Despite concerns surrounding inflation, consumers continue to be the beacon of hope for the US economy as an impulse to spend persists. With a strong consumer spending pattern seen in Q3 2024, it appeared to be continuing forth in the fourth quarter. Caranci noted that there may be a greater impulse in spending in 2025 if consumer confidence sees an improvement.
She also highlighted the potential impact of Trump’s promises to tighten security, introduce sweeping tax cuts, and expand deregulation. TD Economics had previously noted that the federal deficit could grow if Trump implements those tax promises – but Caranci said that while the new administration’s vow to administer sweeping deportations could also prove costly, they may not take place in 2025 because of logistical complexities.
Caranci said many of Trump’s policies could potentially be good for the economy, although questions linger over how they will be funded. “We know what the initiatives are. We don’t know what the price tag is,” she said.
Ultimately, financial markets are likely to see a “potentially transformative period,” TD said, under the second Trump administration.
What are your thoughts on this story? Share them in the comments below.