A recent survey indicates that economists foresee a rise in inflation and federal deficits if former President Donald Trump returns to office, compared to Vice President Kamala Harris' policies.
What Happened: The survey conducted from Oct. 4-8, a majority of economists predict that inflation, interest rates, and deficits would escalate more under Trump's economic strategies than under Harris's proposals. This survey mirrors findings from July when Trump was competing against President Biden, who withdrew from the race on July 21, leading to Harris's nomination, Wall Street Journal reported on Monday.
The survey results show that 68% of economists expect prices to rise more rapidly under Trump than Harris, an increase from 56% in July. Only 12% anticipate higher inflation under Harris, with the remainder seeing no significant difference.
Dan Hamilton from California Lutheran University highlighted Trump's tariff plans as a contributing factor, stating, "Since July, it became apparent to us that Trump is even more anti-free-trade than Harris."
Trump has proposed tariffs ranging from 10% to 20% on imports, with a 60% or higher tariff on Chinese goods. Economists argue these tariffs could lead to increased consumer costs. Philip Marey of Rabobank cautioned, "If the tariffs work the way economists think they work, I think people are in for a very nasty surprise."
Additionally, 65% of economists predict Trump's policies would increase the federal deficit, compared to 51% in July. The Committee for a Responsible Federal Budget estimates Trump's plans could widen deficits by $7.5 trillion over the next decade, more than double the expected increase under Harris.
Why It Matters: Trump's economic strategies have been a topic of discussion, particularly his focus on reducing energy costs to combat inflation. During an interview with financial expert Dave Ramsey, Trump emphasized the importance of lowering energy prices to ease economic pressures and reduce interest rates.
However, his plans for tax cuts, tariffs, and mass deportations have raised concerns among economists about potential inflation spikes. At the New York Economic Club, Trump downplayed the costs of child care, focusing instead on the revenue he expects from tariffs, which he claims will bring in "trillions of dollars" for the U.S. government.
Meanwhile, Scott Bessent, a key economic adviser to Trump, has defended the former president's economic policies, assuring that a new Trump administration would support a strong dollar, contrary to previous suggestions of a weaker dollar to boost exports.
