President-elect Donald Trump Victory in the November 5th election Highlighting the dissatisfaction of millions of voters, many Americans are pointing out exit poll On Tuesday, they said they were dissatisfied with the country’s economic trajectory as it continues to be hit by the highest inflation in 40 years.
Trump campaigned on a promise to address these issues. Ending the “inflation nightmare” And lower prices “very quickly.” He also proposed countless tax cuts to various groups. senior citizen to homeowneralso to fund some of these cuts. New tariffs on imported goods from China and other countries, and deport millions of illegal immigrants.
Following President Trump’s victory, economists and policy experts are assessing how these policies will affect the economy and consumers’ wallets. Already, Wall Street is predicting that his policies could spur corporate growth. raise the S&P500 It rose as much as 2.2% on Wednesday.
But some experts say Trump’s plan could also push up inflation, hurting consumers hoping for relief at the checkout counter.
“The devil is in the details,” Ed Mills, Washington policy analyst at investment bank Raymond James, told CBS MoneyWatch. “President Trump’s tax, trade, tariff, and immigration policies could have a significant economic impact and raise concerns about a second wave of inflation.”
But Mills added that compromises and changes to the plan “could potentially reduce the impact.”
To be sure, it’s unclear whether President Trump will be able to address voters’ most pressing economic issues, especially if the House of Representatives flips to Democratic control, which could thwart plans to extend the tax cuts enacted in the 2017 Tax Cuts and Jobs Act. There is sex. (TCJA) and other changes.
List five effects of President Trump’s policies on the economy and money.
Your money under President Trump’s tax plan
The core of President Trump’s tax plan is to extend the provisions of the TCJA, which are set to expire at the end of 2025. These include the law’s lower tax rates and expansion of the standard deduction.
President Trump also wants to provide even larger tax cuts for some individuals and businesses, with his campaign proposing cutting the corporate tax rate from the current 21% to 15%. He has floated the idea of eliminating personal income taxes on many types of income, from tips to Social Security benefits, but has not yet released details.
President Trump’s combination of tariffs and tax cuts would be the sixth largest tax cut since 1940, according to a recent Tax Foundation analysis.
If President Trump is able to pass these tax changes, they would lower personal income taxes for all income groups. But the biggest beneficiaries will be high-income households, according to an analysis of the Penn Wharton Budget Model (which evaluates President Trump’s proposed tax cuts but does not include the impact of tariffs).
In other words, a middle-class family with an annual income of about $80,000 would receive a tax cut of about $1,740 in 2026, the analysis found. High-income households with incomes of $14 million or more will see their taxes reduced by $376,910, according to Penn Wharton.
What happens when inflation occurs?
Consumers cite inflation as one of their top economic concerns, and many are still feeling the effects of rising prices during the pandemic. Although the US inflation rate has now fallen to near the Federal Reserve’s inflation rate, Annual target 2%, Many Americans still describe things as expensive because they haven’t come down. In fact, prices are just rising more slowly than during the pandemic.
Economists have warned that President Trump’s plan could reignite inflation. That’s because tariffs are essentially sales taxes paid by U.S. consumers, not by countries exporting goods to the U.S. Moreover, President Trump’s plan to deport millions of immigrants is It could also push up inflation, as employers are likely to face higher wages due to the lack of power.
“The two mainstays of his policy proposals, tariffs and mass deportations, could cause prices to rise by making it harder for businesses to produce goods,” Jacob Channell, chief economist at LendingTree, told CBS MoneyWatch. It’s very sexual,” he said.
According to the nonpartisan Peterson Institute for International Economics, President Trump’s plan to impose tariffs of 10% on all imports and more than 60% on Chinese goods shipped to the United States will cost the typical middle-class household It is possible that additional duties of $1,700 per year may be incurred. .
Trump’s plan could push up inflation by as much as 1 percentage point, reaching an annual rate of about 3.4%, above the Fed’s 2% target, said Andrzej Skiba of RBC Global Asset Management. There is sex.
“If we’re going to add 1 percentage point to next year’s inflation rate, we should say goodbye to rate cuts,” Skiba said.
Could economic growth accelerate?
According to Oxford Economics, economic growth may initially accelerate slightly under President Trump’s corporate tax cut plan, but the impact will wane over time, especially due to the impact of deporting millions of immigrants. There is a possibility.
Real GDP growth in 2026 could be 0.3 percentage points higher than if current economic policies continued, Ryan Sweet, chief U.S. economist at Oxford Economics, said in a Nov. 6 research note. said.
But he added that the effects of deportations and tariff hikes could ultimately result in GDP growth in 2028 being 0.6 percentage points lower than initially expected.
Will housing become more affordable?
Probably not, according to Lisa Sturtevant, chief economist at Bright MLS.
First, the Fed may not continue lowering benchmark interest rates if President Trump’s plan reignites inflation, as some economists predict. He added that mortgage rates are unlikely to fall unless borrowing costs are further lowered for consumers and businesses.
Second, deporting millions of illegal immigrants will impact the housing sector, which is already facing a severe housing shortage because it relies on these workers to build new housing. Possibly, Sturtevant said.
“His mass deportation proposals will have a chilling effect on the construction industry, shrinking an already constrained workforce and stalling desperately needed new housing construction,” she said. “At the same time, the proposed fees would increase construction costs.”
Will Trump’s policies help your 401(k)?
Perhaps President Trump’s proposed corporate tax cuts and support for less regulation for businesses, if passed, could boost corporate profits and lift the stock market.
On Wednesday, indexes like the S&P 500 and the Dow Jones Industrial Average rose sharply There is strong optimism on Wall Street about strong corporate growth.
“Corporate tax cuts under the Trump administration and deregulation of the energy and financial sectors could provide further support,” Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, said in an email. .
President Trump’s pledge to make the United States the “crypto capital of the world” could also boost other financial products, including cryptocurrencies.
At the same time, Channel noted that many of these projections depend on President Trump pushing for changes in tax, regulatory and other laws.
“Even if Republicans controlled the House, the Senate and the presidency, it would be difficult to implement virtually all of these policies,” he said. “With that in mind, we may not see much change in the broader economy.”
He added: “Inaction by the incoming Trump administration could mean the economy will continue steamrolling along its current course.”
