Sixteen Nobel Prize-winning economists warn a second Trump term would ‘reignite’ inflation

Sixteen

Nobel
Prize-winning
economists
signed
a
joint
letter
Tuesday
warning
of
what
they
see
as
economic
risks
if
former
President

Donald
Trump
were
to
serve
a
second
term,
including
reheated
inflation.

“While
each
of
us
has
different
views
on
the
particulars
of
various
economic
policies,
we
all
agree
that
Joe
Biden’s
economic
agenda
is
vastly
superior
to
Donald
Trump’s,”
the
economists
wrote.
Axios
was

first
to
report
the
letter.

“There
is
rightly
a
worry
that
Donald
Trump
will
reignite
this
inflation,
with
his
fiscally
irresponsible
budgets,”
wrote
the
group
of
politically
progressive
academics.

Trump
has
so
far
proposed
making
his
first-term

tax
cuts
permanent,
imposing
universal

tariffs
on
all
imports,
with
a
China-specific
tariff
rate
between
60%
and
100%,
and
pressuring
the
independent
Federal
Reserve
Board
to
cut
interest
rates.

Economists
and
Wall
Street
analysts
alike
have
predicted
that
any
or
all
of
those
proposals
could
reinflate
prices,
which
remain
vulnerable
despite
cooling
slightly
in
recent
months.

Joseph
Stiglitz,
who
won
the
Nobel
Prize
in
2001,
led
the
effort
to
publish
Tuesday’s
letter.
His
co-signers
include
George
Akerlof,
Sir
Angus
Deaton,
Claudia
Goldin,
Sir
Oliver
Hart,
Eric
Maskin,
Daniel
McFadden,
Paul
Milgrom,
Roger
Myerson,
Edmund
Phelps,
Paul
Romer,
Alvin
Roth,
William
Sharpe,
Robert
Shiller,
Christopher
Sims
and
Robert
Wilson.

“Nonpartisan
researchers,
including
at
Evercore,
Allianz,
Oxford
Economics,
and
the
Peterson
Institute,
predict
that
if
Donald
Trump
successfully
enacts
his
agenda,
it
will
increase
inflation,”
the
economists
wrote.

Stiglitz
said
he
felt
compelled
to
initiate
the
letter
based
on
a
flurry
of
recent
polling
in
which
voters
said
they
trusted
Trump
over
Biden
to
manage
the
U.S.
economy.

“A
lot
of
people
think
Trump
would
be
better
for
the
economy
than
Biden,”
Stiglitz
told
CNBC
in
an
interview.
“I
thought
it
would
be
important
for
Americans
to
know
that
at
least
a
group
of
credible
economists
differs
very
strongly.”

The
timing
of
Tuesday’s
letter
was
notable,
coming
just
days
before
Trump
and
Biden
are
scheduled
to
face
off
in
the
first
presidential
debate
of
the
general
election.
The
Atlanta
debate
hosted
by
CNN
is
expected
to
dedicate
significant
time
to
the
economy
and
specifically,
inflation.

The
Trump
campaign
staunchly
rejected
the
Nobel
economists’
position.

“The
American
people
don’t
need
worthless
out
of
touch
Nobel
peace
prize
winners
to
tell
them
which
president
put
more
money
in
their
pockets,”
Trump
campaign
spokesperson
Karoline
Leavitt
said
in
a
statement
to
CNBC.

Under
Trump,
the

December
year-over-year
Consumer
Price
Index
fell
during
three
of
his
four
years
in
office.

The
Biden
campaign
seized
the
opportunity
to
tout
the
letter
on
Tuesday:
“Top
economists,
Nobel
Prize
winners,
and
business
leaders
all
know
America
can’t
afford
Trump’s
dangerous
economic
agenda.”

The
Nobel
laureates’
letter
contained
a
distinct
political
perspective,
as
well
as
an
economic
one.

Many
of
these
economists
signed
a
similar

September
2021
letter
expressing
support
for
President
Joe
Biden’s
Build
Back
Better
package.
Critics
at
the
time
argued
that
the
massive
spending
packages
would
drive
up
inflation.

At
the
time,
Stiglitz
observed
that
some
people
“invoked
fears
of
inflation
as
a
reason
to
not
undertake”
the
Build
Back
Better
investments.
“This
view
is
short-sighted,”he
said
in
a
press
release.

This
time
around,
Stiglitz
and
his
co-signers
took
a
more
cautious
approach
to
inflation,
after
the
U.S.
economy
has
spent
that
last
year
recovering
from
2023’s
scorching
inflation
spike.

The
higher
prices
were
partly
due
to
pandemic-era
supply
chain
snarls,
which
left
the
global
trade
system
unable
to
meet
the
pent
up
demand
of
American
consumers.

But
this
demand
was
itself
the
result
of
a
U.S.
economy
that
weathered
the
pandemic

better
than
many
had
anticipated
it
would
—
thanks
to
generous
government
subsidies
like
the
expanded
Child
Tax
Credit
and
the
Paycheck
Protection
Program.

Since
then,
Stiglitz
said,
Biden
has
helmed
a
successful
effort
to
cool
those
inflation
peaks.

“Inflation
has
been
brought
down,
actually,
remarkably
quickly,”
he
said.
“I
would
say
it’s
because
of
Biden.”

—

CNBC’s
Kevin
Breuninger
contributed
to
this
report.