Why did Trumponomika not cause a breakdown on the stock exchange? Paul Krugman: A boom in the AI sector masks the fatal effects of Trump's policy

The boom in the AI sector masks the fatal economic effects of US President's policy Donald Trump; It is also a reason why, despite the trade war, there was no bursting on the stock exchanges – writes the economic winner of the Nobel Professor prof. Paul Krugman.

“The vast majority of economists believe that Trump conducts destructive economic policy. The duties he implemented is waste the effects of international trade negotiations conducted over 90 years. The immigrant deportation campaign causes no hands to work in certain sectors. And drastic cuts of expenses for scientific research will slow down the development of American technologies, “explains the Nobel Prize winner.

And yet many people wonder why the stock market does not respond with such a policy and slim only for a short time, after Trump announced the plan to apply tariffs on most countries at the beginning of April. However, it should be remembered that the quotations of the campaign “are not and have never been a useful prefiguration of economic cycles” – writes Krugman.

He further explains that the most important impact on the behavior of stock market investors is the most important in a given period of “narratives – positive or negative”. And the current narrative is full of optimism that the development of the AI sector causes in the markets. The change in the main narrative of Wall Street is only able to cause “very significant shock”.

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“For now, however, a sudden increase in investments in the AI sector, which in the first half of 2025 was responsible for half the GDP growth of the United States, probably saved the American economy from stagnation and possible slipping into a recession,” says the author.

“So if the question, why Trumponomics (Trump's economy) did not cause a breakdown on the stock exchange, one of the answers is that Boom AI masks the effects of Trump's policy” – concludes the Nobel Prize winner, emphasizing that the US will pay for it for a very long time. (PAP)

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