Trump triggered economists' worst fears — and Nobel laureate warns it may be 'permanent'
President Donald Trump's economy has created a "possibly permanent" new era that has confirmed the fears of many of America's top economists, according to one expert.
Throughout Trump's second term, his administration has sought to deport millions of people the administration claims are in the country illegally. Those efforts are already starting to negatively affect the U.S. economy, according to Nobel Prize-winning economist Paul Krugman. If they continue, Krugman warned, the U.S. economy may never recover.
"Since Donald Trump returned to the White House ... job growth has slowed to a crawl," Krugman wrote in a new Substack essay on Sunday. "Granted, it’s nothing like the plunge in employment that took place in 2020, as Covid shut much of the economy down. And a couple of strong job reports earlier this year encouraged some observers to believe that the worst of the Trump II job drought might be over."
"But the most recent Employment Situation report from the Bureau of Labor Statistics estimated that employment actually fell in July, while simultaneously revising the estimates for earlier months down," he added. "Thus July’s report confirmed the now widespread view among economists that the Trump-era job slowdown isn’t a blip. It’s now clear that America has entered a new, possibly permanent era of stagnant employment."
Earlier this month, the BLS released a jobs report that showed the country lost 23,000 jobs between June and July. The only industries to see growth during that period were health care and social services, which some analysts say speaks to the overall weakness of the economy.
Krugman highlighted several challenges that could accompany the new economy Trump is creating.
"Well, it is indeed a problem. One reason is that America’s responsibilities — to ensure national security, to take care of retirees, maintain public infrastructure and provide health care — remain the same, but there will now be fewer workers, paying less taxes, than previously expected to meet those responsibilities. Moreover, foreign-born workers bring distinct skills and are willing to do jobs native-born workers shun, such as emptying bedpans and picking fruit. Removing them from the U.S. economy will leave the rest of us poorer and with a lower quality of life.