Trump and Harris’ opinions on inflation based on their past actions and statements
Inflation has become a pressing concern leading up to the 2024 presidential election, with a significant majority of voters indicating its importance in their choice for the president, as per CBS News’ polling in mid-August. The electorate is eager to learn about the strategies that candidates Donald Trump and Kamala Harris would employ to address this economic challenge.
Defined as the rate at which prices of goods and services increase over time, inflation has resulted in diminished purchasing power for many Americans, making it harder to save money. Data from the Federal Reserve shows that inflation averaged 1.9% annually during Trump’s presidency from 2017 to 2021. However, under the Biden administration, inflation is projected to average 5% annually, despite a recent dip to a three-year low of 2.5%. This surge in inflation has had a tangible impact on the affordability of essential items for the average consumer.
Nowadays, individuals seeking to purchase a home in the U.S. must have an annual income of $106,500 to comfortably afford a standard dwelling, a stark contrast from the $59,000 required during Trump’s tenure. This substantial increase is attributed to rising home prices and elevated interest rates, creating a significant financial hurdle for aspiring homeowners. Likewise, the cost of groceries has seen a 20% uptick during the first three years of the Biden administration, further exacerbating the strain on household budgets.
In addition to its economic ramifications, inflation also presents a political challenge as prices tend to remain elevated once they rise. The International Monetary Fund highlights that while high inflation can harm an economy, deflation, or declining prices, is equally undesirable as it leads consumers to postpone purchases in anticipation of further price drops, resulting in reduced economic activity and growth. The Federal Reserve aims for an inflation rate of 2% to achieve a ‘soft landing.’
Amidst the blame game surrounding inflation, Trump faulted the Biden administration for the surge in prices, labeling it as one of the worst instances of inflation in the nation’s history. While inflation did spike to an 8% high in 2022, the modern era’s peak was 13.5% in 1980. Trump expressed a desire to have greater influence over the Federal Reserve’s interest rate decisions, citing his successful track record in business. However, he clarified that he would not dismiss Fed Chairman Jerome Powell before the conclusion of his term in 2026.
Two years ago, the Inflation Reduction Act was enacted by Congress and signed into law by President Biden, aiming to reduce drug prices and stimulate investments in climate and domestic energy. Republicans argue that the government spending under the Biden administration has exacerbated inflation rather than abating it, questioning the efficacy of the legislation. The administration has acknowledged the financial strain imposed by inflation on essential goods like housing, groceries, and medication, implementing measures to alleviate the burden on American households.
Looking towards potential solutions, Harris has outlined plans to assist first-time homebuyers and combat price gouging at grocery stores by holding large corporations accountable for price irregularities. While economists acknowledge the multifaceted nature of grocery price escalations, citing factors like supply chain disruptions and increased labor costs, Harris intends to promote competition within the industry to drive down costs. Additionally, she proposes offering up to $25,000 in aid to first-time homebuyers as part of her economic agenda.
Edward Pinto from the American Enterprise Institute raised concerns about the impact of governmental down payment assistance on home prices, cautioning that such initiatives could lead to market distortions. He cited previous instances where similar interventions resulted in price hikes and anticipates a comparable effect with the proposed $25,000 assistance for first-time buyers.
On the other hand, Trump has been critical of the Biden-Harris administration’s handling of inflation without presenting concrete proposals for addressing the issue. While he has mentioned imposing tariffs on Chinese imports and other foreign goods, the specifics of these tariffs remain uncertain. Trump argues that his previous tariffs did not contribute to inflation, emphasizing the detrimental impact of inflation on countries and economies.
A comparative analysis by Moody’s Analytics explores the predicted inflation rates under a Trump or Harris presidency, with varying outcomes depending on the political landscape. Should Republicans secure victory across Congress and the White House, inflation is expected to rise to 3.5% in 2025. Conversely, under a scenario where Harris assumes office with a divided Congress, inflation may decrease to 2% by the summer of 2025.
