Chuck Darwin on Nostr: Trump’s election will mean substantial changes for the economy and has implications ...
Trump’s election will mean substantial changes for the economy and has implications for the Fed’s policy choices.
If Trump is able to fully enact ideas he floated while campaigning
– such as heavy tariffs on imports from China and mass deportation of immigrants,
could 🔸reduce households’ purchasing power and harm labor supply, some policy experts, researchers and economists say.
Indivar Dutta-Gupta, who focuses on policy research and seminars at the Georgetown University McCourt School of Public Policy, said Trump’s immigration policies could result in a 🔸large reduction of labor supply.
“The economy has benefited and native-born workers have benefited in recent years from the growth in workers coming in from abroad. One would expect that to slow and potentially net in the other direction,” Dutta-Gupta said.
Mark Zandi, chief economist at Moody’s Analytics, said that based on what we know now about Trump’s proposals, the Fed will have to contend with an inflationary environment.
“The policies President Trump espoused on the campaign trail, which include higher broad-based tariffs, mass deportation of unauthorized immigrants already in the country, tax cuts that are largely deficit-financed, and the view that the president should have input into the decision making process of the Federal Reserve around interest rates
– 🔥all of that is inflationary,” he said.
This could mean that in the future, it’s less likely the Fed would continue to cut rates and would potentially raise rates.
“It all depends on whether President Trump follows through on those things he said during the campaign and to what degree and over what period of time.
But all of those things are directionally towards higher inflation, which means higher interest rates than otherwise would be the case,” he added.
Trump has talked about the possibility of the president having greater “say” over the Fed’s decisions on the campaign trail.
During his first term in office, he was very vocal in his displeasure with some of the Fed’s decisions on interest rates.
In October he said that although he should not be able to order the Fed to make the decisions he favors,
“I think I have the right to put in comments as to whether or not the interest rates should go up or down.”
Powell responded to questions about a second Trump administration’s effect on the independence of the Fed on Thursday.
When asked if the president can demote him or other leadership at the Fed, he said: “Not permitted under the law.”
The Fed is designed to operate on data, not politics.
Powell said that the election will have no effects on the Fed’s policy decisions in the near term.
He added that the Fed doesn’t yet know the timing or policy substance of the incoming administration.
“We don’t guess, we don’t speculate and we don’t assume,” he said.
https://idahocapitalsun.com/2024/11/08/fed-cuts-interest-rates-heading-into-end-of-biden-white-house-and-looking-to-trumps-2nd-term/
If Trump is able to fully enact ideas he floated while campaigning
– such as heavy tariffs on imports from China and mass deportation of immigrants,
could 🔸reduce households’ purchasing power and harm labor supply, some policy experts, researchers and economists say.
Indivar Dutta-Gupta, who focuses on policy research and seminars at the Georgetown University McCourt School of Public Policy, said Trump’s immigration policies could result in a 🔸large reduction of labor supply.
“The economy has benefited and native-born workers have benefited in recent years from the growth in workers coming in from abroad. One would expect that to slow and potentially net in the other direction,” Dutta-Gupta said.
Mark Zandi, chief economist at Moody’s Analytics, said that based on what we know now about Trump’s proposals, the Fed will have to contend with an inflationary environment.
“The policies President Trump espoused on the campaign trail, which include higher broad-based tariffs, mass deportation of unauthorized immigrants already in the country, tax cuts that are largely deficit-financed, and the view that the president should have input into the decision making process of the Federal Reserve around interest rates
– 🔥all of that is inflationary,” he said.
This could mean that in the future, it’s less likely the Fed would continue to cut rates and would potentially raise rates.
“It all depends on whether President Trump follows through on those things he said during the campaign and to what degree and over what period of time.
But all of those things are directionally towards higher inflation, which means higher interest rates than otherwise would be the case,” he added.
Trump has talked about the possibility of the president having greater “say” over the Fed’s decisions on the campaign trail.
During his first term in office, he was very vocal in his displeasure with some of the Fed’s decisions on interest rates.
In October he said that although he should not be able to order the Fed to make the decisions he favors,
“I think I have the right to put in comments as to whether or not the interest rates should go up or down.”
Powell responded to questions about a second Trump administration’s effect on the independence of the Fed on Thursday.
When asked if the president can demote him or other leadership at the Fed, he said: “Not permitted under the law.”
The Fed is designed to operate on data, not politics.
Powell said that the election will have no effects on the Fed’s policy decisions in the near term.
He added that the Fed doesn’t yet know the timing or policy substance of the incoming administration.
“We don’t guess, we don’t speculate and we don’t assume,” he said.
https://idahocapitalsun.com/2024/11/08/fed-cuts-interest-rates-heading-into-end-of-biden-white-house-and-looking-to-trumps-2nd-term/