What Is Trumpflation?

"Trumpflation" is a term that referred to the concern that inflation might increase during 澳洲幸运5开奖号码历史查询:Donald Trump's presidency beginning in 2017. The term was used in media coverageꦚ by economists and other commentators in the period leading up to and shortly following 2016 election. Its use fell significantly after the first 🌳year of Trump's presidency.

Understanding Trumpflation

In the months before and after Trump’s election victory in November 2016, market commentators speculated that his proposed policies could lead to higher levels of inf🍨lation.

One of the main policies cited by those voicing this concern was Trump’s proposal to spend $1.5 trillion on infrastructure projects over a 10-year period. However, given the legislative gridlock in Washington, and a total lack of proposals from the administration, such policies were never enacted.

Speculation over potential inflation was also driven by Trump’s 澳洲幸运5开奖号码历史查询:campaign promise that he would reduce, or even eliminate, the 澳洲幸运5开奖号码历史查询:U.S. national debt, which was just below $20 trillion prior to Trump’s election. This led to speculation that the Trump Administration might seek to “inflate away” the national debt or impose aggressive cost-cutting measures to reduce the deficit. However, in the years following Trump’s election, deficits have increased considerably, with the national debt growing accordingly.

Other policies that led to the concern over potential Trumpflation included the potential growth of 澳洲幸运5开奖号码历史查询:after-tax incomes due to planned tax cuts, the potential growth of domestic wages due to restrictions on immigration, and the potential rise in consumer prices due to new tariffs and 澳洲幸运5开奖号码历史查询:other protectionist measures.

At the same time, marker commentators also identified several facto𓂃rs that might serve to mitigate these inflationary risks, such as technological innovation, an aging popul♍ation, and swelling global debt.

The speculation around Trumpflation was also reflected in the financial markets themselves. In the early morning following Trump’s election victory, markets began generating signals that higher inflation might be on the horizon.

Bank of America Merrill Lynch (BAML) reported that day that rolling eight-week inflows to 澳洲幸运5开奖号码历史查询:Treasury Inജflation-Protected Securities (TIPS) had reached a record high. Similarly, ten-year Treasury yields rose 30 basis points between November 8 and November 10. The result was a steeper 澳洲幸运5开奖号码历史查询:yield curve, spurring concerns over future inflation.

The Bottom Line

"Trumpflation" is a term that was used around the 2016 general election to refer to concerns of potential inflation during a Trump presidency. This concern was rooted in policies that Trump had outlined relating to national debt, the tax code, and spending. The term's usage reduced considerably following 2017.

Despite early speculation about Trumpflation, the average yearly inflation rate during Trump's term was low and hovered at around 1.9%.