Krugman warns that relentless turmoil could outpace U.S. economic resilience
Economist Paul Krugman argues that while the U.S. economy has withstood numerous shocks under Donald Trump, the continual stream of crises may eventually overwhelm its strength.
Paul Krugman, writing in early September, observes that the U.S. economy remains functional after a succession of disturbances linked to Donald Trump's administration, ranging from expansive tariffs to a faltering war effort in Iran. He credits the market's belief that these shocks are isolated, allowing businesses to absorb higher tariffs and reduced oil flows. Yet Krugman warns that the pattern of new antagonisms—particularly a spiraling trade conflict with Canada, whose auto sector is tightly integrated with U.S. manufacturing—poses a growing risk.
He also highlights internal challenges, citing perceived incompetence in both civilian and military leadership, including figures like Elon Musk and Defense Secretary Pete Hegseth. While current indicators such as GDP growth and unemployment appear stable, Krugman stresses that the economy's past ability to “plod along” offers no guarantee against future cumulative damage.
Why it matters
The piece highlights how persistent political and geopolitical shocks could jeopardize U.S. economic stability.
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