the Fed not resonating much with the ordinary voter, that would be true in a normal election. In a Donald Trump election, well, we might want to consider another of the articles todays NY Times Op-Ed Section concerning how it's possible to attack targets these days. I wouldn't be surprised to see such tactics used very widely against those designated as Donald Trump's enemies.
2
Another way of saying this is that economy is the movement of money.
1) Yes, after the tax cut there was a short term increase in that movement, hence the "sugar high" that was predicted back when the tax cut was made law.
2) Now - the medium term post tax cut going into effect - that sugar high has settled and short term increased movement of money has settled into already large capital pools (basically meaning into places where there was already a lot of money).
3) Add in unpredictable trade wars, there is diminishing near term incentive for that money to flow out of those capital pools. Businesses large and small need some measure of predictability to invest if we don't get policy stability this problem of frozen capital pools will get worse.
4...and this is the part that starts to get worrisome) Meanwhile there are many geo-political hotspots that could spark new military conflicts or other kinds of unrest that could accelerate fear in the markets and cause a good old fashioned economic shocks.
5) Oh yeah climate change. That's not helping.
tl;dr:
We are in a powder keg and we've got a president flinging lit matches everywhere because it entertains his base.
12
Last week Paul Krugman seemed to be a critical of the Fed for giving into pressure from President Trump with a 0.25% interest rate cut. Professor Krugman is remembering this week that when the Fed began its series of 0.25% rate increases, he opposed them. He pointed out that despite the record high federal deficit, the US Treasury was having no trouble borrowing both short term T-bills and long term bonds at near historic low interest rates. The Trump corporate tax cuts did not spark a wave of corporate investment, because lack of money to invest was never the issue for America's large corporations. The problem has been and continues to be, America's corporations, despite sitting on lots of cash, for the most part just aren't seeing profitable ways of investing in new plants and equipment. So instead the cash goes to maneuvers, which do little to increase employment or GDP, such as stock buy backs. Interest rates are low, so if the economy slows or goes into a recession, the Fed can only cut so far. The Administration could deescalate the Trade War with China or even better, the American people could elect a new President clearly committed to end the Trade War removing the threat of uncertainty from International Trade. Another possible stimulus would be to repeal most of the Trump tax cuts for the rich and corporations and instead give tax cuts to low and middle income people who will stimulate the economy by spending more on goods and services.
6
Speaking of US Treasuries; remember when Pres. Trump said this in 2016? Will Pres. Trump use the same tactics he used with contractors and try to bully his way into paying US creditors less? It seems to be the way he is handling China. But guess what; China is smart, strong enough and has the resources to fight Trump's tactics.
From the NYT on 5/6/16:
"After assuring Americans he is not running for president “to make things unstable for the country,” the presumptive Republican nominee, Donald J. Trump, suggested that he might reduce the national debt by persuading creditors to accept something less than full payment.
Asked on Thursday whether the United States needed to pay its debts in full, or whether he could negotiate a partial repayment, Mr. Trump told the cable network CNBC, “I would borrow, knowing that if the economy crashed, you could make a deal.”"
5
1. The Federal Reserve basically controls short-term rates, but not long-term rates;
FALSE. This used to be the case . Then in 2009 the Federal Reserve invented QE (Quantitative Easing) precisely to influence long term rates
2. low long-term yields mean that investors expect a weak economy, which will force the Fed into repeated rate cuts.
FALSE
The low long term yield has little to do with the economy but is the results of the central banks printing billions of dollars - with no plan to mop up.
Interest rates are set by supply and demand. The ECB so flooded the market that you can , in some EU countries, get mortgages at negative rates. The bank will pay you to take the money of their hands.
With no plans of the central banks to mop up (winding down their positions) investors have given up hope to return to historic rates
1
Those Republican tax cuts have not trickled down.
They never have, and never will.
All they have produced was stock buybacks, and windfall profits for the wealthy, then ultimately recession.
Good for them.
Not so good for the rest of us.
Get ready for the next taxpayer funded bailout.
12
In the absence of world wars, which nukes make impossible, economic catastrophe seems the likeliest impetus to real social change, and my consolation is that another crash will result in another wave of reform. This time the reforms may stick.
Private enterprise is a great engine for organizing work and creating wealth, but it requires rules and limits, or it proceeds on a rhythm of boom and bust, with each bust more catastrophic than the one before it. 1929 gave us the greatest wave of economic and social reform in U.S. history, and FDR said that he was saving capitalism from itself. The fallout of WWII gave us the Great Society and another round of fundamental reforms and improvements. The crash of 2008 was pre-empted by the bank bailout, but still resulted in Obamacare, and a eight-year reign of decency, between the Bush II and Trump catastrophes.
Coming so soon after the previous one, the crash of 2020 will be better handled by lawmakers who remember '08, and how NOT to fix it. But if Trump is re-elected, then there could be a real depression, as there was in 1929 under newly elected Herbert Hoover, and we might have to wait until 2024 to get a government devoted to serious reform. Other shocks are possible, including a major war, but left to itself, capitalism is like the World Series of Poker, ending in one player holding all the chips, and no one left to buy what the economy produces.
5
Tariffs are taxes. The equivalent of sales taxes. As such, they are regressive: paid by the people least able to afford them. A question to white working-class America: who do you plan to vote for in 2020?
15
And Democratic policies will be so much better? We will still have the crushing debt extremely high taxes and millions more on the welfare roles, public housing, and other govt. giveaways. The Trump economy like the Reagan economy has it's faults but I'll take it over any alternative.
@MiguelM - Just wait until the inevitable Trump Recession. Trump supporters are among those Americans who will suffer the most.
11
In the past 50 years the economy under democratic administrations has without exception outperformed the economy under republican administrations. That’s a fact.
9
@Christopher M —
Yes his hoodwinked working class supporters will be hurt but his rich cronies will have made out like bandits.
4
Everyone has to step back and realize Trump is the leader of a disinformation "Shock and Awe" campaign to divert attention daily from the enduring long term issues of importance. He's a Television actor! That's why several former federal prosecutors, a U.S. Senator, the military, the cops, and the Television industry helped elect him. Republicans have always promoted actors. Think about all that.
7
It is good that you are acknowledging a Trump boom because till now it was projected as Obana boom by lefties....great show
3
@rohit This article does not acknowledge a Trump Boom. In fact, it quite clearly declares that the boom never materialized. Quote: "In particular, the promised boom in business investment never materialized." You need to read this article more carefully.
9
It's not just that Trump juiced the economy with his tax-giveaway, but that he's also rolled back or refused to enforce countless industry regulations. Big business knows they can do basically whatever they want, and they have, which has further juiced the economy.
But then, in the same way the tax giveaway created an ephemeral boost for the economy, so too will the "gains" from deregulation slow, and eventually, reverse. The regulations Trump lifted were necessary in the first place, and without them, people start to take notice. In other word, a robber baron is only going to get away with robbery for so long.
Perhaps the gloomiest element of this inevitable downfall is that it's at least somewhat encouraging because it will help us get rid of Trump. Said again: Trump is so bad, if it takes a recession to get him out, so be it. We can start rebuilding on the other side.
10
No fan of Trump. But it's interesting that Paul Krugman is paying so much attention to the stock and bond market. Yet larger more relevant economic data shows that the US economy is currently working for a large number of Americans. Unemployment is low, Job gains are good , wages have increased. While the Stock and Bond market are the concern and impact a relatively small percent of the population . My financial adviser used to tell that there were three things. The Economy ( GDP ) and other macro numbers, The Real economy ( jobs, wages ) things people lived on a day to day basis and The Stock Market. Paul Krugman is much more interested in the Stock Market now. Who could forget his famous "The Market Will Never Recover" after Trump won back in 2016. It maybe that the inverted yield indicates a recession is on the way. But it may also not and it may not happen for a year or more.
2
Trump strategy: blame the Fed, blame Obama, blame the media. B....lame.
11
If Trump says the Fed is responsible for an economic decline, his followers will believe it. Whether they know what the Fed is or not.
15
I agree completely that Trumponomics - a core course at Trump University, along with Fraudulent Conveyance 101 - is a flop.
But I disagree that the Fed was wrong to raise rates when they did. That is Trump's argument, and the lowest sort of excuse for bad fiscal policy.
After all, the unemployment rate fell to its lowest rate since the late 1960s (3.6%), and core PCE inflation rose to at or above 2%, with real rates barely positive. According to Trump the economy was booming like never before in the history of all booms.
Yet despite said boom, Trump and the GOP advocated for more fiscal stimulus, creating massive annual deficits to benefit corporations on the flawed premise that it would lead to investment.
It would also lead to the endless winning that would make us all sick.
House Speaker Pelosi tried to work with Trump to create actual investment and increase productivity, through a much needed infrastructure program, in exchange for sensible immigration reform and border protection.
That is putting country over politics, likely extending the expansion. After agreeing to move forward with it, Trump promptly cancelled the meeting.
Trump is either too ignorant to understand that trade wars, current depreciations, and other "beggar thy neighbor" policies are lose-lose, or Putin wants him to muck up America's standing in the world, along with all else.
When the Fed must cut rates, it is an admission that the US is not booming and Trumponomics is failing.
9
Watching the republicans play out their trickle down economics game over and over again on an electorate that never seems to get the trick seems like insanity. It's only when I remind myself that we don't all have equal votes in this country that it actually makes sense. The folks that put republicans in power are hopeless fools and I have no sympathy for them so if the trade war brings a recession and extreme hardship for them all I can say is, please, bring it on. I'm ready.
12
Trump may be an add-on but he is destabilizing the US economy and it will add to the already global unease. When we speak of policies and Trump in the same breath, we are making a mistake. Tweets are not policies and neither are rally taunts. Trump wouldn't know a policy if it bit him. His so called policies change like the wind. To me this means more global destabilization and a greater chance for some more economic chaos. Just what our business communities and the market do not want. Hopefully sooner (before the election 2020) rather than later this economic chaos will be felt by Trump supporters who have only him to blame.
9
Of course Trumponomics is a flop.
It’s the same trickle-down con that left us with economic downturns late in the Reagan, Bush I and Bush II presidencies - give trillions to the wealthiest individuals and corporations, and pretend it will trickle down to everyone else. We now have mountains of evidence that this doesn’t happen.
The pattern is, Republican presidents create massive deficits and eventually crash the economy with tax cuts for the rich, outsize military spending and irresponsible deregulation. Democratic presidents (Clinton then Obama) clean up the mess by restoring fairer taxation, emphasizing domestic investment and reprofessionalizing the government. Since 1980, we’re on the fifth leg of this consistent cycle.
There is another crash coming, and we should all hope it’s before the election, so we have a chance of ousting this oaf. God forbid it should happen at the start of a second Trump term, and we have to suffer through years of an incompetent group that will have no idea how to deal with such a crisis.
11
Starting with the premise the Trump is a military puppet and elected by same, it's obvious the Republican C.I.A. Military "New World Order" is an understanding between America and Russia, essentially a non-aggression pact. But now we have a new "Star Wars" strategy by the military in which they call the "Trade Wars" a loose inference to China.
So it's a given this nation is ruled by it's military that manipulates our voting. Trump was elected by and for the military Television industry. They stay in business by starting wars. We should all want peace. Investigate and prosecute the plotters however many there are.
1
Trump's racism, misogyny, thuggery, corruption, incompetence, climate change denial, embrace of white nationalist rhetoric, and contribution to national and international disorder should be sufficient reasons to boot him from the White House. Perhaps he's most dangerous as he stokes the fires of nationalism and prepares to engage in another nuclear arms race, both of which will increase the likelihood of nuclear confrontation. The concept of mutually assured destruction might have brought some sense to the US and Soviets back in the day, but good sense may be difficult to find in a free-for-all world of nationalistic pretension and proliferated nuclear weapons. Yet it may take a recession, not fear of a nuclear conflagration, to oust the fool from office. Sadly, we may face an additional four years of Trump-inspired chaos if Democrats rely solely on a recession to defeat Trump while succumbing to the GOP's plan to make the election about "socialism" and the culture war.
1
How anybody thinks Trump will get re-elected is beyond me. He has gained approximately zero additional voters since 2016, and his racism, xenophobism and downright spiteful nastness has surely managed to upset the - admittedly small - number of centrist Republicans, who held their noses and voted not for Clinton. So, a net loss for Trump.
The Democratic voter has not moved toward Trump, otherwise they'd not have been a Democratic voter to start with.
The independents, allied to those Democratic voters who stayed at home, will make the difference in 2020. The latter will be 100% for whoever is not Trump, whilst the independent voter must surely have been disgusted enough by Trump to lend their vote to the Democratic party for 2020?
So I think Trump is doomed, even without a recession. With a recession, he could be staring down the barrel of a genuine, proper landslide.
3
Trump bankrupted two casinos and nearly every other business he’s been involved in. That’s all I need to hear when trying to determine if his economic decisions are smart or not.
7
@ALB. If you haven’t seen it, check out the movie ‘Inside Job’ for just how mismanaged (to put it politely) the economy was leading up to the crash, and by whom. An object lesson in what to avoid in future - we must hope.
1
No one in their right mind ever believed that a con man who has failed at so many businesses, declared bankruptcy multiple times and is a pathological liar would have financial policies that had any merit.
Trickle down economics has been disproven over and over but the Trump supporters are so gullible- they believe anything even when their own pockets are being picked.
When Trump was first elected, I told my financial advisor that the real economy will suffer under Trump- in spite of the rosy stock market picture.
Looks like I was right all along- cold comfort.
9
This is why he's called "Pump and Dump" Trump. I hope the SEC is looking into suspicious trades in the days before he postponed the tariffs. Trump will use the office to get out of hock. He's gonna need expensive lawyers the day he leaves office.
3
@T
He may need them, but most won't work for him because he doesn't pay his bills. His campaign still owes El Paso a cool half million for the costs of his self aggrandizing rally. I wonder when they'll pay up. Oh, when porcine aviators take to the skies.
Dr. Krugman writes:
I might add that blaming the Fed looks to me like a dubious political strategy. How many voters even know what the Fed is or what it does?
Since only about a quarter of all eligible voters can name all three branches of government, and some of the rest can't even name one, one can be assured that those knowing what the Fed is or what is does is in the single digits.
Compared to all other advanced nations, the supposedly greatest country on the planet has the least informed voters.
To partially paraphrase Clinton : "It's not the economy stupid, it's the education, stupid".
3
While we are rattling on about "inverted yield curves" and "Trumponomics" how about some insight into what deflation will look like and how to benefit from same?
1
Trump was as always attempting to dupe the general public. His tax cuts put US$ in HIS pocket, not yours.
7
It would be nice to have a less toxic POTUS in 2020.
It would also be nice to have an economics column that’s consistent, informative and apolitical.
I fear we will get neither.
1
Donald Trump‘s overt racism is a reaction to the fact that the demographic is changing and that there is nothing he can do about it. His attitude of protectionism is a denial of the ever present global economy that we live in. One might even say that his attitude of protectionism in the 21st-century is bordering on delusional.
So, the question you need to ask yourselves is - is a person who is this out of touch with reality fit to be president of the United States for another four years?
You do the math…
7
This was all fairly easily predictable. Any Republican president would have pushed through on the tax cuts. It's simply what they do.
The only silver lining is that this Republican president is so incompetent. To marry tax cuts to trade war while hollowing out the institutional expertise from every government agency is playing Russian roulette with a fully loaded revolver.
Maybe that's the point? The real marriage seems to me to be the unbridled greed of the donor class and their lackeys to the malign ambitions of Putin and the emergent Right.
You simply have to sit back and gawp in awe of how well Putin has played this. Even he must be stunned at how many powerful Americans have eagerly joined his cause. The American Vichy government is ascendant.
5
Has anyone commented on the so thoughtful pose in the artfully lit photograph? trump looks to be thinking & contemplating. The photograph is the most flattering I've seen of him but the mood it conveys is fake, to use one of trump's favorite words.
2
@Mary Ann Donahue
I'm more taken by that angel of death looming in the background. It's coming his way.
2
Surely you cannot mean that four-time bankruptist Trumps economic what ever it is or isn’t turns out to be wrong?
Surely you jest.
