- Economists asked about their outlook under a Trump regime said they fear rising inflation and slowing growth, but even then, they see America faring better than Europe.
While President-elect Donald Trump might have a spring in his step as he heads toward the White House, economists looking at their 2025 calendar can’t find the same optimism.
More than 200 economists across the U.S. and Europe were questioned about how they feel Uncle Sam will fare under a second Trump presidency.
The research commissioned by the Financial Times and the University of Chicago’s Booth School of Business concluded that the majority of experts see Trump’s combative “Maganomics” as ultimately hurting U.S. growth.
Likewise, a significant proportion of respondents see Trump’s policies as potentially inflationary.
The root of many concerns is Trump’s tariff plan. The billionaire entrepreneur proposes an increase of 60% on nations like China and 10% to 20% on the rest of the world.
On the other hand, growth could be spurred by a more free-market approach, coupled with tax cuts, which have the potential to boost consumer spending and confidence.
But overall, of the approximately 50 economists surveyed on the U.S. alone, more than half view Trump’s policies as ultimately having “some negative effect” on the economy, while a further 10% forecast a “large negative effect” on the thus-far surprisingly resilient market.
That being said, even the hand-wringing about the world’s largest economy is preferable to the outlook across the Atlantic.
A separate survey conducted by the FT found that 13% of Eurozone analysts expect their nations to be significantly negatively impacted by Maganomics, while 72% expect some negative repercussions.
What the markets are saying
Economists’ outlook is at odds with that of the Republican voters who backed the former President returning to the Oval Office once more.
A December Gallup survey of more than 2,000 people found that 88% of Republicans expect the stock market to rise and 87% expect inflation to continue at a reasonable rate.
A further 78% predict general economic prosperity, compared to 40% of independent voters and 15% of Democrats.
And while Wall Street veteran Jamie Dimon says bankers are “dancing in the street” at the prospect of a regulation-light administration, the general consensus on the economy is still muted.
As Goldman Sachs’s Ronnie Walker writes in a note seen by Fortune: “The direct impact of higher tariffs on GDP is likely to be modestly negative, with the hit to real income and consumer spending from higher prices outweighing the decline in the trade deficit, especially if other countries retaliate.”
Taking heed of the impact in previous tariff rounds—such as in 2018 and 2019—Walker adds: “Here would also be negative indirect effects, such as the reaction of financial markets, a deterioration in business sentiment, increases in trade policy uncertainty on investment, and supply chain disruptions. These channels are more uncertain and could potentially be larger than the direct effects.
“We estimate that every 1pp increase in the effective tariff rate would reduce the level of GDP by 0.03% through direct effects and as much as 0.1% through indirect effects.”