The Economics Show The Wolf-Krugman Exchange: Trump’s ‘vibecession’
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Nov 26, 2025 
In this engaging discussion, Nobel Prize-winning economist Paul Krugman shares insights on the future of the U.S. economy and democracy alongside Martin Wolf. They explore the impact of Trump's tariffs on consumers and the potential reasons behind the stagnant labor market. Krugman introduces the concept of a 'vibecession' affecting consumer sentiment and highlights how big tech and AI hype contribute to public distrust. Despite concerns, Krugman expresses a more optimistic outlook on the resilience of democracy amidst these challenges.
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Sentiment Lags Stock Market Gains
- Consumer sentiment is at its lowest level in the Michigan survey's history, deeper than post-2008.
- The AI boom hasn't created broad public optimism because gains are concentrated among a few firms.
Unfairness Trumps Abstract Inequality
- Perceived unfairness, not inequality statistics, drives political anger.
- People sense the system favors plutocrats even if many details are unknown to them.
Inflation Left People Feeling Cheated
- Inflation spike (2021–23) left people feeling cheated despite real wage gains, especially versus housing costs.
- Affordability, notably housing, sustains political anger.