Trump Faces Economic Challenges: Uncertainty Clouds His Inheritance
WEST PALM BEACH, Fla. (AP) — The robust economy Donald Trump was set to inherit now appears shakier, with critics suggesting the president-elect is exacerbating the instability.
The Dow Jones Industrial Average ended Thursday nearly flat, capping a streak of 10 days of losses. Meanwhile, the Federal Reserve has signaled that inflation, currently at 2.7%, remains persistently high, prompting caution about the interest rate cuts planned for the coming year.
Budget Turmoil and Tariff Tensions
On Wednesday, Trump derailed a bipartisan budget deal, raising the possibility of a government shutdown after midnight on Saturday. He subsequently endorsed a Republican-backed alternative on Thursday, but the proposal failed to gain the two-thirds majority required in the House.
Adding to the economic uncertainty are Trump’s renewed tariff threats. The Congressional Budget Office (CBO) warned on Wednesday that these tariffs could raise consumer prices and dampen economic growth while falling short of offsetting the cost of Trump’s proposed tax cuts.
Markets React to Trump’s Unpredictability
As Trump prepares for another term, his approach—marked by unraveling deals and last-minute replacements—tests the resilience of financial markets. Once a metric of success frequently cited by Trump, markets now grapple with his mix of unpredictability and media-driven spectacle.
From Trump’s perspective, the economy was already troubled under President Biden due to persistent inflation and widespread public dissatisfaction. Transition spokeswoman Karoline Leavitt stated:
“On day one, President Trump will get to work to launch the largest deregulatory agenda in history, cut taxes, and expedite permitting for drilling and fracking to lower energy costs and inflation for all Americans.”
A Familiar Pattern of Turbulence
Recent events echo the economic turmoil of Trump’s first term. While the economy experienced growth, it was often overshadowed by uncertainty. Now, voters weary of inflation must decide if they are ready for another round of instability.
Trump has doubled down on his demands, using social media on Wednesday to vow resistance unless Democrats agree to lift the debt ceiling in exchange for short-term government funding. He, along with billionaire ally Elon Musk, has also pledged to fund primary challengers against Republican lawmakers who oppose him.
Musk criticized the bipartisan funding package proposed by House Speaker Mike Johnson, R-La., which would extend government funding through March 14. A previous partial government shutdown under Trump in late 2018 cost the economy $3 billion, according to the CBO—a modest yet symbolically significant hit.
As Trump’s leadership unfolds, the balance between economic growth and political turbulence remains uncertain.
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