\u201cMany economists\u2014actually, all the economists I know\u2014are worried about a potential downturn,\u201d wrote Krugman, who won the Nobel Prize in Economics in 2008. <\/p>\n
Krugman explained that income inequality is back on the rise after a dramatic decrease under the Biden administration. <\/p>\n
According to Krugman, the Trump\u2019s economy is experiencing a \u201cK-shaped expansion.\u201d <\/p>\n
Essentially, while the economy is growing overall, only the most affluent Americans are actually seeing their wages grow, while middle and lower-income Americans are feeling the pressure of inflation and unemployment. <\/p>\n
![\"Paul](\"https:\/\/www.europesays.com\/us\/wp-content\/uploads\/2025\/10\/XK2N45I33RH5VBXGQ6YECRRVJQ.jpg\")
Krugman, a former ‘New York Times’ columnist, told readers on Substack that while the U.S. is not yet in a recession, the economy is still hurting workers. Ricardo Rubio\/Europa Press via Getty Images <\/p>\n
While the AI sector is booming, Krugman says that Trump\u2019s \u201cwildly erratic policies\u201d have created so much uncertainty that businesses in other sectors have stopped making investments, including hiring new workers. <\/p>\n
Krugman\u2019s post didn\u2019t go into specifics about Trump\u2019s \u201cerratic\u201d behavior. However, the economist, whom Trump once called<\/a> a \u201cderanged BUM,\u201d previously told MSNBC<\/a> that the president\u2019s tariffs had damaged the country\u2019s negotiating power and were \u201cbased on a false picture of U.S. relations with the world.\u201d <\/p>\n \u201cIncreasingly unhinged statements from the administration feed a general sense of destructive instability,\u201d wrote Krugman in his Friday newsletter. The hiring rate has now dropped so low that it mirrors the 2008 recession, leaving the economy \u201cfrozen.\u201d <\/p>\n \u201cEven though we haven\u2019t had a recession yet, the frozen state of the U.S. economy has already made life much worse for many workers,\u201d added the economist.<\/p>\n Unlike during the 2008 recession, Krugman says the US economy isn\u2019t seeing mass layoffs\u2014at least not yet. <\/p>\n However, the number of Americans facing long-term unemployment\u2014six months or more without a job\u2014is skyrocketing. The total jumped from just over 1.4 million in May to more than 1.9 million in July. <\/p>\n To make matters worse, federal unemployment numbers haven\u2019t been updated since the start of the government shutdown. <\/p>\n Krugman also warned readers that while the stock market looks healthy on its face, that isn\u2019t a reliable indicator of the overall economy\u2019s health. <\/p>\n \u201cInvestors seem to have decided that the wonders of AI matter more than Trump\u2019s tariff madness, so we\u2019re seeing a stock market surge dominated by technology companies,\u201d wrote Krugman. <\/p>\n \u201cIt\u2019s important to be aware that the top 10 percent of households own 87 percent<\/a> of equities, while the bottom half own almost no stock at all and gain nothing from a rising market.\u201d<\/p>\n The White House did not immediately respond to request for comment.<\/p>\n Krugman is hardly the first prominent finance voice to warn that Trump is leading the country into a recession. Earlier this month, JPMorgan CEO Jamie Dimon told Bloomberg<\/a> he anticipates a major stock market correction in the next six months and believes the U.S. could enter a recession as early as 2026.<\/p>\n![\"Jamie](\"https:\/\/www.europesays.com\/us\/wp-content\/uploads\/2025\/10\/MDOXOGUUMZFA5IDRVOEG7GHRHI.jpg\")
JPMorgan Chase CEO Jamie Dimon has also slammed Trump’s tariffs, warning that the U.S. could enter a recession as early as next year. Noam Galai\/Getty Images <\/p>\n