Krugman Says Trump’s Tariffs and Deportations Are Driving Inflation as AI Spending Holds Up the Economy

Overview

• In a Substack essay published Sunday, the Nobel laureate warns the policy mix is creating an inflationary shock and a drag on growth.
• He says the United States would likely be heading into a recession now without a surge in AI-related capital spending.
• Krugman cautions that a downturn in the AI boom would raise the odds of a recession.
• He cites White House figures on centi-billion-dollar U.S. commitments by NVIDIA, Apple and TSMC.
• He has also flagged labor shortages and price pressures from deportations in sectors such as agriculture and meatpacking, invoking the risk of stagflation.