Deporting immigrants could shrink the labor force, creating more competition for U.S. workers and pushing up wages, also adding to inflationary pressure, economists warn
Sixteen of the world's most notable economists, all Nobel Prize winners, are warning that former President Donald Trump could spark inflation if he wins the presidency in November and implements his economic plans.
"Many Americans are concerned about inflation, which has come down remarkably fast. There is rightly a worry that Donald Trump will reignite this inflation with his fiscally irresponsible budgets," the economists wrote in a letter. Signatories include Joseph Stiglitz, a Columbia University professor who won the Nobel Prize for Economics in 2001, and Yale professor Robert Shiller, who won the prize in 2013.
This warning comes as the U.S. continues to struggle with persistent inflation. The Federal Reserve has kept interest rates at their highest levels in over two decades to cool the economy and bring inflation down to a 2% annual rate. Although inflation has eased from its peak of 9.1% in June 2022, many Americans still have a negative view of the economy, with 6 in 10 rating it as either bad, fairly bad, or very bad, according to a CBS News poll.
Trump's policies could be inflationary, other economists warn, pointing to his proposals such as a 10% across-the-board tariff on all imports and deporting immigrants. Experts at the Peterson Institute for International Economics estimate that the tariff plan would add $1,700 in annual costs for the typical U.S. household, effectively acting as an inflationary tax. Deporting immigrants could reduce the labor force, increasing competition for U.S. workers and driving up wages, which would also add to inflationary pressures.
While the letter from Stiglitz and the other Nobel Prize winners did not detail specifics of Trump's plans, it praised some of President Joe Biden's economic policies, including the Inflation Reduction Act and investments in U.S. manufacturing.
"In his first four years as President, Joe Biden signed into law major investments in the U.S. economy, including in infrastructure, domestic manufacturing, and climate," the letter said. "Together, these investments are likely to increase productivity and economic growth while lowering long-term inflationary pressures and facilitating the clean energy transition."
The economists emphasized their belief that Biden's economic agenda is vastly superior to Trump's. Biden campaign spokesperson James Singer echoed this sentiment, stating, "Top economists, Nobel Prize winners, and business leaders all know America can't afford Trump's dangerous economic agenda. In Donald Trump's America, the rich pay less, and working Americans pay more."
Trump campaign national press secretary Karoline Leavitt responded, "The American people don't need worthless out-of-touch Nobel Prize winners to tell them which president put more money in their pockets." She added that if re-elected, Trump plans to implement a "pro-growth, pro-energy, pro-jobs agenda to bring down the cost of living and uplift all Americans."
The letter concluded with a concern for the U.S. economy under a potential second Trump administration, stating, "We believe that a second Trump term would have a negative impact on the U.S.'s economic standing in the world and a destabilizing effect on the U.S.'s domestic economy."
Signed:
- George A. Akerlof (2001)
- Sir Angus Deaton (2015)
- Claudia Goldin (2023)
- Sir Oliver Hart (2016)
- Eric S. Maskin (2007)
- Daniel L. McFadden (2000)
- Paul R. Milgrom (2020)
- Roger B. Myerson (2007)
- Edmund S. Phelps (2006)
- Paul M. Romer (2018)
- Alvin E. Roth (2012)
- William F. Sharpe (1990)
- Robert J. Shiller (2013)
- Christopher A. Sims (2011)
- Joseph E. Stiglitz (2001)
- Robert B. Wilson (2020)