4
@SuzanneWheat
To stop shopping also sounds like a great way to take action:
I.e., for the next year stop shopping or shop only at
Real bad news for Krugman. The market in two days gained back 50% of its recent 800 point loss. Nobody knows what the future holds. But there is no question that there are people who are actually rooting for a stock market crash, preferably next October.
3
Yes there are people rooting for a crash. But their cynical desires won’t cause it. Trump’s inane policies will.
2
Here's something you can bank on: If/When the economy is doing well, Trump will take full credit; if/when the economy takes a dive, Trump will point every one of his short little fingers at someone else.
6
Ordinary trickle-down (aka supply side, or voodoo, economics) is enough of a flop. The Trump version might even last through the Dems-in-power recovery or even prevent that recovery from even happening. That's because he has taken it far deeper than ordinary economy flim-flam, into the soul of America, by dragging it in along with fear and its children, hate and anger. He has infested almost every aspect of American life with Trumponomics, which is ultimately greed, selfishness, and the criminal's belief that if you get taken for a fool you deserve to be taken–it's your own fault.
And that's why we ended up with Trump as POTUS. We have too many (most?) who are financially or politically powerful, or both, that think like criminals. With too many regular folks who either think that way or assume those in power are mostly that way, anyway, so oh well–might as well support the criminal who seems to be on my side.
Right now, we seem to think that as long as we only flirt with a recession, then racism, a shredded democracy, and hyper-partisanship is bad but we'll take it. Not thinking long term, are we? Because manipulating things to stave off short term pain will make the inevitable period of pain long and deep. The swelling US debt and deficits get more dangerous the longer we get to ride the National Credit Card without reigning in our horrible fiscal behaviors. And, unlike Trump (and Kushner), there is no one the USA can file bankruptcy with or ask for a bail out.
2
the democrats had control of everything in 2009. Instead of taxing the rich and returning some balance to things after "W" tanked the economy, Obama bailed out the banks and Wall Street (and the fat cats kept their jobs, bonuses and special tax rates) and one guy went to jail. Gietner after bailing out the rich went on to make millions on Wall Street. Every day citizens lost their houses and jobs. Some good came of this, but when given the chance the dems often turn out to be corporatists just like the rebubs. Maybe we need a third party that isn't beholden to the 1%.
4
@Al.... "Obama bailed out the banks"....First, remember that Obama inherited the mess from the Bush Administration. And it is a good thing that Obama bailed out the banks otherwise things on main street would have been a whole lot worse. And by the way, the Federal Government ended up making money on the bail out.
1
@W.A. Spitzer. Of coarse I said exactly that. But my point was the bankers themselves didn't didn't need and didn't deserve the bail out. Something all the Obama worshippers conveniently forget. Those crooks could and should have been fired or even jailed. Which wouldn't have affected the banks.
Mr. Krugman admitting to a Trump Boom after all this years of talk of "sky is falling" economics. This is a clear sign of sobriety for Mr. Krugman. And the boom is still booming and even boomeranging...
1
The idea that "smart money" actually exists seems odd, and, in fact something that Krugman himself has probably denied
after all, the entire Bogle/index fund investing idea is that there is no such thing as smart money - or if there is, it is impossible for the avg investor to find
It appears once again a bumbling, ignorant, incompetent Republican president will be passing along a shambolic economy to a Democratic one. Only conditions will be even more dire this time.
4
The only economic theory DJT is skilled in is bankruptcy. And he just may bankrupt us all if he is not voted out of office in 2020.
7
The next little tariff move or some other Trumpian idiocracy that he says or does will crash the world economy.
This time, he'll bankrupt the entire planet.
2
@Joe
The biggest, most beautiful bankruptcy in the history of the world.
Like "Star Wars", Trump's "Trade Wars" has little to do with economics and everything to do with C.I.A. Pentagon aggression to assure their mutual growth, relevance, and ironically, future.
1
It's not just Trump. A recession is what happens every time there's a Republican in the White House. Bush I, Bush II, Trump...
6
Paul, the bond market is not the best indicator of the economy. It's GDP. And there's no such thing as "smart money." Get real. You're credibility as a leading economist is going down the tubes by the day.
2
The smart money may think Trump is a flop . Well , you don`t need to be that smart to know that . The fact that some of them may have been on board with Trump is due to greed . Con men use the greed of their victims to double cross them .
2
I hope the downturn when it comes will for once land in the lap of those who arguably caused it.
2
“The stock market is not the economy”. Well, neither are tariffs.
“Neither I nor anyone else is predicting a replay of the 2008 crisis.” Maybe nobody you respect.
I don’t know much about economics but I think the crash is coming (I think it just started) and will persist because nobody has any money. “…everyone is sitting on piles of cash, waiting to see what an erratic president will do.” Again, “everyone” and “anyone else” should come down to main street. Consumers have no money. They won’t be buying enough new cars to keep auto employment up. Delinquent car loans just hit record highs (seven million people are now 90+ days delinquent on their auto loan). Liar loans are common, as they were in housing last time, and, like 2008, they have been bundled into bonds that will fail. Nobody needs a new car. Keeping a modern car less than 15 years is completely optional.
So, nobody has any money, and nobody needs a new car. Corporate debt has also risen astronomically over the last decade. The wicked fun Trump rallies, like the hippie wicked fun rallies of old, are mobilizing a new “moral majority”. The Democrats will take the presidency House and Senate. They will keep them for many years. Voting will become easier and more secure from the voter fraud liars.
The recession will take a while to reverse. The way out will be massive public works infrastructure projects, mostly sustainable energy. Coal will die and oil will start to die. Just in time.
4
The perception that the stock market under trump outperformed the Obama stock market is wrong.
6
Trumponomics is the art of selling the media on the orders you got from Trump even though they will destroy the economy. Our chief economic adviser to the President does not hold a degree in economics.
3
The economy and the stock market are not synonymous. Nevertheless, if you don’t like Trumponomics you are really going to hate Warrenomics. She has even guaranteed a downturn and recession in her master plan...a real winner.
1
@Charlie...Warren won't be able carry out one tenth of her agenda because there isn't any money, thanks to Trump who has double the budget deficit in three years.
1
If the "smart" money has abandoned Trumponomics, why are Trump's campaign donations from the 1% vastly increased from his 2016 numbers?
Certainly these folks have been the largest benefactors of Trump's tax cuts, deregulation, massive deficit spending and climate change denial--but the long term prospects, not just for his economic "plan" but for what he is doing to destroy American influence in the world, is bleak.
How "smart" is that?
2
Why is there no mention of corporate debt? Highly leveraged investments and lax regulation?
1
Krugman basically has two rules: if the market goes up, it’s because of Obama’s lingering influence, and if the market goes down, it’s all Trump’s fault.
5
@Working Stiff
If you were to read the article you may find he said the market went up because of the tax cut.
Throughout the nation and beyond, trump has taken the happiness from all, even economics which always react to the general state of mind of the people.
2
The smart money places its bets where it thinks the greatest rate of return with an acceptable amount of risk might be. Among the risk variables are the people in government who set the rules of the game. There are few, if any "Acting" people in the Trump administration who have the stature and reputation to inspire confidence that they have "the right stuff" to make the correct decisions when problems present themselves.
Future growth can often be signaled by some new technology, business orders and growing payrolls.
What do people with cash need and want to spend their money to buy? House? Car? Stuff?
On "the dark and stormy night" who will be holding the rudder, trimming the sails, keeping the ship away from the rocks, and "heaving to" to avoid a broadside wave. Will everyone on board have a life jacket? Enough lifeboats? Are they all drilled and ready?
Glass-Steagall gone, Dodd-Frank neutered, Tax Reform Act, US Trillion Dollar deficit, collateral loan obligations, leveraged debt, gulp!
Government by Tweet does not inspire confidence.
9
Administrative Destruction is going on all across our government. What will another year and a half of the same produce?
7
We need to face the gloomy truth that Trumponimics is not just a flop but, contrary to Dr. Krugman's assessment, may very well be positioning the economy for a deeper recession than most expect.
The Trump tax cuts did little to nothing to stimulate the broader economy. Directed at the already wealthy, most of the money was converted into non-productive investments - real estate and the stock market to name a couple. The result has been a meteoric rise in the stock market. My 401K has been rejoicing. But, real economic growth has lagged far behind the equities markets. As many have pointed out, the Buffet indicator (the ratio of market capitalization to GDP - which is, in broad terms analogous to a price earnings ratio for the whole market) has soared to heights that all but guarantee a recession.
When (not if) that happens, what will the FED do? Interest rates globally are approaching negative territory. Will our central bankers do the same? How low can they drive them? At present we are in the late stages of a sluggish recovery, with low inflation rates, and a budget deficit running at historic highs. By all rights this should not be happening. The reason it is? The money that is being made is all on paper and in the hands of the plutocracy. The average worker's pay check hasn't risen enough to stimulate demand which would lead to more hiring and exert upward pressure on prices. We have joined Slim Pickens riding the bomb in Dr. Strangelove oblivious to what awaits.
10
@Jim Perhaps Elizabeth Warren will be elected and we can try a more progressive socialist approach?
1
In the name of nationalism, Trump has been damaging economies around the world. Trump creates lose/lose situations and calls it a win if a foreign economy is damaged more. Beyond trade, he chokes off flows of both investment money and people across borders both because of his direct hostility and the uncertainties caused by the US abandoning its leadership role around the world.
17
@Mark
“Trump creates lose/lose situations and calls it a win if a foreign economy is damaged more"
"Trade wars are easy to win”
Yes, but only in the wrestling match definition of winning: you are the winner if the other guy came out worse than you did.
Actually, trade wars are unwinnable.
1
Remind me again, how many of Donald Trump's companies went bankrupt? Now he is in charge of the country with the world's biggest economy. Bankrupting the US could be the next step in that progression. Let's hope not.
19
@Antonio Casella
"Bankrupting the US..." and the entire world...
The biggest, most beautiful bankruptcy in the history of the world.
1
Now more than ever we need to see Trump's tax forms. Has he benefitted from his chaotic approach to tariffs (imposing them, not imposing them, maybe imposing them, etc.)
7
My credentials are limited to basic Econ 211
and a couple of courses, Urban Econ, and a
course in which the prof debunked fixed
rail mass transit, but i’m talking approx fifty-sixty
years ago.
I doubt if djt really studied Econ at Wharton, and
like everything presides by way of instinct and
personal experience, and works out of back
pocket, and frankly who doesn’t ?
Yes, of course he attended Pennsylvania’s famed
school, though his academic records are
apparently not available, meaning to me his
bankruptcies and showdown with China are
instinctual, granted he’s experienced lows and
highs throughout his terrific career.
In my opinion he apparently likes to take chances, and who doesn’t ?
My perception is that his voters knew what they
we’re buying, and five bankruptcies is a major
part which was no secret when the fools voted
for their guru, despite he had to borrow from
non domestic based banking for funding property empire.
Messing with tariffs apparently was initially
applauded, especially re China’s behavior.
We are the reserve currency nation, and
confidence in our dollar is ultra important.
Recession is not his fault shall be the make
us great again theme for the remainder
of his semi respected presidency.
I hope to eat my sarcasm, and btw I love the
thrill of gambling, and who doesn’t can throw
that initial rock.
2
@Robert Cohen
The only difference between the way Trump ran his businesses and the way he is running the country is that he won't have his father or Russia to bail him out when he fails. Not if he fails. When he fails.
At this rate, he is going to tank our economy and is dragging the world economy down with it. He is reckless, irresponsible and uninformed. In other words, he is a danger to our democracy and our position of leadership in the world.
4
Once the world stops trading together, the markets collapse and we have to protect our overseas interests, there are plenty of hotspots and way too many hotheads in power to forestall widespread military action for long. If the DOTUS can maintain his carnival ride policies into next year, I think we will all stop worrying about financials and prepare to gear up for martial law and a postponement of elections while we Make America Great Again, for the survivors.
The countries ignoring Krugman's advice to put tax rates at 90% are booming.
Indonesia is taxing at less than 30% and has had a 5% growth streak, as has Poland, and Vietnam.
The countries which followed Krugman's advice and have high tax rates have choked on those tax rates:
Japan, Brazil, Italy, France, England, Spain and South Africa all are growing at 1%. They only get this level of growth because of tax loopholes and tax evasion.
Austria which had low tax rates went whole Krugman and in a year in which the U.S. grew $680 billion real, had negative growth.
1
@John Huppenthal Correlation is not causality.
1
Even the Trump tax cut induced sugar high period, Trump motive was clear.
Bringing America the level of Post Soviet Collapse Russia. So Putin will accomplish his saga.
America and Russia , two cold war giants will be equal.
I am looking that prospect, Trump is particularly rooting for that.
3
What goes around, comes around. A price will be paid for tRumpsters total lack of good judgement. A price has already been paid by a lot of those voters, the farmers, the hourly workers, etc. I hope it's not too late for our country to recover from all this destruction.
7
When Paul Krugman asked: So what accounts for this wave of gloom? He answered with: Much though not all of it is a vote of no confidence in Donald Trump’s economic policies. I wanted to scream: What economic policies? As far as I can tell, he has no policies beyond enriching himself and his rich friends. Yes, I have done well in the Stock Market since his election - but like Dr. Krugman says - the stock market is not the economy.
13
@Mike
Well, tax cut is the one policy and immigration chaos is sort of policy.
It's easy to point to return to normalcy as economic growth if you caused it to decline and then remove the cause. Trump likes to claim credit for fixing problems that he himself caused.
That's what all of his policies are doing. It's all a big con. He thinks its easy because he's been getting away with these cons for decades. You can't take his policies as serious attempts at improving the US economy because that's not actually about him. He just wants to make it look like he did something good for the US economy to take credit for it.
7
“it’s now clear that the Fed was wrong to raise short-term rates last year”
Not really. The Obama recovery was still happening. Unemployment was reaching it lowest practical levels. What the Fed did not, nor could not, predict was the trajectory of the tariff wars. Perhaps they should have foreseen the impact of withdrawal from trade agreements, but the numbers, the available economic data was positive ... and then Trump happened. His recent economic mismanagement was unimaginable, so it is wrong to blame the Fed for being blind sided.
7
I remember at the end of the Clinton administration there was a surplus, government spending was under control to the point we would continue to run a surplus for years and reduce the debt. Congress would pass no new programs unless they were paid for. Bush 2. He passed a prescription drug plan for seniors (not paid for) adding debt. Then he wanted a tax cut and past fed guru (Greenspan) said; sure; it;s not good to pay off debt too soon. Then another tax cut. Lied us into a war (still ongoing, still adding to debt). Spend ourselves out of debt. (A theory that will work; although Reageanomics failed and his administration doubled the size of government and DOUBLED the debt of all previous administrations before him!) All these and the financial crisis left to Obama more than doubled the debt of all other administrations combined. Surplus? Gone, gone. Debt: trillions! Trump gets more tax cuts adding more trillions to the debt. I'm 87 and in my life time have never encountered anyone successful who tried to spend themselves out of debt. We have tried too many theories that have failed. Hopefully, some day politicians will follow truth such as 2 plu s 2 equals 4. Always did, is now, an will!
9
Very good points here, Dr. Krugman. With Mr. Trump's excessive reliance on tax cuts which primary benefit the very wealthy and the largest corporation, he has, I believe, forgone the opportunity to create an economic stimulus which will create numerous good jobs and provide a relatively long lasting multiplier effect on economic growth. Yes- that would be a broad based, well planned nationwide infrastructure improvement plan with very substantial federal funding. Instead, what do our citizens get- lip service from the President and demonstration of an inability to really think deeply about economic policy and federal spending which truly helps provide for a sound economic future. Any credible economist or business leader should be appalled at the Trump administration's absolute inability to plan and then manage and properly delegate for execution. Mr. Trump has more than once blown his opportunities, to foster smart capital spending and, in turn really build for a better U.S. economic future. The only option now is to vote with a high turnout and send Mr. Trump into the pages of history.
3
"low long-term yields means investors expect a weak economy"
They might be expecting long-term inflation to be negative and growth to be booming. The Phillips curve is defunct. So are inverted yield curves.
"Promised boom in business investment never occurred."
Business investment in 2016 under Obama? $448 billion
Business investment in 2017 under Trump? $507 billion, a 13% increase.
Business investment first quarter 2019? $676 billion, an all-time record, a $247 billion increase over fourth quarter of 2016.
