Yield curve inversion 'less ominous' than it might seem, says Paul Krugman
President Trump's tariff-happy trade war with some of the United States' major commerce partners, including China, is often considered a boogeyman as fears of a global recession dance in the heads of economists and investors. But Nobel Prize-winning economist Paul Krugman doesn't lay the entire onus at the foot of the Oval Office.
Instead, Krugman said that the trade war is just "one ingredient" amid a smorgasbord board of reasons for what could be a looming international economic downturn. He wrote something similar in 2018 when he argued that there was nothing as "obvious" as the housing bubble to predict a forthcoming crash, but that there were several mid-sized bubbles that could lead to a tumble.
Krugman isn't really defending the White House's policies — in fact, back in 2016, before Trump was elected, he predicted that his presidency would lead to an "endless recession." He's just taking a larger view of all the economic mechanisms at play here.
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The well-known economist also isn't pressing the panic button just yet, even after news broke about the U.S.'s 10-year yield dipping below the two-year rate for the first time in a decade on Wednesday.
So, in Krugman's book, it's apparently worth keeping your eye on the road, but not yet time to fret too much.
