Robert Kuttner, The American Prospect - KUTTNER ON TAP - March 09, 2026

 

Robert Kuttner, The American Prospect<info@prospect.org KUTTNER ON TAP Trump’s economy Bad news everywhere you look, and worse is to come. Foreign-policy commentators on the Iran debacle have been invoking Colin Powell’s so-called Pottery Barn rule—“You break it, you own it.” As Powell warned George W. Bush on the eve of the Iraq War, “You are going to be the proud owner of 25 million people. You will own all their hopes, aspirations and problems. You’ll own it all.”  Powell’s famous warning failed to deter Bush’s Iraq quagmire. By the same token, as Suzanne Nossel writes in Foreign Policy magazine, “Donald Trump and his administration are plainly unmoved by claims that they bear responsibility for the fates of nations where the United States has intervened.” However, in the other key policy area that is defining Trump—the economy—there is no escaping responsibility: Trump is breaking the economy, and he owns it. On Friday, the Labor Department reported the latest jobs numbers, and the result was not pretty. The U.S. economy shed 92,000 jobs in February, and revisions to prior months’ reports reduced December and January jobs figures by another 69,000. The unemployment rate rose to 4.4 percent. How does Trump bear responsibility? Well, he has cut direct federal employment by about 330,000. Freezes in research funding and other federal aid have cut hundreds of thousands more jobs. Tariffs have raised costs to domestic producers, and Trump’s war on the renewable economy has also reduced employment in that sector.  Since Trump’s reversal of Joe Biden’s industrial policies, manufacturing employment is down by about 300,000 after increasing by about 600,000 jobs under Biden. And Trump’s war on immigrants has caused large numbers of frightened people to stay home rather than reporting for work, largely in service sectors targeted by ICE. And all this was before the impact of the Iran war. On Saturday, The Wall Street Journal ran an unintentionally hilarious editorial on the economy, which began, “Washington’s pessimist caucus is always on duty and the members had a good Friday.” It continued, “The first point to understand is that the jobs report is unrelated to the Iran war, though Democrats want to link the two. The Labor household and employer surveys took place mid-month before the bombing began.” This is good news? The war will only worsen the economy going forward, and next month’s report will be even bleaker. The price of oil rose from $67 to $91 a barrel in just a week, and broke through the $100 barrier last night, though it has since moderated slightly. Retail gas prices are soaring.

Generally, the Trump economy is entering a period of stagflation, as both joblessness and inflation tick upward. That means that the Fed, which Trump tried but failed to take over, will not ride to the rescue with low interest rates. The stock market reacted to all of this bad economic news by declining about 10 percent from its peak—a loss of more than $5 trillion. And this is a very fragile and overvalued market because of highly leveraged speculation not just in stocks but in crypto and AI. Steep declines are likely to feed on themselves.  All of this is on Trump, who has backed further deregulation of crypto and of the financial sector as a whole. Bitcoin is now trading at about $68,000, down from its October peak of more than $123,000. In addition, the war’s impact on financial markets is likely to worsen. Foreign investors have some $35 trillion of equity investments in the U.S. A good deal of financial investment comes from the Middle East. Petrostates in the Gulf—Saudi Arabia, Qatar, UAE, and Kuwait—are now unable to generate oil income but still must cover their own state budgets. As our friend Matt Stoller reports, they are exploring how to sell the financial assets they own in the West, including invoking force majeure clauses, allowing contracts to be broken in time of war. These sales will worsen the downdraft in stock markets. Trump’s blather about the affordable economy only further erodes his credibility, as it contradicts people’s lived experience. Even if Trump were to end the war in a matter of weeks, which he is very unlikely to do, the war damage and the casualties of Trump’s other economic policies will live on for a long time. Trump has not just broken some crockery. He has broken the store. Robert Kuttner Co-Editor, Co-Founder