It was the economy, not the economy.
That’s the message that a lot of experts are getting from the election on Tuesday, when former President Donald Trump easily beat Vice President Kamala Harris in key states. A lot of people across the country voted for the former businessman, who promised to fix what he called a “terrible economy.”
As a candidate, the Republican nominee played on Americans’ ongoing anger over the rising cost of living. He blamed both President Joe Biden and a wave of new immigrants for the post-pandemic inflation that caused prices for things like eggs, car insurance, and more to skyrocket.
He lied when he said the country was about to go into a slump and kept many promises that he said would help the economy. For example, he said he would deport a lot of immigrants, cut taxes drastically, cap credit card interest rates, and let people deduct the interest they paid on their car loans.
Trump’s ideas could have a huge effect, but some of them would make things more expensive for people. But it’s still not clear if he can make them come true: The Senate was won by Republicans, but as of Wednesday afternoon, the House was still up for grabs.
Chief credit analyst at loan comparison site LendingTree TREE -0.31% Matt Schulz said, “Trump’s victory could have a profound effect on consumers’ wallets, but it is not at all clear what that will look like.”
When MarketWatch asked the Trump campaign for a response, they did not answer.
According to the experts, these are how Trump’s planned policies might affect your money.
Trump won’t be able to do much to keep prices down.
Trump promised to lower prices, recognizing that many Americans are still unhappy with high prices even though the economy is growing and the jobless rate is low.
Experts say that prices won’t go back to where they were in 2019 any time soon, because that’s not how the economy works.
Another economist at the Manhattan Institute, a conservative think tank, said, “That level of deflation would mean something is very, very wrong with the economy.”
Mark Hamrick, Washington bureau chief for the personal finance site Bankrate, said that Trump will not be able to do much to change prices or the inflation rate. This is true for all leaders.
He said, “There is no way to lower prices from the Oval Office.” “That would have been done by any president, even Joe Biden, if there were one.”
Monetary policy, which is run by the Federal Reserve, is the main way to keep inflation in check. In the past, the Federal Reserve has made those choices on its own, but now the president chooses the Fed chair.
Trump has said he won’t give Federal Reserve Chair Jerome Powell a third four-year term and has attacked Powell. In 2017, Trump chose Powell to be chair during his first term as president.
Hamrick also said that some of Trump’s planned policies might make people’s living costs go up. As an example, he said that mass deportations of immigrants could make it harder to find people to work in building, which would make it more expensive to build homes.
Trump wants to raise taxes and bring manufacturing back to the U.S. by putting 20% tariffs on all things that come into the country. Two new studies say that these kinds of tariffs would bring in trillions of dollars in tax money but also make prices go up for everyone, especially those with lower incomes.
Steve Wamhoff, federal policy director at the Institute on Taxation and Economic Policy, wrote, “Trump’s proposed tariffs are much bigger than any that are already in place. They would make prices go up for Americans of all income levels.” “This would have a big effect on the budgets of low- and middle-income families because they have to spend a bigger chunk of their income to make ends meet.”
Rates on credit cards and car loans may stay higher for longer.
Some of Trump’s main policy ideas, like deporting a lot of people and putting big taxes on goods, would cause prices to go up. If the inflation rate, which shows how quickly prices of goods and services rise over time, went up or stayed above the Federal Reserve’s goal of 2%, they might have to keep interest rates higher for longer to slow price increases.
That would stop people in the US from paying less in interest on their car loans, credit cards, and other loans.
A limited rate cap on credit cards is another idea Trump has put forward. Schulz said, “This is very unlikely to ever happen, even though a lot of people support it.”
Trump said that mortgage rates would go down, but rates are not set by the president.
In the past few weeks, mortgage rates have been going up because the markets thought Trump would win. For now, they’re likely to keep going up.
Based on Mortgage News Daily, the average rate on a 30-year loan went up by 9 basis points to 7.13% on Wednesday.
Lisa Sturtevant, chief economist at Bright MLS, said in a statement that buyers and sellers of homes can expect the housing market to be more rough in the coming weeks. She also said that Trump’s policies will probably make it harder for middle-class and first-time buyers to buy homes in the long run because “his policies favor high-income individuals and homeownership.”
Also, don’t think that very low mortgage rates will come back.
Trump said that the 30-year mortgage rate would go back to 2% while he is in office, but leaders don’t set mortgage rates. In 2021, the 30-year rate was last in the range of 2%.
MarketWatch spoke with Mike Fratantoni, chief economist at the Mortgage Bankers Association, who said that it would take a major economic crash or something else very big to bring down mortgage rates to that level again.
During his campaign, Trump also said that the president “should have at least a say” on monetary policy and that the president should have more power over the Federal Reserve.
Schulz said that would be “a huge change” in the way monetary policy is made.
Trump is expected to keep the tax cuts in place.
The Tax Cuts and Jobs Act, which was passed by Trump’s predecessor, cut taxes on many people in 2017. Trump is likely to move to continue all of these cuts. The tax cuts were set to end next year, but Trump’s win makes it clear that he has to keep TCJA in place. Trump might be able to make TCJA bigger if Republicans take over the Senate and the House of Representatives.
“Your taxes probably aren’t going to go up in a Trump administration,” Schrager stressed.
Along with other possible tax cuts, Trump has also talked about making the interest people pay on their auto loans tax-deductible and getting rid of taxes on tips and Social Security payments. But how those plans turn out will depend on who is in Congress.
Schulz, the LendingTree expert, said, “It’s not clear if any of these ideas will ever come to life, but if they did, they could have a very real effect.”
Protections for consumers could go away.
Consumer protections are likely to be less strict under the second Trump administration.
The Chief Federal Consumer Protection Bureau, which is in charge of protecting consumers, tried to limit credit card late fees, tighten rules on buy-now-pay-later loans, and look into the “junk fees” that home buyers pay when they close on a mortgage while President Joe Biden was in office.
Many of the consumer rights that Gov. Biden pushed for in the last four years could be weakened if Trump gets a second term.
“Given how inactive the CFPB was under [Trump’s] first administration, it makes sense to think that they will take a similar hands-off approach this time,” Schulz said.
So, many of the CFPB’s efforts made under Biden’s leadership might be undone, he said. For example, efforts to limit junk fees might be undone.
Conservatives have called for the CFPB to be dissolved many times. A court challenge that said the way the CFPB is funded is unconstitutional was successfully thrown out.
Consumer advocates are afraid about what will happen to the CFPB and how it will affect people if Trump runs for a second term.
“They are smart and move quickly,” said Adam Rust, who is in charge of financial services at the Consumer Federation of America. “Today might be a great day for them.”