Net investment: (W790RC1A027NBEA)
Dr. Krugman study rational expectations to understand economics. As Dems took House control with 90% tax plans, the stock market tanked $5.5 trillion.
Despite stocks recovery, the sluggish economy is digesting that $5.5 trillion gap.
Compare global numbers even with the lower stock market. While the U.S. stock market is at $31 trillion, China is only at $10 trillion and Europe is a tad below even that at $9 trillion.
Paul: I'll have you know I was all ready to short the market, but then I read this latest column of yours; and noting how accurate you've been on past predictions especially the market collapse and deep recession that would surely come the moment Trump was elected (which of course couldn't actually happen), I decided I better stay long after all as a high-probability bet, though I admit there is some risk; as the saying goes: even a broken clock is correct twice a day.
3
@JW Amen brother. This guy is blinded by his hate for Trump
There should be no legitimate dispute that the stock market is not the same as the economy. Mr. Krugman made a dire prediction in 2016 that we were headed for a global recession, which would affect both the economy and the markets. That did not happen. To the contrary, on the economic front Real GDP has been stable. The market has also performed well. (But to Trump's chagrin, neither have done as well as under Obama.)
I have to wonder if his prediction then was sprinkled with a bit of partisan flavoring and what is different about his current prediction to give us greater comfort that he is correct in his analysis. Did he not consider "smart money" last time?
This sort of begs two questions -to what extent can a president independently sabotage the economy, and do economists know what they are talking about when they try to predict the economy or the market? I hope we never experience an affirmative answer to the first question and I look forward to the day when we can confidently say yes to the second.
4
Krugman repeats the plainly false assertion that the stimulative effect of the tax cut has abated. It has not. Of course not: the lowered tax rates remain lowered. The trillion dollar deficits continue, and are expected to continue for years.
The economy may be slowing. A recession might be pending. That is as may be. But it is happening in the teeth of stimulus, not because the stimulus ended when the media lost interest.
3
I am not an Economist but the only things that Trump has that are positives to me are the stock market as a retiree without a pension and his policy towards China for stealing our intellectual property and its trade policy. Both seem to be tanking
1
‘The stock market is not the economy...”. Sure, but the market dictates the fate of almost all business, and that is the economy. As a small manufacturer who pays attention to, especially, technology, I can assure anyone that the present course of arbitrary tariffs and insane fiats results in a slowdown, if not end, to innovation and manufacturing in this country. The market is a harsh realist operating on the shortest term results. Today, this week, this quarter. With federal crippling of funding for science, and the market’s lack of long-term vision, we are in stasis. But the rest of the world isn’t, climate change proceeds, populations increase.
How long does it take for us to be left behind? One year, one presidential term, a decade? Every day we sit on the sidelines and wait for a ‘favorable’ market, is a week lost to growth.
3
Economic downturns are not new. They are a routine part of our economic life. How they are managed it critical. Americans, for whatever reason, have a very short memory. Caught up in the" irrational exuberance" of growth they act surprised every time a growth cycle ends and we go through a period of retrenchment. Manufacturing slows as demand lessens. Layoffs take place. Unemployment rises. People fall behind on their bills. They defer vacations and projects and wait it out. The rebound usually comes in a year or two after the bottom of the downturn is reached. Underlying all of these economic twists and turns is, hopefully, a President who can calm people's nerves, explain what government is doing to ease the burdens on individuals, and provide guidance and leadership. Trump offers none of those. For him, this is al a game. Something to be won, capitalized on, or distance himself from. A leaderless recession will be something new. One for the history books.
8
Has the 'inverted yield curve' ever been wrong?
I admit, six out of six is pretty good.
But has this indicator occurred before nothing special happened?
I'm not an economist. Trump's tax cut of 2017 was following sustained economic growth under Obama following the great recession under Bush II. Tax cuts have usually been to stimulate the economy. This one was not helpful to the economy but only to billionaires (so he says) like Trump. Future tax cuts to stimulate an economy are not likely for at least a decade. Deficit spending in general has been abused by this administration and congress. Tax the super rich to eliminate the increase in the deficit under Trump. Gloom is making its presence known.
5
As otiose as I find Mr. Trump’s personality, politics and policy, this column does not sufficiently highlight the impact of foreign central bank’s negative interest policy on the US treasury yield curve. Would the US yield curve invert if foreign central banks weren’t “pushing on the string” of negative interest rates? Bond markets around the world are fully integrated and the piles of money created in the aftermath of the financial crisis gravitate to high real yields and stable currencies. Trump didn’t create this situation, on the other hand beating up on the Fed will only create greater instability. And unstable financial markets can lead to unexpected outcomes, including crisis.
2
What is the main job of a CFO in a company,to pay the bills and wages with the money through that company earns by its sales,so central bank is the CFO of a country but not it’s not in realm of policies that brings money to this country it’s the job of a president and his team.If there is ample resources regarding money officers will act accordingly but if there is not they will act again accordingly.
Interest rates have now crept to 'super-low' status. The US government should borrow a trillion dollars or more and set the loan interest rate at this historic level. Then it should invest that money in renewable energy and power grid upgrades, insuring tens of thousands of high-paying jobs, including new manufacturing jobs in the Trump states, for generations to come. Wait, I'm getting ahead of myself. First vote Democrat on all races on all tickets in all states. THEN do the borrow, renewables, grid, manufacturing, jobs, etc. thing.
2
To embellish the point, Republicanomics is a certifiable flop. Economic downturns you ask? The GOP is a specialist, having presided over almost the entirety of the 111 months our economic has spent in recession over the post WWII period since Ike.
Now, we'll get to see whether or not pocketbook issues animate Trump's electorate more than white grievance.
3
So, stock investors know nothing, but bond traders can predict the future...
4
@Max
That is not what he stated. He said stock investors try to predict the short term and bond investors try to predict the long term. Those who invest in stocks must seek profits when they can. When a recession does occur you will see them pull their money out of equities. And large investors will get their money out much faster than those dependent on the stock market for their retirement.
I was surprised at PK's reluctance to take the final step: We have to presume that the next recession is coming as surely as a high-speed wave at sea will hit shore as a tsunami. Because up till then he was laying out the case for its inevitably.
Yet a recession has been inevitable because Trump has been knocking out all the supports of our economy since day one. In fact, when you look at how he's abandoned all the economy's safety nets and ballooned the deficit and debt, and moved capital from where it could actually be productive into billionaires' pockets, it's all very familiar.
It's the same strategy he used that led to his six bankruptcies, the collapse of ALL his casinos, his destruction of the USFL, the near-total collapse of AC because of him, his myriad failed businesses (Trump Air, Trump Steaks, and the crooked Trump U), and ALL the lenders and vendors he's stiffed (including, ironically, the city of El Paso which he dissed and stiffed), the end is obvious:
The collapse of America's economic and democratic (small d) structure. And, of course, his answer will be the same as Ayn Rand's villainous incompetent Wesley Mouch: "I need more power!"
It's not that I see the recession in the future, it's that I see NO WAY to avoid it now. We are too far gone.
2
Doesn't it take a couple of economic quarters to determine that a recession is occurring? And then, won't Trump just dispute the "facts" and argue that the economy is booming?
Dems need not wait and should be hammering Trump long and loud on the current economic "slowdown" and "instability" that his erratic non-policies have created.
As Trump has proven over and over, fear is a great motivator for a large part of the American voting population. And on this issue fear is on the Dem's side, so they should use it.
When Trump blames the Fed, it really doesn't matter if his supporters know what the Fed is or what it does. What matters is that the Fed is THEM, and blaming others for hurt feelings and stalled prospects is Chapter 1 of the Trump playbook. For example, whether or not Trump is personally racist, he knows that accusing female Muslim Congressmen of whatever will play well with the roundheads, and the swells in the boxes will appreciate his mastery of the art of the pander, a talent that has been honed and annealed in the GOP labs going back more than a generation.
Tell me that George Wallace and Bull Connor would feel out of place in today's Republican Party.
In the meantime, for only $19,995 a year, you can subscribe to the White House pre-briefing, which gives you several hours' head start before each market-tanking tweet. For only another $5,995, you can have your broker cc'd so that you don't have to go to the trouble of calling in the put order.
For those who wondered after WMDs how lazy and irresponsible American voters could be, voila.
8
Big business. Capitalize the profits; socialize the losses.
7
Trump bases his policies on, “What would President Underworked do”. He must believe he can just file for bankruptcy again and walk away...
7
Rattner and Krugman, aka The Blues Brothers. Each has been forecasting The End of The World As We Know It for so long, it's difficult to take their latest predictions seriously.
Check back in six months to see if they're finally right.
5
@John Spot on brother!
I do not know what is the end of the world for you but for many people.
Loosing their houses in 2008 SMCrises ,
Almost loosing everything , if Obama and ratner decided not to save GM.
You live in Georgia , which is practically colonial economy background capitalism , we will live in north , here Corporations and theri value in the society vital.
We cannot react like georgians, this cottonfiled dead move the next one, or This peach orcahrd is finished , lets go next one.
This is Michigan, New york , Ohio. we live with industry , die with industry.
Yes it was the end of the world 2008 .
The elephant in the room is, of course, the war with Iran...and the theory that war is good for the economy. It is not, unless you're a defense contractor.
3
Everyone’s known someone in their life who takes all the credit for the success of things they don’t do and blames someone else for their own failures. Donald Trump is epitome of that person. He was taking credit for the 8 year Obama recovery as soon as he got in office and now we’re seeing the results of his own efforts which could be a massive failure. Obama inherited an economic disaster and saved us.....Trump inherited a slow but powerful economic recovery and has now done everything possible to destroy it. Which he’ll ultimately blame on the Fed, Democrats, Obama, Hillary, immigrants......
7
Didn’t Kaufman predict a global economic meltdown immediately after Trump was elected?
5
@CHM Lets not make him accountable...after all he is a Noble prize winner!
Immediately after the election Krugman predicted a recession would occur eventually and would be the result of Trump’s ignorance and incompetence. He didn’t say the recession would happen immediately after Trump’s election. Based on what is happening now, Krugman was right.
1
Trumponomics forgot the watchwords of James Carville back in the Clinton years:
“I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody.”
When historians write of our little speck in history, they'll marvel at the stupidity of letting the King of Bankruptcy anywhere near our national finances, or the Federal Reserve - especially considering how few bankers would even loan the guy $5 then risk letting him out of their sight.
5
Trump needs to articulate the "light at the end of the tunnel" if things get rough, Otherwise he'll be a one-term pres
1
@Mark Browning: The trouble is that "articulating a light at the end of the tunnel" is right up Trump's alley. All you need to do is misstate the problem, deflect the blame, and come up with some rhetoric about the future lying ahead.
(Actually, I just now searched the phrase online, and was startled that apparently nowadays it is generally defined in its literal, positive sense. Those of us who grew up during the war in Vietnam always heard it with dark cynicism, as in "It turns out that the light at the end of the tunnel is an oncoming train...")
2
@Mark Browning - That's not going to happen. There is no light in Trump's world.
1
Several events have occurred since last Friday Night in which Trump met with big financiers in Southampton N.Y. just east of Wall Street on eastern Long Island. They range from Epstein's death in federal custody that night to the stock market swoon decline of Tuesday and the profiteering of Wednesday. Why did these events occur such that now all discussion surrounds Friday and that meeting has not been addressed? I gather that significant discussions occurred and wonder if the markets were manipulated following the Friday meeting. Remember that Trump has been conducting a campaign of "Shock and Awe" with his daily rants since he started his campaign. Do they indicate an underlying major crime?
2
What about the "dumb money"? The Trumpistas don't understand any of this, and they still love their man.
3
Save psychic energy, this has barely started.
Who on earth would expect anything but incompetence, cronyism, and stupidity out of the Trump Administration?
3
Trump like many , still live in a world of short term thinking. Short term thinking permeated the business leaders for the past 40 years. Thinking, Wall Street is the economy has driven up deficits, killed many middle class jobs and off loaded our core technologies IP.
We now have a higher trade deficit, prices in the USA are higher than ever, thank you (sic) Trump for this crazy idea that exporting countries pay for the tariffs.
Again, We desperately need adult supervision to start fixing this “ cluster “ created by government.
1
Thanks for writing about this in terms of real economic fundamentals instead of just blathering about a "flight to safety" as has been the standard financial speak over the past several days. We need this.
2
Thanks! You actually almost have me understanding our troubled economy.
1
I'm shocked, simply shocked, that a man with a background in beauty pageant management, reality TV, failed casinos, and education scams, would have proved to possess so little knowledge about the workings of international trade flows.
7
Trumponomics = Lemon Capitalism: all profits go to the Uber rich; all risks and losses go to the rest of us.
In every Republican administration: wash, rinse, repeat.
2
“Historically, it has been a pretty good signal of recession, and I think that’s when markets pay attention to it, but I would really urge that on this occasion it may be a less good signal,” “The reason for that is there are a number of factors other than market expectations about the future path of interest rates that are pushing down long-term yields.” Janet Yellen
https://www.cnbc.com/2019/08/14/janet-yellen-say-yield-curve-inversion-may-be-false-recession-signal-this-time.html
1
Any one else have the feeling that the US economy is about to go the same way as a bunch of Atlantic City casinos? Or the USFL, a failed airline, line of steaks, vodka, for profit university, etc....? Unfortunately, there's no rich daddy to bail us out.
3
There was never a Trump boom. The boom was Obama’s.
7
I have a 4 year old grandchild. We think he's smart & impetuous. I would not put him in charge of the economy or the world's greatest military.
By 78,000 votes that's what we decided to do.
4
“...that there is no policy discussion at all.” This sentence is the most chilling that I have ever seen in the Times. It means that there are worrisome things on the horizon—and no one’s home.
It means that we have a president who is spending untold millions (billions?) flying to uncounted rallies but is doing nothing to tend to the nation’s financial health. I am no economist, like I am no fireman, but if I see or smell smoke billowing from a structure, every sense tells me that something is wrong and that inaction is both both negligent and criminal.
The president swore an oath to “preserve, protect...” Oh, I’m so tired. Oaths mean nothing. If the shrinking middle class got up tomorrow and saw that it all was blown up, Donald Trump would fly off to Bedminster—to golf.
It’s going to get worse, folks.
7
We should have learned from what Donald did fifty years ago or so that he's more bluster than knowledge. We should also have learned that he's more about taking care of Donald than he is about the rest of us. One day he praises Secretary X and the next day Secretary X is gone. One day his best friend is Putin, and the next day it's Xi.
Any man who refuses to serve in our armed forces is not someone who should be considered a "keeper", regardless of the things he tells you. There's nothing there, and there never will be! He's just an old, empty, vase.
2
The scary thing is there are no competent economists in this left in this administration!!
2
There is a reason there was a meeting between Trump and Wall street figures on Friday in Southampton N.Y. and then the stock market rally on Tuesday and the resulting profit taking on Wednesday.
2
So now, after being ruinously wrong about the stock market Dr. Krugman has declared the bond market to be the smart money. Oh how I wish I got paid for simply making predictions rather than being paid for being right. Oh, I am envious Dr. Krugman!
4
Yes, Trump is blaming the Fed as could have been predicted. But I think no one would have predicted that he would also blame the “Fake News Media” of “doing everything they can to crash the economy...”
That is surely one of Trump’s most mind-boggling claims.
2
Linguists have been searching for years for an antonym to the "Midas touch." They finally have one...the Trump touch. Everything he touches turns into a disaster.
3
Trump thinks after he takes the economy into the toilet he can just declare bankruptcy and start over again.
Unfortunately, those who enable him will continue to support him and either they or Putin will re-elect him in 2020.
3
"No policy discussion at all." You couldn't sum up the people running the US more perfectly than that. When a bunch of fat kids break into a candy store they have no plan beyond grabbing as much of the candy as quickly as they can and stuffing their mouths with it. They have no concern for anything but that sweet mess in their mouths. And this is one sweet mess Trump's sugar bandits are getting the US economy into.
2
You have to give trump some credit. Who else could destroy a functioning Obama economy in three years.
