Is Trump or Harris better for the American economy? What experts said

It’s been a challenging few years for the US economy after it took a huge hit from the global coronavirus pandemic, sending growth and unemployment deep into the negative.

As the economy and employment boomed as lockdowns ended, restrictions were lifted and the world reopened for business, inflation sent prices skyrocketing, putting severe pressure on Americans’ incomes.

So it’s no wonder that polling ahead of the 2024 election by both Gallup and Pew showed the economy — and the desire for a stronger economy — at the top of American voters’ minds.

Harris’ economic plan promises to cut taxes for middle-class families, defund housing to lower rents and increase homeownership, tackle inflation through a “federal ban on price gouging” and encourage startups help by expanding their tax deductions for expenses.

Trump’s economic platform promises to “end inflation,” “end outsourcing” and protect American manufacturing through import tariffs, increase energy production by cutting green regulations, reduce taxes on workers such as no tax on tips, and extend his 2017 tax cuts.

As voters head to the polls, key figures show that the economy is moving along at a steady pace. The economy grew 2.8 percent in the third quarter of the year, according to the Bureau of Economic Analysis. And inflation has stabilized and stood at 2.4 percent in September.

But the unemployment rate is rising, reaching 4.1 percent in October, according to the Bureau of Labor Statistics, up from 3.8 percent a year earlier.

So whose plan is better for the US economy between Trump and Harris? Newsweek put the question to economists for their opinion. This is what they said.

Mark Zandi, chief economist at Moody’s Analytics

The U.S. economy will perform better and working Americans will fare better if Vice President Harris wins the presidency, as economic policies will remain largely unchanged.

As president, Harris will almost certainly face divisions Congress which will severely limit any change in economic policy.

The first two years of her government will be characterized by the status quo of policy. This suggests that the current tax cuts for individuals, which expire at the end of next year, will be extended, as will the enhanced subsidies from the Affordable Care Act.

There may also be some smaller changes to the tax code, including research and development tax credits and accelerated depreciation for businesses. Republicans favor, and expanded child tax credits and tax credits for working households, something Harris and the Democrats favor.

There is an outside opportunity for comprehensive immigration reform, given bipartisan support for such legislation earlier this year, which would stem the flow of illegal immigrants at the southern border but allow more legal immigration of those with the necessary job skills.

Former President Trump is likely to impose higher, broad-based tariffs and engage in deportations of immigrants, as he will be doing so under executive order and thus does not care whether Congress is controlled by Republicans or divided. These policies will result in a combination of higher inflation and interest rates and slower economic growth.

If Republicans win the election, there will likely be more tax cuts, including for corporations, which are significantly deficit-financed. Deficit-financed tax cuts in a full-employment economy like the current one are also inflationary and would lead to higher interest rates and slower growth than would otherwise be the case.

The US is currently strong and resilient, so it should be able to weather most storms in the coming year, including the presidential election and its outcome.

This assumes, of course, that the election is not so controversial as to result in significant social unrest, and that the next president and Congress can agree on a timely increase or suspension of the national debt limit before the government bonds run out of cash and will somewhere not fulfill his obligations next summer.

Brett Ryan, senior US economist, Deutsche Bank

Our analysis shows that the candidates’ economic plans provide at best a modest boost to growth.

Our base case assumes a full extension of the 2017 Tax Cut and Jobs Act. Against that backdrop, Trump’s additional tax cuts could boost growth by roughly 0.4 to 0.5 percent over the next few years.

According to Harris, her calls for expanding the child tax credit and the earned income tax credit could be worth 0.2 to 0.4 percent in the coming years.

The caveat in assessing Trump’s plans is the tariffs. In our view, a 10 percent global rate would act as a consumption tax that would negatively impact growth and could depress corporate spending in the short term.

We predict that a full-blown trade war would negate any positive impact on growth from Trump’s other policies and reduce growth relative to our base case.

Unfortunately, neither candidate’s proposals address the unsustainable trajectory of federal deficits and debt.

Strikingly, they ignore the looming Social Security cuts that would have to happen if the trust fund is depleted within the next decade, as currently projected.

In short, the winner of the 2028 presidential election will have to be the one to do the hard work of strengthening Social Security, as neither party seems willing to tackle the issue seriously.

Claudia Sahm, Chief Economist, New Century Advisors

With inflation-adjusted growth well above pre-pandemic trends and unemployment near historic lows, the U.S. economy will enter the new administration from a position of strength.

Yet the past four and a half years have exposed economic problems, such as the lack of affordable housing. Vice President Harris’ proposal to support the construction of millions of new homes would be an important corrective. Typically, the federal government does not have the lead in housing construction, so there are barriers to success.

Higher productivity growth is the ‘holy grail’ of economic prosperity. Labor productivity growth has increased significantly in recent years.

Policies that can support new technologies, more inclusive workplaces and business formation are essential for expanding higher productivity growth. There is no one policy that we can point to. Details will matter. Implementation will matter.

The US economy is worth almost $30 trillion. No one, including the president, controls economic outcomes. The US will join the new administration from a position of strength, but we should not take that for granted.

Recent growth is no guarantee of future growth, and radical new policies, such as mass deportations, would almost certainly slow growth.