Where Does a ‘Remarkable’ U.S. Economy Go From Here?
America’s economy is far outstripping its peers, but there are serious risks, including from the president-elect.The U.S. economy is pulling ahead of its global peers. Inflation is moderating, and the Federal Reserve is cutting interest rates.
Add in a decrease in unlawful southern border crossings and revved-up domestic production in several critical industries and they amount to a rough list of Donald J. Trump’s campaign promises.
It’s a list of economic wins that Mr. Trump is inheriting in large part because of policies that the Federal Reserve and Biden administration have pursued in recent years.
The economy is doing better than most economists predicted a few years ago. Forecasters widely warned that the Fed would seriously harm the economy as it tried to control runaway inflation by sharply raising interest rates in 2022 and 2023. Instead, price increases have come down substantially without a broader implosion. The unemployment rate is low. Consumers are spending.
But a variety of risks — some sheer happenstance, some floated by Mr. Trump — could interfere with that rosy outcome just as the newly re-elected president takes office.
Economists have also warned that Mr. Trump’s own policies could lift inflation.
In particular, the president-elect has promised to slap large tariffs on American trading partners, particularly China, a move that could raise consumers prices for imported goods.
Fed officials do not have a good sense yet of what Mr. Trump’s policies will encompass or how much they might add to inflation. But if they push up prices, that could prevent officials from cutting interest rates as much as they would otherwise.
Where Does a ‘Remarkable’ U.S. Economy Go From Here?
America’s economy is far outstripping its peers, but there are serious risks, including from the president-elect.
