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Your guide on what the 2024 U.S. election means to Washington and the world
Since the turbulent second term began, U.S. President Donald Trump has proudly claimed that he had “just started” Tuesday night. This is a bad sign for the world’s largest economy. Optimism among companies and investors caused by the victory of businessman elections is rapidly declining. The S&P 500 initially eliminated all gains since the November poll after the president confirmed tariffs on Mexico, Canada and China on Monday night. Consumer confidence plummeted. New orders and employment for manufacturers are reportedly down sharply, with bearish investor sentiment far above its historical average.
Uncertainty clouds data and predictions. Nevertheless, it is clear that the president wasted a decent economic legacy. Price pressure not long ago is gradually disappearing, the U.S. Federal Reserve is at the forefront of a stable price cut cycle, and the S&P 500 is sliding upward. This is no longer true.
The frustrating turnover is the product of the government’s pursuit of responsibility for imports, as well as a chaotic policy agenda. The White House might think it has a plan, but American economic exceptionalism, from its relentless consumer spending and booming stock markets to its reputation for reliable economic governance, is a loss of collateral.
Personal spending (the bastion of recent U.S. growth) fell for nearly four years in January. As inflation in the pandemic era has not yet completely disappeared, and the reality of Trump’s plan to raise tariffs is now on the rise, consumer expectations for inflation in the coming year have surged. So far, the Fed has dealt with the coming price pressure by putting down tax rates, putting borrowers at higher credit costs. Elon Musk’s plan to provide public sector employees will also raise unemployment in the already cooled labor market.
The animal spirit is also under pressure. Perhaps naive, many businesses and investors expect import duties to be merely a negotiation tool. But Trump also believes that tariffs are about “protecting American work.” The president offered automaker a month-long probation Wednesday and moved on Thursday after the latest Salvo to North American neighbors.
The unpredictability of tariffs, reversals and steps targeting other trading partners make it impossible for businesses to plan. Retaliation measures can also hurt exporters. Broader policy announcements, some of which already have significant geopolitical consequences, increase the risk of decision-making facing board and businessmen.
Beliefs in the U.S. economy and financial institutions are also being tested. Trump filled regulators with his chum. The independence of the Federal Reserve is a constant concern. Then there is a weird economic idea, from building cryptocurrency reserves to the rumored “Mala Laugh Agreement” to the depreciation of the dollar. Some analysts point out that the dollar’s recent weaknesses due to economic turmoil suggest that financial markets may begin to question the currency’s safe haven status.
Indeed, the government’s tax cuts and deregulation work has not yet begun. But as they may be with more trading partners, rash decision-making and restrictions on undocumented immigration (estimated by 5% of workers) are increasingly optimistic about recent U.S. economic growth. Trump’s economic agenda profile has been raised. It’s worse than everyone thinks, he’s only six weeks.
