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A trader reacts as he watch the speech of Donald Trump at the Frankfurt Stock Exchange on November 9, 2016 in Frankfurt, Germany. Stock markets around the world reacted with volatility to the surprise win for Republican candidate Donald Trump in yesterday's U.S. presidential elections. - Thomas Lohnes—Getty Images
A trader reacts as he watch the speech of Donald Trump at the Frankfurt Stock Exchange on November 9, 2016 in Frankfurt, Germany. Stock markets around the world reacted with volatility to the surprise win for Republican candidate Donald Trump in yesterday's U.S. presidential elections.Thomas Lohnes—Getty Images
Prominent economists warned investors the day after the U.S. presidential election to brace for a recession; possibly, in the words of one, "a global recession, with no end in sight."
With overseas markets thrown into upheaval overnight as election results came in showing that Donald Trump had won the presidential race, Nobel prize-winning economist and New York Times columnist Paul Krugman warned late last night that the economic fallout could be unprecedented, calling the election results "the mother of all adverse effects" on the still-fragile U.S. economy. "What it brings with it is a regime that will be ignorant of economic policy and hostile to any effort to make it work," he wrote.
In Japan, traders working a foreign exchange desk watch U.S. election results. The Nikkei index fell more than 900 points as Trump's win became real. Toru Hanai—ReutersThe Philippine Stock exchange fell to a 7-month low on Trump’s win. In this photo, a Filipino trader looks at the electronic board showing a downward trend during trading at the Philippine Stock Exchange at the financial district of Makati, south of Manila, Philippines, Wednesday, Nov. 9, 2016. Aaron Favila—APPedestrians look at an electronic stock board displaying the Nikkei Stock Average outside a securities firm in Tokyo on Nov. 9, 2016. The yen strengthened against the U.S. dollar, which will make it more difficult for Japan to fight off its ongoing inflation problem. Tomohiro Ohsumi—Bloomberg via Getty ImagesAs news that Clinton lost major battleground states was confirmed, billions were wiped from Australian Securities Exchange, as it was described as "a sea of red." David Gray—ReutersOne of Trump's biggest campaign promises has been to crack down on the Chinese government, who Trump says weakens the value of China's renminbi, giving it an unfair advantage in world trade. The Chinese currency rallied as the U.S. dollar's value fell following Trump's win. Wang Zhao—AFP/Getty ImagesAsian markets were up and running during the wee hours of the morning in the U.S., when Trump's gain on electoral college votes surpassed Clinton's. Hong Kong’s Hang Seng index fell to 2.6%. Isaac Lawrence—AFP/Getty ImagesGulf State markets -- such as the Qatar Stock Exchange being monitored by a trader shown here -- fell after news of the Trump victory. These markets are heavily exposed to changes in the oil market, and Trump has promised to make America an even bigger fuel and oil producer. Naseem—ReutersA trader watches Trump on TV as Dubai’s stock market falls. The one upside for traders there? The U.S. doesn't do much trade with countries like Dubai, so Trump's protectionist trade policies may not impact them directly. Ashraf Mohammad Mohammad Alam—ReutersIn Germany, the DAX exchange fell 3% after trading began, following news of Trump's victory. Michael Probst—APTraders on the floor at ETX Capital in London watched as Trump was elected. The UK markets suffered huge losses in June, after their own surprise Brexit referendum results sent stocks into a tailspin. Chris Ratcliffe—Bloomberg via Getty ImagesA man looks at a screen displaying news of markets update inside the Bombay Stock Exchange (BSE) building in Mumbai, India, November 9, 2016. Danish Siddiqui—Reuters
In a Wednesday morning Tweet, Krugman walked back his dire predictions to an extent, saying the fallout might not be worldwide.
An error occurred while retrieving the Tweet. It might have been deleted.
Krugman wasn't the only economist expressing concern on Wednesday. Nordea Chief Economist Helge Pedersen predicted in a note to clients that Trump's anti-globalization stance and protectionist trade policies could result in a trade war that would trigger a recession, according to Bloomberg. HSBC chief US economist Kevin Logan wrote in a note to clients Wednesday that Trump's economic policies "would likely put the economy into a recession after a year or two," Business Insider said.
Others were less circumspect and more blunt in their assessments. "How President Donald Trump will wreck the world economy," read a headline in the U.K.'s The Independent. "Welcome to the Trump Recession" read one on 24/7 Wall St.
HSBC's Logan sounded one note of potential optimism, writing, "Whether his proposals will actually be implemented depends on the willingness of Congress to enact legislation to put his proposals into law."
Of course it's never been a secret that Trump's trade and immigration policies are unpopular with academic economists of all political stripes. Indeed in August, when the Wall Street Journal polled 17 economists who had advised Republican presidents, none said they backed Trump.
What's more, economic predictions don't always come to pass. While many pundits predicted that the Brexit vote would wreck Great Britain's economy, that hasn't happened yet. Although all bets are off on what comes yet when it is actually enacted -- or for that matter, when Trump takes office.
