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Donald Trump’s economic policies are causing concern among economists, who fear that his fiscal policy excess and attacks on the Federal Reserve’s independence could impact the US’s status as a haven for foreign investors, according to a poll conducted by the Kent A Clark Center for Global Markets at the University of Chicago Booth School of Business.
The survey found that over 90% of economists are worried about the role of US dollar-denominated assets in the next five to 10 years. Despite the White House’s assurances that Trump’s policies will reduce US debt, independent estimates suggest that the federal debt will reach a new high later this decade.
While the dollar typically strengthens during market turmoil, recent events have seen a depreciation of the US currency following Trump’s tariff announcements. However, the S&P 500 has rebounded and reached record levels, with hopes that Trump’s economic agenda will sustain growth.
Concerns about fiscal sustainability and the Federal Reserve’s independence have led to a decline in the dollar’s value, with some economists suggesting that safe-haven assets like the Swiss Franc and gold are more attractive. The possibility of a change in Fed leadership and rising long-term yields are contributing to uncertainty in the market.
The survey indicates that US Treasury yields may rise above 5% in the near future, which could raise alarms within the Trump administration. Economists have revised down their growth forecasts for the US economy, citing factors like trade tensions and policy uncertainty.
Despite concerns about inflation and trade issues, economists are cautiously optimistic about the outlook, with expectations for core PCE inflation rising slightly. The recent data on consumer price index inflation and core personal consumption expenditures inflation suggest a mixed picture of the economy.
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