Revisiting Some of Paul Krugman’s WORST Economic Predictions
In an amusing column following Joe Biden’s spectacular loss to Donald Trump in the first presidential debate, the New York Times’ chief hack Paul Krugman called Biden the best president of his adult life…. before asking him to step aside.
Even in the face of a performance like what we saw last night, Krugman’s hyperpartisanship prevents him from truly acknowledging that there’s anything wrong with Biden. When posting his post-debate article to twitter this morning, he captioned it “I really hated writing this.”
Oh, the horrors.
Always a staunch enemy of the GOP, Paul Krugman’s partisanship predates the “Trump Derangement Syndrome” we saw sweep the media. He was seemingly never vaccinated against TDS, Romney Derangement Syndrome, McCain Derangement Syndrome, Bush Derangement Syndrome, and the list goes on, and on, and on.
If Trump does win in November, which is now a statistical favorite, Krugman’s TDS may finally reach stage four.
During his presidency, Trump had personally blasted Krugman for losing all credibility with his “false and highly inaccurate writings,” and there’s no hyperbole there.
On the theme of Krugman being betrayed by his own partisan hackery, I thought it would be fun to compile some of his worst predictions over the years.
Here are just a few.
The Stock Market is Doomed Under Trump!
When it became clear that Donald Trump would win the presidential election late into the night on November 8th, 2016, the stock futures market initially panicked, with the Dow Jones shedding over 800 points.
Before the markets even had the chance to open the following day, Krugman took to his New York Times column to predict they would never recover. “It really does now look like President Donald J. Trump, and markets are plunging. When might we expect them to recover? … If the question is when markets will recover, a first-pass answer is never.”
The Dow closed up 250 points the next morning – and skyrocketed thereafter.
Admittedly I’m not sure how to calculate the margin of error on the difference between “never” and “the next day.”
The Trump stock market surge continued almost entirely uninterrupted during his presidency, with the only exception being at the beginning of 2020 due to a global pandemic. But despite even that, major indexes still closed out higher in 2020.
Krugman in 2017 – There Will Be No Return to 3% Growth
Appearing on the network Bloomberg in March 2017, Krugman expressed doubt that we’d be seeing a return to 3% economic growth under the Trump administration.
He reiterated the same point later in the year on Twitter, arguing that at it would be difficult to achieve 3% growth due to baby boomers leaving the workforce.
No surprise here: he was dead wrong.
Growth was 3.1% from the fourth quarter of 2017 in the fourth quarter of 2018. Even more impressive, the economy was only projected to grow 2% according to the baseline under Obama.
A Recession is Coming!
In February of 2019 Krugman predicted that a recession is coming “this year or next.”
It’s hard to give Krugman any credit for his predictive ability, because he been predicted a Trump recession every single year of his presidency.
Krugman had also dialed back the severity of his prediction. On election night Krugman predicted that Trump would throw the entire planet’s economy into a recession. He admitted in his February prediction “By the way, my track record for this is bad—as is everybody’s. No one is good at calling these turning points.”
Anyone can be a prophet when they make the same prediction every year, and Krugman was “technically” right in that there was a recession in 2020, though no one can put the blame for the Chinese virus that caused it on Trump (though they will try). Trump then oversaw the fastest recovery from a recession of that severity in U.S. history – which Krugman did not predict.
Nothing New
It’s not just under the Trump-era that the world’s most arrogant economist has butchered his predictions.
In 1998, Krugman dismissed the rise of the internet’s popularity and its eventual economic effects: “The growth of the Internet will slow drastically, as the flaw in ‘Metcalfe’s law’–which states that the number of potential connections in a network is proportional to the square of the number of participants–becomes apparent: most people have nothing to say to each other! By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.”
Only four years later Krugman came up with a plan to save the economy from the technology bubble which had just went bust – create another economic bubble! “To fight this recession the Fed needs…soaring household spending to offset moribund business investment. [So] Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.” And with that came the worst financial crisis since the great depression.
And that’s not all! In 2010 he predicted that we’d begin experiencing deflation – when in reality we experienced relatively low inflation. In 2008 he predicted that Europe would outperform America economically – and then the financial crisis hit, and Europe was hit far harder than the U.S. (and took much longer to recover from it). On eleven occasions between April 2010-July 2012 Krugman predicted that the Euro would collapse – which obviously never happened.
There’s a running joke in the finance community that you can make yourself a killing my simply doing the opposite of whatever Jim Cramer is advising. Perhaps the same can be said for Krugman, too!
