Americans are yearning for change in the economy, as they express frustration with high prices and a lack of economic stability. President-elect Donald Trump has promised to tackle many of the economic policies put in place by the Biden administration. Trump campaigned on imposing tariffs on foreign goods, reducing taxes on individuals and businesses, and deporting undocumented immigrants. Many Americans believe Trump can bring back low prices and economic stability, especially after the COVID-19 recession in 2020. Despite a recent surge in inflation, which has since come down, prices remain high, leading to dissatisfaction among consumers.
Since the election, the Dow Jones Industrial Average has seen significant gains, driven by expectations of tax cuts and deregulation under Trump’s administration. However, economists warn that Trump’s policies could potentially worsen inflation, increase the federal debt, and slow down economic growth. The Peterson Institute for International Economics estimates that Trump’s policies could lead to a decline in the U.S. GDP and a sharp increase in inflation within two years. A group of Nobel-winning economists have also expressed concerns about Trump’s economic proposals, warning of higher prices, larger deficits, and greater inequality.
While the economy shows signs of strength, with healthy growth and low unemployment rates, Americans continue to struggle with high prices. Grocery bills and rent hikes are particularly burdensome for lower-income households, despite some increase in inflation-adjusted wages. The frustration with high prices was evident in the recent election, with voters expressing concern about falling behind financially and worries about the cost of essentials like groceries, healthcare, housing, and gasoline. The outcome of the election reflects a desire for change and a hope for economic improvement under Trump’s leadership.
Trump’s economic agenda centers around taxing imports, with the aim of reducing trade deficits and pressuring other countries to make concessions. However, experts argue that imposing tariffs on imports is inflationary, as companies tend to pass on the higher costs to consumers. Trump’s proposed tariffs on Chinese goods and other imports could lead to significant financial losses for American households. Additionally, Trump’s plan to deport millions of undocumented immigrants could disrupt the job market, potentially affecting inflation and economic growth. Economists warn that deportations could lead to lower GDP and increased inflation over the coming years.
Trump’s proposed tax cuts, including extensions of individual tax cuts and incentives for businesses, could swell the federal deficit. The University of Pennsylvania estimates that Trump’s tax policies could increase the deficit by trillions over the next decade. With an already imbalanced federal budget due to increased spending on social programs and past tax cuts, Trump’s tax proposals could further strain government finances. Experts express concerns about the lack of measures to bring the federal budget back into balance, such as cuts to social programs or tax increases. Overall, there are uncertainties surrounding Trump’s economic policies and their potential impact on inflation, economic growth, and the federal deficit.
