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• A Trump economist has warned that Americans will have to endure economic hardship due to upcoming policies.
• The warning comes amidst concerns over tariffs, tax cuts, and rising federal deficits.
• Economic growth forecasts for 2025 are uncertain, ranging from 1.5% to 2.7%.

Quick Brief

2-Minute Digest

Essential Context

As President Trump begins his new term, his economist has issued a stark warning: Americans will have to suffer due to the economic policies set to be implemented. This warning is rooted in several key factors, including the potential imposition of tariffs, the extension of the 2017 Tax Cuts and Job Act, and the rising federal budget deficit.

Core Players

• Donald Trump – President of the United States
• Trump’s Economic Team – Advisors and economists guiding economic policy
• Federal Reserve – Central bank that sets monetary policy
• U.S. Congress – Legislative body that approves or rejects policies

Key Numbers

• 1.5% to 2.7% – Projected U.S. economic growth rate for 2025
• 3% – Annual inflation rate potentially driven higher by tariffs
• 6% – Federal budget deficit as a percentage of GDP
• 100% – National debt held by the public as a percentage of GDP
• 4.5% – Ten-year Treasury yields, up from 3.5% in September

Full Depth

Complete Coverage

The Catalyst

The warning from Trump’s economist is a response to the broad economic policies President Trump is pursuing. These include the imposition of tariffs, which have historically weakened economic growth and driven inflation higher. The tariffs could push the annual inflation rate above the current 3%, prompting the Federal Reserve to be cautious about easing monetary policies further.

Inside Forces

The internal dynamics of President Trump’s administration are marked by a complex interplay of economic policies. The extension of the 2017 Tax Cuts and Job Act is expected to keep the federal budget deficit high, currently at 6% of GDP. This high deficit, combined with a national debt that has reached 100% of GDP, contributes to rising bond yields and economic uncertainty.

The deportation of undocumented immigrants, another policy initiative, could reduce the labor force growth, which has been heavily dependent on immigrant workers in recent years.

Power Dynamics

President Trump’s economic team holds significant influence over policy decisions. However, the Congress also plays a crucial role in approving or rejecting these policies. The public is divided, with Republicans generally supporting President Trump’s plans while Democrats are mostly opposed.

A recent survey showed that 67% of Republicans support all or most of President Trump’s plans and policies, while 84% of Democrats support few or none.

Outside Impact

The broader implications of these policies extend beyond the U.S. economy. Tariffs and trade tensions could affect global trade dynamics, particularly with European countries. Additionally, the rising federal deficit and national debt could have long-term consequences for the U.S. economy’s stability and growth potential.

The public’s mixed reactions reflect ongoing partisan divisions, with Republican satisfaction with the country’s state surging and Democratic satisfaction dropping significantly.

Future Forces

Looking ahead, several factors will shape the economic landscape. Labor productivity, which has been a key driver of growth, may revert to its slower pre-2023 rate due to policy changes. The impact of tariffs on inflation and the Federal Reserve’s response will be crucial in determining the economic trajectory.

Potential tax cuts and infrastructure spending plans, though yet to materialize, could also influence future economic growth.

Data Points

• December 2017: President Trump signed the Tax Cuts and Jobs Act
• 2019: Federal budget deficit increased by almost 50%, to nearly $1 trillion
• 2023-2024: Labor productivity growth at 2.3% per year
• 2025: Projected economic growth rate ranging from 1.5% to 2.7%
• 4.1% – Current unemployment rate