3
Some Indian news paper reported that General Electric (GE) is short on cash and hiding $38 billion in losses, calling it a "bigger fraud than Enron."- https://www.ndtv.com/world-news/general-electric-bigger-fraud-than-enron-alleges-report-shares-fall-2085708
It seems that Trump administration is started to face the some of the obvious (to sane people) consequences of its policies in almost every front- economic to foreign relations to domestic politics.
Every country, mainly the autocratic ones, very wll knows that they can ignore USA so long Trump is the president. They realized that they can get away with any crime, any human rights violation if it can throw some money in form of buying some American corn/Soybean/weapon etc or give some business to a Trump company. Trump's two most powerful foreign policy "experts" (Kushner and Ivanka) are more powerful than anyone in the state Dept.
And of course, Trump knows the best- "more better" than any Noble laureate economist or such expert in terms of economy and trade.
Not sure if Christian fundamentalism, racism, and white supremacy can pull him out in coming months!
2
An insightful essay, as usual Mr. Krugman. But I do think you’re being FAR too generous when you write that Donald Trump actually has “economic policies”. Donald Trump has tantrums. Donald Trump passes gas (sometimes from his mouth). His aides and sycophants try to sculpt these into “policies”, admirable efforts but with usually laughable results.
Trump’s tariff tantrums are the intellectual equivalent of a chimpanzee throwing feces at zoo enclosure glass.
2
So what does Mr. Economist think the solution is? I guess that a piece he'll write later.
On the 7th of Never.
2
Wait isn’t this the guy who predicted a market drop like no other after the election of ‘16?
Yeah, it is
3
2017: Trump Bump
2018: Trump Pump-and-Dump
2019: Trump Slump
7
When the recession comes, Trump will call it fake news.
2
A dismal science
Indeed, for Trump and China,
Both face reckoning
2
I don't have a degree in economics and I knew Trumponomics was going to be a flop.
2
Does Trump know anything about economics? Only his school transcripts and his tax return will tell.
The “great pretender” has no cloth.
3
It must be a wretched world for Paul Krugman. He predicts on election night a total, and unrecoverable stock market collapse, followed by an endless recession.
Then, as the stock market booms for two and a half years, unemployment reaches record lows, and by every measurable the economy grows and prospers, he continues to sound like an increasingly shrill and foolish Jeremiah.
All he can dream of is the day that, inevitably given the world we live in, there are signs of downturn so he can caper and gloat that he might have been right all along.
Well, a blind hog finds an acorn now and then, so I guess this week's bumpy stock market ride has Paul filled with glee.
But I'd still like to know how much personal wealth he has accumulated since Donald Trump entered the White House. He has no problem constantly carping on Trump's taxes. Let us know Paul: How have YOU fared under Trumponomics?
5
If experience is an indicator, we are headed down a rough road with a big cliff at the end.
Did trump ever repay a loan from profits and cash flow?
Does anybody have an accurate count for the number of trump entities that have gone bankrupt? 6? 8? More?
How many times did daddy bail him out? With what? More than $400 million?
Who will bail us out?
Nobody
We’ve become an economic pariah
1
Paul, you've been itching for a recession since 2016. With any forthcoming bad luck for the country, you can finally celebrate.
3
Oh please. Krugman predicted a stock market collapse that we would never recover from if Trump was elected. He is an academic who writes a column for a newspaper. NYT readers should avoid his investment advice and counsel. Like many liberal economists, he simply can’t fathom enormous impact of tax cuts and regulatory reform on the economy. His liberalism lives loudly within him.
2
No matter what the economy does...the deficit is out of this world !! I have asked numerous times for a Trump supporter to explain their support. Mexico never paid for the Wall,Kim Jung Un did not stop shooting his rockets or denuclearize. The farmers are being subsidized by our taxes and we pay the tariff increases. The Deficit has risen our Allies think we've lost it .....and on and on ! Where is this MAGA ?? I can't see it. Winning? What's there to support ? I'm tired of Losing !!
3
Krugman misses the point here, which is that the US and global economies are very much weaker than they should be given the level of interest rates and the amount of stimulus from deficit spending. Our economic system seems to be failing, for reasons that none of the experts can really identify. Secular stagnation is still the big problem of our time.
Krugman tries to blame everything on Trump because Krugman is a liberal. Trump's trade tariffs aren't big enough to explain what is going on. In fact, in a world where shortage of demand is a global problem, tariffs make sense to stop other countries from sucking demand out of the US economy. The disappointing effect of the tax cut also doesn't really explain the current bond market action.
Krugman and Trump actually agree on the Fed and the direction of interest rates. The Fed should never let the yield curve invert. They should slash rates before that happens. Rates should be cut at the next meeting.
One way to offset a slowdown would be to increase infrastructure spending. Democrats can't do this, because they are beholden to radical environmentalists who want to protect every endangered beetle and slug. Reformed environmental laws are necessary before infrastructure and housing can be built where they are needed. Deficit spending can fund new infrastructure, which should be chosen so as to open up new opportunities for housing and energy development.
Submitted 8.39pm EST Aug 15th
2
Let’s try and have a little sympathy for
Dictator trump . Vlad’s protege is trying his best .
1
What an utterly pointless column.
Krugman starts with the assertion an inverted yield curve has predicted 6 of the last 6 recessions. It asserts "the smart money" (whatever/whoever that is) thinks recession. But the smart money is sometimes wrong. There may not be a recession.
For these keen insights you get a Nobel Prize?
3
No. He got the Nobel Prize for this:
https://www.nobelprize.org/prizes/economic-sciences/2008/press-release/
1
Nope, not yet. Everyone knows Obama left the Dow at 19k. As long as it is above that, Trump is victorious. Any questions?
I don't know why yawl twist into paroxysms attempting to explain why the evil is not good (lol). Americans vote for evil all the time - every time a Republican wins, so does evil. Democrats should tie Republicanism with evil - maybe then the church ladies will finally get the point.
1
Thank you, as always, for your clear, insightful, fair piece.
3
Trump a failure and an existential threat; in peril our Nation/World.
Oh he has competencies.
He is an exquisite con-man - probably the best ever.
He is one of the best criminal enterprise Dukes ever. A Teflon-Don to beat all others; a poster boy for Machiavellianism making the World his oyster turning the succulent into excre.
He is beyond amoral - he is pathologically amoral - he naturally escapes the bounds of truth, compassion, empathy, our higher principles, etc.. It is not an act. At one time he could be considered an amusing reprobate perhaps - but today - well he is armed and dangerous - nothing really humorous to see.
Now here is where we are in America - and we best think really hard about it:
The 42% GOP - the Party and its Voters - have exposed themselves with their Trump support.
They'll object to the bluntness and mount eloquent fluff in opposition - but clinically the essence of my assessment stands.
They UN-PATRIOTICALLY fit his mold - it's thus telling to the extreme.
Real honor - civility - truthfulness - modernity out the door - real Conservatism too!
Scratch the surface of the loyal 42% - parochial base emotions/objectives abound.
And the new GOP Party - if you don't see its drive toward theocratic authoritarian plutocracy dinged with prejudice, bigotry, fear, hate, vindictiveness you are blind.
2020 election a top tier important election for our Nation.
58% it is EXISTENTIAL! D ONLY Party pointed toward modern liberal democracy! VOTE!
3
I prefer:
From Obama Boom to Trump Slump
2
We had eight years of an Obama boom from which we climbed out of the Bush - Cheney recession.
Now we are in the 3rd year of the Trump - Pence demolition of the US economy, led by a minor league UC Irvine professor (Navarro), a right wing China hating protectionist (Lighthizer) and a silly old Fox News announcer (Kudlow). Rank amateurs without rhyme or reason.
The Constitution (the Commerce Clause) gives the US Congress the power to regulate trade among nations. Ask yourself. Why isn't the US Congress doing its job?
2
Dr. Krugman insulted Putin's "president Trump" by saying there is "a vote of no confidence in Donald Trump’s economic policies". There is no such a thing as "Donald Trump’s economic policies" so one cannot have a vote of no confidence on a non policy.
As for the "trade war" and "tariffs" with China that, according to Hump, is pouring billions of dollars into the US Treasury through his "tariff", I predict Hump will fold.
The "Fake News" media never gives any credit to Putin's Hump. In addition to being the liar-in-chief, chest-pounding-in-chief, they never admit his is also the folder-in-chief. They overlooked his history of holding, as in Casinos, European auto tariffs, NAFTA, and now Chinese tariff.
1
Krugman is not Smart Money. They laugh at him.
is he managing money? No
Is he working as an economist. No
Does he rant daily about republicans? Yes.
Do his economic predictions prove accurate ? No. Hence his economics career ended early
4
Huh?
Nobel Economists are not there to make money or predictions about the market direction. They typically are theorists. It is rare to have people like Keynes and Samuelson who made money pretty systematically. Bob Merton and Myron Scholes tried and almost went personally bankrupt in 1998 (their firm LTC did of course).
Krugman is a brilliant trade theorist. He stopped doing serious economics a while ago as he would probably admit.
3
The Trump Slump is here.
1
A failed businessman without a plan or soul purveys poison to fragile self-loathers and then disclaims its effects when they respond to what is intended as a stimulus to action. You are being played for jerks. Wake up and ask yourself, "How has he tangibly made my life any better?" He hasn't. He's lining the pockets of his cronies, his family, and himself. He despises you as much as he despises himself. He no more has a credible plan for the economy than he did for his failed casinos and airline. Every day, he spews whatever crosses his mind without study, thought, or care. How long can you ignore what is there to see and hear? You've handed the keys to the economy to someone who has littered the highways of his business life with almost nothing but wreckage. He told you he was the king of the deal makers. Quick. Name me three deals he's cut with an adversary since he's been President. I'm waiting. Throw off the yoke he's placed on you. Think and act for yourself. Don't be a chump. He conned you once. I suppose that happens. But, for goodness sake, don't let him con you again.
3
Krugman has never been right, so his “doom and gloom” tripe means Trump’s economy is working for all Americans.
Thanks for the reinforcement.
4
Yep, Mr Krugman. You also stated on election night 2016 that the stock market would crater with Trump as president. It’s up 5,000 points (roughly 25%) since he was sworn. Me thinks you don’t know what you talking ‘bout.
5
"The Global Trump Recession"
1
A new twist on a common theme from analysis of the Trump insurgency:
Follow the money
What spews out of Trump's mouth are words that are intended to take all the credit for things that haven't crashed and burned yet, and to blame others when something has, about anything and everything. And while he's doing that, while few are paying attention, he has his agency heads do the dirty work of him and his white nationalist administration's agenda.
1
“...there is no policy discussion at all” ! OMG, an advanced nation of 330,000,000 million, led by a impetuous ignoramus and staffed by no-nothings, is surely on the way to economic recession, perhaps even depression. A pilotless plane never lands safely.
1
Now, be fair. Things will turn around economically when Adipose Rex buys Greenland. We'll abandon the weakening dollar for an entirely new virtual currency, Greenland Stamps. And for every square mile of Florida that disappears below water, two extra square miles of new land will appear from beneath the melting glaciers north of Thule. ( BTW, Trump has it on good authority that Thule has a nice rack) You just have to have faith in the ability of this stable genius to play three dimensional tic tac toe. Who knows, maybe next he'll buy Hawaii from Kenya.
The “D” in Doom is when central banks loan out money at zero % interest! Which is what’s happened in Europe for awhile now. Let’s be serious here: is there a banker on this planet that would be happy about loaning out money at zero percent? No!!!
If this present day world economy were a Monopoly board game, we’d be down to using pieces of toilet paper as legal tender!...and we all know what happens when that runs out!
The smart money always knew Trumponomics was a flop.
1
Fortunately for him, Trump has no idea what anything in this column means. So he can sleep well tonight...
1
Jobs created in 31 months:
Previous administration: 7,135,000
This administration: 5,988,000
Difference so far: 1,147,000 fewer jobs this administration
Source: https://data.bls.gov/timeseries/CES0000000001?output_view=net_1mth
Projection for 48 months:
1,776,000 jobs (almost two million fewer jobs this administration)
With both chambers of congress and the Supreme Court on its side, this administration has not been able to match the previous administration’s job creation numbers.
A recession/depression before the election could be blamed on the Fed or and/on any increase in the likelihood of Senator Warren winning the election.
Krugman says - "everyone who knows anything about economics left the Trump administration months or years ago". Still Trump economy is better than most other countries. That may be the reason why Trump said once that he is smarter than most smart ones in Washington. In another place Krugman says - "To be fair, it’s now clear that the Fed was wrong to raise short-term rates last year". Again, Trump was right to criticize Fed when it raised interest rate. So, if "smart money" people follow Krugman's predictions of doom and gloom, they will be in trouble. He has been predicting such things from day one, but nothing has happened. So, he has to repeat it when there is any sign of trouble to save his skin and to prove his smartness.
2
Dr. Krugman, could you in a future column possibly explore what might happen to the economy (and Trump's chances for reelection) if consumer spending were to suddenly (but temporarily -- until the election) drop 5 percent or 10 percent? Thanks.
3
Der. Krugman:
"Who cares if the economy is going South? We, whites, are winning; that's why we voted for Trump"...For the 38 % that supports Trump that is the important variable; the rest is meaningless for them.
Don't bother them with facts, their prejudices are the reality "Tariff wars are easy to win cutting taxes will produce enormous economic growth" and so on.
Like a quote goes: "Truth is the first casualty in a war": Aeschylus. There are "Alternative truths now"...
3
Der: a combination of Dear and Dr. Cute!
1
This is not worth Krugman's byline. All obvious and not much insight. As for what led to the optimism and improved economy in 2017, sure, point to changes in corporate tax rates and some of the deregulation. However, that half a point of increased employment (being generous) and 1% of higher growth (again being generous and now gone) was a pretty small gain from a big stimulus cost. Blaming the Fed is silly. As for stocks, rapid rises are mostly irrational exuberance, and those hopes are now dashed. Ok, all obvious now but also obvious then. Still hoping to learn something new.
2
You guys seem to be hoping for that so you can finally claim your predictions years ago were right just delayed. But there is still no real evidence there will be a recession in the US and certainly no evidence there will be a severe one. Even if there is a recession we are overdue for one so it doesn't mean "Trumponomics" is a failure. What matters is whether things are better or worse than they otherwise would have been not the absolute numbers which are cyclical and always go up and down.
3
@Keith
No one is hoping for a recession. The real question is, just what are you hoping for? For Trump steaks to come back? Trump Vodka? Trump's Casinos? Trump Airlines? Trump's Golf Resort in Aberdeen Scotland? Trump's overpriced bottles of Trump's Water? Trump University?
After all, you're the one claiming Trump's numbers must be "cyclical".
Does that also mean that the trillion or so he's added to the deficit will "cycle" into being of concern to the GOP once he's out of office and another Democrat has to clean up this mess?
Replete with histrionics that involve weeping as well as reading Dr. Seuss books?
What matters is getting these infantile charlatans out of office and replacing them with sane adults.
1
several pieces i have read have noted that the "staff" @1600 is ill prepared for handling a recession That will likely lead to increasingly desparate and draconian moves on the economy as the "get rich quick" cowboy himself rides off into the sunset, walking away from his wreckage of the world's economy.
So much for a "business leader" as President.
First one has to be a success in business (6 personal bankruptcies would lend credence to the fact that he is NOT a success)
then one has to be a leader (and listen to advice, not just his gut)
Trump is absolutely 100% neither.
22
Please remember that what brought the Democrats into the presidency and into control of both houses of Congress was a nearly complete financial meltdown of our country. Given gerrymandering and other forms of blatant Democratic voter suppression by Republicans at the State level (and by the right-wing justices on the Supreme Court), our country is going to have to be horribly convulsed again economically for voters to get rid of the morally bankrupt right-wing legislators who are currently presiding over the growing mess they created.
If Democrats don't manage to snatch defeat from the jaws of victory in 2020 and are able to retake control of the presidency and Congress, we might actually begin to see real action on supporting and protecting working families, addressing climate change, restoring expertise in and rebuilding our federal government agencies, consumer protection, infrastructure improvement, and much more.
One more thing: it is no accident that trickle-down economics gets replayed whenever the Republicans are in charge -- and part of that has to do with the decline in journalism. Experienced reporters who've been to the trickle-down rodeo many times before don't give the trickle-downers a pass. When those experienced reporters are replaced by lower-salaried newbies with little to no perspective on the effects of trickle-down policies, those policies don't receive the clear-eyed, critical reporting they deserve.
