Americans have been chafing against higher prices for years now, propelling unhappy voters to the polls and helping to deliver the White House to the Republican candidate, Donald J. Trump.
But how Mr. Trump’s policies would help on costs is unclear. And in fact, many economists have warned that his proposals could instead make inflation worse.
Inflation measures how much prices are rising over a given period, usually a year. It picked up sharply starting in 2022 and remained rapid in 2023. While prices are no longer climbing as quickly, those two years of rapid increase have left costs for many common purchases — from eggs to apartments and restaurant meals — notably more expensive than consumers remember them being as recently as 2019 or 2020.
For months, that has weighed on consumer confidence and caused many voters to give the nation’s economic performance poor marks, even though the unemployment rate is very low and companies have been hiring.
Voters regularly cited the economy as a top concern in polls headed into the election, and they often suggested that they thought Mr. Trump would do a better job in managing it. While the economic perception gap between Mr. Trump and Vice President Kamala Harris, the democratic candidate, closed somewhat over time, it never fully faded.
While rapid inflation had been a global trend, Mr. Trump regularly pinned the blame for it on the Biden administration. And exit polls suggested that voters were indeed worried about the economy as they headed out to vote. Roughly three in four voters said that inflation had caused their families hardship over the past year.
But now that Mr. Trump has captured the White House and Republicans have control of the Senate, the looming question is whether the party will change the outlook for prices — or whether it might in actuality worsen the problem.
Inflation is expected to continue fading in the months ahead, even with no new policy out of the White House.
Price increases as measured by the Personal Consumption Expenditures index have already fallen to just above 2 percent, down from more than 7 percent in 2022. And even a “core” measure that strips out volatile food and fuel to give a sense of the underlying inflation trend is expected to return to normal over the next two years, based on the Federal Reserve’s latest economic predictions.
But slower inflation means that prices will not increase as quickly: It would not bring today’s price levels down.
To give an example, it means that a $100 grocery bill today would climb only a bit over the next year — perhaps to $102 — but it does not mean that groceries would become cheaper.
Yet Mr. Trump has regularly promised to lower inflation and even bring down costs.
“My plan will rapidly defeat inflation, quickly bring down prices, and reignite explosive economic growth,” Mr. Trump said during a speech at the Economic Club of New York this year.
Economists do not widely think his plan for doing so is realistic.
Much of Mr. Trump’s strategy hinges on cutting gas prices: He has pledged to slash oil costs through a cocktail of deregulation and geopolitical maneuvering. But oil and gas analysts have said that the price drops he’s promising would be too big to pencil out for energy companies.
Mr. Trump has suggested that when gas costs come down, that will cause other prices to fall and will prod the Fed to lower interest rates, which are now near 5 percent.
Rates had already been starting to come down. The Fed cut interest rates in September in response to slowing inflation, and it is widely expected to lower them again on Thursday. Central bankers expect to continue cutting interest rates in 2025 as inflation cools.
But Mr. Trump’s policies could actually complicate that path.
Mr. Trump has suggested across-the-board tariffs on U.S. trading partners and especially large ones on China, a combination that could push prices up for U.S. consumers, depending on how trading partners respond.
He has also promised a spate of tax cuts that could leave consumers and companies with more spending money, which could add fuel to an already strong economy and give companies the wherewithal to lift prices.
But those could be offset by policies that restrict immigration, which are expected to slow growth by removing consumers from the economy. At the same time, deportations risk stoking higher prices by causing bottlenecks. If a lot of construction workers are deported, for instance, it could make it difficult for companies to build enough home supply to meet demand in the near term — pushing prices up.
If White House policies do bolster inflation, Fed officials may not be able to lower interest rates as much as they had been planning in 2025, analysts have suggested.
Next year, “we expect at least one fewer Fed cut under Trump,” Krishna Guha, vice chairman of Evercore ISI, wrote in a research note reacting to Mr. Trump’s win, calling it “reflationary for the U.S.”
Markets seem to agree. Investors have been dialing back expectations for future rates cuts, and yields on longer-term government bonds have been climbing as a Republican victory came into sight, which many analysts have interpreted as a sign that investors think that Mr. Trump’s agenda could fuel cost increases.
A market measure of 10-year inflation expectations rose by a tenth of a percentage point on Wednesday, to 2.4 percent, its biggest one-day increase since early 2023.
How much the Trump agenda would fuel higher prices depends hugely on how it is carried out.
One analysis by the Peterson Institute of International Economics examined three big proposals of Mr. Trump’s: deporting millions of unauthorized migrants, levying 10 percent tariffs on all imports and 60 percent tariffs on imports from China, and eroding the Federal Reserve’s independence.
That report suggested that if all of Mr. Trump’s economic plans came to fruition, by 2028 most prices could be as much as 28 percent higher than current forecasts, and that inflation would at its peak climb even higher than it did in 2022 — and to nearly four times its current rate.
Other economists have projected a more modest boost, but a range of economists have estimated that the policies could be inflationary.
Goldman Sachs economists have estimated that tariffs would boost inflation by 0.3 to 0.4 percentage points at the point of largest impact. And analysts at T.D. Securities wrote in a research note early Wednesday morning that Mr. Trump’s victory could be a recipe for quicker price increases and slower growth.
“We think that a Trump win means higher inflation in the near-term,” they said. “We think the Fed will continue to ease this year, but likely take a pause in the first half of 2025 as it waits to get a better sense of the impact of the new administration’s policies on inflation and growth.”
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