The outlook for the United States economy, according to 2008 Nobel Prize winner in Economics, Paul Krugman, is one of continued uncertainty and the risk of further deterioration. When evaluating what lies ahead after the economy’s first year under the country’s president, Donald Trump, under the term “Trumpnomics”, Krugman states that “it could very well get worse before it gets better”, indicating that the “weak” results observed in 2025 may not represent the worst case scenario.
For the economist, there is no expectation of a relevant change in the conduct of economic policy. Krugman writes that Trump is “clearly” not going to reconsider his choices, reacting to signs of failure with “denial and doubling down.” In this context, tariffs tend to be maintained, since “their failed tariff policy will continue unless the Supreme Court invalidates it.”
Krugman points out that the main consequence of this strategy is the maintenance of an environment of strong uncertainty, which discourages investment and hiring. He assesses that the economy will continue to be pressured by erratic decisions and proposals that he classifies as “a sequence of unfeasible and ill-conceived ideas”, incapable of offsetting the negative effects already observed in the job market and industry.
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The economist also draws attention to additional risks ahead, such as the attempt to politicize the Federal Reserve (Fed, the North American central bank) and the prolongation of the trade war, factors that could “destabilize financial markets” and deepen corporate caution.
While the stock market remains resilient, Krugman points out that “the rest of the US is not,” highlighting the fragility of the situation for workers and small businesses.
The Nobel laureate maintains that the combination of persistent policies and high uncertainty indicates an adverse scenario in the short and medium term.
According to him, without a reversal of course, the American economy is likely to face a prolonged period of stagnation and frustration, especially among voters who believed in the promises of rapid prosperity made by the current government.
