That is not to say that there will be no hardship ahead. Economic development has been stronger than in other nations, and Americans have profited because “the price of what it exports, particularly natural gas, has risen more than the price of what it imports,” according to the Wall Street Journal.
However, there is grounds for concern: government borrowing. Former President Donald Trump’s 2018 tax cut, bipartisan COVID-19 relief in 2020, and President Biden’s 2021 stimulus all boosted the economy, although some argue at a cost.
“US deficits have been around 2% of GDP greater than the IMF predicted in late 2022. They will be far and by the highest among major industrialised economies for the foreseeable future,” according to the WSJ.
According to the site, “in the long run, deficits inflate future interest bills and crowd out private investment.” However, they may already be causing harmful imbalances. Deficits were justifiable when unemployment was high, private demand was weak, and inflation and interest rates were low. None of this is true now.”
Despite Biden’s continued campaign for student loan debt relief and help to Ukraine, Taiwan, and Israel, “the IMF thinks core inflation (which excludes food and energy) is a half percentage point higher than otherwise would be because of fiscal policy,” according to the WSJ.
Another topic to watch is the dollar’s increase. “The strong dollar might destabilise the international economy another way: through protectionism,” according to the Wall Street Journal (WSJ). “The outcome will almost probably be increased protectionist pressure. Biden is already planning to increase tariffs on China. If Trump returns to the White House, anticipate no action on the deficit and, if his first term is any indication, more tariffs and an attempt to devalue the dollar.”