The good, the bad and the uncertainty of the US economy under a Trump presidency

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Subscribe to enjoy similar stories. What impact will the next US administration have on economic growth and inflation? The answer isn’t clear, because while some of President-elect Donald Trump’s proposed policies would boost growth and reduce inflation over time, while others will have the opposite effect. On the positive side of the ledger, Trump will be pro-business overall, and this fact alone could stimulate economic activity by unleashing the ‘animal spirits’ that drive business investment, innovation and growth.

Growth should also benefit if he and congressional Republicans extend the corporate and personal income tax cuts that will expire in 2025. Equally, if the potential excesses of his deregulatory agenda are kept in check, a reduction of bureaucratic red tape could promote growth and competition, reducing prices over the longer term. Trump also wants to boost America’s oil and gas production by the equivalent of 3 million barrels per day, which could reduce energy prices and make domestic energy-intensive sectors more competitive.

But one hopes this can be done without phasing out most of the Biden administration’s subsidies for green energy. The Department of Government Efficiency (DOGE), an external advisory committee led by Elon Musk and Vivek Ramaswamy, will come nowhere close to cutting the US federal budget by $2 trillion, as promised. But if DOGE can identify even $200 billion worth of cuts, that could reduce inefficiencies in the public sector.