NewsNobel laureates warn Trump term threatens US economy and inflation

Nobel laureates warn Trump term threatens US economy and inflation

Former US President Donald Trump
Former US President Donald Trump
Images source: © Getty Images | NurPhoto

26 June 2024 08:18

According to the Axios portal, six Nobel Prize laureates in economics have warned in an open letter that a second term for Donald Trump would be associated with a resurgence of inflation and lasting damage to the US economy. The economists assess that Joe Biden's economic programme is significantly better.

The laureates expressed concerns that a second term for Donald Trump could negatively impact the US economic position and destabilise the domestic economy. In the letter published Tuesday, they wrote that such a scenario would likely strengthen inflation due to fiscally irresponsible budgets under Trump. The document was initiated by Joseph Stiglitz, former World Bank chief economist and Nobel Prize laureate 2001.

Laureates call Donald Trump's ideas unrealistic

According to the laureates, many Americans are worried about inflation, which, although decreasing rapidly, could rise again under Trump's leadership.

The letter's signatories, cited by the Axios portal, also stated that despite differences in assessing the current president's economic policy, his programme is significantly better than Trump's plans.

The letter was signed by George Akerlof, Angus Deaton, Claudia Goldin, Oliver Hart, Eric S. Maskin, Daniel McFadden, Paul Milgrom, Roger Myerson, Edmund Phelps, Paul Romer, Alvin Roth, William Sharpe, Robert Shiller, Christopher Sims, and Robert Wilson, among others.

The letter highlighted several questionable proposals by Trump, including tax plans that would extend or increase the tax cuts from his first term, favouring the wealthiest. These actions could increase the US debt by over £3 trillion. Trump even suggested the total abolition of income tax and replacing it with tariffs on imported goods, which experts deem unrealistic.

According to the laureates, other controversial proposals from Trump include the introduction of universal tariffs on all imported goods and 60% tariffs on products from China. For comparison, in his programme, Biden proposes, among other things, introducing a minimum 20% tax on wealth valued over £81 million, raising corporation tax from 21% to 28%, and increasing the tax credit per child to £2,500-£3,000.

Over the past two years, the annual CPI inflation rate in the US has decreased from 9.1% to 3.3% in May, while the core PCE index is 2.75% and still exceeds the 2% target set by the central bank. Despite the slowdown in price growth, solid economic growth, low unemployment, and wage increases, most Americans negatively rate the economy, blaming Biden for inflation. However, according to a recent Fox News poll, assessments of Biden's economic policy are improving. Although more voters still trust Trump more than Biden on financial matters, his lead has shrunk from 13 to 5 percentage points in a month.

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