15
One of the tools central banks have to deal with a recession is to lower interest rates. But we are already in a situation where some bonds are paying negative interest rates. There is currently about $15 trillion invested at a negative rate. (that means a lot of institutions see paying someone else to hold their money is less risky then investing in the future).
So when the recession hits, will lowering these rates even further even be an option?
1
@George Bradly
No US bonds are paying negative rates unless they are in default. Those are European bonds that are paying negative rates. We still have a 2.25% benchmark rate and most bonds are above that. So, yes we can cut rates and help the economy some though rates are already really low so probably not a ton, but if rates drop to near zero again people could refinance mortgages and other loans to save money and make a recovery quicker and stronger.
You can only blame the Fed for raising 'short-term rates last year' if you knew that the American economy was too weak too handle moderate interest rate levels. Neither Krugman or anyone else knew how weak the economy was last year. Now we know.
We also know that, if there is a recession, neither the Trump administration not the Fed will be of any help. Imagine it is 2009, Obama has just been sworn in, the unemployment rate is over 8%, 1/2 million people per month are losing their jobs - and what does the POTUS do? He blames his predecessor, W. Bush, and leaves the country to go golfing - that's what the coming recession will be like. No one is coming to save the economy this time.
7
I don’t remember Obama’s golf trip. But what I do remember are 2 things: a leading republican voice that said “let GM go bankrupt”. The other thing was that President Obama and Tim Geithner worked very hard to stop the bleeding. And found a way to stimulate the economy into a recovery. I have zero faith that our current President could be as resourceful if things go sour. Or would even care.
1
On a loosely related topic, I dread Trump’s incompetent response to another Ebola outbreak if it were to threaten the United States. Hopefully he’ll stay out of the way and let the CDC handle it.
1
What strikes me about this--and everything else---is that it's all about Trump. The Trump trade war. The Trump tax cuts. The Trump foreign policy. Etc. It's as if the separation of powers the founders envisioned has become a more-heirarchical structure, Trump at the top and everything/ everyone else below. With that, as Mr. Krugman correctly notes, anyone with expertise (of any sort) is bailing out (or already has): they aren't being listened to, so why bother? This state of affairs is profoundly dangerous for both America and the rest of the world. The "divine right of kings" has long-passed. We don't need it resurrected.
7
All well and true but I believe it misses the main point, uncertainty. Presidents most influence the economy by providing policy certainty. Tell people what the policy will be and they will dial it into the plan. Business people hate uncertainty and the only thing certain about Trump is that nothing is certain. The daily tweet gyrations without any evidence of thought, knowledge or policy make it impossible to plan. Today's data reflects decision made months ago and the cumulative effect of Trump is to destroy all ability to plan.
To me the best predictor of an impending recession is CEO confidence. When I recently saw a poll that more than 60% of CEOs felt there was a higher likelihood of a recession then I knew it was a done deal. CEOs make the decisions and this becomes a self-fulfilling prophecy.
11
I need to understand this better. We have a predictive tool in the yield curve: when the short term rate is too much higher than the long term rate then a recession is more likely; many people acting on economic factors in their lives and business cause this inversion. The administration's prescription is to eliminate the inversion by lowering the short term rate. This seems like bending a protractor to show that the misshapen board must fit the shelf rather than reworking the board.
3
I need to understand this better. We have a predictive tool in the yield curve: when the short term rate is too much higher than the long term rate then a recession is more likely; many people acting on economic factors in their lives and business cause this inversion. The administration's prescription is to eliminate the inversion by lowering the short term rate. This seems like bending a protractor to show that the misshapen board must fit the shelf rather than reworking the board.
Pres Trump correctly identified China as a rising threat who has tilted the field unfairly in their direction but the strategy he employed of imposing tariffs as a bargaining chip in a negotiation is mindless.
There is no way Xi will capitulate or even have any real negotiations as a response to bullying tariffs. He'll find alternate markets and bide his time until Trump is gone. Xi doesn't care if his economy suffers short term - he doesn't have elections looming but Trump does.
The way to confront China was the TPP, which Trump dumped capriciously.
11
The GOP for the last almost forty years, back to their savior Ronald Reagan has preached this dogma. If you lower taxes on the rich then they will invest it back into the economy and we will all live happily ever after.
Over my 50 plus years I have listened to what they say, but more importantly I have watched what they have done. The Republicans have been great at running up the budget deficit and the national debt when they are in power and scold the democrats for attempting anything intelligent like infrastructure spending.
20
Trump's economic policy is simple, it is based on what he believes will benefit him. Tax cuts for the rich, check. Low interest rates for he who owes huge sums to unknown banks or oligarchs. It's just like his foreign policy, good relations with those who will help him build a motel or golf course.
It's not policy it is greed.
16
The US pays one billion dollars *per day* just for the interest on out national debt.
The Trump one trillion dollar tax breaks for corporations are *not* paying for themselves. Not by a long shot.
With a president who loads shoots then aims, I’m not hopeful for a rosy future.
8
My intuition has been telling me that Trump will have us all in deep trouble pretty soon, economically. You can't treat a global economy like a Monopoly game, and try to re-write the rules as you go...without any idea of a logical goal, at all.
Now someone with actual intellect and knowledge is telling me it's probably worse than that, by far. He doesn't say so, being intelligent, but if one extends the argument...
Great.
9
Krugman and other Trump haters are twisted enough to want a recession if it will cost Trump the 2020 election.
4
But not as twisted as Trump’s supporters. "There are none so blind as those who will not see.” The most deluded people are those who choose to ignore what they already know.
1
I keep reading this and similar comments from Trump defenders. It may be true that Trump opponents are cynically wishing for a recession but their wishes won’t make that happen. Trump’s ignorance and incompetence will. Deal with that reality, not the dark fantasies of Trump’s opponents.
1
First of all trump really has no policy on anything. His long term plan is the next news cycle. The smart money was never betting on trump as it knows trickle down economics is voodoo. Smart money was just looking for a quick buck in tax cuts and sugar high.
11
There really is no Trumponomics - in fact there is no economics behind the actions and words of the Trump administration. It is ALL and ONLY about poking the "enemies" in the eye - because that is the only thing which makes his #MAGA base feel "good again". If the economy has been doing well these past few years, it is because of the work that the Obama team did.
16
Trump Slump is unwarranted optimism.
Trumphole economy perhaps?
3
The one and only certainty regarding Trump and any negative result is that he will blame someone or something else. I can't recall a single instance where he admitted that he made an error. His fragile mental state won't allow it.
Such a man surrounds himself with sycophants and toadies. To have such a man as president of the U.S. results in extreme dangers.
10
The rest of the world has been moving to create economic systems independent of the US for over a decade. If Trump-McConnell-Murdoch and the GOP recognized the shift, their chaos machine based in lies, betrayal of allies, astronomical multigenerational debt, military threats and actions underestimated the value of decades of US international goodwill [that they trashed] to have the US to continue to play a leadership role.
Now recognized on the world stage as amoral, two-faced and racist whose demands are an endless vacuum, Trump and his talking heads have clearly overestimated their capacity.
And now trying to hide their chaos from their loyal base by postponing impact of tariffs on their loyal base till after Christmas, is a desperate attempt to save votes in the next election.
9
What Trump boom? The "tax cut" was simply a giveaway to corporations and rich donors, with nothing positive to show for it, not even repatriating moneys for productive users in rebuilding American industries over here. And it mushroomed the deficit GOP "deficit hawks" zealously want to limit or reduce.
What Trump boom? What infrastructure work, which was promised and never delivered, as the country crumbles?
For most of us, the Trump "boom" is a boom for a hostile foreign power that wishes to destroy the postwar economic and military order that kept us safe and, increasingly, prosperous for the past 70 years. They manipulated the 2016 election through a good understanding of the influence of "social media" and hate propaganda posing as "news" have on lazy, self-entitled people reveling in their ignorance. They went traitor-shopping and netted Trump and the GOP.
MAGA = Make America a Has-been.
10
Pretty much every economist, except maybe Faux News Kudlow, predicted all of this. The last people to figure it out will be Trump's supporters. It's difficult to see economic collapse when you have blinders on.
4
Trump supporters forget that Obama was the architect of the robust economy that Trump inherited. Like his inheritance from his father, Trump falsely claims that he was the cause of the economic flourishing in the last two years. Fred Trump was a ruthless business man and handed his son a fortune. From 1985-1994 Trump lost over a billion dollars in his businesses while the economy was doing well. Anyone who believes Trump knows what he is doing with the economy is a fool. The unfortunate thing is that independents, republicans, democrats and unregistered voters will have to suffer the consequence of Trump economic recession.
8
Trump, with his mystery undergrad degree from Wharton, destroyed many of his businesses. The casinos. Trump U.
Banks turned him away for loans. He was an abject failure when Mark Burnett rescued him with a reality TV show.
Now Trump is doing to the country what he did in his private life.
Vote him out.
11
Great logic and concluding line. Paul:
"The bond market, which is the best indicator we have, is declaring that Trumponomics was a flop." --- with the emphasis on "WAS"!
We can only hope, demonstrate, protest and pray that Emperor Trump becomes 'WAS'.
As my only two-sided demonstration, march, and protest sign since 2016 simply says on one side:
DUMP
EMPEROR
TRUMP
and on the other side under an image of 'our' flag:
"We can't be an EMPIRE"
8
I fully agree with the clear and basic analysis.
The Trump administration has no economic thinkers in it at all. Steven Mnuchin was a second class ex-banker (his father Robert was a first class trader at Goldman but I am told by friends that he is extremely unhappy with his son these days) and first class opportunist married for the third time to a second class actress and a first class opportunist. The chief economic advisor is Larry Kudlow. I don’t have to define him for anyone!
The administration does not have a Bob Rubin, Larry Summers, Ben Bernanke or even Tim Geithner. Maybe they can convince Gregory Mankiw to help but I doubt even he would want to be associated with this train wreck.
Trump is a disgrace. He should be impeached for lying to the American people. That also will help with the economy as a nice side effect.
12
Trump is the flop, in many, many ways. And it’s Boom to Gloom to Doom. That the entire trajectory of his vaunted career as famous “ businessman “. So sure, Trump Fans. Party like it’s 1929. It WILL be. And really, who could have possibly known ???
4
A recession will doom Trump! Unfortunately this may be the price we have to pay to get rid of this “so called” President. The sooner the better. Anything to restore honor to the office of the Presidency.
3
What could go wrong when you surround yourself with grossly unqualified people, to run the US economy?
Trump’s reality TV approach to his Presidency, looks like it will hit the harsh reality of challenging economic times, for which they will surely apply the wrong policies, to the detriment of the US and world economies.
4
Sure, Trumponomics is a flop. However, communicating that to red hat-wearing supporters who think the Fed is part of the deep state and Reaganomics actually worked as propagandized, thus trickling down to the working class, is another.
7
'Stable genius' that he is, somehow it seems that everything he touches or owns turns to dust sooner rather than later. The mere fact that he inherited an economy rebounding from a deep recession and was hellbent on reversing or eliminating everything his predecessor established underlies not only his ignorance and incompetence but also his arrogance and vindictiveness to everyone other than himself.
Vote.
7
If it's true that the Fed placed too much faith in Trump's economic policies how can we trust them with anything? Trump is a failed businessman running America into the ground. He has no grounding in economics and not much in business. In fact the only thing Trump has is arrogance and it's not the arrogance of a person who is smart, knows he's smart, and has the results and knowledge to prove it.
The stock market is NOT the economy. And the official unemployment rate is not the real unemployment rate. What's real is how many people cannot find jobs, couldn't find them before Trump was elected, and may not find them once he's out of office. In my opinion this is because the structure of work and jobs has changed but our laws and attitudes have not. This is something that our next president will need to address. The gig economy is not a substitute for one that has steady, well paying jobs, will hire and pay for the experience it wants, and doesn't discriminate against women, older employees, or minorities.
Trump is an old white man with prejudices and attitudes that belong to the middle of the 20th century. He hasn't changed since he came on the scene in NYC back in the 1970s or so. These attitudes are going to hurt us in the long term and not just economically. So will his appointees because they share his attitudes.
Trump and his cabinet are everything we don't need in an administration. The boom we need is a knowledge boom from voters.
8/15/2019 8:33pm
3
If it's true that the Fed placed too much faith in Trump's economic policies how can we trust them with anything? Trump is a failed businessman running America into the ground. He has no grounding in economics and not much in business. In fact the only thing Trump has is arrogance and it's not the arrogance of a person who is smart, knows he's smart, and has the results and knowledge to prove it.
The stock market is NOT the economy. And the official unemployment rate is not the real unemployment rate. What's real is how many people cannot find jobs, couldn't find them before Trump was elected, and may not find them once he's out of office. In my opinion this is because the structure of work and jobs has changed but our laws and attitudes have not. This is something that our next president will need to address. The gig economy is not a substitute for one that has steady, well paying jobs, will hire and pay for the experience it wants, and doesn't discriminate against women, older employees, or minorities.
Trump is an old white man with prejudices and attitudes that belong to the middle of the 20th century. He hasn't changed since he came on the scene in NYC back in the 1970s or so. These attitudes are going to hurt us in the long term and not just economically. So will his appointees because they share his attitudes.
Trump and his cabinet are everything we don't need in an administration. The boom we need is a knowledge boom from voters.
8/15/2019 8:33pm
6
Dr Paul, you're saying you're not even sure if we're heading for a recession. That the smart money (we know where that is!) is very gloomy about our economy's prospects."From Trump Boom to Trump Gloom". Save us the poesie. We've been living a grade B Reality TV show for almost 3 years.
The sky is falling under Donald Trump's bizarre policies, domestic, foreign, economic. Who has confidence that Tariff Man's MAGA racism, demagoguery and ignorance will save our democrcy? Trump's fingers are in our whole American pie. How long from "Trump Gloom" to Trump gone?
3
Frankly I am tired of daily distractions about the economy caused by this one person in American history.
Thankfully during his reign I have eliminated all my debt. I am living within my means. And thus I can honestly say, I would prefer recession versus another four years of his hatred and imbecile ideas.
My car is 7 years old, I will not replace it until he is not in office. My iPhone is 2 years old, I will not replace it until he is not in office. My electricity is renewable and being over charged and paid by me until life becomes sustainable for all on our planet. My job is protected by the defense industrial complex, I will not need to resolve that until he is not in office.
Dear CEOs your actions matter more. Do you want customers or slaves to your economic will? Yes, he as devolved our discussion to that.
2
I'm not worried as long as Larry Kudlow doesn't get fired. Mr. Kudlow has this brilliant mind you know and he was a star at CNBC for many years. What is there to worry about with old Larry around to massage Trumponomics? Plus Trump can fire the Fed Chair and that will be great too. Get rid of the political hack and install a real Fed Chair more accommodating to Trumponomics. There is so, so much that Trump can still do so why worry? Plus if we buy Greenland that will stop global warming almost immediately.
3
"The smart money thinks Trumponomics is a flop."
I heard Arthur Laffer complain about the tariffs. So the stupid money also thinks Trumponomics is a flop.
4
It is hard to take another gloomy economic lecture from the guy that said after Trump won, “If the question is when markets will recover, a first-pass answer is never.”
3
Paul Krugman has no shame for having been consistently wrong about his dire predictions that President Trump would ruin the economy. He just keeps churning out these economic doom and gloom columns as record-low unemployment, increased wages and a return of manufacturing jobs are the results of 45's tax cuts and lifting of stifling regulations. At what point, will Krugman write on an issue that isn't dictated by Trump Derangement Syndrome.
3
As long as Trump throws his base the red meat of racism, xenophobia and misogyny they will support him no matter what, even through a self-inflicted recession. He will simply find a convenient scapegoat like the Fed or Obama or Clinton (pick one), his adoring fans will believe him, and we will have a very close electoral college vote in 2020. There is nothing his base won't swallow and nothing is beneath this man. Rationality, facts, recession-depression, it just doesn't matter. Tell 'em they're superior and you can use them as you will.
1
There once were three brothers who jointly owned a printing business. As their business declined, they blamed each other. They actually had knock down fights. They decided that the only people in their organization that seemed to know how to make money were a few of the deceitful fellows on the sales team, who would lie to customers and to the brothers. Whatever it took to boost income. So, the moneymakers were put in charge....sound familiar?
