Nobel laureates warn Trump's second term could trigger inflation
The Axios portal reports that sixteen Nobel laureates in economics have written an open letter warning that Donald Trump's second term will be linked to a resurgence of inflation and lasting damage to the U.S. economy. The economists assess that Joe Biden's economic program is much better.
26 June 2024 06:13
The Nobel laureates expressed concerns that a second term for Donald Trump could negatively impact the United States' economic position and destabilize the national economy. In the letter made public on Tuesday, they wrote that such a scenario would likely strengthen inflation due to Trump's fiscally irresponsible budgets. The document was developed at the initiative of Joseph Stiglitz, a former World Bank chief economist and the 2001 Nobel Prize laureate.
Nobel laureates call Donald Trump's ideas unrealistic
According to the Nobel laureates, many Americans are worried about inflation, which, although decreasing rapidly, could rise again under Trump's leadership.
The letter's signatories, quoted by the Axios portal, also stated that despite differences in assessing the current president's economic policy, his program is much better than Trump's plans.
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 are among those who signed the letter.
The letter highlights several of Trump's proposals that raise doubts, including tax plans that would extend or increase the tax breaks from his first term, favouring the wealthiest. These actions could increase the U.S. debt by more than 4 trillion dollars. Trump even suggested abolishing income tax altogether and replacing it with tariffs on imported products, which experts deem unrealistic.
Other controversial Trump proposals include introducing universal tariffs on all imported goods and 60 percent tariffs on products from China. In comparison, Biden, in his program, proposes, among other things, introducing a minimum 20-percent tax on wealth over 100 million dollars, raising the corporate tax rate from 21 to 28 percent, and increasing the tax credit for each child to 3,000-3,600 dollars.
Over the past two years, the annual CPI inflation rate in the U.S. fell from 9.1 percent to 3.3 percent in May, while the core PCE rate is 2.75 percent and still exceeds the 2 percent target set by the central bank. Despite the decrease in the price growth rate, strong economic growth, low unemployment, and wage increases, most Americans negatively assess the state of the economy, blaming Biden for inflation. However, according to a recent Fox News survey, perceptions of Biden's economic policies are improving. Although more voters still trust Trump over Biden on financial issues, his lead has shrunk from 13 to 5 percentage points over the month.
