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.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
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.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Tim is a staff writer at The Week and has contributed to Bedford and Bowery and The New York Transatlantic. He is a graduate of Occidental College and NYU's journalism school. Tim enjoys writing about baseball, Europe, and extinct megafauna. He lives in New York City.
-
Nashville dining: Far more than barbecue and hot chicken
Feature A modern approach to fine-dining, a daily-changing menu, and more
-
Music Reviews: Coco Jones and Viagra Boys
Feature "Why Not More?" and "Viagr Aboys"
-
Visa wants to let AI make credit card purchases for you
The Explainer The program will allow you to set a budget and let AI learn from your shopping preferences
-
Warren Buffet announces surprise retirement
speed read At the annual meeting of Berkshire Hathaway, the billionaire investor named Vice Chairman Greg Abel his replacement
-
Trump calls Amazon's Bezos over tariff display
Speed Read The president was not happy with reports that Amazon would list the added cost from tariffs alongside product prices
-
Markets notch worst quarter in years as new tariffs loom
Speed Read The S&P 500 is on track for its worst month since 2022 as investors brace for Trump's tariffs
-
Tesla Cybertrucks recalled over dislodging panels
Speed Read Almost every Cybertruck in the US has been recalled over a stainless steel panel that could fall off
-
Crafting emporium Joann is going out of business
Speed Read The 82-year-old fabric and crafts store will be closing all 800 of its stores
-
Trump's China tariffs start after Canada, Mexico pauses
Speed Read The president paused his tariffs on America's closest neighbors after speaking to their leaders, but his import tax on Chinese goods has taken effect
-
Chinese AI chatbot's rise slams US tech stocks
Speed Read The sudden popularity of a new AI chatbot from Chinese startup DeepSeek has sent U.S. tech stocks tumbling
-
US port strike averted with tentative labor deal
Speed Read The strike could have shut down major ports from Texas to Maine