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MainFT’s Economics Show is known for featuring prominent figures. This week, two renowned economists engaged in a discussion once again.
Paul Krugman and Martin Wolf, considered as leading economics commentators over the past three decades, revisited a conversation they began earlier this year, delving into the impacts of Trump’s economic policies.
In the initial episode of a new podcast series, Krugman and Wolf explored a major question surrounding the US economy: why do people not feel the positive effects of a supposedly strong economy? Are we experiencing a ‘vibecession’?
According to Krugman, the state of the US economy is mediocre at best, rating it a 5 out of 10:
The economy is not as robust as it was in January . . . Key indicators like the unemployment rate and inflation rate have worsened compared to 2024. Unemployment has slightly increased, and inflation, which was declining, is now on the rise. While it’s not a crisis and we’re not in a recession, there are hidden challenges in the economy that make the situation more severe than the conventional numbers suggest.
What are these hidden challenges? Factors such as trade uncertainties and the impact of artificial intelligence are affecting the job market. While some businesses are hesitant to hire, others are investing heavily in data centers, leading to a stagnant job market despite resilient growth, as noted by Krugman.
We haven’t seen widespread layoffs or significant job losses yet. However, there is very limited hiring. The labor market is frozen, likely due to tariffs and overall uncertainty. Businesses are neither hiring nor firing much. So, if you have a job, you’re relatively secure. But for those at risk of job loss or young individuals entering the job market, the outlook is grim.
This situation spells bad news for recent graduates, not just in the present but potentially in the long term, as weak job markets can hinder career progression over time.
Artificial intelligence poses a threat of job displacement, absorbing business investments and creating a facade of a stronger economy. Moreover, it’s not even enjoyable:
Some have drawn parallels with the late ’90s, particularly the dotcom and telecom investment boom. During that period, people were optimistic. The average person felt part of a prosperous era. However, the current sentiment lacks that excitement. There is no widespread belief that success in certain sectors like Nvidia signifies opportunities for everyone.
The dotcom era may have been whimsical and at times nonsensical, but it had a certain charm. There was a sense of opportunity.
In contrast, the prevailing mood in 2025 is rather bleak.
To listen to the full discussion — covering topics such as the public’s dissatisfaction with inflation, the legality of Trump’s tariffs, and the concerning rise of fascism — visit The Economics Show on MainFT’s website or listen through Apple Podcasts, Spotify, Pocket Casts, or your preferred podcast platform. You can also access the transcript here. Share your thoughts in the comment section below.