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 elections: either Trump or Biden will win with their party controlling Congress, or they will win in a divided Congress. Goldman Sachs states that Republican control of Congress could lead to policies that increase inflation risks, including higher tariffs and reduced immigration, which could exacerbate labor shortages and wage pressures.
The bank suggests that investing in gold can 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 Peterson Institute for International Economics, the presidential candidates aim to impose a 60% tariff on Chinese imports and a 10% tariff on other imports, which could increase household spending by $1,700 per year.
Trump also advocates for increased control of 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.
Furthermore, extending the 2017 tax cuts (which expire in 2025) could increase national debt by $4 trillion to $5 trillion, intensifying inflation pressures.
Analyses from 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 causing conflicts between Trump and the Fed.
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 term is 5.4%.