With the countdown to Trump's second inauguration ticking, Paul Krugman, a Nobel Prize-laureate economist and author of the recently launched Substack, "Krugman Wonks Out," joins Seana Smith and Madison Mills on Catalysts to discuss his expectations for the US economy under Trump 2.0.
Krugman says that heading into Trump's second term, the biggest threat is the former president's proposed policy changes. "If you did nothing on policy, we would appear to be in pretty good shape," he explains. "You know, we got low unemployment, low inflation ... There's no imminent threat on the horizon except for the possibility of crazy policy by the incoming administration," he says.
"The market seems to be getting a bit of a wake-up call in the last few weeks, but people have been pricing as if this is as if Trump 2.0 is going to be like Trump 1.0: a lot of noise, but in the end, really relatively modest tariffs on China and not much on anybody else and no major disruption. And that's not a good bet."
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The economist says, "The people around him are different. He's different ... The market is still, for the most part, pricing a more or less normal presidency," adding "There's been a there's been a clear pattern if you look at reporting sources, anonymous sources tell reporters, 'Trump really isn't as crazy as he sounds' and then Trump immediately and in an outraged mood goes on Truth Social and basically says, 'Yes, I am as crazy as I sound.'"
To watch more expert insights and analysis on the latest market action, check out more Catalysts here.
This post was written by Naomi Buchanan.