With just days until his inauguration, President-elect Donald Trump is set to transition from campaign rhetoric to substance in economic policymaking. While his predecessors faced weaker economies, Trump starts with a robust macroeconomic backdrop.
The labor market and real GDP growth are strong under Trump’s leadership. Unemployment stands at 4.1%, beating any recent incoming president’s start. Real GDP growth has been respectable at 2.4%, operating above many estimates of its potential. Inflation, however, remains a concern, albeit within manageable bounds.
The deficit is the only significant issue, but it can be managed with careful planning. Trump’s policy proposals run the risk of spending the inheritance prematurely, introducing uncertainty and frictions that could undermine the economy.
To avoid squandering this strong foundation, the administration should focus on maintaining the current trajectory. This means implementing policies that support labor costs pressure and productivity gains, while avoiding structural breaks that could lead to stagflation.
With a booming labor market and economy operating above its potential, Trump’s bar for outperformance will be high. He must navigate bold policy proposals and replace rhetoric about an “economic disaster” with one about a strong economy. The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
Source: https://fortune.com/2025/01/15/trump-economy-inflation-tax-cuts