5 Ways Trump's Next Presidency Could Impact the US Economy – and Your Money

President-elect Donald Trump Victory in the election on November 5th underscores the frustration of millions of voters, and many Americans are taking notice End polls on Tuesday that they are still suffering from the highest inflation in 40 years and are dissatisfied with the country's economic development.

Trump ran a campaign promising to address these problems and promised to do so End the “inflation nightmare” and to reduce prices “very quickly”. He also offered a variety of tax cuts for various groups, from Seniors To Homeownerand to finance some of these cuts new tariffs on imports from China and other nations and after Deport millions of illegal immigrants.

In the wake of Trump's victory, economists and policy experts are examining what impact these measures could have on the economy and consumers' wallets. Wall Street is already predicting that his policies could boost business growth. sending the S&P 500 higher on Wednesday even by 2.2%.

But some experts point out that Trump's plans could also spur inflation, potentially harming consumers hoping for relief at the checkout.

“The devil will be in the details,” Ed Mills, Washington policy analyst at investment bank Raymond James, told CBS MoneyWatch. “Trump’s tax, trade, customs and immigration agenda could have significant economic impacts and raise concerns about a second wave of inflation.”

However, compromises or changes to its plans could “mitigate the impact,” Mills added.

However, it is uncertain whether Trump will be able to respond to voters' most pressing economic issues, especially with the House of Representatives under Democratic control, which could derail his plans to expand the tax cuts he passed in 2017's “Tax Cuts & Jobs.” Act (TCJA) and to enact other amendments.

Here are five ways Trump's policies could affect the economy and your money.

Your money under Trump's tax plans

The core of Trump's tax plan is to extend the provisions of the TCJA, which are set to expire at the end of 2025. These include the law's reduced tax brackets and expanded standard deduction.

Trump also wants to allow larger tax cuts for some individuals and companies. In his election campaign, he proposed reducing the corporate tax rate from the current 21% to 15%. He has floated the idea of ​​eliminating income taxes on many types of income, from tips to Social Security benefits, but has not yet announced details.

Trump's combination of tariffs and tax cuts would be the sixth-largest tax cut since 1940, according to a recent analysis by the Tax Foundation.

If Trump is able to implement these tax law changes, personal income taxes would decrease for all income groups. But the biggest beneficiaries would be high-income households, according to an analysis by the Penn Wharton Budget Model (this study assesses Trump's proposed tax cuts but does not take into account the impact of tariffs).

That means a middle-class family with an annual income of about $80,000 would receive a tax break of about $1,740 in 2026, the analysis says. According to Penn Wharton, households with the highest incomes, those making more than $14 million, would see their taxes reduced by $376,910.

What could happen to inflation?

For consumers, inflation is one of their biggest economic concerns, and many are still feeling the effects of rising prices during the pandemic. However, the US inflation rate has now fallen close to that of the Federal Reserve 2% annual target, Many Americans still describe it as high because prices have not fallen. Rather, prices are simply rising more slowly than during the pandemic.

Economists have warned that Trump's plans could spur inflation again. That's because tariffs are essentially sales taxes paid by American consumers, rather than by the countries that export goods to the United States. Additionally, Trump's plan to deport millions of immigrants could also spur inflation, as employers would likely face higher wages due to a labor shortage.

“Two main pillars of his policy proposals, tariffs and mass deportations, will likely lead to rising prices as they make it harder for companies to produce goods,” Jacob Channel, chief economist at LendingTree, told CBS MoneyWatch.

According to the nonpartisan Peterson Institute for International Economics, Trump's plan to impose a 10% tariff on all imports and 60% or more on Chinese goods shipped to the U.S. could cost a typical middle-class household an additional $1,700 a year cause .

According to Andrzej Skiba of RBC Global Asset Management, Trump's plans could boost the inflation rate by up to 1 percentage point, bringing it to an annual rate of about 3.4% – above the Fed's 2% target.

“If you increase inflation numbers by 1% next year, we should say goodbye to rate cuts,” Skiba said.

Could the economy grow faster?

According to Oxford Economics, the economy may initially grow slightly faster under Trump's plans to cut corporate taxes, but that impact could fade over time, particularly due to the impact of the deportation of millions of immigrants.

Real GDP growth could be 0.3 percentage points higher in 2026 than if current economic policies continued, Ryan Sweet, chief U.S. economist at Oxford Economics, wrote in a Nov. 6 research note.

However, he added that GDP growth in 2028 could ultimately fall to 0.6 percentage points lower than previous forecasts due to the impact of deportations and higher tariffs.

Will housing become more affordable?

According to Lisa Sturtevant, chief economist at Bright MLS, probably not.

First, if Trump's plans boost inflation again, as some economists predict, the Federal Reserve may not lower its key interest rate further. Without further reductions in borrowing costs for consumers and businesses, mortgage rates are unlikely to fall, she added.

Second, deporting millions of undocumented immigrants could impact the housing sector, which is already facing a severe housing shortage because it relies on those workers to build new homes, Sturtevant said.

“His mass deportation proposal would have a chilling effect on the construction industry, shrinking an already limited workforce and halting much-needed new housing construction,” she said. “At the same time, the proposed tariffs will increase construction costs.”

Will Trump's Policies Help Your 401(k)?

Possibly, given that Trump's proposed corporate tax cuts and support for looser regulations on businesses, if enacted, could boost corporate profits and boost the stock market.

On Wednesday, indices such as the S&P 500 and the Dow Jones Industrial Average rose on Wall Street optimistic for stronger corporate growth.

“Lower corporate taxes and/or deregulation of the energy and financial sectors under a Trump administration could provide additional support,” Solita Marcelli, chief investment officer Americas, UBS Global Wealth Management, said in an email.

Other financial instruments, including cryptocurrencies, could also see a boost due to Trump's promise to make the US the “crypto capital of the planet.”

At the same time, many of these forecasts depend on Trump pushing through changes to tax code, regulations and other laws, Channel noted.

“Virtually all of these measures will be difficult to implement, even with Republicans in control of the House, Senate and presidency,” he said. “With this in mind, we may not see much change in the overall economy at all.”

He added: “Inaction by the next Trump administration could result in the economy remaining on its current trajectory.”