Economy

Remember the old quip about economists? “That’s all very in practice,” they say, “but how does it work out in theory?” Nobel laureate Paul Krugman of the New York Times is a splendid example of that sort of folly. On the evening of November 9, 2016, Krugman skirled that the election of Donald Trump would precipitate economic Armageddon. “If the question is when markets will recover,” he said, “a first-pass answer is never.” How could they recover since the nation had just elected an “irresponsible, ignorant man who takes his advice from all the wrong people,” that is to say, he didn’t take advice from people like Paul Krugman.Reality check: the day Krugman wrote that, the market closed at 18,589. In the last few days the Dow broke 50,000.

It began, as most things do under Donald Trump, with an idea that struck outside observers as a lark. An interested party – in this case, billionaire Ron Lauder – suggested to the President during his first term that the United States should acquire Greenland, a move that would represent the largest expansion of US territory since the purchase of Alaska from the Russians more than 150 years ago. The notion was reportedly considered and then left on the shelf, like so many ideas in Trump’s first term. Yet time away from the presidency gave it more resonance. Now the President is back on the case – and he seems very committed to the move, to the shock and horror of European observers who never took his Arctic ambitions seriously.

I hate to be the bearer of good news, but the US economy is doing quite well. A delayed government report shows that third-quarter GDP grew at 4.3 percent, hardly a record, but still healthy, the highest growth rate in two years. Last week’s inflation report showed a lower-than-expected number, and wage growth is exceeding inflation. Consumer spending is up, and, yes, the stock market is booming. Happy days are here again. The sky above is clear again. Many accounts on my X feed, which are either run by Democratic partisans or Iranian trolls or both, say that food-pantry lines are reaching record numbers this holiday season, and that poverty and homelessness are increasing even as the rich get richer. “Trump lies,” they said. Yes, and the sun is hot. What’s the point?

It is easy to criticise the Budget. The process was a chaotic mess. For many on the right, Rachel Reeves’s £26 billion tax raid to placate Labour MPs was a form of madness as well as badness. But good politics means understanding your opponents. One former No. 10 Tory thinks there was method in the madness: ‘It totally makes sense for Labour to move to the left.’ Nearly half of those who voted Labour last year would not vote for the party today. The number of voters fleeing Labour to the right – to Reform or the Tories – has remained steady since January at between 13 and 16 per cent, or one in seven of their 2024 voter base. Two-thirds of those votes have been lost to Reform.

It’s becoming increasingly taxing for Donald Trump to defend his tariff policy. His latest gambit is to float the prospect of a $2,000 rebate to Americans from the tens of billions that the federal government has collected in tariffs. But will this prove any more successful than his previous attempts to justify his loopy tariffs?With the Supreme Court apparently poised to strike down his tariffs as a form of revenue collection designed to perform an end-run around Congress, Trump is scrambling. As usual, bravado prevails. On Sunday, he declared, “A dividend of at $2000 a person (not including high income people!) will be paid to everyone,” the president said on Truth Social.” Trump also dismissed his detractors as “FOOLS!