Donald Trump policies “risk” big mortgage rate increase, economist warns

Former President Donald Trump‘s policies “risk” a big mortgage rate increase, economist Lawrence Summers recently warned.

Trump, the presumptive GOP presidential nominee, will likely go up against President Joe Biden, the Democratic incumbent, in November. While the two duke it out for a potential second term, Trump and his supporters have made Biden’s economic policies, known as Bidenomics, a major talking point.

Public perception of Biden’s economic policy is dismal, with only 33 percent of Americans approving of the way he is handling the economy, according to a Yahoo News/YouGov poll conducted from June 3 to 6. The poll surveyed 1,854 U.S. adults and had a margin of error of plus or minus 2.8 percent. Meanwhile, Biden’s supporters have celebrated the low unemployment rates under his administration. April was the 27th straight month in which the unemployment rate has remained below 4 percent, which is the longest streak since the 1960s, according to The Associated Press.

Biden’s critics also complain of high inflation. The Consumer Price Index (CPI) increased by 3.4 percent in April from a year ago, according to the U.S. Labor Department, which is down from 3.5 percent in March. CPI measures how fast prices are changing. While April’s numbers show that inflation continues to cool from pandemic highs, it has yet to reach the Federal Reserve’s goal of an annual increase in inflation of 2 percent in the price index for personal consumption expenditures (PCE). However, some economists have predicted that Trump’s policies may worsen the economy.

Summers, former treasury secretary under the Bill Clinton administration who also has served as the top White House economic adviser for former President Barack Obama, told The Atlantic of a few economic policies that Trump would enact that could increase inflation.

“These included compromising the independence of the Federal Reserve Board, enlarging the federal budget deficit by extending his 2017 tax cuts, raising tariffs, rescinding Biden policies designed to promote competition and reduce ‘junk fees,’ and squeezing the labor supply by restricting new immigration and deporting undocumented migrants already here,” The Atlantic wrote in an article published last Sunday.

At a rally in Wildwood, New Jersey, last month, Trump promised tax cuts for all Americans. “Instead of a Biden tax hike, I’ll give you a Trump middle class, upper class, lower class, business class big tax cut,” the former president said.

Meanwhile, Trump has floated the idea of a 10 percent tariff on all imports and an over 60 percent tariff on Chinese imports. He told Time magazine in April, “It may be more than that,” referring to the tariff. “It may be a derivative of that.”

During a speech in Iowa last fall, Trump also said if he returns to the White House, his administration “will carry out the largest domestic deportation operation in American history.”

Summers argued that “it is hard to imagine a policy package more likely to create stagflation” than Trump’s economic agenda.

“There is a real risk during a Trump presidency that we would again see mortgage rates above 10 percent as inflation expectations rose and long-term interest rates increased,” he warned.

Newsweek has reached out to Summers, Trump’s campaign and Biden’s campaign via email for comment.

Stagflation is an economic term used to describe slow growth and high unemployment mixed with inflation.

Summers, however, did say that he is unsure if another Biden term can decrease inflation to the Fed’s 2 percent goal. The economist had successfully predicted that inflation would rise when the Biden administration and the Fed overstimulated the economy in 2021, according to The Atlantic.

In March 2021, Biden signed the American Rescue Plan Act, also known as the COVID-19 Stimulus Package, which gave $1.9 trillion in relief to Americans.