November 11, 2024 – The two areas where Donald Trump worries me the most are US foreign policy and long-run damage to norms of truth, democracy, and respect for the rule of law. But these areas are not top priorities for much of the American public. Rather, voters are consistently reported to be most concerned with the economy. They asked, “Are we better off than we were four years ago” and answered “no.” This is itself remarkable, since four years ago would be November 2020, when covid deaths were running 10,000 per week and unemployment was 6.7 %, versus 4.1 % today.
One hears various explanations for the public’s perception of poor economic performance. Perhaps the most common is the observation that inflation under Biden has been higher than it was during Trump’s first term. But most of the economic policies that Trump has run on can be predicted to put upward pressure on inflation, assuming he follows through on them. Five such policies include: (1) challenges to the Fed’s independence and pressure for lower interest rates; (2) depreciation of the dollar, to counter supposed undervaluation of trading partner currencies; (3) large tax cuts that are not paid for, with the result that they raise the budget deficit; (4) sharp increases in tariff rates, to 60% on all imports from China and 20 % on the rest of imports; and (5) curtailed new immigration and deportation of past immigrants.
If this prediction of upward presume on inflation during the coming four years is borne out, will American voters take note? Will Trump supporters remember in 2028 which way they voted in 2024?
[An earlier version appeared at Project Syndicate, in a round-table on the Return of Trump.]