Leading economic experts are increasingly concerned about the trajectory of the economy, attributing many potential pitfalls to the current administration's fiscal and trade policies. A comprehensive survey of 159 economists, conducted by the National Association for Business Economics (NABE) between July 31 and August 11, highlighted several key areas of risk, including tariffs, recent tax and spending legislation, immigration enforcement, perceived interference with the Federal Reserve, and the handling of government economic data.
The consensus among economists points to significant negative impacts from these policies. Specifically, a substantial majority (88%) believe that tariffs will impede economic growth and exacerbate inflation, echoing concerns raised in previous surveys. While there was a slight reduction in immediate recession fears linked to tariffs, the long-term inflationary pressures are expected to persist, with few forecasters anticipating inflation to stabilize at the Federal Reserve's target of 2% before 2027. Furthermore, the survey revealed strong support for increased immigration, with 66% of experts believing it benefits the economy, while only a small fraction advocated for reduced immigration levels. The recently enacted tax and spending bill also raised red flags, with 78% of respondents indicating that the costs associated with tax cuts would outweigh any economic benefits, signaling a likely increase in spending deficits.
Economists also voiced considerable apprehension regarding attempts to exert pressure on the Federal Reserve and the management of economic statistics. A majority expressed concern about the administration's interference with the central bank's independence, particularly efforts to influence interest rate decisions. This sentiment was evident even before specific incidents, such as calls for the dismissal of Fed officials, came to light. The perceived integrity of government economic data is another major concern, with experts giving an average rating of 7.5 out of 10 for their worry about potential declines in data quality and reliability. This follows instances where changes in economic reporting leadership raised questions about political influence on data accuracy.
In these challenging times, maintaining the independence of critical economic institutions and ensuring the transparency and integrity of data are paramount. Upholding these principles fosters an environment of trust and predictability, allowing for sound policy decisions that promote sustainable growth and broad prosperity for all citizens. A stable and fair economic landscape empowers individuals and businesses to thrive, contributing to a resilient and progressive society.