Jan 28, 2017

New for '17: Trumpflation?


Economists say President Trump's trade policy, tax cuts and infrastructure-spending plan could reignite inflation, making goods more expensive at a time when much of his base already feels squeezed.

Jon Lansner, business columnist for the Orange County (Calif.) Register, points out how good we've had it: The Consumer Price Index rose 1.3% last year, the fifth straight year under 3%, and best in half a century.

  • Why the change? Trump policies — including a tax on imports, tax incentives for companies to return cash from overseas, and up to $1 trillion in infrastructure spending — could fuel inflation.
  • And one more: The N.Y. Times' Neil Irwin, in an Upshot dispatch in November, pointed out that increased deportations could lead to a shortage of low-skilled labor: "The remaining workers … could demand higher pay."
  • Why it matters: Inflation is felt most acutely by people who immediately spend most of their incomes, many of them in the economically stressed Trump coalition. And how people feel will be a vital component of Trump's narrative headed into the 2018 midterms and his 2020 reelection.
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