When our betters can't or won't spend, borrow, or lend money, they are supporting forces that induce economic famine. There is a point at which lower interest rates means higher risk because when borrowing slows even when interest rates are attractive, there's starvation going on in the economy. We don't expect the NYSE to show signs of malnutrition, but, business people know, when things are too cheap, something is up. Cash is king. Next, the economy will be eating the seeds it needs for next year's crops and we will have a crisis that is so deep that interest rates won't solve it. The Trump's tourniquet has already caused economic gangrene to an unhealthy form of capitalism and Brexit's self-amputation is about to drop through the floor. If Fred Trump hadn't loved Hoover so much, Donald wouldn't have tried to become him in pursuit of his father's love.
2
Yes, protectionism and racism are the only political views Trump has. His protectionism can be found when he was aiming at Japan. All of Trumps other political actions aren’t based on a belief but on self interest and sociopathy.
2
Didn't this voter-approved mistake promise something like, "I, alone, can fix it"? Well, for all the world to see, he's fixing it. To the lifeboats!
1
In this case, one could say that failures in the past are a guarantee for the future. You put someone with a history of serial failing at the helm of a prosperous nation, you shouldn't be surprised that he manages to wreck it. What does surprise me is that stupidity is so contagious.
2
His entire life consists of the reverse Midas touch , then walking away. Why should name owner be any different?
1
It's all been the Hoods Robin' from the initiation and cultivation of hatred toward all immigrants to stop the dilution of the economy's wealth, to the pillaging of the Tax Cuts and Tariffs taxes. It is led by the Trump Wall St Administration as they rob the nation and deregulate to allow widespread wrongful greedy profiteering.
They know the cycles the economy always follows and we are overdue for what you write of. I suspect the Friday meeting in Southampton N.Y. attended by Trump and New York financiers may have led to the market rally of Tuesday and the profiteering from the downturn the next day, Wednesday.
Trump has displayed a lack of confidence in the future and it appears the one percent are bailing out while methodically skimming the economy as they go to their second homes in other nations supported by their buried treasure there and the industries they exported to support them.
Like Locusts, the greedy are moving from our nation of wealth having devoured much of it, and on to other nations to graze. They do say it's a Bull market.
2
June, 1930 President Hoover signed the bill called the Smoot _ Hawley tariff.. One thousand and twenty eight economists had written the President advising against the bill.
Dozens of nations reacted. France and Italy imposed auto tariffs. Canada raised tariffs three times. The Swiss boycotted U. S. imports. Tariffs were supposed to protect American producers. They were a disaster for the U.S. and the world economy.
Does Trump have any advisers that can read?
4
Some time back Ben Bernanke said the tax cuts would keep the economy going through 2019 but in 2020 there’d come a time when it would be “Wile E. Coyote off a cliff.” Made sense at the time - makes sense now.
1
It's all been the Hoods Robin' from the initiation and cultivation of hatred toward all immigrants to stop the dilution of the economy's wealth, to the pillaging of the Tax Cuts and Tariffs taxes. It is led by the Trump Wall St Administration as they rob the nation and deregulate to allow widespread wrongful greedy profiteering.
They know the cycles the economy always follows and we are overdue for what you write of. I suspect the Friday meeting in Southampton N.Y. attended by Trump and New York financiers may have led to the market rally of Tuesday and the profiteering from the downturn the next day, Wednesday.
Trump has displayed a lack of confidence in the future and it appears the one percent are bailing out while methodically skimming the economy as they go to their second homes in other nations supported by their buried treasure there and the industries they exported to support them.
Like Locusts, the greedy are moving from our nation of wealth having devoured much of it, and on to other nations to graze. They do say it's a Bull market.
1
Sure, watching those 401k numbers rise was thrilling but I am also acutely aware that trump and his no-nothing cronies have no interest in me and my piddling (by their standards) 401k. I am hoping to retire in 2021 and can only hope that this incompetent bunch are out of the White House and on their way to mess up someone else's life; leaving the clean-up to the Democrats and professionals who might actually know what they are doing and care a wit about us.
The financial future of anyone wanting to retire in the next couple of years should give serious thought to supporting this bunch of crooks. I do not want to be working until 70 because of the incompetency of this president.
3
Insights available here!
These articles and comments about economics remind me of that Showtime series, "Shameless": At first I thought it was just a very offensive comedy. Then I realized it's actually a very accurate documentary... with a very dismal punchline.
1
The only person consistently declaring Trump’s economic policy a flop is the author, pretty much from day 1 of his presidency. The long bond yield is low, so what? Our debt is cheaper than ever to finance and lower bond yields are the pattern in all developed nations for years, look at Euro bonds or the JGB. Trump complained last year that Fed tightening was wrong, this author of course disagreed and now, shockingly admits Trump was right! Wow, almost choked on my Cheerios, that was almost like the author by extension admitting in the past he was wrong. Almost. Inverted yield curves are not a problem professor, recessions are, flights to safety during uncertain times will drive yields down, not all flights to safety are correct in predicting recession and this one driven by geopolitical tensions smacks of a very temporary move. But hey, keep this column on file for next year before the election, when you write your future inevitable column “Why Trump is the worst President for the economy of all time”, you might want to recheck your notes...
3
Oh, how I wish the temptation to label Trump's economic policy (such as there is one) "Trumponomics" might have been resisted. Why not come up with something even less original, like "Trumpogate?"
1
Calling it Trumponomics is a bit of a reach - it would seem to suggest some kind of coherent beliefs and policies.
Instead what we've got is an ignorant bully going with his gut and whatever he just saw on Fox. We've got the greedy cashing in while they can. We have markets finally realizing yeah, he is that clueless (and vicious). He breaks everything and everyone around him sooner or later - and he's getting worse all the time.
And Mexico still won't pay for the wall.
1
When your advisors are Navarro and Kudrow, following the 100% useless policies of Reagan, Laffer et al well, just go to Kansas and ask them how well it worked for them. Trickle down has never worked, its just convenient for the ignorant and the amoral to further their agendas.
1
The national debt, consumer debt, student loan debt and a horrible POTUS = disaster. It's not an if but a when does it al collapse. This is not chicken little the sky if falling. The stock market going up is NOT a leading indicator. Apple stock goes up 10 points on iPhones being exempted on the same day Foxconn who makes their iPhones says profits were down on weak iPhone sales. The Market is making up stuff (again) to keep stock prices up. They did the same thing during the dot.com bubble. Back then companies were worth $Billions on projected sales. Can you say Beyond Meat?!
I totally disagree with Dr. Krugman about Trumponomics.
There is no such thing, it never was, it never will until 2020.
What failed is Great old GOP ideology of tax cut for rich.
They tried and tried and tried ...……. no avail, the net result is extreme deficit.
Again a woody may claim , but Obama stimulus create deficit too. Yes it is because economy tanked and needed money, no other way was exist , at that moment Bush and Obama's economic minds has no choice but spend taxpayers money to save economy. House burned then.
So Trumponomics , no such thing , never existed , not this man or his capacity can propose such thing.
Trump has only one talent: Trump-raptucy.
1
In the words of a retired casino pit boss:
"Back in the day we had an expression called 'flake'. This meant a player who couldn't be trusted to pick up his markers, who always wanted the luxe treatment, never had a kind word, never tipped. He always expected people to do his bidding. Once we were on to him he was 86 from the joint unless he was a friend of the owner. A flake could get by if he had juice with the owner until his juice ran out, then he was done."
Trump is a flake. He has some juice now, but it's running out. People are getting wise.
Vote Blue, No Matter Who!!
2
Other than slashing taxes for the rich and attaining massive, record-breaking deficits, what IS Trumponomics? A joke. With a supposedly hot economy driven by growth in low-paying jobs. Awesome.
1
With Trump, if the stock market goes up, it's because of him. If it goes down, "it's leveling", he'll say.
If it crashes, he'll blame Obama.
3
The wealthy are abandoning America. They know their minds will not be free in coming days.
Of course Trumponomics was a flop.
Trump is the guy who declared bankruptcy six times and who tanked his credit so badly that no American bank would lend him money.
What Trump knows about Economics would fit on the head of a pin with room left over.
3
Is it okay to consider one's losses in the stock market a contribution to get a candidate other than Trump elected?
@gian
Golly! You actually had net losses in the stock market since Trump was elected?! With the DOW 6,000 points higher? Really?
1
Donald J Trump is completely unstable intellectually, morally, spiritually and emotionally, and he is in charge of our economy and future. When he shoots, it is without consideration and from the hip. Fasten your seat belts. It's a bumpy ride ahead.
2
"deal effectively with problems as they arise..."By tweet?
2
Mr Krugman here still appears to be mired in dark age economics.... let us return to the time of the Marshall Plan and
the westernization of Japan post WWII... let is mix in the Communist flavor of the Soviet Union and China .. sprinkle in the Korean "War?" -- Viet Nam -- and OPEC .. a dash of
ill founded US domestic policy expanding a a population that
could not support itself.. enter the EPA an element that
- whilst doing real good - chased American industry away from its shores ... cover the whole progression with the
WEB and an ever deepening National Debt and ... voila an economic rudderless state pin-cushioned by global cheap labor and expansion of the world population in the greatest numbers by the lowest in wealth scale.. finally spray with horror mist currencies in all countries that is essentially worthless .. in spite of the "modern?" investment contraptions-
indicator- charts - trends and even web-ish spyders .. the economy can do whatever it is intended to do ..
I'm setting on piles of cash, waiting for this President to be gone. Maybe a selloff just before the 2020 election would be a way to vote twice.
1
"No confidence in Donald Trump’s economic policies"?
Come on! Why wouldn't you trust the financial insights of a man who filed bankruptcy so many times he eventually had to go on television with low budget ads asking viewers to "Come on down to the motel near the airport so I can sell a book on 'How to be A Winner'! for $39.95"?
Sure, Trump has stiffed every contractor he's ever met, and everyone else who ever got into bed with him financially. And we all know he couldn't negotiate his way out of a paper bag unless he could sue it first, but he's the President of the United States now! Isn't that all you really need to be accepted as a "stable genius"? To be seen as the "master negotiator" that can bring unprecedented stability to the complex and highly integrated global economy?
Ah, forget it. We're all doomed and we know it don't we?
1
Several events have occurred since last Friday Night in which Trump met with big financiers in Southampton N.Y. just east of Wall Street on eastern Long Island. They range from Epstein's death in federal custody that night to the stock market rally of Tuesday and the profiteering of the market decline Wednesday. Why did these events occur such that now all discussion surrounds Friday and that meeting has not been addressed? I gather that significant discussions occurred and wonder if the markets were manipulated following the Friday meeting. Remember that Trump has been conducting a campaign of "Shock and Awe" with his daily rants since he started his campaign. Do they indicate an underlying major crime?
2
It should be no secret to the astute that Republicans always break the economy -- on purpose. After enriching the wealthiest and the corporations that define them. they blow the budget as a backdoor way to defund popular programs they despise. Then, once defeated, the corporate Democrats are left to make the cruel cuts -- always from the bottom as they bail out the banks . . . Trump is no different, just more brutal and upfront about it.
1
As a person who is employed by a company that is heavily exposed to the automotive and construction industries the news we are hearing from customers makes me feel quite pessimistic about our chances of going another 12 months without a recession. Hearing Dr. Krugman acknowledge that we are far from guaranteed an immediate recession is a nice respite from otherwise poor news on the economy.
However, one of the things that we have forgotten since 2007/2008 is that every recession is not the great recession. While we may rightly be concerned about troubled waters ahead, there is no indication that the coming set of waves will tower as high over our head as they did just over a decade ago.
Warren Buffett and Ray Dalio agree! The two most successful investors of our time are sitting on piles of cash because they also expect a recession.
1
It would seem that the great deal maker has backed himself into a corner. He desperately needs to be reelected if for no other reason than to avoid criminal prosecution. China’s leaders have no such worries. They can wait Trump out knowing that he cannot afford a pre-election economic downturn. Trump has already blinked once. Any deal now will be a very bad one for us and very difficult to spin as a victory.
7
So here we are. Trillion dollar yearly deficits. Twenty two trillion dollars in national debt. A severely over inflated stock market. More money tied up in mortgages than in 2007. A trillion and a half dollars in student loan debt. Interest rates so low that very little stimulus will be on hand when the next recession hits. The national minimum wage mired at $7.25/hr. What can go wrong? Plenty.
11
I also think that with Boris Johnson not having a Brexit plan when Britain crashes out of the EU in October there will be economic chaos in Europe for a long period further stifling investment and growth which will exacerbate the world slow down. If Trump follows through with further tariffs on China and and China retaliates again things could get gloomy indeed.
4
In view of his past record, if I were Paul Krugman I would keep away from predicting any economical disasters for the foreseeable future.
2
@A. Grundman
In view of Trump's past record, I'd stay away from willfully ignorant talking points aimed at Paul Krugman.
1
"The advisers who remain are busy with high-priority tasks like accusing The Wall Street Journal editorial page of being pro-Chinese."
Or researching the cost and interest to buy Greenland.
8
@Jtati
Good one!
The Economist said it best: "American cannot have a strong economy, a trade ware and a weak dollar all at the same time." Trump and his advisers "may imagine that the Federal Reserve can ride to the rescue by cutting interest rates again. But that misunderstands the depth of unease now felt in factories, boardrooms and trading floors around the world."
3
The Fed was left with little option. With rates so artificially low, what recourse would the Fed have with a world-wide economic downturn? They needed to raise rates, to give some maneuverability in the event of a downturn. It was only a matter of time for a downturn to occur, and we all know it.
Trump's way of doing the country's business does not work in the long term. As George W. Bush learned, tax cuts, without spending cuts (coupled with an increase in military spending), leads to recession. Trump combined tax cuts, increased spending AND a trade war. Economic policies should not be run on the whims of one man, especially one without any economics background (and one who has bankrupted many companies, including a casino).
8
The Economy is in great shape despite the Doom and Gloom you read here. Actually, the Inverted Bond curve where 2 year bond rates exceed the 10 year has been followed by a significant rise in the Markets the vast majority of the time in years past.
This slowdown is all because of the China US Trade Tariff issue. If we can get that resolved things will be running smoothly to the consternation of the Left. I truly believe they would love it if we had a recession or even a depression if it served their purpose which is to get rid of DJT.
Judging by the 700 that Warren had and the thousands ( 7-12000, thousands couldnt get in yesterday) DJT had in VT yesterday I'd say maybe he'll win the state he narrowly lost this time around.
"I truly believe they would love it if we had a recession or even a depression"
"Belief" is no substitute for reality. We just spent a half billion in 2 months - a record and borrowed 4 trillion since 2016.
The left is not supposed to care about debt. More untrue "beliefs".
2
@Jtati
The Reality is we have a dysfunctional Congress with Millenial Socialist Leftists fighting against those on the other side who used to be the Left!
Ironically DJT is the only thing standing in the way of the end of America as we know it..or some of us know it. You may love him or hate him but the alternative is truly frightening.
Deficits are shared blame, you know that.
Of course the future was robbed to pay for the enrichment of the doomsday Republicans who lead Trump, but I do see a possible advantage in all this; The tax cuts were a robbery paid for with Tariff taxes on all of us, and the "Trade Wars" is a sad attempt at concealing the fact that our nation is an "Evil Empire" led by the Emperor and his "Imperial Storm Troopers". Reagan did the same thing when he called Russia "The Evil Empire" during the "Star Wars" frenzy and the Star Wars weapons program. It's really pitiful how this Television Actor President manipulates our brainwashed public with his daily rants of diversion and deception to keep all of us from thinking clearly. But the one possible advantage to the "Trade Wars" is the idea that the Tariffs will keep more money in America, albeit, in the treasury to pay for the tax cuts to the wealthy, but the high prices may grow internal industries over the long term even if the foreign manufacturing does not return. Once again, Trump and his class want it all in a diabolical scheme to not only shun responsibility for supporting the government services they receive but the very workers they have and the investors they get money from. It really is a remarkable scheme. Remember that all nations deceive their own. In this case, the military Industrial Complex is our Capitalism.
4
@PATRICK
If you put together my years of comments you will see a clear picture indicating that the military runs our government and elected Trump using Television.
