When The Jobs Promise Doesn't Deliver

Nobel Prize-winning economist Paul Krugman isn't mincing words about President Donald Trump's economic track record. In his newsletter this week, Krugman declared that Trump's job creation agenda has been an "abject failure," arguing that the very policies meant to revive American manufacturing have instead weakened competitiveness and hurt employment.

Here's the thing that often gets lost in the noise: while everyone focuses on Trump's promises about bringing down prices, Krugman points out that "the main goal of his policy agenda wasn't lower prices, it was job creation." And by that measure, things aren't going well.

According to Krugman, "a significant number of Americans who voted for Donald Trump in 2024 now regret their choice," with that disappointment largely driven by unmet economic expectations. Trump had campaigned on reviving U.S. manufacturing through sweeping tariffs, deregulation, and mass deportation of undocumented workers. The result? Employment in manufacturing, construction, and mining has actually fallen since Trump took office.

The Math Problem

Krugman argues that Trump's trade strategy is built on some seriously flawed assumptions. The big one: the belief that eliminating the U.S. trade deficit would create a manufacturing jobs boom. Citing research from the Peterson Institute for International Economics, Krugman notes that even if you could magically eliminate the trade deficit, it would raise the share of U.S. manufacturing production jobs by less than one percentage point. "They didn't do the math," he said.

Meanwhile, tariffs are raising costs for domestic producers, making them "less competitive" against foreign manufacturers. It's the economic equivalent of tying weights to runners' ankles before a race and expecting them to run faster.

The irony isn't lost on Krugman: employment in these sectors actually increased under former President Joe Biden, partly thanks to his green energy policies. Trump reversed those policies, and the employment numbers reversed too. And official figures might get revised even lower, potentially making Trump's record look worse.

The Stall-Out

Economist Justin Wolfers echoed similar concerns, noting that the American economy has effectively stalled, with "close to zero jobs" created since the "Liberation Day" tariffs were announced in early April.

The National Association of Business Economics Survey projects 2% GDP growth for 2026, which sounds decent on paper. That's up from the 1.8% projected in October and 1.3% in June. But here's the catch: most respondents expect job creation to remain subdued all year, with unemployment forecasted to stay at 4.5%.

And about that GDP growth? Bank of America's Global Research recently analyzed what's actually driving it, and the answer is: artificial intelligence spending. According to their report, AI spending contributed 62.5% of GDP growth, or a full percentage point, during the first six months of 2025. Without AI investment propping things up, the U.S. would have entered a recession.

So we have an economy that's technically growing but not creating jobs, sustained by AI spending while the manufacturing revival that was supposed to be happening remains conspicuously absent. That's not exactly the economic transformation Trump promised on the campaign trail.