President-elect Donald Trump’s victory highlights Americans’ concerns over inflation and economic trajectory. His campaign promised to tackle these issues, including lowering prices “very quickly” and offering tax cuts. Economists predict his policies could boost corporate growth, sending the S&P 500 higher by up to 2.2%. However, some experts warn that Trump’s plans may also boost inflation, potentially hurting consumers.
Here are five ways Trump’s policies could impact the economy:
1. **Tax Cuts for High-Income Households**: Trump’s tax plan aims to lower corporate and personal income taxes. While middle-class families would see a tax break of around $1,740 per year, high-income households with incomes over $14 million would benefit more, with reduced taxes amounting to $376,910.
2. **Inflation Concerns**: Tariffs imposed by Trump’s plan could reignite inflation, increasing costs for consumers. Economists predict the inflation rate could rise by 1 percentage point, reaching an annual rate of about 3.4%.
3. **Faster Economic Growth**: Corporate tax cuts under Trump’s plan may lead to slightly faster economic growth in the short term, with some experts predicting a 0.3 percentage points higher Real GDP growth by 2026.
4. **Less Affordable Housing**: Trump’s plans are unlikely to make housing more affordable due to potential inflation and increased mortgage rates. The construction industry relies on undocumented immigrants for labor, which could lead to a shortage of homes.
5. **Potential Boost to Your 401(k)**: Corporate tax cuts and deregulation could bolster company profits and lift the stock market, potentially benefiting your 401(k) investments. However, much of this forecast depends on Trump’s ability to implement these changes.
Source: https://www.cbsnews.com/news/trump-election-impact-on-economy-taxes-inflation-your-money