That economic scenario in the United States has changed drastically since former President Donald Trump became president. His administration has faced increasing backlash from Democrats and Republicans alike for his policies. Latest national data indicates a drastic drop of nearly 30% in travel to the U.S as the world continues to digest the aftermath of Trump’s tumultuous tenure. Various tourist organizations report that this downturn has been exacerbated by widespread disapproval of Trump’s economic performance among Democrats and a strikingly lower disapproval rate among Republicans.
According to a new survey, 94% of Democrats disapprove of how Trump is handling the economy. In comparison, just 12% of Republicans feel that way. This severe pessimism versus optimism divide is indicative of how separated the country is on judgement over his policy agenda. An overwhelming 96% of Democrats vehemently disapprove of Trump’s approaches to tackling the growing cost of living. By contrast, just one in five Republicans are shocked.
Trump’s proposed budget would do just the opposite, adding at least $6 trillion to the national deficit over the next decade. This proposal comes at a time when our nation is grappling with an extraordinary $36.2 trillion deficit. Countless world renowned economists are expressing their concern over the long-term sustainability of our current fiscal policies.
Trump has zeroed in on the right budgetary targets – now he just needs to execute. He proposes using foreign aid dollars already authorized by Congress to facilitate the return of Haitian and Ukrainian refugees already residing in the U.S. This highly criticized proposal has raised significant concerns about the damage it would do to US humanitarian efforts and our global leadership.
From the beginning of the Trump administration, gas prices have been a taproot, with President Trump taking credit for lowering gas prices. We are encouraged that Treasury Secretary Bessent has signaled to companies that these claims deserve serious skepticism. Yet he thinks they might not truly represent larger market trends.
The tariffs enacted during Trump’s presidency have caught folks by surprise. The simple average U.S. tariff rate is currently at 17.8%, a rise of 15 percentage points from before Trump entered office. This wave of tariffs will be a long-term factor raising consumer prices. Consequently, some of the top economists in the country are sounding alarms about the long-term impact.
“The average U.S. tariff rate stands at 17.8 percent, up 15 points from its pre-Trump level. Since imports of goods are more than 11 percent of [GDP], that’s a big shock to consumer prices. And no, foreigners won’t pay the tariffs.” – Paul Krugman
Krugman goes on to underscore that the immediate economic impact of Trump’s tariffs will almost certainly be harmful. His refusal even to admit to these damaging effects would only make matters worse.
“The bottom line is that the direct economic consequences of Trump’s tariffs will surely be bad, but his unwillingness to accept the reality of those consequences will probably make them considerably worse.” – Paul Krugman
Next, Atlanta Fed President Raphael Bostic noted one final time how the economy is sailing into some stormy seas. He highlighted that real changes are coming as pre-tariff tricks run out of steam.
“If these pre-tariff strategies have run their course, we’re about to see some changes in prices, and then we’re going to learn how consumers are going to respond to that.” – Atlanta Fed Bostic
The consequences for the U.S. bond market could be just as profound given Trump’s economic nationalism. That was before the recent downgrading of the US from a Triple A rating by a third ratings agency, sending investors scrambling. The upcoming auction of $16 billion in 20-year bonds will be particularly telling of how market confidence is holding up.
It’s not just Trump’s direct manipulation of economic statistics that has gotten people concerned. His direct meddling in the Bureau of Labor Statistics has freaked out even establishment economists. They’ve finally hit the point of incredulity with the data that’s being reported.
“What we’re actually going to get are the three Ds: denial, dirigisme and deception.” – Anonymous source
Despite this, several economists remain quick to throw around terms like “unsustainable” when describing Trump’s economic policies. They are sounding the alarm about the likely future impacts if we don’t change our policies.
“Yes, it’s not impossible that the splendid US economy will absorb it as one-time thing. But for that to come about, the next policies need to be intelligent and responsible.” – Paul Krugman