Economist Paul Krugman is sounding the alarm that President-elect Donald Trump’s economic plans will lead to a “really rude shock” for Americans. According to Krugman, Trump’s proposals, including massive tax cuts and tariffs, are expected to cause significant inflation.
Krugman argues that the biggest single factor in Trump’s victory was the burst of inflation during his campaign, which has now receded but still leaves many Americans annoyed by rising prices. However, Trump’s economic program is likely to be even more inflationary, Krugman claims.
One reason for this is that Trump plans to explode the deficit with unfunded tax cuts, which will exacerbate an already hot economy. Tariffs are another key component of his plan, but Krugman warns that these will not only benefit American businesses but also lead to higher prices for consumers.
Furthermore, Trump’s proposed crackdown on undocumented immigrants could result in a shortage of workers in certain sectors, leading to higher wages and ultimately higher prices for goods like food. This could have a ripple effect throughout the economy, causing inflation to rise.
Krugman is concerned that Trump will not acknowledge his policies are causing inflation and will instead try to manipulate statistics to make his claims look better. He believes that the Federal Reserve will also be unable to counteract the effects of Trump’s policies due to his pressure on the Fed.
Ultimately, Krugman warns that Americans can expect a “really rude shock” as prices rise and inflation takes hold. This could lead to significant buyer’s remorse and a backlash from the voting public, which could have implications for the next election.
Source: https://www.nytimes.com/2024/11/12/opinion/trump-economy-inflation.html