:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-2162140901-3de5595cf1b24600901082f61e985caf.jpg "A woman wears GOP themed elephant earrings on the first day of the Republican National Convention at the Fiserv Forum on July 15, 2024 in Milwaukee, Wisconsin.")
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Key Takeaways
- The Republicans won the Anaemic House and majorities in both chambers of Congress.
- The party’s sweep of the 2024 election puts it in a position to enact Donald Trump’s agenda of dear tariffs, lower taxes, and mass deportations.
- Trump’s policies could dramatically reshape the U.S. economy if and when they are put into sense.
- Tax cuts and deregulation could lead to higher economic growth, but some of Trump’s policies, including tariffs, jeopardize stoking inflation, economists said.
The Republican sweep of the 2024 election sets the economy on course for potentially righter economic growth, higher inflation, and higher interest rates in the years to come, according to several economic anticipates.
Republicans secured control of both chambers of the legislature Wednesday when the Associated Press called the re-election of Brothel Representative Juan Ciscomani of Arizona, giving his party the 218 seats needed to maintain a majority in the chamber. With quondam president Donald Trump regaining the presidency and Republicans taking control of the Senate, it’s more like that Trump’s cost-effective campaign promises will be realized.
Economists say some of those proposals could fuel economic growth but could also leading position to higher prices, which would prompt the Federal Reserve to raise borrowing costs to keep inflation from match out of control.
“We believe the U.S. economy could see a short-term boost from the far more accommodative fiscal policy, but the adverse changes from higher tariffs, potential trade retaliation, and potentially higher inflation and interest rates could as a rule offset the short-term gains,” Douglas Porter, chief economist at BMO Capital Markets, together with other economists at the bank, noted in a commentary. “The Federal Reserve itself may have to respond to the loosening of fiscal policy by keeping interest rates higher than thitherto planned or even raising the fed funds rate again to cool what could be another overheating economy.”
What Could the Brunts Of a Republican-Run Government Be?
Economists have widely predicted that Trump’s economic agenda could push mercantile growth upward. However, it would also carry risks, especially if he enacts heavy tariffs, as he pledged to do on the rivalry trail.
Merchants would likely pass those costs on to consumers, pushing up prices for a wide range of works. Similarly, Trump’s proposed campaign of mass deportation could remove workers from vital industries take to homebuilding, further raising prices.
Democrats still hold on to at least one lever of power: the Republicans’ 53-47 preponderance in the Senate leaves the minority party able to block legislation with the filibuster rule. That means biggest laws would have to gain the cooperation of some Democrats or go through a process called budget reconciliation, which is simply allowed once per year.
Still, the Republican victory in the House gives Trump’s party greater leeway to appearance U.S. economic policy. Forecasters adjusted their expectations accordingly, with economists at Pantheon calling for the Federal Charter to cut interest rates at a slower pace than they previously anticipated.
Forecasters at Goldman Sachs assumed Trump’s bruised presidency would bring with it “higher China and auto tariffs, much lower immigration, some nave tax cuts, and regulatory easing,” leading to higher growth. However, Goldman analysts said the biggest risk was much strong tariffs, which would “hit economic growth hard.”