Economists Predict Higher Inflation and Deficits Under Trump Compared to Biden: WSJ Survey

A recent Wall Street Journal survey reveals that most economists anticipate higher inflation, deficits, and interest rates under a second Trump administration compared to a Biden presidency. The survey, conducted among 68 professional forecasters, highlights concerns over Trump's policy preferences on immigration and trade.

WSJ Survey: Economists Expect Higher Inflation, Deficits Under a Second Trump Administration

According to a report published by The Wall Street Journal this week, most economists anticipate that inflation, deficits, and interest rates would be higher under a second Trump administration than if Biden remains in the White House.

The Wall Street Journal reported that 68 professional forecasters from academia, Wall Street, and business responded to its quarterly survey of forecasters, which was conducted between July 5 and 9.

"Of the 50 who answered questions about Trump and Biden, 56% said inflation would be higher under another Trump term than a Biden term," said the WSJ. This is said to be compared to 16% who said the opposite, with the remainder seeing no material difference.

The publication elucidates that Trump's policy preferences, particularly immigration and trade, primarily contribute to economists' perspectives on inflation and interest rates.

However, they note that it is "unlikely those assessments would change substantially with a different Democratic candidate."

Analysts at the Economic Outlook Group informed the Wall Street Journal that there is a genuine possibility that inflation will reaccelerate during a Trump presidency.

The WSJ further states that economists anticipate a 1.7% increase in the U.S. gross domestic product this year following the most recent inflation data, a decrease from the 3.1% growth achieved in 2023 (based on the fourth quarter compared to the previous year).

Furthermore, they predict that unemployment will continue to hover slightly above 4% until 2026 and that payrolls will increase by approximately 131,000 monthly jobs over the next year.

Economists generally estimate a recession likelihood within the next year is 28%. According to the Wall Street Journal, the forecasts have undergone minimal modification since their most recent survey in April.

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