newly elected President Donald Trump Victory in the November 5 elections It highlights the frustration of millions of voters, including many Americans voting On Tuesday that they are still suffering from the highest inflation in 40 years and are dissatisfied with the economic pace of the country.
Trump ran a campaign pledging to tackle those issues End the “nightmare of inflation” And prices have to be brought down “very rapidly”. He also offered numerous tax cuts to various groups senior citizens To homeownersAnd also to finance some of those cuts New tariffs on imports From China and other countries to Deport millions of undocumented immigrants,
Following Trump's victory, economists and policy experts are assessing how those policies could impact the economy as well as consumers' wallets. Wall Street is already predicting that his policies could boost corporate growth, sending the S&P 500 higher An increase of up to 2.2% on Wednesday.
But some experts say Trump's plans could also fuel inflation, potentially hurting consumers hoping for relief at the checkout counter.
“The devil will be in the details,” Ed Mills, a Washington policy analyst at investment bank Raymond James, told CBS MoneyWatch. “The Trump tax, trade, tariff and immigration agenda could have a significant economic impact and raise concerns about a second wave of inflation.”
However, compromise or changes in their plans “could reduce the impact,” Mills said.
Of course, whether Trump can respond to voters' most important economic issues is far from certain, especially if the House of Representatives moves to Democratic control, which would block his plans to extend the tax cuts enacted in the 2017 Tax Cuts and Jobs Act. Can disrupt. Act (TCJA) as well as enacting other changes.
Here are five ways Trump's policies could impact the economy and your money.
Your money under Trump's tax plans
The core of Trump's tax plan is to extend provisions in the TCJA that are set to expire at the end of 2025. These include the law's lower tax brackets and the expanded standard deduction.
Trump also wants to provide deep tax cuts for some individuals and businesses, with his campaign proposing to reduce the corporate tax rate to 15% from the current 21%. He has floated the idea of eliminating personal income taxes on many types of earnings, from tips to Social Security benefits, but has not yet provided details.
Trump's combination of tariffs and tax cuts would be the sixth-largest tax cut since the 1940s, according to the Recent Tax Foundation. Analysis,
If Trump is able to implement these tax code changes, personal income taxes will decline for all income groups. But the biggest beneficiaries will be high-income households, according to an analysis by Penn Wharton Budget Models. (This research assesses Trump's proposed tax cuts but does not include the impact of tariffs.)
The analysis found that this means a middle-class family earning about $80,000 a year would get a tax break of about $1,740 in 2026. According to Penn Wharton, top-income households with incomes above $14 million would see a $376,910 reduction in taxes.
What can happen from inflation?
Consumers rank inflation as one of their biggest economic concerns, with many still feeling the impact of rising prices during the pandemic. Although the US inflation rate has now reached close to the Federal Reserve 2% annual target, Many Americans still rate it as high because prices have not decreased; Rather, prices are rising more slowly than during the pandemic.
Economists have warned that Trump's plans could stoke inflation again. This is because tariffs are essentially sales taxes paid by US consumers, not by countries that export goods to the US. Additionally, Trump's plan to deport millions of immigrants could also boost inflation as employers face higher wages due to the labor crisis. ,
“The two main pillars of his policy proposals, tariffs and mass deportations, are likely to increase prices because they will make it more difficult for businesses to produce goods,” Jacob Channell, chief economist at LendingTree, told CBS MoneyWatch.
According to the non-partisan Peterson Institute for International Economics, Trump's plan to impose a 10% tariff on all imports and a 60% or more tariff on Chinese goods shipped to the US would add $1,700 a year in additional costs for a typical middle-class family. Can. ,
According to Andrzej Skiba of RBC Global Asset Management, Trump's plans could raise the inflation rate by as much as 1 percentage point, bringing it to an annual rate of about 3.4%, above the Fed's 2% target.
“If you add 1% to next year's inflation number, we should be saying goodbye to rate cuts,” Skiba said.
Can the economy grow faster?
According to Oxford Economics, the economy may initially grow slightly faster under Trump's plan to cut corporate taxes, but this effect may diminish over time, especially due to the impact of deporting millions of immigrants.
Ryan Sweet, chief U.S. economist at Oxford Economics, wrote in a Nov. 6 research note that real GDP growth could be 0.3 percentage points higher in 2026 if current economic policies continue.
But, he said, GDP growth could ultimately be 0.6 percentage points lower in 2028 than earlier projections due to the impact of deportations and higher tariffs.
Will housing become more affordable?
Probably not, according to Lisa Sturtevant, chief economist at Bright MLS.
First, if Trump's plans drive inflation back up as some economists are forecasting, the Federal Reserve may not be able to continue lowering its benchmark rate. He said mortgage rates are unlikely to fall without further reductions in borrowing costs for consumers and businesses.
Second, deporting millions of undocumented immigrants could impact the housing sector — which is already facing a severe shortage of homes — because it depends on these workers to build new homes, Sturtevant said. .
“His mass deportation proposal would have a devastating impact on the construction industry, shrinking an already limited labor force and hindering much-needed new housing construction,” he said. “At the same time, the proposed tariffs will increase building costs.”
Will Trump's policies help your 401(k)?
Possibly, given that Trump's proposed corporate tax cuts and support for lighter regulations on businesses, if enacted, could boost company profits and lift the stock market.
On Wednesday, indices including the S&P 500 and the Dow Jones Industrial Average, increased On Wall Street optimism for strong corporate growth.
“Lower corporate taxes and/or deregulation of the energy and financial sectors under the Trump administration could provide additional support,” Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, said in an email.
Trump's pledge to make the US the “crypto capital of the planet” could also give a boost to other financial instruments, including cryptocurrencies.
At the same time, most of these forecasts depend on Trump making changes to the tax code, regulations and other laws, the channel said.
“Virtually all of these policies will be difficult to implement, even with Republican control of the House, Senate, and presidency,” he said. “With that in mind, we likely won't see much change in the broader economy.”
“Inaction by the next Trump administration could mean the economy will continue on its current path,” he said.