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Analyzing the Economic Impact of a Potential Trump Administration

The economic landscape may experience significant changes should Donald Trump secure a second term in office. Recent data reveals that inflation has surged by 2.9% year-over-year as of December, signaling ongoing challenges for the Federal Reserve in managing persistent price increases.

Expectations for the Consumer Price Index (CPI), which is a measure of the average change over time in the prices paid by consumers for a market basket of goods and services, were projected at an increase of 2.8%. However, the actual rise demonstrates a more complex situation for policymakers.

Since September, the Federal Reserve has embarked on a series of interest rate cuts following multiple hikes intended to bring inflation under control. This strategy aimed to address the peak inflation rate of 9.1% recorded in June 2022, a 40-year high. Nevertheless, the Federal Reserve faces mounting difficulties in achieving its inflation target of 2% annually, and the latest CPI figures may lead to a pause in further rate cuts during its upcoming meeting on January 29.

As these economic conditions unfold, analysts are voicing concerns regarding the economic strategy proposed by a potential Trump administration. Plans involving new tariffs, tax reductions, and the prospect of mass deportations could pose risks of renewed inflationary pressure, complicating the efforts to stabilize the economy.

Seema Shah, chief global strategist at Principal Asset Management, expressed her concerns in a recent email. “Progress toward the Fed’s 2% inflation target has stalled. The proposed increase in tariffs by the incoming administration is adding to inflation concerns,” she noted, highlighting the potential economic ramifications of Trump’s policies.

—This is a developing story and will be updated as more information becomes available.

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www.cbsnews.com