Almost 80 per cent of Americans who said “the economy” was their number one priority at the exit polls in Tuesday’s US election voted for Donald Trump. That might perplex outsiders. After all, the recent performance of America’s economy is enviable: growth is solid, inflation is easing and the jobless rate is low. But national strength belies local pockets of weakness. Households have been stretched by the 20 per cent rise in price levels since January 2021. Rent and healthcare costs are harder to cover. Credit card debts are mounting.
The over 70mn Americans who voted for Trump are optimistic that their fortunes will now be turned around. The stock market is rallying, too. The president-elect’s plan to cut taxes and his courting of the tech “bros” has Wall Street and Silicon Valley — twin engines of the US economy — salivating. Trump has vibes on his side. He also inherits an economy in good nick: the US Federal Reserve has embarked on its interest-rate cutting cycle and price pressures are easing.
He could, however, jeopardise the optimism and favourable economic backdrop, depending on how much he actually follows through with his proposals. His plans emulate his first term, but on steroids. He wants to extend the tax cuts he enacted in 2017, and slash levies on business and pay. On tariffs — the “most beautiful word” in the dictionary, he says — there could be a 10 to 20 per cent bill on all imported goods, with 60 per cent for Chinese imports. The “largest deportation operation” in American history is also on the agenda.