“I believe the Trump economic agenda is likely to significantly increase inflation,” said Larry Summers, a prominent Democratic economist, during an event at the Economic Club of New York alongside Republican economist Glenn Hubbard on Tuesday.
Summers identified several of Donald Trump’s proposed policies that he believes will raise prices, expressing concern about the lack of respect for the Federal Reserve’s independence, signals favoring a weak dollar, tax cuts without corresponding spending cuts, and the implementation of significant tariffs not seen in the last fifty years.
Summers referenced an April report suggesting that some of Trump’s allies have ideas that could undermine the Federal Reserve’s independence. He also warned that Trump’s immigration policies, which would restrict labor supply, could lead to higher inflation.
Summers, who served as a top economic advisor during the Obama administration and as Treasury Secretary under Clinton, previously warned that Biden’s COVID-19 stimulus plan would cause inflation. Recently, he has been cautioning about the potential inflationary impact of a second Trump term. He stated on social media that there’s a real risk mortgage rates could exceed 10 percent due to rising inflation expectations and long-term interest rates during a Trump presidency.
Hubbard, a top economic advisor to President George W. Bush, acknowledged Summers’ concerns about tariffs but pointed out that Biden has supported and imposed tariffs similar to those of his predecessor. Summers responded by asserting that a Trump administration would likely engage in far more protectionism.
Summers also critiqued Biden’s economic policies, though he still preferred them over Trump’s. He expressed a desire for more emphasis on fiscal sustainability and less economic interventionism under Biden, while noting a greater respect for the central bank and currency, and less inclination toward large-scale protectionism. Summers also highlighted Biden’s commitment to research and development in key technologies like artificial intelligence and clean energy, making him more optimistic about Biden’s economic prospects compared to Trump’s.
