Trump Or Biden? Most Economists Say This Candidate's Win Could Bring Higher Inflation

A recent survey conducted by The Wall Street Journal suggests that most economists believe that a potential win for former President Donald Trump in the upcoming presidential election could result in a surge in inflation, deficits, and interest rates, higher than under a continued President Joe Biden administration.

What Happened: The survey indicated that a majority of economists believe a second Trump term could lead to higher inflation and interest rates than a continued Biden presidency. The survey, conducted between July 5-9, gathered responses from 68 professional forecasters from business, Wall Street and academia.

Out of the 50 who responded to questions about Trump and Biden, 56% predicted higher inflation under Trump, while only 16% foresaw the opposite. The remaining respondents did not anticipate a significant difference. The survey also revealed that economists’ views are largely influenced by Trump’s policy preferences, particularly on trade and immigration.

"I think there is a real risk that inflation will reaccelerate under a Trump presidency," Bernard Baumohl, chief global economist at the Economic Outlook Group, told the outlet. “That would likely lead the Federal Reserve to set interest rates higher than if inflation continues its downward trajectory.”

Trump has proposed a 10% tariff on all imports and a 60% or higher tariff on imports from China. He also plans to carry out the largest deportation of undocumented immigrants in history, which could impact the labor supply in some industries.

Also Read: Ex-Trump Staffer Shares Texts To Prove That Ex-President’s Campaign Settled To Keep Discrimination And Sexual Harassment Lawsuits Quiet

However, the implementation of Trump’s or Biden’s policies is uncertain and will depend on Congress and other factors such as litigation. The report also noted that presidents generally have less influence on the economy and inflation than the business cycle, external shocks like oil prices and the Federal Reserve’s interest-rate policies.

"It is hard to know, he says so many things that are so extreme," said Joel Naroff, head of the consulting firm Naroff Economics, of Trump.

"I think we are very likely to be running large deficits regardless of who the next president is," Matthew Luzzetti, chief U.S. economist at Deutsche Bank Securities, added. "The bigger inflation difference is probably going to come from policies like trade."

Why It Matters: Since Biden took office in January 2021, consumer prices have risen 19%, fueled by government spending, shortages of goods and labor and a supply-chain disruption due to the pandemic. During Trump's four years as president, prices increased 7.8%.

This inflationary trend under Biden’s administration has been a cause for concern among economists. The potential for higher inflation under a second Trump term, as suggested by the Wall Street Journal survey, adds another layer of complexity to the economic outlook for the U.S.

Now Read: Following Debate, Latest Poll Among Democrats Signals Major Trouble For Joe Biden — Although There's One Silver Lining

This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

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