Why Trump's economic policies could make way for recession, stagflation
If there was one thing President Donald Trump was supposed to represent to many voters, it was the prospect of an upturn in their economic fortunes.
If there was one thing President Donald Trump was supposed to represent to many voters, it was the prospect of an upturn in their economic fortunes.
Yet, less than three months into his second administration, Americans are being asked to reset their expectations about the trajectory of the U.S. economy — in the near term and beyond.
Rather than reignite the economy, Trump’s unusual and unprecedented economic policies, like tariffs, tax cuts and spending reductions, are raising the specter of not only a recession, but also stagflation: sustained price increases, but no growth to go along with it.
It would be the worst of both worlds: Consumers get hit with higher costs alongside declining employment and wages.
Investors, not to mention electoral pollsters who were active in the 1970s, remain scarred by the stagflation that took root during that decade. It caused both inflation and unemployment to average around 6% for the decade, setting the stage for a period of economic “malaise” in America that helped cost Democratic President Jimmy Carter a second term in the White House.
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