"Trade Wars"?
1
@PATRICK
Upon second reading, it became clear to me Trump needs real protection and those in his realm have to look for plotters. We don't need another military martyr. Trump is no Lincoln or Kennedy but must still be protected.
It seems to me in spite of limited economic knowledge, that a large amount of money was pumped into the economy after the 2008 recession and we've been living off the real estate boom and that wealth, that money, since then. Now the tax cuts have injected even more money into the economy. It's mostly soaked up by the already rich and corporations, and real estate. Inflation is down because of computers and increased productivity, so the additional money is also soaked up by technology's efficiencies rather than inflation. The money injected was to keep real estate prices from falling, thus the bail-out. Compared to the amount of money injected, how much was lost in 2008?
1
There is more debt per person and in governments across the globe now than before the Great Recession. More and more people are uninsured and facing the specter of bankruptcy as Republicans everywhere slowly suffocate the ACA. 50% of employees in the U.S. economy have zero benefits. Wages are rising slowly, but are still abysmally low.
The next recession will flatten an economy with little resilience - a broadly based prosperity with enough savings and investments that would get companies and individuals through tough times.
Deficit spending to spur the economy out of a depression or recession will be difficult to impossible because we've run up too much debt on credit card wars and tripping over each other to give more of our money to the idle rich.
Interest rate cuts won't work to cheapen the money supply to spur exports because the rates are too low now for cuts to make a difference.
There are no arrows left in the quiver. We are defenseless before the oncoming gale. Thanks Donald.
24
and what if the tariffs up (at the right moment...), tariffs down (at the right moment...) and so on is a calculated maneuver? In the end inside trading is an easy way to make lots of dirty money....
7
The trade war is slowing the economy. Good, as long as an agreement with China is reached soon. We are much better off slowing the economy by trying to achieve a realignment of trade with China than we would have been if the Fed had slowed it in the traditional way, by jacking up interest rates.
3
@Kurfco
Raising interest rates provided the necessary space to CUT rates and stimulate the economy, via spending, when the recession occurs. With no option to do so, we have less tools to combat a recession.
1
A pre-requisite for functioning democracy is a reasonably well informed citizenry that can make educated judgements out of the competing claims of politicians.
So when Krugman asks the rhetorical question "How many voters even know what the Fed is or what it does", and we know this is nowhere near the only area of ignorance, then this has frightening implications for real democracy.
1356
@Bob in the Jungles of Southeast Asia Many people in the US don’t know who the VP is. They don’t know how government is supposed to work and apparently they either don’t read or they don’t comprehend what they read.
They are so ignorant that if you ask if Hillary should be impeached they say yes. Trump is still campaigning against her even though she holds no office.
I don’t know what our schools are doing but it seems like they’re not teaching critical thinking skills.
174
@Bob in the Jungles of Southeast Asia
Yes, that one stuck out at me as well. Part of me thought it unfair, then all of me knows it's true. We are already living in the tyranny that, as Plato predicted, follows the degeneration of democracy. Right now the only thing holding this whole shaky government "of the people" up are our laws and institutions, but without the bedrock of an informed and engaged populace they are built on sand.
It's all just a matter of time, unless 2020 reverses the trend. That vote could just as easily be the final tolling of the death knell of what this nation once was.
100
@Cindy Mackie There sure aren't any critical thinking skills taught in the online Betsy DeVoss-supported graduate school I'm embroiled in - and it's one of the more respected ones.
The biggest skill taught seems to be plagiarism, and after hours of frustration I will be graduating soon, along with my classmates who excelled in that fine art.
The teachers don't actually teach - they grade. There are no classes, no webinars, and no interaction with the professors. There is no feedback on assignments and no way to verify calculations.
The biggest qualification for good grades seems to be paying the tuition bill on time. (E.g. it's as much as your job is worth to flunk a student)
And these kids and their employers think they actually learned something. And by the way, NO, I'm not kidding in the least.
127
I am a business owner. I never understood how anyone thinks I would invest more in my business, or hire more people based on lower taxes. I do these things when I see demand go up. That seems so Business 101 to me.
Lower taxes mean a better result of my hard work that I can use for personal investments elsewhere (stock market, retirement) and cash leftover for a rainy day.
The tax reform was such a scam.
2355
@Alex
I'm a business owner too and I tell everyone the same thing. But it's actually worse than that.
Consider that (most) business investment isn't taxed at all (they're deductible business expenses), while profit is. As a result tax cuts have lowered the cost of not investing in the business, creating more of incentive for me to draw money out of my business as profit rather than reinvesting it.
Scam indeed.
333
@Alex. Amen. I worked for rich guys. They never, ever said, “I have surplus cash, I’ll expand.” NEVER. They only expanded to meet increased demand. I have screamed this for years. It is so obvious. Thanks.
332
@kaydayjay Right. Many large corporations were sitting on record amounts of cash BEFORE the tax cuts. So if they weren't using it to expand their business then, why would giving them a tax cut change that?
263
I’ll bet you will only be happy Krugman if there is a huge bust soon. After all, you have been forecasting one since Trump took office. Most people don’t like to be wrong.
2
@Richard Winchester
Don't judge others by yourself or better yet, by Trump's mentality of never being wrong or responsible for anything. If the Economy does well, Trump takes credit, and if it doesn't he blames someone or somethin else. Trump owns nothing, he sold his soul to Putin.
@Richard Winchester Oh yes. Nice segue into blaming the Democrats and the few Republicans who are sane and have some integrity. Yup. Saw it coming down Route 101.
Of course Trumponomics failed. It is the same old trickle-down nonsense that always failed. It is strange that every time it is implemented, much of the media acts like it is the first time such tax policy has been passed and is surprised when it fails. Republicans use the same old disproved talking points to promote the benefits of a policy that will not deliver. Maybe the party of ideas could come up with a different idea.
1230
@David Bible - And even if trickle-down worked, which is doesn't, what good is a trickle? A trickle is a very small amount, no?
68
@Fourteen14
So true. 35 years of Reaganomics have crafted an income inequality that rivals the old "Guilded Age".
This was always the intention.
75
@Fourteen14
Your wonderful sarcasm is so dry that I had to do a double and triple take to make sure it wasn't serious opinion.
Some writers are adding a postscript of some kind, commonly or to alleviate any doubt their intent.
Please give it consideration, if you haven't already. Thanks.
17
In fiscal 2018, the government spent 3.9% of GDP, above what it received, to achieve 2.9% GDP "growth." This year, the deficit will be more like 4.5% of GDP, to achieve "growth" of a little over 2% of GDP. Trump ran his businesses the same way: borrow heavily, create the illusion of economic success (which is, in fact, merely excess spending funded by unsustainable debt), and then leave town, so someone else has to pay. If you spent 25% more than you earned, you could have a higher standard of living. How long can even a government get away with such a practice? We'll soon find out.
18
exactly. and the next administration will have to play clean up for the Republican tax cutting frenzy.
3
My finances were so devastated by the "tax cuts" that I have stopped shopping. I stick to food and other necessary items. It strikes me as odd that "consumers" are still out there consuming like crazy. It won't be pretty when the music stops.
1052
@Suzanne Wheat
The same has happened to me, and my colleagues. We are middle class teachers who owed between 4k & 10k in additional taxes for 2018.
This so called tax cut (HA!) devastated my savings, and I now have no money to be a consumer beyond food, gas, utilities, and perhaps a train into NY.
Basically, I lost half of my homeowner deductions, and all the professional expenses that I took out of my pocket. I was supposed to be happy that Trump allowed $250 to us teachers. I spend that five times a year on my students.
So yes, just like you, Suzanne, I am no longer a consumer. So much for taking care of us working stiffs!
193
@Suzanne Wheat
Consumers are consuming paid fir on credit. The day of reckoning is coming....and trump is desperate that it be AFTER the Nov 2020 elections.
Let’s see how many people are fooled by his large con.
71
@Kate. And yet Republicans have managed to convince some 40% of white men, those working and not, that their problem are caused by dark skinned immigrants. Education can only go so far when people are intent on not seeing reality.
77
Trump is purely transaction oriented. Hence, he plays checkers when he should play chess. Most don't know that the bond market dwarfs the 'stock' market. Yet, Trump only thinks of the 'Dow." We are headed into a liquidity trap, similar to Japan and now Europe. If we fuel growth any longer with merely "free" money, it is going to inflate the wrong assets. Namely stocks and NYC corridor ( and Cali) real estate. Recession will come. When it does, the collapse will cause a deflation that may rival the 1930's. Let the air put of the balloon now, in order to avoid calamity later. Stand pat Mr. Powell.
5
I’m torn between wanting a severe slow-down or recession in order to get Trump out of office and not wanting it due to the fact that it will hurt lots of people. Maybe one can hope for a quick slump and then a new and steady pair of hands in the White House to calm things down enough for a quick recovery.
1507
@Anders I share the torn feelings. However, I've lived 72 years and watched a number of recessions and booms come and go.
A recession from the 2008 recovery is inevitable. Expansions don't die from old age. They die from policy failures, but they all die. So let's not spend a lot of angst beating ourselves up about the social cost of the next recession. It is inevitable. Whether it was accelerated by Trump's goofy economic policies can be debated by historians. But a recession will happen and it will impose pain.
If we can transform that pain into tossing Trump and his merry band in to the dustbin of history, then let us do so with no guilt. We don't deserve it. It is unfair for people with sound economic ideas to blame themselves.
161
After 11 years of expansion, it's coming anyway so better sooner (before 2020 election) than later.
81
@Anders I decided if I had to choose I would prefer to lose some money (the inflated stock market is all ridiculous anyhow) and let Trump take his lumps and get canned by the voters if the economy gets worse.
No short term stock market gains are worth allowing Trump and his crowd to continue in office.
136
Next year could be a doozy. If a recession creeps in, and layoffs start in earnest, watch out for Trump and his economic wizards. If he thinks he's losing ground in the campaign, there's no telling what extreme measures he'll take. Ban China imports all together, threaten Iran with more sanctions, blame Germany for the recession along with most of our former allies like Canada, the UK, and France.
And if Trump convinces himself he's going to lose the election, God help us all.
2037
@cherrylog754
"..there's no telling what extreme measures he'll take."
War. You forgot to list war.
When he was elected, I told my friends that anything short of nuclear war should be considered a win.
248
@cherrylog754 "We were doing great until the Democrats made a little headway in the House and messed things up," is what he will say. And he will add, "You must re-elect me and return the House to its rightful owners, the GOP, so that we can restore America to the greatness I was creating and will continue to create." He will never ever admit that he IS the problem.
199
@ImagineMoments That's exactly right. The GOP answer to most financial crises is to start a war. That increases military spending, which helps their friends and contributors.
137
Its fun to make up the rules as you go, ain’t it Paul.
@J Clark
This might be a good point to recall that you have no economics background and don't really know what you are saying (see WYSIATI and it will lead you to another Nobel laureate).
@J Clark
You are referring to Trump, Right? I wonder if Trump understands what inversion means?
Paul writes, "it’s now clear that the Fed was wrong to raise short-term rates last year."
Be specific please. I think the last 2018 one was a raise too far but the others were not. That would have made this latest cut not necessary if it was really needed at all. QE3 was one money flood too many. QT should have started gradually and sooner and should continue slower now.
The 'dumb' beats now are for more cuts. Pun intended. Big question: Why is the FED is responsible for undoing the economic damage done by the Trump tariff and trade blunders?
2
@Larry Oswald
I agree!!! Why is the Fed responsible for Trump's miss handling of everything relative to our economy and everything else he miss handles.
Paul,
I think the Dems are missing a golden opportunity. They seemed to be afraid to talk about the economy.
A few years ago, my school, South Carolina, had a pretty good lineman/linebacker named Jadeveon Clowney. Whenever other schools had success against him, it was when they ran straight at him. This counter intuitive strategy seems like suicide against the man who would later be picked no. 1 overall in NFL draft, but it sometimes worked.
Similarly, the Dems should go after Trump on the weaknesses of his economic POLICIES. Show the voters that the overall economy is very good, but if left in the hands of a man who will do things like start an unnecessary trade wars while at the same time alienating our economic allies, then, I believe he is vulnerable on the only issue he really has.
So, Democrats, let's get out our biggest, strongest OL and go straight at him.
11
As a recently retired member of the quickly disappearing "middle-class", a recession will probably cost me greatly in the value of my retirement investments. I'm willing to pay any price to get the country back on the right track on foreign policy, the economy and socially. That's how "Trumponomics" is working for me.
10
I am not so sure that it was clear a mistake the Feds raised interest rates last year. We had Trump cut taxes for the rich on the fiscal policy side, did we need the Feds to lower interest rates to give the same rich people more money?
3
The GOP is in quite a bind. Their masters, the investor class, own almost all the stocks, yet their base is completely decoupled from the market and can't even recognize they receive zilch from the "greatest tax cut in history", much less being affected by the gyrations of the Dow. The party and their backers however have made a devils bargain with Trump, one which will be impossible to wriggle out of. Go after Trump at the behest of the plutocrats, and his base will rebel; go after the plutocrats and their funding dries up. Both the rich and the poor will suffer, but guess who won't suffer too much? No wonder Joe Biden now is looking like the nearest thing to Republican Lite to disenchanted GOP'ers.
10
@stan continople
I'm sorry...maybe they forgot to tell you.
The GOP is dead.
You're stressing over something that doesnt exist anymore.
A Trump slump is inevitable. You can't have that much political interference without it affecting the economy eventually.
Once again Democrats are going to have to repair the damage created by Republicans wasting too much of the country's money on conservative causes.
22
@JimmySerious a slump is inevitable. We're heading into an election year. The politicians grappling for power like to entertain the belief that everything's a crisis and only the politician's great superhuman powers can save us! Vote for Me.
@JimmySerious
I am 75 and I can't tell you how many times this scenario has been repeated in this country. The Democrats always get in after the Republicans screw things up and then the Dems are left holding the bag and trying to undo the damage. Obama's plight in 2009 was the last time it happened but not the first. However, this may be even worse than W and Cheney's 2008 debacle.
2
It's just too bad that this litany of mistakes designed to pump up the market and line the pockets of oligarchs and corporations will likely take more than a year to have consequences from which the uninformed electorate will suffer.
5
I truly hate to say this, but if I had to choose between a recession and four more years of Trump...bring on the recession. Eight years of Trump would be far more damaging to the future of America than a passing recession.
Of course, I'm hoping for the best of both worlds.
22
For 31 months, I have sat silent in my dissent whilst MAGAts and pundits alike have predicted a second term for Trump because of the [inherited] economy, silent because there is no point arguing with people who live in a fantasy world. All I need to do is to look at the man's track record. At least 13 of his businesses have failed, resulting in six bankruptcies. Moreover, he is obsessed with punishing his perceived enemies, seemingly blind to the interdependency of a global economy. Greater fools allowed him to get away with such a profile as a businessman, but geopolitics is a different animal. Worth noting: at virtually the same time in his presidency, GHWB enjoyed at 90% rating (Trump's is less than half that). A little more than a year later, it was in the 30s, and he lost in 1992. Why? The economy fell apart. Trump has a year to run the economy into the ground—which he will.
22
What makes me angry is Trump is handed a good economy and he and the Republicans ruin it with massive tax cuts to the wealthy, trade wars and then the Democrats will have to clean up the mess. I truly do not understand how the Republican voter has not realized that trickle down economics doesn't work. I do not understand how they vote against their own best interest. Did the tax cut help the people of West Virginia or Kentucky? But of course, Obamacare did. It is absolutely maddening.
30
It’s easy to understand once you realize that it’s all based on their hatred of minorities and educated people.
Trump has always believed he knows more than the experts in EVERY policy area. When facts don't matter, they have a habit of biting back, hard. Just because Trump could bully, lie, and cheat all his life, and avoid consequences by manipulating and hiring high-priced lawyers, doesn't mean he can get away with ignorance and incoherence in economic policy. Of course, he wants to be re-elected so he can't be pursued for his crimes on leaving office in 2020. In his simple-minded logic, if he can bully China to show "victory" in his trade war and the Fed to lower interest rates, he can have the election all sewn up. As that old Republican idol, Reagan, would have put it: "There you go, again!"
