Portside

After Donald Trump won the 2024 election, progressives had one great fear about his economic policies — namely, that he wouldn’t do much. Oh, he’d slap on a few tariffs, make a big show of eliminating “woke” spending, and of course cut taxes for corporations and the wealthy. But, we worried, he would basically avoid rocking the boat too much. Instead, he’d parade around claiming credit for the low unemployment, low inflation economy left behind by his predecessor.

And based on what happened during Trump’s first term, I expected many people to lap it up, at least for a while. I expected stocks to rise on the prospect of tax cuts and deregulation; I expected consumer confidence to rise because Republican views of the economy are largely shaped by partisanship (this is true for Democrats too, but to a lesser extent); I expected media coverage of the economy to turn more positive, with right-wing editorial pages and opinion writers in particular lavishing praise on the new administration.

I was wrong.

True, between Election Day and the inauguration, things looked a bit like Trump’s previous go-round. Stocks rose, while America’s oligarchs put on a truly nauseating display of sycophancy. Hey, Trump may destroy democracy, but think of the profits:

But once Trump actually took office, he quickly revealed who he was, and always has been. Investors and CEOs had somehow managed to convince themselves that Trump wouldn’t follow through on his threats of trade war. In fact, he’s imposed tariffs higher than anything he suggested during the campaign — then un-imposed, re-imposed, and re-un-imposed them. His erratic behavior may be doing as much damage as the tariffs themselves.

Then there’s Trump’s decision to give vast power to Elon Musk, who is displaying a combination of arrogance, ignorance and incompetence worthy of Trump himself. I mean, how clueless do you have to be to imagine that it would be a good idea to end phone service for Americans filing retirement and disability claims?

And people are catching on more quickly than I would have expected. At this point in 2017, the S&P 500 was up 15 percent since the inauguration; it was down 9 percent as of Thursday’s close.

News coverage of the economy did turn more positive after the election, as expected — but not for long. The San Francisco Fed maintains an index of daily news sentiment about the economy “based on lexical analysis of economics-related news articles”; the index is now well below its pre-election level:

Source: San Francisco Fed

And Trump isn’t having a honeymoon on consumer sentiment, either. The chart at the top of this post shows a tracker from Civiqs; it’s less well-known than the venerable measures from the University of Michigan and the Conference Board, but it’s conducted by reputable people and is weekly rather than monthly, which is helpful given how quickly things have been changing. The fall in consumer perceptions since Inauguration Day is striking in itself, but even more so in contrast to Trump’s first term.

A nerdy footnote: both the SF Fed news sentiment index and the Civiqs consumer sentiment index are “smoothed”; what you see isn’t the latest raw number, it’s an average of recent numbers. This is helpful as a way of making the data less noisy, but it also introduces some lag, so it’s likely that sentiment has plunged even more than these indexes are showing so far.

Finally, while I don’t have a number for this, my sense is that media opinion — even at hard-right venues like the Wall Street Journal — has turned even more strongly against Trumponomics than consumer sentiment or news reporting. The mad king himself certainly seems to think so:

Will Trump respond to the public backlash by moderating his policies or hiring some actual adults? That seems less ever less likely. What has happened, as I noted a couple of days ago, is that his top economic officials have embraced “liquidationism,” the view that the economy needs to go through a period of suffering (“detox”) to compensate for previous excesses. Shades of Herbert Hoover!

In retrospect, I may have spent too much time in that post showing that these claims are economic nonsense, and not enough time pointing out the desperation they reveal.

For one thing, it’s awkward to center your economic messaging on claims that Americans need to suffer for President Biden’s (imaginary) sins when Trump’s message throughout the campaign was that he would fix everything on Day One. It’s also remarkable, if you think about it, that Trump officials are in effect offering excuses for a recession that hasn’t happened yet and is at this point only a possibility.

Also, who’s hearing these messages? I would be curious to know what percentage of voters have any idea who Scott Bessent or Howard Lutnick are or what they do, but I’m sure it’s not a big number. (Actually I’m not clear myself on exactly what Lutnick does.)

Another president might be making speeches, even doing fireside chats, to reassure the public. But Trump seems focused instead on annexing Canada, a subject on which he has grown ever more obsessive even as Canadians recoil at any thought of associating themselves with a nation that seems to be turning into the Republic of Gilead from The Handmaid’s Tale.

So the closest thing we have to an economic spokesman for this administration is Elon Musk, who sees dead people collecting Social Security. And here’s the thing: while there’s still a dwindling Musk/Tesla cult, to a first approximation everyone else hates Elon.

Trump won the election because a number of people believed, wrongly, that he would do great things for the economy. It has taken him less than two months to squander all that undeserved trust.

I [Paul Krugman] am an economist by training, and still a college professor; my major appointments, with some interim breaks, were at MIT from 1980 to 2000, Princeton from 2000 to 2015, and since 2015 at the City University of New York’s Graduate Center. I won 3rd prize in the local Optimist’s club oratorical contest when in high school; also a Nobel Prize in 2008 for my research on international trade and economic geography.

However, most people probably know me for my side gig as a New York Times opinion writer from 2000 to 2024. I left the Times in December 2024, and have mostly been writing here since.

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