Paul Krugman: Trump Slump Coming?

The consequences of Trumpism:

Trump Slump Coming?, by Paul Krugman, NY Times: Let’s be clear: Installing Donald Trump in the White House is an epic mistake. …

But will the extent of the disaster become apparent right away? It’s … tempting to predict a quick comeuppance — and I myself gave in to that temptation, briefly, on that horrible election night… But I quickly retracted that call. Trumpism will have dire effects, but they will take time to become manifest.

In fact, don’t be surprised if economic growth actually accelerates for a couple of years.

Why am I, on reflection, relatively sanguine about the short-term effects of putting such a terrible man, with such a terrible team, in power? …

First,… take the signature Trump issue of trade policy. A return to protectionism and trade wars would make the world economy poorer over time… But predictions that Trumpist tariffs will cause a recession never made sense: Yes, we’ll export less, but we’ll also import less, and the overall effect on jobs will be more or less a wash. We’ve already had a sort of dress rehearsal for this … in … Brexit, …

Beyond these general principles,… a Trump administration might actually end up doing the right thing for the wrong reasons. …

Donald Trump isn’t proposing huge, budget-busting tax cuts for the wealthy and corporations because he understands macroeconomics. But those tax cuts would add $4.5 trillion to U.S. debt over the next decade…

True, handing out windfalls to rich people and companies that will probably sit on a lot of the money is a bad, low-bang-for-the-buck way to boost the economy… But an accidental, badly designed stimulus would still, in the short run, be better than no stimulus at all.

In short, don’t expect an immediate Trump slump.

Now, in the longer run Trumpism will be a very bad thing for the economy… For one thing,… if we … face a new economic crisis — perhaps as a result of the dismantling of financial reform — it’s hard to think of people less prepared to deal with it.

And Trumpist policies will, in particular, hurt, not help, the American working class… More on that in future columns.

But all of this will probably take time; the consequences of the new regime’s awfulness won’t be apparent right away. Opponents of that regime need to be prepared for the real possibility that good things will happen to bad people, at least for a while.