Trump would make inflation worse

It's better to make things better

There’s been incredible interest recently in the question of whether Americans’ perceptions of the economy align with reality.

To an extent, though, all the descriptive wrangling over both this question and its relevance to the 2024 campaign involve a set of facts on which sane people (unfortunately not as large a share of the commentariat as one would like) likely agree:

• The unemployment rate is low.

• Interest rates are high.

• Inflation is above target.

Whether you rate the current situation “good” or “bad” or “mixed” or “things are good but I’m mad about the big spike in inflation that happened and I don’t want to give Biden any credit,” we’d all like to see inflation and interest rates decline without unemployment rising.

And I think we’re on a trajectory where this is likely to happen.

Former Boston Federal Reserve President Eric Rosengren said last week that a soft landing is now his “base case,” which seems correct to me. That, again, doesn’t mean that you need to love Joe Biden or think the current economy is fabulous or forgive him for whatever policy errors you believe he committed in the past. But it does mean that when you consider a particular electoral outcome or world event or policy change, you should ask yourself whether that change is going to make things better or worse.

A huge regional war in the Middle East, for example, would clearly make things worse by disrupting global oil supplies. A miraculous peace deal between Russia and Ukraine would make things better by facilitating more global agricultural production. And most relevant to American voters as they think about the presidential election, implementing Donald Trump’s policy ideas¹ would make things worse.

The press still largely covers Trump as an amusing sideshow, as if the world were stuck in a perpetual 2015, and the loudest critiques of this I hear call for more alarmist coverage of his authoritarian leanings. But I think the single most under covered story in American politics is about what you might call the “boring” stakes of the 2024 election. If the country elects Trump and a Republican congress and they implement their ideas on tax policy, trade, and immigration, what’s going to happen to the big economic variables that everyone cares about?