Nobel Prizewinning economists caution that inflation will reignite during a Trump presidency
With the upcoming presidential election just a few months away and the first debate set for June 27th, discussions and tensions surrounding the two leading candidates, Joe Biden and Donald Trump, are intensifying once again.
Given the current state of inflation, interest rates, and the stock market, which seem to be simultaneously strong and fragile, it’s no surprise that the economy is a major focus of attention.
While Republicans often boast about their financial expertise, and Trump’s popularity is partly based on his billionaire status, it appears that leading economists overwhelmingly prefer Joe Biden.
On June 25th, a letter signed by 16 Nobel Prize-winning economists, endorsing Biden for a second term, was revealed.
So, why are economists warning against a Trump presidency? Despite their varying opinions, these experts generally agree that Trump’s economic plans are significantly inferior and likely to result in a surge of inflation.
The Republican candidate is expected to extend and possibly make the tax cuts permanent, while also increasing tariffs. Additionally, he is likely to pressure the Federal Reserve to lower interest rates. These policies, combined with the cash injection from the tax policy, are likely to cause inflation to skyrocket once again.
The idea of imposing tariffs has faced criticism, with Goldman Sachs concluding that it would actually strengthen the US dollar, contrary to Trump’s goals. This is a concern for the tech sector, as many companies heavily rely on foreign imports, especially from China, which could face high tariff rates under a Trump presidency. China is a major exporter of minerals crucial for big tech firms.
When considering the impact on the national debt, historical data suggests that a second Trump presidency could lead to a significant increase. Despite their reputation for financial restraint, Republicans have actually borrowed more on average than Democrats. The possibility of additional tax cuts only raises the risk of further debt accumulation under Trump.
Even research conducted by Finbold, which focuses on the increase in the US national debt following the 2008 crisis, found that Biden, in his first three years, has increased the burden by the same amount as Trump did throughout his entire first term.
Lastly, both the concerns expressed by the Nobel Prize-winning economists and historical records cast doubt on the stock market’s performance under Trump. On average, the stock market has fared better under Democratic presidents.
