Trump Policies More Likely To Reignite Inflation Than Biden’s, Economists Warn
A new survey of economists conducted by The Wall Street Journal has found that a majority of experts believe former President Donald Trump‘s policies are more likely to cause a resurgence of inflation than those of President Joe Biden. The survey, which polled 50 economists, revealed that 28 respondents stated that the risk of high inflation returning was greater under Trump’s proposed plans than under Biden’s. Only eight economists believed inflation would be worse under Biden, while 14 stated that the difference between the two agendas would be negligible.
This finding comes as a stark warning, particularly given the recent success in cooling inflation. The Consumer Price Index (CPI), a key measure of inflation, showed a decline of 0.1% in June, marking the first month-over-month decrease in more than four years.
Key Takeaways:
- Majority of economists surveyed believe Trump’s policies pose a greater inflation risk than Biden’s.
- Trump’s proposed tariffs could lead to higher producer costs, ultimately driving up consumer prices.
- Trump’s immigration restrictions could potentially further exacerbate labor shortages, contributing to inflation.
- Biden’s large spending packages have been cited as a possible source of inflation by some economists.
- The survey adds to the growing chorus of economists, including 16 Nobel Prize winners, who have previously warned about the inflationary dangers of a second Trump term.
Trump’s Policies: Tariffs, Immigration, and Tax Cuts
The economists surveyed pointed to Trump’s proposed tariffs as a major contributing factor to potential inflation. They argue that a 10% tariff on all imports, coupled with a 60% to 100% tariff on goods from China, would increase producer costs, which businesses would likely pass on to consumers in the form of higher prices. This could lead to a resurgence of inflation, reversing the recent positive trend.
Another concern raised by the survey is Trump’s restrictive immigration policies. These policies could potentially exacerbate labor shortages, particularly in industries that rely heavily on immigrant workers. With fewer workers available, wages could rise, potentially pushing up inflation.
Adding to the concerns, Trump has proposed making his first-term tax cuts permanent, which could lead to an increase in the federal deficit. This would likely result in more government borrowing, potentially driving up interest rates and ultimately contributing to inflation.
Biden’s Policies: Large Spending Packages
While the survey highlighted Trump’s policies as the more significant inflationary threat, it did acknowledge that Biden’s large spending packages could also contribute to inflation. Some economists argue that significant government spending can lead to increased demand, potentially outpacing supply and driving up prices.
Despite these concerns, it’s important to note that the survey also highlighted Biden’s success in reducing inflation. This success has been attributed to a combination of factors, including the Federal Reserve’s aggressive interest rate hikes and the cooling of the global economy.
Beyond the Election: A Complex Economic Landscape
The survey highlights the complex economic landscape and the crucial role that government policies play in influencing inflation. However, it also recognizes that the president has limited control over the economy. Factors like global events, supply chain disruptions, and the decisions of independent government agencies, including the Federal Reserve, all have a significant impact on the economy.
A Political Battleground
The survey’s findings have become a focal point in the heated 2024 presidential election. Biden’s campaign has seized upon the survey to bolster its claim that Trump’s policies would be detrimental to the economy. "While inflation is falling and manufacturing is booming under President Biden’s leadership, experts are sending a clear warning" about Trump’s policy agenda, said Biden-Harris 2024 spokesperson Sarafina Chitika.
The Trump campaign has not yet responded to the survey’s findings.
The economic narrative surrounding the election is likely to continue to dominate the campaign as both candidates seek to convince voters that their policies are the key to a healthy economy. While the survey provides valuable insight from economists, the ultimate impact of the different policy agendas on inflation will only be known after the election.
