The return of Donald Trump to the presidency could significantly alter the economic direction of the United States, particularly regarding inflation control and the reduction of budget deficits.
Financial analyst and economist Alexey Kusch made this statement. He added that during the Democrats' term, energy resource prices remained high, leading to a rise in so-called "energy inflation." The Democratic "green agenda" implied elevated prices for energy carriers. In contrast, Trump is exploring alternative methods to combat inflation, especially by lowering energy prices.
Another key aspect of Trump's policy could be budget spending cuts. Trump's team has already announced the potential involvement of Elon Musk to manage a special administration focused on regulating government expenditures.
"He promises to reduce the budget by $2 trillion. This is a substantial amount, which would effectively eliminate the current deficit. In other words, it could reduce the deficit from 6% to zero. It's a very ambitious goal," noted Kusch.
The spending reduction plan entails decreasing funding for many geopolitical projects that, according to Trump, do not provide direct benefits to the American economy.
The high interest rate economic policy implemented by the Democrats, while having a short-term effect on lowering inflation, has negatively impacted the labor market. In October 2024, the U.S. reported a low increase in new job openings, signaling a possible onset of recession, as the labor market is one of the first indicators of economic downturn.
Another challenge for Trump is the enormous U.S. national debt, which stands at 125% of the country's GDP. Annual costs for servicing the debt already exceed one trillion dollars, which is more than expenditures on defense and education. Trump views the solution to this issue not through tax increases but by cutting budgetary expenses. He also hints at utilizing cryptocurrency and other digital financial instruments to optimize the national debt.