Inflation remains public enemy No. 1 in today’s economy. Americans are fed up with the cost of living and former President Donald Trump says he will help.
Yet 16 Nobel Prize-winning economists are warning that Trump’s proposals wouldn’t just fail to fix inflation — they would make matters worse.
“We the undersigned are deeply concerned about the risks of a second Trump administration for the US economy,” the economists wrote in the Tuesday letter, which was first reported by Axios.
The letter, organized by famed economist Joseph Stiglitz, argued there are valid reasons to worry the Trump agenda will “reignite” inflation.
In particular, the economists point to Trump’s “fiscally irresponsible budgets” and nonpartisan research from the likes of the Peterson Institute, Oxford Economics and Allianz that finds the Trump agenda — if successfully enacted — would increase inflation.
Trump approved $8.4 trillion of new 10-year borrowing during his term — nearly twice as much as President Joe Biden has so far in office, according to fiscal watchdog group the Committee for a Responsible Federal Budget.
Not only does Trump want to extend his 2017 tax cuts — a move that the Congressional Budget Office warns would cost nearly $5 trillion — but the former president recently told CEOs during a closed-door meeting that he’d like to cut the corporate tax rate even further.
However, cutting taxes would risk accelerating an economy at a time when the Federal Reserve is working hard to slow it down to fight inflation.
“The outcome of this election will have economic repercussions for years, and possibly decades, to come,” the economists wrote in the letter. “We believe that a second Trump term would have a negative impact on the US’s economic standing in the world and a destabilizing effect on the US’s domestic economy.”
The Stiglitz-led letter did not directly mention Trump’s trade and immigration policies, but some mainstream economists warn they would be inflationary, too.
Trump has called for raising tariffs on China and all other trading partners — a move that Moody’s Analytics predicted would kill jobs and worsen inflation. Trump argues the tariffs would save jobs and punish China for trade practices that both parties are fed up with.
Biden has kept in place the vast majority of the Trump-era tariffs and recently lifted some tariffs on China, albeit in a more targeted way.
Some economists are also concerned Trump’s plans to launch an immigration crackdown and unprecedented deportations will overheat the jobs market and boost consumer prices.
In the letter, the 16 Nobel economists expressed concern about the rule of law and stability if Trump wins the White House again.
“Among the most important determinants of economics success are the rule of law and economic and policy certainty,” the letter said. “Donald Trump and the vagaries of his action and policies threaten this stability and the US’s standing in the world.”
Beyond Stiglitz, the letter was signed by Robert Shiller, who famously called the mid-2000s housing bubble, former World Bank chief economist Paul Romer, and George Akerlof, the husband of US Treasury Secretary Janet Yellen.
By contrast, the economists praised Biden’s work on the economy, arguing his major investments in infrastructure, manufacturing and climate will lower long-term inflationary pressure and ease the clean energy transition.
“While each of us has different views on the particulars of various economic policies,” the economists wrote in the letter, “we all agree that Joe Biden’s economic agenda is vastly superior to Donald Trump’s.”
In response, the Trump campaign blasted the economists and blamed Biden for high inflation.
“The American people don’t need worthless out of touch Nobel prize winners to tell them which president put more money in their pockets,” Karoline Leavitt, the Trump campaign’s national press secretary, said in a statement to CNN. “Americans know we cannot afford four more years of Bidenomics, and when President Trump is back in the White House, he will reimplement his pro-growth, pro-energy, pro-jobs agenda to bring down the cost of living and uplift all Americans.”
To be sure, economists don’t have a crystal ball, not even Nobel Prize winners.
And voters do give Trump higher marks on the economy.
As CNN’s Harry Enten has reported, an average of polls gives Trump an 18-point lead over Biden on inflation and 13 points on the economy.
In an ABC News/Ipsos poll in May, more than 80% of respondents said the economy and inflation were important in determining their vote — and on both issues Trump scored a 14-point lead over Biden.
Voters have made clear their concerns about Biden on the economy. Just 34% of Americans approved of Biden’s economic policies in a late April CNN poll and even fewer (29%) approve of Biden on inflation.
And yet some experts are concerned about what Trump’s policies would mean for the economy.
Last week, Moody’s Analytics cautioned that if Republicans sweep into power in November, a toxic mix of higher tariffs, fewer immigrants and tax cut-fueled stimulus would cause inflation to reaccelerate, unemployment to climb above 5% and the US economy to stumble into a recession.
By contrast, Moody’s found that if Biden wins and there is a divided Congress, the Fed will start cutting interest rates, inflation will go back to normal and the US economy will avoid a recession.
