'Pay cut for everybody': Expert explains the 'tricky spot' Trump put himself in

President-elect Donald Trump has placed himself in a "tricky spot" after making several campaign promises that economists have warned will raise inflation, CNBC senior Washington correspondent Eamon Javers explained on Thursday's episode of MSNBC's Deadline: White House.

"I think any fair read of the exit polls can leave you with a pretty clear understanding that the voters thought that they were getting something great in a Trump economy," host Nicolle Wallace began, speaking with Javers. "I just want to level set that with some facts. This is from The New York Times:

When Trump took office in 2017, the US economy was emerging from the grindingly slow economy that following the Great Recession. Inflation and interest rates were both low, for the first time in years.

This time, Mr. Trump is inheriting an economy that is solid but slowing. Inflation has eased but remains above the Fed's target of 2 percent, and memories of the rapid price increases of a few years ago that are fresh in consumers' minds.

"If you look at the economy right now, on paper, a lot of things are really great about the economy," the correspondent replied. "The stock market, except for the past ten days, has really been on a tear. We've had a ten day losing streak, which is the longest since 1974, so this week hasn't been great. But this year has been great for the stock market. Unemployment is really in a great place. If you look at inflation, it is more under control than it was a couple of years ago. The problem is that prices are still high. When you say inflation is coming down, that doesn't mean prices are coming down. That means prices are going up a little more slowly than they were before."

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"So, people remember when milk was a lot cheaper than it is now. When people go to the grocery store, they feel that. Inflation is like a pay cut for voters, and everybody hates a pay cut, and this is like a national pay cut for everybody. That mood kind of pervades through the economy and the voters' minds, and I think a lot of that was reflected in the vote for Donald Trump. People said, 'Look, this is a business guy — he's gonna be able to fix that.'"

He continued, "The challenge is that Trump is gonna have is that a number of his signature ideas are things that economists say will increase inflation. Mass deportations, most economists will tell you, will increase inflation, because you're gonna lower supply of a lot of things, particularly agricultural commodities, and that's gonna raise the prices for food stuffs, for example. Widespread tariffs will also raise inflation — most economists will tell you."

With that, Javers emphasized, "Trump is in a tricky spot here. The tension is his campaign promises were things that will raise inflation, and he knows he got elected because inflation was high. So the question is, and what will he decide to do. And we have no idea how to predict that because this is a president who is serving a second term, who in theory won't be running again in four years. So he's kind of detached now from political calculations."

Watch the video below or at this link.

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