Sixteen of the world's leading economists – all Nobel laureates – are warning that former President Donald Trump could stoke inflation if he becomes president in November and moves forward with his economic plans.
“Many Americans are concerned about inflation, which has fallen remarkably quickly. There are legitimate concerns that Donald Trump will reignite this inflation with his fiscally irresponsible budgets,” said a letter signed by the economists, including Joseph Stiglitz, a Columbia University professor who won the 2001 Nobel Prize in economics; and Yale professor Robert Shiller, who won the 2013 Nobel Prize in economics.
The warning comes as the US continues to battle stubborn inflation, with the Federal Reserve maintaining the highest interest rates in more than two decades with the aim of cooling the economy and reducing inflation to 2% annually. Although inflation has cooled from a recent peak of 9.1% in June 2022, inflation-weary Americans are downbeat about the economy, with six in 10 rating it as poor, fairly poor or very poor, according to the latest CBS News poll.
Trump's policies could prove inflationary, other economists also warned, such as his proposal to impose a blanket 10% tariff on all imports for deporting immigrants. The pricing plan would add $1,700 in annual costs for the typical American household, essentially acting as an inflation tax. according to to experts from the Peterson Institute for International Economics.
Deporting immigrants could shrink the labor force, creating more competition for American workers and raising wages, which would also increase inflationary pressures, economists say warn.
While the letter from Stiglitz and the other 15 Nobel laureates did not detail any part of Trump's plans, it did praise some of President Joe Biden's economic policies, ranging from his Inflation Reduction Act to investments in the U.S. production. .
“In his first four years as president, Joe Biden has signed into law major investments in the American economy, including in infrastructure, domestic manufacturing and climate,” the letter said. “Together, these investments are likely to increase productivity and economic growth, while reducing long-term inflationary pressures and facilitating the clean energy transition.”
They added: “While each of us has different views on the specifics of different economic policies, we all agree that Joe Biden's economic agenda is vastly superior to Donald Trump's.”
“Top economists, Nobel laureates and business leaders all know that America cannot afford Trump's dangerous economic agenda,” Biden campaigner James Singer told CBS MoneyWatch.
“In Donald Trump's America, the rich pay less and working Americans pay more,” he added.
“The American people don't need worthless, outrageous Nobel laureates to tell them which president put more money in their pockets,” Karoline Leavitt, national press secretary for the Trump campaign, said in an emailed statement to CBS MoneyWatch.
If Trump is reelected, he plans to implement a “pro-growth, pro-energy, pro-jobs agenda to drive down the cost of living and uplift all Americans,” she added.
“We the undersigned”: Read the letter
You can read the text of the letter below:
We, the undersigned, are very concerned about the risks of a second Trump administration for the American economy.
The most important determinants of economic success include the rule of law and economic and political security. For a country like the US, which is embedded in deep relations with other countries, it is also a necessity to conform to international standards and have normal and stable relations with other countries. Donald Trump and the vagaries of his actions and policies threaten this stability and the US's position in the world.
While each of us has different views on the specifics of different economic policies, we all agree that Joe Biden's economic agenda is far better than Donald Trump's. In his first four years as president, Joe Biden signed major investments in the American economy, including in infrastructure, domestic manufacturing and climate. Together, these investments are likely to increase productivity and economic growth, while reducing long-term inflationary pressures and facilitating the clean energy transition.
During Joe Biden's presidency, we have also seen a remarkably strong and equitable recovery in the labor market – enabled by his pandemic stimulus measures. With another four years of Joe Biden's presidency, he could continue to support an inclusive economic recovery in the US.
Many Americans are concerned about inflation, which has fallen remarkably quickly. There are legitimate concerns that Donald Trump will reignite this inflation with his fiscally irresponsible budgets. Nonpartisan researchers, including at Evercore, Allianz, Oxford Economics and the Peterson Institute, predict that if Donald Trump successfully implements his agenda, it will increase inflation.
The outcome of this election will have economic consequences for years, and possibly decades, to come. We believe that a second Trump term would have a negative impact on the US economic position in the world and a destabilizing effect on the US domestic economy.
Signed,
George A. Akerlof (2001)
Sir Angus Deaton (2015)
Claudia Goldin (2023)
Lord Oliver Hart (2016)
Eric S. Maskin (2007)
Daniel L. McFadden (2000)
Paul R. Milgrom (2020)
Roger B. Myerson (2007)
Edmund S. Phelps (2006)
Paul M. Romer (2018)
Alvin E. Roth (2012)
William F. Sharpe (1990)
Robert J. Shiller (2013)
Christopher A. Sims (2011)
Joseph E. Stiglitz (2001)
Robert B. Wilson (2020)
