2024-07-13 10:01:18
WSJ survey of 68 experts including economists
“Trump’s trade and immigration policies are a huge blow to the US economy”
A survey found that most economists believe inflation and fiscal deficits will be worse under former President Donald Trump’s re-election than under President Biden.
There are concerns that the universal tariffs and blatant anti-immigration stance that resulted from former President Trump’s “America First” policy will block global trade and labor flows, ultimately dealing a major blow to the U.S. economy.
◆“Inflation and fiscal deficit will worsen under Trump… Interest rates will also rise further”
On the 11th (local time), the Wall Street Journal (WSJ) reported the results of a survey conducted from the 5th to the 9th targeting 68 experts including academics, Wall Street, and financial economists.
According to the survey results, 28 out of 50 people (56%) who answered the question about President Biden and former President Trump said, “Inflation will be higher during Trump’s term (if re-elected) than during Biden’s term (currently).”
Only 16% answered that it would not be the case. The remaining 28% said that there was no real difference.
As for the fiscal deficit, 51% said the deficit would increase during Trump’s term, while 22% said it would increase during Biden’s term.
Also on interest rates, 59% of respondents said they expected rates to be higher under former President Trump, while 16% said they would be higher under President Biden.
“I think there is a real risk that inflation will accelerate again under a second Trump administration,” said Bernard Baumoll, chief global economist at the Economic Outlook Group.
He added, “If that happens, the Federal Reserve is more likely to set interest rates higher than when inflation continues its downward trajectory.”
◆“Trump’s hard-line policy ‘MAGA’, a huge blow to the US economy”
Economists cited former President Trump’s hard-line policies, dubbed “Make American Great Again” (MAGA), as the reason for concerns about worsening inflation.
Former President Trump has pledged that if he is re-elected, he will impose a 10% tariff on all imported goods (universal tariff) and a tariff of more than 60% on Chinese imports. He has also promised the largest deportation of illegal immigrants in U.S. history.
Economists predict that while such policies may seem to benefit the U.S. in the short term, they will ultimately lead to a global trade freeze and labor shortages that will have a major impact on the U.S. economy.
The policy of former President Trump, who strongly applied the ‘America First’ principle on trade and immigration, could once again lead to the rise of global ‘isolationism’ and ‘protectionism’, resulting in economic failure.
In fact, Deutsche Bank in Germany estimates that former President Trump’s universal tariffs would increase overall prices by 1-2%, while it also said that high immigration rates in recent years could have lowered inflation by up to 0.5%p by alleviating labor shortages after the pandemic.
◆“Trump’s tax cut policy will also worsen the fiscal deficit”
Economists worry that former President Trump’s massive tax cuts will worsen the U.S. budget deficit.
Former President Trump introduced a large-scale tax cut policy that lowered individual, corporate, and property taxes during his first term in office (2017-2021), and he has pledged to make the tax cut policy permanent if he is re-elected.
According to the ‘2024-2034 Budget and Economic Outlook Update’ released by the U.S. Congressional Budget Office (CBO) on the 18th of last month, the size of this year’s fiscal deficit was set at 1.9 trillion dollars (approximately 2,625.8 trillion won).
CBO projects that the U.S. fiscal deficit will steadily increase over the next decade, reaching $2.8 trillion in fiscal year 2034, or 6.9 percent of GDP in 2034.
In this situation, if former President Trump implements a large-scale tax cut policy, the government’s revenue will decrease, leading to a larger deficit, which will ultimately lead to increased inflation and pressure to raise interest rates.
◆WSJ: “Don’t expect Trump to lower inflation faster than Biden”
The WSJ noted that “former President Trump likes to remind voters that ‘under President Biden we saw the highest inflation in 40 years.’”
“But don’t expect Trump, the presumptive Republican nominee, to reduce inflation faster than Biden if he wins in November,” he warned.
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2024-07-13 10:01:18