The US economy, which was expected to be strong under President-elect Donald Trump, now looks uncertain due to his actions and policies. The Dow Jones stock index ended flat after 10 days of losses, and the Federal Reserve has become cautious about interest rate cuts as inflation remains elevated at 2.7%.
Critics say Trump’s behavior is contributing to the uncertainty, with his promise to “fight till the end” unless Democrats agree to lift the debt ceiling causing concern among investors. The proposal, which would push the debt ceiling out until January 30, 2027, was met with opposition from both parties.
Trump’s economic policies are also under scrutiny, particularly his plan to cut taxes and increase deregulation. While some experts say the economy is in good shape, others warn that the policies could unleash an “economic disaster.” The Federal Reserve chair, Jerome Powell, has expressed concerns about policy uncertainty, saying it’s like driving on a foggy night or walking into a dark room.
As Trump prepares for his second term, he faces a skeptical public and must navigate a series of tough policy choices. He needs to increase the government’s legal borrowing authority, renew tax cuts set to expire after next year, and address a budget deficit that has become less sustainable with higher interest rates. The economy is still recovering from pandemic-era distortions, making it essential for Trump to make informed decisions.
The uncertainty surrounding Trump’s policies and actions poses a significant threat to the smooth inheritance of the economy. As one economist noted, “All of the risks are policy risks.” The Federal Reserve has downgraded its interest rate forecasts due to increased uncertainty, and investors are watching closely to see how Trump will manage the economy.
Source: https://finance.yahoo.com/news/trump-poised-inherit-strong-economy-120023064.html