“There are understandable fears that Donald Trump will reignite inflation with a fiscally irresponsible budget,” the group of politically progressive academics wrote.
Trump has so far proposed making his first-term tax cuts permanent, imposing flat tariffs on all imports (with the China-specific tariffs rising from 60% to 100%), and pressuring an independent Federal Reserve to lower interest rates.
Economists and Wall Street analysts alike predict that any or all of these proposals could send prices soaring again, which have remained volatile even after cooling somewhat in recent months.
Joseph Stiglitz, who won the Nobel Prize in 2001, led the publication of the letter on Tuesday. Co-signatories include George Akerlof, Sir Angus Deaton, Claudia Goldin, Sir Oliver Hart, Eric Maskin, Daniel McFadden, Paul Milgrom, Roger Myerson, Edmund Phelps, Paul Romer, Alvin Roth, William Sharpe, Robert Shiller, Christopher Syms and Robert Wilson.
“Nonpartisan researchers, including Evercore, Allianz, Oxford Economics and the Peterson Institute, predict that inflation will rise if Donald Trump is successful in implementing his policies,” the economists wrote.
U.S. President Joe Biden speaks at an event at Germanna Community College in Culpeper, Virginia, on February 10, 2022.
Win McNamee | Getty Images
Stiglitz said he felt compelled to release the letter based on a series of recent polls showing voters trust Trump more than Biden to run the U.S. economy.
“A lot of people think that Trump is going to be better for the economy than Biden,” Stiglitz said in an interview with CNBC. “I thought it was important for the American people to know that there is a very big difference of opinion, at least among a group of credible economists.”
The timing of Tuesday’s letter is notable because it comes just days before Trump and Biden are scheduled to face off in the first presidential debate, hosted by CNN in Atlanta, where the economy, and inflation in particular, are expected to be the subject of significant time.
The Trump campaign has categorically rejected the Nobel economist’s position.
“The American people don’t need a worthless, out-of-touch Nobel Peace Prize winner telling us which president put more money in their pockets,” Trump campaign spokeswoman Caroline Leavitt said in a statement to CNBC.
Under the Trump administration, Consumer Price Index (year-on-year) for December He lost his job three years into his four years in office.
Biden’s campaign seized the opportunity to tout the letter on Tuesday, saying “leading economists, Nobel Prize winners and business leaders all know America cannot survive Trump’s dangerous economic policies.”
The Nobel Prize winner’s letter contained not only an economic perspective, but also a distinctive political one.
Many of these economists are similar. September 2021 Letter He voiced his support for President Joe Biden’s “Build Back Better” package, after critics at the time argued the massive spending package would fuel inflation.
At the time, Stiglitz noted that some people “cite fear of inflation as a reason not to make ‘build back better’ investments,” and said in a press release that “this view is shortsighted.”
This time, Stiglitz and his co-signers took a more cautious approach to inflation, as the U.S. economy has had a year to recover from a brutal 2023 inflation spike.
Part of the price hike is due to pandemic-era disruptions to supply chains that have made it difficult for the global trading system to meet pent-up demand from American consumers.
But the demand was the result of the U.S. economy weathering the pandemic better than many expected, thanks to generous government subsidies such as the expanded child tax credit and the Paycheck Protection Program.
Stiglitz said Biden has since led successful efforts to tame peak inflation.
“Inflation has come down incredibly quickly,” he said. “You can really credit that to Biden.”
— CNBC’s Kevin Breuninger contributed to this report.