SCOTT SIMON, HOST:
President Donald Trump begins his second term in office, promising what he calls a new golden age for the United States. Speaking to the World Economic Forum, Trump suggested the nation's economy has gotten tarnished and needs some polishing.
(SOUNDBITE OF ARCHIVED RECORDING)
PRESIDENT DONALD TRUMP: My administration is acting with unprecedented speed to fix the disasters we've inherited from a totally inept group of people and to solve every single crisis facing our country. This begins with confronting the economic chaos caused by the failed policies of the last administration.
SIMON: NPR's chief economics correspondent, Scott Horsley joins us now. Scott, thanks so much for being with us.
SCOTT HORSLEY, BYLINE: Good morning. Good to be with you.
SIMON: How do experts characterize the health of the U.S. economy?
HORSLEY: In the words of The Economist magazine, the U .S. economy is the envy of the world. If you compare it to where we were eight years ago - the last time Trump took office - unemployment is lower now, GDP growth is stronger now, wages are climbing faster now. Mark Zandi, who's chief economist at Moody's Analytics, says it looks pretty good.
MARK ZANDI: The numbers speak for themselves. Growth is strong. Lots of jobs. Unemployment is low. If you take the economy on the whole, it really is about as good as it gets. So President Trump is inheriting a fantastic economy.
HORSLEY: The economy is certainly in better shape now than when Trump left the White House four years ago in the midst of the pandemic, which, of course, had sidelined millions of workers.
SIMON: And yet, Scott, as I don't have to tell you, polls, and for that matter, election results indicate that people are unhappy with the economy, right?
HORSLEY: Yeah. I mean, the cost of living is still high, and even though inflation's cooled a lot in the last couple of years, people are grumpy about the cumulative price hikes that followed the pandemic and then Russia's invasion of Ukraine. Now, similar price hikes were felt all over the world, not just here in the U.S., but Zandi acknowledges those price hikes have been hard on a lot of people's budgets, especially lower-income families.
ZANDI: Prices may not be rising all that much right now, but the rent I pay is 20, 25% more than it was three, four years ago. The cost of groceries is 20, 25% more than I was paying three, four years ago. Cost of energy is up considerably from where it was three, four years ago. These are things that people have got to buy, right?
HORSLEY: Compared to the last time Trump took office, for example, gasoline prices are up, about 85 cents a gallon, and mortgage rates are a lot higher now, which is making it tough for people to buy houses.
SIMON: What has President Trump proposed to try and roll back those costs?
HORSLEY: Well, he hasn't really offered a specific plan to cut prices other than saying, drill, baby, drill. He wants to boost domestic oil production and suggests that would cut costs for everything else. But here's the thing - U.S. oil production is already at a record high. And if prices did come down, energy companies might want to drill less, not more.
Trump also said this week he will, quote, "demand lower interest rates," but, you know, the president doesn't dictate borrowing costs. That's up to the bond market and the Federal Reserve. And the bond market has generally been pushing interest rates up since Trump was elected, and Fed policymakers have suggested they're going to take their time cutting interest rates.
SIMON: Why?
HORSLEY: Well, the Fed's going to be wary about cutting borrowing costs so long as inflation remains elevated, and there's a concern that some of the new president's policies could actually make inflation worse. You know, Trump has threatened to impose sweeping tariffs on imports and to deport millions of people living in the country illegally.
HORSLEY: If he actually follows through on those promises, it would likely raise prices. Now, Trump has also called for tax cuts, which could boost the economy, but tax cuts probably won't kick in for another year. And when they do, they will probably add to the federal deficit, which is bigger now than it was the last time Trump took office, although not as big as it was when he left the White House in the middle of the pandemic.
SIMON: NPR's Scott Horsley. Thanks so much.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.
