Nobel Prize winner in economics Paul Krugman stated that the US economy is “in an abnormal state in many respects.”
“The US economy is currently moving away from normal functioning on many levels,” Krugman wrote in a post on his personal blog, Substack.
Krugman said the government shutdown delayed the release of the September employment report, leaving policymakers in a state of “partial blindness.” According to the renowned economist, economic data that appears positive on the surface can, upon closer inspection, raise alarming signals.
Key Manifestations of Economic Abnormality
Krugman identified three main headings under which this “abnormal” situation in the economy manifests itself:
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Sharp Polarization
He pointed out that while the field of artificial intelligence is growing rapidly, other sectors are stagnating.
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Employment Freeze
While there have been no large-scale layoffs, the unemployed or those seeking new jobs are having difficulty finding employment, he said.
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K-Shaped Growth
He stated that although investments in artificial intelligence support economic growth, this growth is concentrated in the upper income segment of society, while middle and low-income consumers face increasing difficulties.
Economic Outlook
Krugman described the current outlook for the US economy as “one that is experiencing rapid growth in the age of artificial intelligence but deepening inequality.”