Trump vs The Fed: This Could Get OUT OF CONTROL

Donald Trump's economic plan, focused on stimulating growth through tax cuts, federal land release, and tariffs, could significantly impact the housing market and overall economy. The Federal Reserve's response to Trump's plan will be crucial in determining whether the economy experiences a period of stability or a housing price surge, potentially making homeownership even less attainable for many.

Trump's Economic Plan

• 00:00:05 Trump's economic plan prioritizes stimulating economic growth through measures such as tax cuts, federal land release, and tariffs. The goal is to increase spending and investment, potentially leading to a surge in demand for housing and other assets. The plan aims to create jobs, boost disposable income, and improve affordability, but also carries the risk of higher inflation.

Impact on Interest Rates

• 00:16:59 Trump's economic plan, combined with potential budget deficits, could exert upward pressure on interest rates, even if the Federal Reserve actively tries to lower them. The government's need to fund the deficit through increased treasury issuance could overwhelm demand, driving bond prices higher. The interplay between the bond market and the Federal Reserve's policies will be a key factor in shaping future interest rate trends.

Tariffs & Inflation

• 00:10:34 Trump's proposed tariffs on imported goods are expected to increase prices for consumers, as businesses pass on the costs. While the intention is to bring manufacturing jobs back to the United States and potentially strengthen the economy, this could lead to inflationary pressures and a surge in consumer prices for goods like automobiles, electronics, and clothing. The long-term impact on the economy remains uncertain.

Housing Market Impact

• 00:22:33 Trump's economic policies could lead to higher housing costs due to increased building expenses from tariffs and potential inflation. The increased costs of construction materials, coupled with a potential rise in labor costs, could make homebuilding more expensive. However, if lower interest rates lead to increased consumer demand, the housing market could become even less affordable than it is currently.

Supply & Demand

• 00:24:53 Increased housing supply is crucial for mitigating the effects of Trump's economic plan on housing prices. By opening up federal land and reducing regulations, the government could encourage more housing construction, potentially stabilizing or lowering prices. However, this would take time to materialize, and the success of this strategy depends heavily on the Federal Reserve's actions regarding interest rates.