Noah Smith notes that the status of theory within economics has declined dramatically. He gives the credit to psychologists.
Krugman has thoughts. He finds two problems. First modern theory has no implications. It turns out that the implications of old theory came from the simplifying assumptions made to achieve closed form solutions and that, with new mathematical tricks, it is possible to make a consistent model (with fully rational agents) which does anything one wants it to do. This should have been obvious to everyone to begin with (in the 80s it certainly seemed obvious to me).
He writes "After a while, the new approaches came to seem tooliberating; by the early 90s the joke was that a smart graduate student could devise a model to justify any policy."
The joke predates the early 90s. Some time before 1989 in a chinese restaurant at around 1050 Mass avenue Robert Barro said, and I quote, "isn't there an existence theorem somewhere that there is a second best argument for anything"
Second Krugman notes that modern macro theory, in particular, has great difficulty avoiding plainly false implications. I think these two cases are really similar and commented.
In macro anything is possible too. One bit of macro theory which never became popular is sunspot macro, in which fluctuations occur for no good reason. In contemporary macro assumptions are made so that equilibrium is determinate. I think the cases of macro and trade are more similar than you imagine.
I would place Lucasian macro about like Samuelsonian trade theory. Models with solutions with implications which are grossly false. Macro was liberated by imperfect competition and spillovers too (I'm thinking mostly Jess Benhabib and Roger Farmer but really a lot of stuff which hardly anyone ever read). It's just that you are one of that very vast majority of people who never found liberated macro the slightest bit interesting.
Another thing, what about numerical methods ? Macro was totally taken over by computer simulations. This liberated it (so that anything could happen) but also ruined the fun. When computers were new and scary, simulation based macro was scary and high status. When everyone can do it, setting up a model and simulating just doesn't demonstrate brains as effectively as finding one of the two or three special cases with closed form solutions and then presenting them. Also simulating unrealistic models is really pointless. People end up staring at the comuter output and trying to think up stories which explain what went on in the computer. If one is reduced to that, one might as well look at real data. Models which can't be solved don't clarify thought. Since they also don't fit the data, they are really truely madly useless.