萨默斯指出，“如果这些计划真的得到实施，那么特朗普政策对通胀的刺激力度要远远大于拜登总统制定的任何计划，这一点我毫不怀疑。”① Former US Treasury Secretary Lawrence Summers warned that the Trump administration's economic policies could cause serious inflationary shocks; ② he emphasized the two main concerns about the proposed economic agenda: large-scale demand-side stimulus and severe supply-side disruptions; ③ Summers pointed out that if all of Trump's policies are implemented, then their inflation stimulus will far exceed any plan drawn up by President Biden.
Financial Services, November 26 (Editor: Zhou Ziyi) Former US Treasury Secretary Lawrence Summers once again mentioned in a recent interview that the Trump administration is expected to cause serious damage to the economy. He warned that the proposed economic policy could trigger a more severe inflationary shock.
Key components of Trump's economic policy include broad tax cuts, potential widening budget deficits, and full implementation of tariffs. In an interview, Summers highlighted two major concerns about the proposed economic agenda: one is large-scale demand-side stimulus, and the second is severe supply-side disruptions.
Summers pointed out, “If these plans are actually implemented, then the Trump policy will stimulate inflation far more strongly than any plan made by President Biden. I have no doubt about this.”
Stimulate soaring inflation
The main inflationary risks mentioned by Summers include: first, broad tax cuts will likely widen the federal budget deficit; second, comprehensive tariffs will cause significant increases in the cost of foreign goods and imported goods; in addition, potential large-scale plans to deport illegal immigrants will cause labor shortages.
Earlier Goldman Sachs economic analysis also supported Summers' concerns. The bank estimates that the general imposition of a 10% tariff by the US may push the inflation rate back to 3%, push the inflation rate of core personal consumption expenditure by 0.9-1.2 percentage points, and have a serious impact on US GDP.
Currently, market indicators are still showing elasticity. However, Summers believes, “The market has ups and downs, but it is not a good predictor of inflation.”
The potential economic transformation is taking place in a complex fiscal situation. The US federal budget deficit is expected to reach 1.7 trillion dollars in 2024, and the debt-to-GDP ratio is close to 120%.
Summers also emphasized potential systemic risks and warned that special economic agreements could disrupt the rules-based market economy, which has historically supported strong US stock market valuations.
Earlier in November, Summers mentioned in a media interview, “If Trump sticks to the plans he promised during the election campaign, then the country will suffer a bigger inflation crisis than in 2021.” The US CPI Index began to rise rapidly in the spring of 2021 and eventually reached a 40-year high of 9.1% in June 2022.
