Inflation, deficit under Trump would be worse than under Biden: economists – WSJ

According to a report from The Wall Street Journal this week, Most economists predict that inflation, deficits, and interest rates would be higher under a second Trump administration compared to if Biden remains in the White House.

Citing its quarterly survey of forecasters conducted between July 5 and 9, The Wall Street Journal said it received responses from 68 professional forecasters from business, Wall Street and academia.

“Of the 50 who answered questions about Trump and Biden, 56% said inflation would be higher under another Trump term than a Biden term,” said the WSJ. This is said to be compared to 16% who said the opposite, with the remainder seeing no material difference.

The publication explains that economists’ views of inflation and interest rates seem to be mostly caused by Trump’s policy preferences, specifically, trade and immigration.

However, they note that it is “unlikely those assessments would change substantially with a different Democratic candidate.”

Analysts at the Economic Outlook Group told the WSJ that there is a real risk that inflation will reaccelerate under a Trump presidency.

The WSJ adds that on average, economists predict U.S. gross domestic product to grow 1.7% this year after the latest inflation data, down from 3.1% in 2023 (based on the fourth quarter compared with a year earlier).

In addition, they state it is anticipated that unemployment will remain slightly above 4% through 2026, with payrolls to expand by around 131,000 jobs a month over the next year.

On average, economists are said to put the probability of a recession over the next 12 months at 28%. The WSJ said the forecasts have changed only little from their last survey, in April.