FT News Briefing The Wolf-Krugman Exchange: Trump’s ‘vibecession’
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Nov 30, 2025 
In this discussion, Paul Krugman, a Nobel Prize-winning economist and CUNY professor, delves into the complexities of the U.S. economy under Trump. He and Martin Wolf explore the concept of a 'vibecession,' where low consumer confidence looms large despite steady spending. They scrutinize the impacts of tariffs on business investment and recruitment. The conversation also touches on the unsettling effects of AI on hiring, inequality, and the health of American democracy amidst growing authoritarianism.
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Economy Looks Worse Than It Feels
- The US economy is weaker than a year ago with higher unemployment and sticky inflation, but not in recession.
- Martin Wolf calls it a 'five' due to conventional metrics masking deeper problems and risks from speculative AI investment.
Democracy Is Deeply Strained
- Democracy in the US is seriously impaired but not obliterated; institutions have folded in places.
- Paul Krugman rates American democracy around a three or four, though public pushback gives guarded hope.
Uncertainty, Not Tariffs, Cuts Investment
- Tariffs hurt long-run efficiency but historically aren't immediately recessionary.
- The real damage comes from tariff-driven uncertainty that chills investment and hiring.