With former President Donald Trump reclaiming the White House, economic experts are already speculating on the potential impacts of his policy agenda on the U.S. economy. According to Capital Economics, a prominent economic research firm, Trump’s victory could trigger more inflationary pressures, higher interest rates, and significant changes to the nation’s financial landscape. While supporters hail his plans as a recipe for robust economic growth, economists caution that the implications could be more complex and potentially inflationary.

Capital Economics notes that while the immediate economic effects may appear modest, the long-term outlook could be a different story. “The federal budget deficit is larger, and the government debt burden is significantly higher compared to Trump’s first term in 2016,” the firm reported. These conditions make it riskier to introduce major fiscal expansions without rattling bond markets or worsening inflationary pressures.

The Push for Fiscal Expansion Amid Congressional Gridlock

One of the central pillars of Trump’s economic agenda revolves around tax cuts and potential increases in government spending, moves intended to stimulate GDP growth. But without a filibuster-proof majority in Congress, passing substantial tax cuts or major spending bills could face significant obstacles. With the U.S. economy closer to full employment than it was during Trump’s first administration, any sizable fiscal expansion could risk sparking inflation more than boosting output.

While Trump supporters tout his policies as pro-growth, Capital Economics sees potential downsides. Inflationary pressures could emerge as a byproduct of Trump’s planned restrictions on immigration, increased tariffs, and tax reductions—all factors that tend to increase production costs and consumer prices. These policies, if enacted, could collectively contribute to a rise in U.S. inflation by roughly 1% in the next few years, according to the firm’s projections.

Revised Forecasts for Interest Rates and Bond Yields

Amid these inflation concerns, Capital Economics has adjusted its forecasts for U.S. interest rates, now expecting a bottom range between 3.5% and 3.75%—a 50 basis point increase from earlier predictions. This change would push yields on government bonds higher, impacting borrowing costs for consumers and businesses alike. A stronger dollar is also likely as a result of higher interest rates, making U.S. exports more expensive but potentially boosting the purchasing power of American consumers abroad.

Preparing for Economic Uncertainty: Safeguard Your Wealth with a Gold IRA

Given these potential economic shifts, the importance of financial security cannot be overstated. Rising inflation, higher interest rates, and uncertain fiscal policies can all undermine the stability of traditional investments. For Americans seeking a hedge against inflation and economic unpredictability, a Gold IRA offers a powerful alternative. Precious metals like gold have historically retained their value even in volatile market conditions, making them an ideal asset to protect long-term savings.

Goldencrest Metals specializes in helping Americans secure their wealth with Gold IRA investments, an option designed specifically to provide protection against inflationary pressures. In times of economic turmoil, physical gold is more than just a commodity; it’s a proven shield for your financial future. As inflation looms and economic policies shift, now is the time to diversify and protect your assets with a Gold IRA from Goldencrest Metals. Invest today to secure a stable and inflation-resistant portfolio for the years ahead.

Source: https://www.investing.com/news/economy/trump-win-means-more-inflation-for-the-us-says-economist-3715533