Washington (AP) – Like most presidents, Donald Trump faces an economy that rarely complies with political ambitions.
The Republican has promised strong growth, high prices, income tax cuts and booming oil fields. But despite the solid labor market and the low unemployment rate of 4.1%, it faces opposite winds such as inflation, a budget deficit, an increase in trade tensions, the fallout of its plans for Reduce immigration and a persistent wealth difference.
Each of these questions could help shape what voters think about a president where they returned to the White House with the specific objective of repairing the economy.
For his part, Trump wants to blame all the challenges in front of him on his predecessor, Joe Biden, who in turn blamed Trump in 2021 for the problems that his own administration had to tackle.
“It starts with the confrontation of economic chaos caused by the failure of the policies of the last administration,” Trump told the World Economic Forum on Thursday.
Here are five economic forces that could shape the first year of Trump’s presidency:
For voters, the price is still not good
Whisk inflation is easier to say than to do.
In Potacast, an in -depth study of last year’s electorate, 4 out of 10 voters qualified inflation the “most important factor” of their choice for the president. About two -thirds of this group voted for Trump – a sign that he owes his victory largely to the high cost of grocery store, petrol, housing, cars and other goods.
In the future, monthly reports on the consumer price index will be a clear measure to know if Trump can deliver. But inflation has actually increased in recent months. Consumer prices increased to a healthy annual rate of 2.4% in September, compared to 2.9% in December. Economists say that inflation could get worse if Trump imposes prices and uses income tax reductions funded by the deficit.
Republicans often reach Biden hard for egg prices. But democrats could use similar attacks on Trump. In the past year, coffee costs have only increased by 1% for American consumers, but the International Monetary Fund has the price of real grains climbing 55% in a sign that slats, espressos and Old simple cups of Joe could soon cost more.
Then there is accommodation. Voters are always frustrated by high mortgage rates and prices remain high due to a shortage of properties. The shelter represents 37% of the consumer price index. Price increases for housing have been held, but shelters still increases to 4.6% per year, compared to annual increases by 3.3% before the pandemic.
Trump bets that more energy production can reduce inflation rates, but domestic production is already close to record levels, according to the government.
What prices really come
Trump says that 25% of prices arrive for Mexican and Canadian imports on February 1. He also talked about additional 10% tariffs on Chinese products. Its declared objective is to stop illegal on -board passages and the flow of chemicals used to make drugs such as fentanyl.
For Trump, prices are a diplomatic tool for his political objectives. But they are also a threat, perhaps intended to relaunch trade discussions. They are also a revival of income which, he said, could bring back billions of dollars in the treasury.
Trump increased the prices during his first mandate, the collection of income has more than doubled at an annual rate of $ 85.4 billion, which may seem a lot, but was equal to only 0.4% of the domestic product raw. Multiple analyzes of the LAB budget of Yale and the Peterson Institute for International Economics, among others, say that threatened prices would increase the costs of a typical family in a way that effectively increases taxes.
What really matters is to know if Trump pronounces his threats. This is why Ben Harris, a former Biden advisor who is now director of economic studies at Brookings Institution, says that voters should focus on average rate rates.
“Trade is really delicate,” said Harris. “But in general terms, look at what he does and not what he says.”
What happens with the national debt
Trump likes to blame inflation on national debt, saying that Biden’s policies have flooded the American economy with more money than it could absorb. But around 22% of the total debt in circulation of 36 billions of dollars came from the policies of the first mandate of Trump, according to the committee for a responsible federal budget, a tax guard dog.
Paul Winfree, a former Trump staff member who is now president and chief executive officer of the Economic Policy Innovation Center, warned in a recent analysis that the United States is too close to the comfort of its tax limits. Its analysis suggests that if Trump can preserve growth of 3%, it could prolong its tax discounts in 2017 while keeping the debt sufficiently stable by reducing $ 100 billion to $ 140 billion per year.
The risk is that the higher borrowing costs and debt can limit what Trump does while maintaining high borrowing costs for consumers. Legislators who considered debt once a problem for more and more years consider it something to approach now.
“One of the greatest atmosphere changes that I am now taking among political decision -makers is that they are starting to realize that the long term is today,” Winfree said.
Winfree said that the key number to be monitored is the interest rates billed on the American debt – which will indicate to the public if investors think that the amount of the loan is problematic. The interest in the US Treasury ticket at 10 years is around 4.6%, a full percentage point since September.
Immigrants are still necessary to occupy jobs
Trump’s executive orders are a clear repression of immigration – and this could be an obstacle to economic growth and slow down monthly job gains. Trump often supervises immigration as a criminal and national security problem by focusing on people crossing the border illegally.
But savings that cannot add enough workers may stagnate – and the US labor market at this stage needs immigrants as part of the job mixture. Last year, approximately 84% of American net population growth came from immigrants, according to the census office. It is 2.8 million immigrants.
“They work not only in the economy, but they spend in the economy,” said Satyam Panday, American chief economist at S&P Global Ratings. “Their expenses are the income of someone else in the economy.”
If Trump was simply to give immigration to its 2017 and 2019 averages from 750,000 immigrants per year, growth could slow down, going from 2.7% last year to 2% in the future, revealed the analysis of Panday. The construction, agriculture and leisure and hotel industries would likely find it difficult to find employees.
In other words, it is worth monitoring the monthly job report and immigration flows.
Beware of wealth
Trump will have to understand how to balance the interests of billionaires with those of his voters in blue collar. His inaugural events included several of the richest men in the world: Elon Musk de Tesla, Jeff Bezos d’Amazon, Mark Zuckerberg de Meta and Bernard Arnault de LVMH. Each is worth around $ 200 billion or more, according to the Bloomberg billionaire index.
Scott Ellis, a member of the Millionaire Patriotic Group, said that he was worth watching how their wealth increases under Trump. This year, Friday, Arnault’s net value increased by $ 23 billion, Bezos increased by $ 15 billion, Zuckerberg increased $ 18 billion and Musk’s wealth increased by $ 6 billion. These are all monthly increases.
On the other hand, the data from the most recent census office show that the median wealth of American households increased by $ 9,600 in 2021-2022, to $ 176,500.
