'Grim': Top economist says Americans in for a 'nasty shock' on inflation thanks to Trump

Citing President Donald Trump’s “really extreme policies on both trade and immigration,” and particularly his tariffs, Nobel Prize–winning economist Paul Krugman, one of the nation’s most prominent economic voices, is warning that the U.S. could soon face “stagflation”—a toxic mix of high inflation, rising unemployment, and stagnant demand.

“It’s Beginning to Smell a Lot Like Stagflation,” Krugman wrote on Friday. Noting that “it’s all about Trumponomics,” he warned that “the data really are looking increasingly stagflationary.”

Calling one report “quite grim on both inflation and jobs,” Krugman, an economics professor, warns that “just around the corner,” Americans could be in for a “nasty shock” of “inflation of 4 percent or more,” which is about a 50 percent increase from where inflation is right now.

Krugman also notes that not only are tariffs inflationary, Trump’s “war on immigrants is also inflationary, because it is choking off production in industries that rely heavily on foreign-born workers.” He points to stories of no one available to pick crops, which then rot in fields, and “construction projects hobbled by ICE raids and a climate of fear.”

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On Friday, President Trump appeared to issue a warning to the judiciary not to overturn his tariffs, a possibility given that one court has deemed them unlawful and an appeals court seemed skeptical that the basis for them, a “national emergency,” was valid. Trump said if they did it would lead to “1929 all over again,” a reference to the Great Depression.

Krugman agrees that the President’s tariffs may indeed be unlawful (as do many legal scholars) but he doubts they will be overturned.

“I wouldn’t get my hopes up,” he says of the courts overturning the tariffs. “And if the tariffs are here to stay, we can expect them to be passed on to buyers.”

Krugman is far from alone in his warning.

“America is showing new signs of stagflation,” reported Axios last week.

“Wall Street strategists are sounding alarms that the US economy is drifting toward stagflation as the impact of trade tariffs start to show up,” Bloomberg News reported on Thursday.

“The economy looks like it’s moving closer to a dreaded stagflationary scenario,” reported Business Insider.

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