The year ahead represents a transition from a Democratic to Republican White House.The Biden administration’s focus was recovery from the COVID-19 pandemic and problems related to the pandemic. The Inflation Reduction Act, CHIPS and Science Act, and American Rescue Plan were massive fiscal policy interventions that stabilized the economy and supported millions of American households […]
The year ahead represents a transition from a Democratic to Republican White House.
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The Biden administration’s focus was recovery from the COVID-19 pandemic and problems related to the pandemic. The Inflation Reduction Act, CHIPS and Science Act, and American Rescue Plan were massive fiscal policy interventions that stabilized the economy and supported millions of American households struggling because of the pandemic.
These interventions and the pandemic also had negative consequences for the economy, primarily inflation. It was because of the predictable rise in inflation that Congress and the administration changed from Democrat to Republican control.
This coming year will also bring about a shift in economic priorities. The incoming administration has promised an aggressive policy of tariffs on China, Mexico, Canada and the European Union.
A tariff policy, if enacted, will have a negative impact on the U.S. economy because there will be a reaction by the affected countries and regions, which will impose their own retaliatory tariffs on U.S. goods and services. Nobody wins in a trade war except the protected companies that do not compete in international markets, and there are few of them in today’s globally connected world.
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The second policy is the plan to round up over 1 million illegal immigrants and return them to their country of origin. This is also a massive and economically disruptive plan that ignores the economic reality that many of these workers are performing jobs and in sectors — like agriculture and retail services, food, manufacturing and construction — that are suffering from real labor shortages.
The uncertainty of both the tariff and immigration policies will be a brake on the economic growth currently being experienced.
Fred McKinney is the co-founder of BJM Solutions, an economic consulting firm. He is the emeritus director of the People’s United Center for Innovation & Entrepreneurship at Quinnipiac University.
