By Nermeen Nabil Khear 
President Donald Trump doesn’t like to wait, and patience is exactly what the Federal Reserve is serving right now. After December’s strong jobs report, the Fed seems comfortable sitting tight, keeping interest rates steady instead of cutting them.
The unemployment rate has dropped to an enviable 4.1%, and inflation is still running above the Fed’s 2% target. So, no rate cuts. That’s bound to clash with Trump, who is already so sick and tired of the Fed.
His economic plans—the massive tariffs, the ‘biggest ever’ tax cuts, and the overly strict immigration policies—could push the economy into unpredictable territory.
Economists at JPMorgan have called Trump and his team “alchemists,” experimenting with policies that could cause chaos. It’s a risky formula, and the Fed knows it.
Housing market under pressure
The housing market is already feeling the squeeze. Mortgage rates have climbed back to 7%, partly thanks to rising Treasury yields and expectations of Trump’s return. The yield on 10-year Treasury notes—closely tied to mortgage rates—spiked by 10 basis points recently, reaching highs not seen since late 2023.
This is no small deal for Americans looking to buy homes. Higher borrowing costs mean higher monthly payments, making homes even less affordable.
But wait, it gets worse. Trump’s immigration policies could shrink the workforce for homebuilders. Immigrants make up about 25% of all construction workers in the U.S. If Trump pushes for deportations or stricter immigration laws, the already tight labor supply in construction could dry up even more.
California’s housing market is already reeling from wildfire damage that demands major rebuilding efforts. Combine that with fewer workers, and the housing crisis could deepen fast.
Inflation, debt, and all the headaches
Inflation expectations are creeping up, and Trump’s policies might only add to it. A recent University of Michigan survey showed long-term inflation expectations jumped to 3.3%, the highest since 2008.
Why does this matter? Because when people expect higher inflation, it can become a self-fulfilling prophecy. Shoppers and businesses start adjusting prices, and before you know it, inflation spirals out of control.
Meanwhile, the national debt is an ugly $36 trillion problem. Both Democrats and Republicans have contributed to this financial mess, but Trump’s proposed tax cuts won’t help.
Add to that the higher borrowing costs tied to rising interest rates, and America looks so primed for a full-blown debt crisis.
Wall Street is already taking note. Economists at Bank of America have revised their expectations. They no longer predict any rate cuts this year and even see a potential hike if inflation goes above 3%, which it probably will.
Though Citigroup still expects some rate cuts but pushed the timeline back to May.
Traders, tariffs, and Trump’s experiments
Trump has floated ideas like a 60% tariff on Chinese imports and universal tariffs on other trade partners. Imported goods would cost more, and businesses would pass those costs on to shoppers. The Tax Cuts and Jobs Act of 2017 has provisions expiring at the end of this year, and Republicans are racing to pack as much as they can into one bill. More tax cuts might sound good politically, but economically, it’s playing with fire.
If Congress doesn’t address the fiscal impact of these, the U.S. could face backlash from bond markets. Rising borrowing costs could crush economic growth, and that’s not a gamble anyone wants to take.
The Federal Reserve, for its part, is watching all of this like a hawk. Chair Jay Powell and his team know the risks of jumping into unorthodox territory.
Trump is already unhappy with nearly every single decision the Fed has made over the past four years. And he could either keep it simmering or blow the lid right off. He tends to be quite unpredictable.
Land a High-Paying Web3 Job in 90 Days: The Ultimate Roadmap
This articles is written by : Nermeen Nabil Khear Abdelmalak
All rights reserved to : USAGOLDMIES . www.usagoldmines.com
You can Enjoy surfing our website categories and read more content in many fields you may like .
Why USAGoldMines ?
USAGoldMines is a comprehensive website offering the latest in financial, crypto, and technical news. With specialized sections for each category, it provides readers with up-to-date market insights, investment trends, and technological advancements, making it a valuable resource for investors and enthusiasts in the fast-paced financial world.