Economists Caution on Emerging Inflation Risks Post-Election

Economists Caution on Emerging Inflation Risks Post-Election

Post-Election inflation risks after a two-and-a-half-year effort to curb inflation, notable progress is finally visible. However, the upcoming elections could disrupt this positive trend. Inflation reduction is attributed to high-interest rates, recovered supply chains, and a larger workforce.

Election Policies at Stake

Top candidates Donald Trump and Kamala Harris advocate for growth policies that may complicate efforts to reduce inflation effectively. Consequently, these conflicting approaches raise concerns among economists about their long-term impact on the economy. Moreover, economists specifically warn that Trump’s proposals, including sweeping tariffs and mass deportations, could reignite existing inflationary pressures. Therefore, balancing growth with inflation control remains a significant challenge for both candidates in the upcoming election.

Conservative Economists’ Warning

Brian Riedl, a former Republican Senate aide, cautions that Trump’s policies might exacerbate inflation as we approach 2025. Consequently, he highlights the potential Post-Election inflation risks associated with these proposed policies in the current economic landscape. Furthermore, the present situation features fluctuating inflation rates and rising bond yields, creating uncertainty for consumers and investors alike. In contrast, this volatility starkly differs from the stability that Trump experienced during his first term in office.

A Changing Scenario for the Federal Reserve

The recent rise in bond yields is attributed to speculation regarding a potential Trump victory in the upcoming election. Consequently, this increase signals growing inflationary concerns among investors and market analysts. Moreover, Marc Short, Trump’s former White House legislative affairs director, expresses significant worries about the implications of Trump’s policies. He warns that such policies could create renewed conflicts with the Federal Reserve, complicating its rate policy decisions further.


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Kamala Harris’s Proposal

Kamala Harris aims to combat inflation by implementing housing construction policies and expanding tax credits to support families financially. Consequently, her approach prioritizes balancing new spending initiatives with strategies to increase revenue sources. However, it lacks a strong emphasis on significant deficit reduction, which some economists may critique. Furthermore, Harris’s policies reflect a focus on immediate relief measures rather than long-term fiscal conservatism.

Trump’s Trade and Tax Strategy

Trump proposes extending his 2017 tax cuts, lowering corporate taxes, and eliminating taxes on tips and overtime for American workers. Consequently, his proposed tariffs on Chinese imports, potentially reaching 60%, present a direct inflationary risk. Additionally, these tariffs could raise costs for consumers, impacting everyday expenses across various sectors. Furthermore, Trump’s economic approach aims to stimulate domestic growth, despite concerns over possible inflationary side effects.

Risks for the Bond Market and Economic Stability

Trump’s running mate, JD Vance, voices concern regarding the bond market’s response to recent policy changes. Consequently, he emphasizes that increased market volatility poses a risk to economic stability. Moreover, Vance highlights similarities to the financial turbulence experienced in the United Kingdom. Under former Prime Minister Liz Truss, similar policies led to challenges and economic uncertainty. Therefore, Vance cautions that these policies could potentially replicate such challenges in the U.S.


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