7
Trump gloom didn't just happen after all of his misguided economic efforts. Gloom started the day he realized he was hired. World calmness ended.
The great genius of bankruptcy economics continues his fiscal resume.
We, the world, are doomed with Trumpism gloom.
10
The investor class is not that stupid. They knew Trump has no clue what he is doing, but it was morning at the mansion and they rode his tax cut for all they could. Now that it is coming to an end, they are expecting their next ride to show up. The treasury and the Federal Reserve.
8
This is the naked face of incompetence, policy so incomprehensible that it does not let business use the so called cash infusion from a debt funded tax break that business has no faith in using that money except to buy back stock to sit on still more money.
With the start of the conversation about this instance of inversion, let's bring up and immediately quash the usual tandem and ridiculous conversation about confidence. The right will soon if it has not already started with their notion of confidence for confidence's sake rather than confidence based on data allowing them to put blame willy nilly where ever it wants to. Doing so allows them to scapegoat who or what they've been wanting to take down regardless of whether it's truly involved or not. Shall we all agree, especially in the media that we are not going to entertain such talk this time? Please.
Also, reading this column is making me reconsider that there was an underlying reason for the prolonged shut down last fall/winter. Was it a good cover, one that compulsed conversation about anything else to distract from the conversation about the Fed hike? What other garbage decisions lay hiding under other large attention getting stunts to distract attention from where it should be? The economy, a conversation trump never wants to have and believes the economy is the stock market?
8
Funneling more money to the wealthiest 1% is poor economics. It lead to ruin under Bush in 2008 and Trump is doing it again in 2020. The money needs to be in the economy not tied up in some horde of wealth.
8
The thought that caught my mind is Krugman's comment that most people don't know what the Fed is or what it does. I agree, and there is our problem, the "great unwashed" is ignorant of how our government works and what its objectives are. This ignorance is why we have Trump, a lot of no-nothing yahoos deciding who governs.
8
Whoever (hopefully!!!) takes the reins after trump (hopefully!!!) leaves office in 2021 will inherit a mess equivalent to what Obama inherited from W in 2009. Somehow Republicans managed to blame Obama if not just for the slow recovery (as Republicans dragged their feet to prevent that recovery) but also for that recession. Watch them do it again...
19
@Tom Hayden
Yes, it is like some stupid dance that we go round and round in. GOP tax cuts and deregulation (plus wars) and the Dems get blamed for slow recovery. Obama was left with a train wreck and had us on the right track with a slow and steady growth and recovery. I don't know if the Dems can pull us out of this mess.
1
Ever since his election, there has been a question of whether Trump has any principles at all, or is simply driven by short-term greed and an overweening narcissism. He is, indeed, driven by those things, but by now, as Krugman rightly points out, there is evidence that, actually, Trump actually DOES have some principles: one of them, protectionism, is stupid. The other, racism, is evil. Quite a spectacle...
4
I am not an economist. The argument makes sense to me. If Trump supporters have not awaken by now that he is wrong (on a variety of topics) for leading this country, they will not do so in a US economy in poor health. These people were duped into from buying from this snake oil salesmen in 2016, they will be suckers once again in 2020. Hence why we need to motivate people off the sidelines.
5
What Trump economic policies? There are no policies. Just tactics. He prided himself during the presidential campaign in telling us that every morning he just came into the office and started making calls to see what would happen.
Silly us. We assumed he was making telephone calls. He is was just making calls (think: making business decisions). Like he does today. Make a call. Make a gamble. It doesn't make any difference of which word you use. Who knows. Maybe tomorrow he will decide it is time to bring back Janet Yellen.
3
I would sadly take issue with Paul Krugman when he states: "I might add that blaming the Fed looks to me like a dubious political strategy. How many voters even know what the Fed is or what it does?"
That's the whole point in blaming the Fed...trump is counting on the fact that the general audience he pitches to doesn't have much knowledge of the Fed...so he can turn it into a bogeyman...after all trump still can get a crowd to chant : "lock her up." referring to Hillary Clinton. He may have no shame but he can still rabble rouse.
4
Trump is bankrupting this country- economically and morally. Of course, he has a track record in these areas. Shame on his supporters for fostering this nightmare.
12
"How many voters even know what the Fed is or what it does?" True enough, but for sure Trump and his TV clown economic advisors don't either so the U.S. appears to be wandering in the wilderness! As you said, it is only going to get worse!
3
I get it. Trump is an unstable fool. He does nothing right.
BUT, what are the major economic challenges & opportunities? And then, what policies should be pursued to address the challenges and make the most of the opportunities?
Joseph Conrad on designing ships - "Whatever is wrong with the design of your ship, the sea will find it.
Well, the economy, the ocean of world economics, is finding out what is wrong with Trump's tax cut, his policies, and his advisors. The bond market merely reflects where the economy is trending. And it's the economy, smart or stupid.
That said, 'the stock market is not the economy'. But Wednesday's 3% loss in US markets represents about a Trillion dollars in value, and as the politicians say, "A trillion dollars here, a trillion there, after a while you are talking about real money."
4
I'll be honest. I hope we have a recession because it's the best way to rid ourselves of the plague of the racist hate and white supremacy of Donald Trump that is undermining our Constitution and corroding and corrupting our democratic institutions. No president since William McKinley has been re-elected when there's a recession. Trump's tariff war is pushing China and Germany toward recession, costing consumers as the tariffs on imports amount to a national sales tax thereby curbing purchases, bankrupting farmers in deep red Trump country who cannot sell to China, and with the tax cut pushing the deficit to record levels leaving little room to combat an economic contraction. It's the old story that Republicans crash the economy and Democrats revitalize it. It's the Democrat's best hope for 2020 as well as the nation's and the world's. Trump is a cancer on democracy, the environment, and world trade. With Democrats lacking the backbone to confront this cancer, an old-fashioned recession is our best hope for extirpating it.
5
We are living in a republican led country. We have been there before so we should expect a recession just on that fact. After all, Reagan, George the first, George the second and now djt the dumb all wreck the economy with recessions. They are all republican tax cutters for the wealthy.
Bill Clinton balanced the budget and had a surplus that started to pay the nation's debt down. Barrack Obama had a seven year economic expansion with declining deficits.
We need another Democrat to lead the country.
8
Yes, but we always knew this: Trump knows nothing, he is incompetent, and his need to always be "right" keeps him from being able to learn anything.
What did the Republicans THINK they were doing?
And when will common sense kick in?
3
It's bad situation getting worse with an erratic ignoramus setting "policy." To the extent there is a silver lining, perhaps a recession or weak growth between now and the election will make what's his name a one-term president. And perhaps a Democrat could lead a recovery with some actual fact-based policy making. But since racism might trump the economy, I'm not counting on it.
3
the market may not be the economy, but when your life savings are sitting there, and you're in, or approaching retirement---a 20 or 40% drop could smart a little.
3
Donald Trump is the greatest President this nation has ever known. This fact is unassailable. If it turns out that we are actually in or entering an economic recession, that fault is clear- it is the deep state and democrats, in coordination with the Clintons and Obama.
15
This is the best satire I have read all day. Bravo!
3
@Proud Patriot. Super funny! Thanks for this.
3
@Proud Patriot
Proud Trump and conspiracy fan, but not a patriot. A competent President doesn't lie and whine and claim to be a victim all the time.
3
Trump is instigating economic turmoil in large part to force the Fed to cut rates. And while the stock market may not be the economy, it is widely reported to the average voter as such.
Here are the key issues for the election next year: the stock market, unemployment numbers, and immigration. Everything else is on the back burner.
Sure, voters care about health insurance and health care, climate change and environmental protections, gun control and mass shootings, infrastructure, public education, and international relations including the rise of dictatorships worldwide (perhaps including the United States).
But if Trump manages to keep hold of the economy, enough voters will make excuses for his handling of all these other things. On the other hand, if the economy collapses, people will roll them all up into a bundle indicting the Trump presidency. Trump understands this crucial point: it guides him in how he is playing it for 2020.
Democrats do not have much control over the economy between now and then. So they need to take firm and rational stands on immigration, before it is too late. They need to immediately rein in the extreme left wing of their party and -- critically -- take immigration out of the spotlight.
If Democrats cannot handle this task, then we will all be subjected to four more years of Trumponomics, whether we like it or not. And we will fall ever further behind on all the other things.
15
Just might turn out to be the most effective policy we have out of the Trump administration to lower carbon emissions.
Destroyed the economy = lower emissions.
Not the way I’d prefer, but maybe future generations will be thankful for the Republicans.
3
@sceptical Definitely true that emissions went down during the 2008 recession, and they would see a significant decrease if there's another global slowdown. Despite a lot of talk about "sustainable growth," the decoupling of material flows and economic activity remains largely a fantasy.
It's about time for mainstream economists, including Krugman, to face up to the ecological realities and start talking about a steady-state economy. Chasing the GDP numbers is a losing game. We need to focus on qualitative development, not quantitative growth (at least in the industrialized world).
5
We have to start thinking about "deficits" in an entirely new way. It's important to realize that the private sector cannot create "financial wealth." Why? When a bank issues a new loan, it appears on its books as an asset--the bank expects to be repaid in full. But that same loan is a liability of the borrower. The asset and the liability sum to zero. True, the private sector creates an enormous amount of "real wealth"--new homes, hospitals, business offices, etc. But the amount of money created in the banking system to make all this happen (in the form of assets and liabilities) must always sum to zero.
The only entity that can create "financial wealth" is a sovereign government issuing its own currency and spending more than it takes in via taxes--what we misleadingly call a "deficit." So far, the US government (the Treasury and the Fed) has created about $22 trillion of true "financial wealth"--what we erroneously refer to as the "national debt." It's never going to be repaid, so let's stop calling it that. How do we know this financial wealth is real, and not just "funny money?" Because inflation is so low.
If we really want our economy to hum, the government should embark on a massive infrastructure program and run up another $5 trillion or so in "deficits" so we can fully mobilize the idle workers and resources necessary to complete the project. After all, it's only money.
12
@WDG: Economic product is equal to the amount of currency there is, divided by the average residency time of a unit of currency in an account, over a unit period of time. If issuing more currency slows down money velocity, inflation doesn't happen.
No one wins in a trade war. Factories don't come racing back to America whose 50,000 new engineers each year, compared to 155,000 in China, as well as our low STEM standing in the industrialized nations, pales in comparison to China and others who Trump/Navarro's tariff are vulcanizing against us. Sheer madness of a narcissist and his economic society shunned sidekick. As someone else noted, all the real economists have fled the administration.
22
This article makes it clear that this administration does not have a clue. How can you invest money if you do not know what the next day is going to bring in terms of tariffs/migration/visas. One day tariffs are on the next they are delayed, maybe the next day they are increased. trump does not reveal any plans because if he does and it goes south he is wrong. By not revealing a plan then he can't be wrong.
15
@oscar jror maybe because he doesn't have any
Trumponomics has surely put Mr. Powell and the Fed in a pickle. He can compensate for Trumponomics by cutting interest rates in the near term, keeping the recovery going through Trump’s re-election. But Mr. Powell has to worry about the economic damage five and a half more years of Trumponomics will do worldwide. Alternatively Mr. Powell can stand pat and let Trumponomics run its course into the election, trading a short term slowdown for a quicker end to Trumponomics and a brighter long term future for the economy. Just the fact that Mr. Powell has to make this choice suggests he should choose the latter.
3
Oh my, I did not realize Trump has an economic policy and I thought I was well informed.
13
I know very little about economics and money. But one thing I learned is that at the heart of the matter is a simple but powerful element: confidence.
That, we don't have.
24
"The stock market is not the economy". But most Americans think it is. It is the economic news that flashes across their screens multiple times a day. And most businesses took their tax cut and ran....the other way. They did not do what Trump said they would (and should) do. Nope they either bought back stock or have sat on the money. Why is that? The first thing that comes to mind is greed. The second thing is that when you invite your wierd and gross uncle to Thanksgiving dinner, all bets are on he will ruin the dinner. So corporations spent as little on the meal as possible. And if Trump tries to spend his way through this or gets the fed to lower rates, he is essentially running up the balance on a credit card. All those great packages arriving at your doorstep daily compliments of Uncle Don. And then when you go out to take a car loan or get a mortgage and they check your credit.....you learn Uncle Don was using a credit card he opened in your name. So, Trump accolytes, look in the mirror and practice over and over...."We thought he was such a great guy. We never saw this coming". Maybe for Christmas this year you could send Don a little placard for his desk "The Buck Stops at the Fed". That should make it all right in your world. When you up end the apple cart and then turn it back on it's wheels again, expect it to be empty. Trump wants you to think it will be full.
22
If the economy turns sour, the budget deficit will balloon.
That is to say, a budget deficit of a trillion a year, it will increase by a lot.
Greece. Think Greece.
Oh, and those poor Greeks, they didn't have their own currency, so they couldn't devaluate.
The Americans will be able to. And that will lead to hyperinflation.
U.S. Treasury Bonds are not among the most sure investments one can make. They are among the least.
9
@David Martin: US government debt will get monetized by quantitative easing in the next crash.
3
@David Martin
Spot on Dave
Trump is probably thinking:
1) The economy is going down.
2) So his re-election Is looking less likely.
3) That raises the chances that he is facing a potential prison sentence.
4. Solution: Buy Greenland. Become the king of Greenland and set up a constitution preventing him from being deported and facing a US Court.
Just a thought. :)
But in Trump's made world...quite plausible.
43
@Ben E cause me but buying Greenland, logging the Sequoias, etc. are just attempted distractions from the economy. Knowing this is what trump does why do people engage on these non issues is a bigger mystery, to me, than anything.
3
You are of course quite right. But I couldn't help but see the funny side in these serious times.
1
@Ben Perhaps buying Mexico would be a better investment than Greenland. That way, we wouldn't need that stupid wall.
1
For all the talk on rates, stock market gains, tax cuts, etc. fuggetaboutit! What is missing in today’s (and the last 2-3 decades’) economy is Demand. How can you drive demand? Pay people more! The vast majority of people around the world barely make enough to survive day-to-day. The American middle class hasn’t made any stride in income since the late 70’s.
63
@Gabel
"...pay people more..."
Twelve month average pay increase is sitting at 3.9%, the highest in over a decade. Trump reduced persoal income taxes of all families of four making $53,000 or less to zero.
As a result, real disposable personal income growth hit $597 billion in 2018, by far an all-time record.
1
John the price of essentials went up $600 billion, thus negating the tax cut for working families. Corporations never reinvested the savings like they said/promised they would with their fingers crossed. They repurchased their own stock driving up share holder value/ their own wealth. Even a TU graduate knew this was coming.
18
@John Huppenthal. Those making $53,000 pay no taxes? Is that what you’re saying? What’s up with that? We make less than that on Social Security and definitely pay income tax.
25
Thank you, Paul Krugman, for not chiming in with the voices of avarice. It's a pleasure to read articles that give sold information and in which opinions are based on history and facts.
Now if only Trump'phony'omics would hurt Trump's base fast enough for them to realize they've been conned before they cast their next vote …...
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Trump has a history of running businesses into the ground. Six bankruptcies. Why should anyone expect anything different when it comes to running the country?
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So how many times did Trump declare bankruptcy after inheriting wealth from a predecessor? And its those very same tiny hands that are trying to steer America's economy over the long term. This won't end well.
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"To be fair, it’s now clear that the Fed was wrong to raise short-term rates last year."
Trump was screaming from the rooftops not to raise rates. They did anyway, and thats proven to be a mistake, as Krugman even admits. So why cant Trump blame the Fed? He has every right to.
Upon Trumps winning the election, the stock market went on a tear, and so did the Fed, raising rates 8 times.
The Fed raised rates ONCE during Obama's tenure.
Does anyone have any idea how much the S&P went up for Obama's last 2 years?
1.4%
I dont remember Krugman speaking of Obama's gloomy economy.
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Sports... proven to be a mistake, by who’s measurement? If trump wasn’t such a poor economist, that strategy would have been correct. Revisionist history, the kind trumps likes, seems to be the kind you employ.
@Sports Medicine That's because he didn't have one. He inherited a disaster and made it better. FACTS.
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@Sports Medicine
HUGE budget deficitss.....American paying more in tariffs, no economic advisors in the administration... what could go wrong?