Despite Biden’s frequent association with high inflation, some investors predict that if Trump wins the 2024 election, the inflation rate will rise.
There are several possible outcomes for the 2024 election: Trump or Biden winning with their party controlling Congress, or winning in a divided Congress. Goldman Sachs suggests that Republican control of Congress could lead to policies that increase inflation risk, including raising tariffs and reducing immigration, which could exacerbate labor shortages and wage pressures.
The bank suggests that investing in gold could hedge against inflation if Trump’s economic policies are implemented. They consider potential geopolitical impacts, such as tariffs, Fed surrender, and debt concerns indicating Trump’s proposed policies.
According to data from the Institute of International Economics, the presidential candidate’s goal is to impose a 60% tariff on Chinese imports and a 10% tariff on other imports, which could increase annual household spending by $1,700.
Consumption increases essentially become inflation.
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Trump also advocates for greater control over the Federal Reserve by the White House, which could weaken its efforts to manage inflation and employment. In the past, he has pressured the Fed to lower interest rates, which goes against the standard practice of raising rates to control inflation.
Additionally, extending the 2017 tax cuts (set to expire in 2025) could increase national debt by $4 to $5 trillion, intensifying inflation pressures.
Analyses by Moody’s Analytics and Oxford Economics echo these concerns, predicting that inflation rates under Trump’s leadership will rise and economic growth will weaken due to new tariffs and reduced immigration. These policies may force the Fed to maintain or raise interest rates, potentially leading to conflicts between the administration and the central bank.
However, according to information, the average inflation rate during Donald Trump’s presidency was 1.9%, while the average inflation rate during Joe Biden’s tenure is 5.4%.
