Fed up with high prices and unimpressed with an economy that by just about any measure is a healthy one, Americans demanded change when they voted for president. They could get it. President-elect Donald Trump has vowed to topple many of the Biden administration’s economic policies. Trump campaigned on promises to impose huge tariffs on foreign goods, slash taxes on individuals and businesses and deport millions of undocumented immigrants working in the United States. With their votes, tens of millions of Americans expressed their confidence that Trump can restore the low prices and economic stability they recall from his first term — at least until the COVID-19 recession of 2020 paralyzed the economy and then a powerful recovery sent inflation soaring. Inflation has since plummeted and is nearly back to normal. Yet Americans are frustrated over still-high prices. “His track record proved to be, on balance, positive, and people look back now and think: ‘Oh, OK. Let’s try that again,’ ” said Douglas Holtz-Eakin, a former White House economic adviser, director of the Congressional Budget Office and now president of the conservative American Action Forum think tank. Since Election Day, the Dow Jones Industrial Average has skyrocketed more than 1,700 points, largely on expectations that tax cuts and a broad loosening of regulations will accelerate economic growth and swell corporate profits. Maybe they will. Yet many economists warn that Trump’s plans are likely to worsen the inflation he’s vowed to eradicate, drive up the federal debt and eventually slow growth. Trump policies could boost inflation The Peterson Institute for International Economics, a leading think tank, has estimated that Trump’s policies would slash the U.S. gross domestic product — the total output of goods and services — by between $1.5 trillion and $6.4 trillion through 2028. Peterson also estimated that Trump’s proposals would drive prices sharply higher within two years: Inflation, which would otherwise come in at 1.9% in 2026, would instead jump to between 6% and 9.3% if Trump’s policies were enacted in full. Last month, 23 Nobel-winning economists signed a letter warning that a Trump administration “will lead to higher prices, larger deficits, and greater inequality.” “Among the most important determinants of economic success,” they wrote, “are the rule of law and economic and political certainty, and Trump threatens all of these.’’ Trump is inheriting an economy that, despite frustratingly high prices, looks fundamentally strong. Growth came in at a healthy 2.8% annual rate from July through September. Unemployment is 4.1% — quite low by historic standards. Among wealthy countries, only Spain will experience faster growth this year, according to the International Monetary Fund’s forecast. The United States is the economic “envy of the world,” the Economist magazine recently declared. The Federal Reserve is so confident that U.S. inflation is slowing toward its 2% target that it cut its benchmark rate in September and again this week. Americans are deeply unhappy with prices Consumers, though, still bear the scars of the inflationary surge. Prices on average are still 19% higher than they were before inflation began to accelerate in 2021. Grocery bills and rent hikes are still causing hardships, especially for lower-income households. Though inflation-adjusted hourly wages have risen for more than two years, they’re still below where they were before President Joe Biden took office. Voters took their […]