Economic Outlook Following Trump's Election Victory

This technical report outlines the anticipated economic implications of President Trump's election victory and the potential for Republican control of Congress. It details the expected inflation rates, GDP growth forecasts, and Fed Funds rate projections for 2025 and 2026, highlighting that inflation may rise to 2.9% and 3.4% respectively. The report discusses fiscal policy changes, including a potential fiscal package of 0.5% of GDP and the renewal of the Tax Cuts and Jobs Act. It also addresses trade policy, noting the likelihood of increased tariffs on imports, particularly from China, and the potential risks to global GDP growth. Additionally, the report examines the reaction of capital markets, indicating a swift appreciation of the USD and rising US government bond yields. The document emphasizes the complexities surrounding fiscal activism, public finances, and immigration policy, projecting a challenging environment for large-scale fiscal expansion due to the precarious state of US public finances.