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In this episode of Stocks In Translation, Yahoo Finance markets and data editor Jared Blikre and producer Sydnee Fried welcome Joe Brusuelas, RSM chief economist, to the vodcast to discuss regime change and the post-pandemic economy.
In finance, a regime change refers to a “major shift in economic conditions such as interest rates, inflation or growth, often triggered by policy changes or structural economic shifts,” said Blikre.
As Donald Trump transitions back into the White House for his second term, Brusuelas said the president-elect’s administration will focus on narrowing the deficit. However, there are contradictions associated with Trump’s approach to economic populism. Trump aims to lower taxes and increase government spending, which leads to higher deficits and debt.
“The issue is that Trump and his policymakers will want to narrow the trade deficit. They want to narrow the current account deficit,” Brusuelas said. “But you can't do that when you get a stronger dollar because lower taxes mean more disposable income, and you attract more imports.”
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This results in higher trade deficits, which was seen during Trump’s first two years in office. Brusuelas adds, “that internal inconsistency that lies at the heart of economic populism that the Trump administration clearly intends to pursue, which creates what I think is a road that leads to tensions.”
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This post was written by Shelby Boamah.