Trump Policies Seen Endangering US Economic Gains

The US Federal Reserve’s preferred measure of underlying inflation accelerated in October from a year ago. The so-called core personal consumption expenditures price index, which strips out volatile food and energy items, increased 2.8% from October last year and 0.3% from a month earlier (a good part of that acceleration however was due to the impact of higher stock prices on the calculation). While inflation is taking time to recede back to the Fed’s 2% target, the policy path ahead will be complicated by Donald Trump’s economic agenda, which many economists warn will reverse America’s multiyear climb out of the pandemic recession while reigniting inflation. Indeed, Trump’s plans—despite his promises to lower US fuel costs—are seen as causing a spike in US gasoline prices by as much as 50 cents a gallon come summer. And if you’re looking to buy that special someone a power drill for Christmas, better do it now: Stanley Black & Decker said it’s already considering raising prices in anticipation of the president-elect’s promised tariffs.

While Trump ran for re-election on the promise of lowering prices for consumers still bruised by inflation, Goldman Sachs says the 78-year-old Republican’s threats of Canadian tariffs will accomplish the exact opposite. US residents face “significant consequences” from his proposed 25% duty on America’s closest ally, said Daan Struyven, the bank’s head of commodities research. Trump’s other neighborhood target, Mexico, is ramping up its warnings to Americans: Mexico’s economic minister cautioned that tariffs would cost the US as many as 400,000 jobs. And beyond their warnings, both countries are readying retaliation, too.