U.S
Many economists believe that Trump's vows to reduce inflation are not feasible
Economists and analysts are dubious of Trump’s promises to slash gas prices or prod interest rates lower.
Updated 2024-Oct-06 07:34
Trump points with a finger onstage at an outdoor rally, with crowd in the stands. Former President Donald J.
Economists at Nomura suggest that the Fed would be less aggressive in cutting rates if Trump is reelected because of the inflationary impact of more tariffs.
However Trump and his campaign argue that his economic plans will be successful pointing to his track record in his first term.
In his initial term Trump s policies resulted in historically low mortgage rates and gas priced at $1.
Gas prices did decrease in early 2020 to $1. 50 in certain areas and nationally to $1. However the decrease in prices as well as the low mortgage rates were due to the rapid recession caused by the pandemic leading consumers to stay home and the Fed to lower borrowing costs to prevent an economic downturn.
Leavitt stated that when questioned about an economic analysis supporting the prediction of energy prices halving and gas prices falling below $2: Time warp alert!.
As he seeks to return to the White House former President Donald J. Trump has pledged to cut Americans’ energy costs in half in the span of a year part of a plan to reduce inflation and drive mortgage rates back toward record lows.
But economists and analysts and Mr. Trump’s own record from his first term suggest that it is unlikely that Mr.Trump can deliver on those promises. Mr. Trump’s vow to dramatically reduce Americans’ cost of living hinges in part on his plans to quickly expand oil and gas drilling and reduce government impediments to power plant construction which he says would slash energy bills by more than half.
As prices fall he regularly states interest rates will come down along with mortgage rates. But Mr.Trump has not cited modeling or other economic analysis to support his assertions. Economic research and historical experience suggest that presidents have only a limited effect on locally regulated electric utilities or on the cost of oil which is a globally traded commodity.
He doesn’t really have the tools to lower oil prices enough to cut gasoline prices in half said Steven Kamin a senior fellow at the conservative American Enterprise Institute and former Federal Reserve economist.
In all experts and past evidence suggest that Mr. Trump is over promising on key economic issues related to prices and interest rates.
And that fits with a pattern he established during his earlier campaigns one in which he emphasizes big catchy outcomes with little attention to costs or how he might make good on his pledges.
Trump is making big economic promises. Mr. Trump has been making a frequent pitch from the campaign trail.
He will issue a national emergency declaration to achieve massive increase in domestic energy supply he told an audience at the Economic Club of New York last week.
Then in his telling gas prices will fall dragging other prices down with them. We’re going down and getting gasoline below $2 a gallon bring down the price of everything from electricity rates to groceries airfares and housing costs Mr.Trump said. As inflation cools he then implies the Fed will lower interest rates: He has begun to predict that mortgage rates could fall to under 3 percent.
But that series of events seems to hinge in large part on energy prices falling sharply which analysts say could be difficult to achieve.
Similar to 2016 experts on Wall Street and economists predicted that Trump s policies would lead to decreased growth and increased inflation.
The media accepted these predictions without question and never updated the information. Growth and inflation during Trump s presidency were consistent with past trends until the start of the 2020 pandemic.
Trump may attempt to appoint Fed officials sympathetic to his desire for low interest rates he probably wouldn t be able to do so immediately.
Powell the Federal Reserve chair will remain in office until 2026. Trump has indicated that he currently has no intentions of attempting to dismiss Mr.
