Trump inherits a healthy economy, experts agree, and he could get credit when Americans eventually feel better

Donald Trump, who made criticizing high prices a campaign mantra as voters struggle with the lingering effects of 2022′s post-pandemic inflation spike, is set to take office with an economy that experts agree is healthy. All the key data points ― notably inflation, which is nearly back down to normal — are trending in the right direction.

But many Americans have yet to feel the improvements in their own finances. Although wages have grown faster than inflation since early 2023, economists said it’s going to take more time for that extra pay to offset those higher costs.

“On a lot of aggregate macroeconomic indicators, things look pretty good,” said Joanne Hsu, chief economist for the University of Michigan’s widely followed consumer confidence survey. “That being said, consumers don’t feel like they’re thriving at all, and they remain extremely frustrated by the persistence of high prices.”

About three-quarters of voters in exit polls in key states on Election Day said inflation had been a hardship for them or their family over the past year. And a study by financial information firm Bankrate found that the gap between growth in prices and wages is narrowing but not yet closed. From the start of 2021 through the end of this past June, prices increased 20 percent while wages rose 17.4 percent.

“The performance of the US economy has been surprisingly robust and resilient,” said Mark Hamrick, Bankrate’s senior economic analyst. “The contradiction is where people try to ascribe the state of the economy to how they think an individual’s personal finances ought to be and it’s clear they aren’t always aligned.”

Trump has promised to bring prices down. But aside from gasoline, prices for most other purchases, such as groceries, rarely drop. So wage growth needs to continue to outpace inflation for another six to 12 months before the percentage of the income that people spend on those items returns to what it was before prices shot up in 2022.

“The economy is performing exceptionally well, but nobody believes it, and they’re not going to for a while, until [the pain of] having to pay those higher prices fades away. And it will fade. It’s fading already,” said Mark Zandi, chief economist at economics and research consulting firm Moody’s Analytics.

“Kind of the dark irony is maybe President Trump’s going to get the credit here because, if everything sticks to script and the economy hangs reasonably well together, 12 months from now people are going to feel a lot better,” he continued. “And this simply had nothing to do with President Trump.”

But that path is not set in stone. And economists worry that some of Trump’s policies could cause inflation to jump again.

His plan to extend the sweeping 2017 tax cuts, and possibly expand them, could overheat the economy and drive up prices — especially if he tries to keep the Federal Reserve from raising interest rates to counter it. His vow for mass deportation of undocumented immigrants would drain workers from the economy and could cause prices to rise if employers have to boost wages even higher to attract US citizens to take those jobs.

And Trump’s promise to hike tariffs on imported products — fees that US importers pay — could lead to higher prices here for those goods.

“If we get tariffs, we will pass those tariff costs back to the consumer,” Phil Daniele, chief executive of auto parts retailer AutoZone, told investors in September. “We’ll generally raise prices ahead of [when] we know what the tariffs will be.”

In its most recent quarterly survey, an organization of economists for US businesses and industry trade associations found that higher-than-expected costs from tariffs was one of the top downside risks to the economy. But broadly, the National Association for Business Economics survey found the risk of recession was falling and concerns about inflation were abating.

“The economy looks really, really solid at the moment,” said Selma Hepp, chief economist at real estate data analytics firm CoreLogic and chair of the survey. “Everything is moving in the right direction.”

There’s broad consensus on that point.

Last month, the International Monetary Fund upgraded its projection for US economic growth this year to 2.8 percent compared with an average of 1.8 percent for all advanced economies. Its forecast of 2.2 percent US growth next year is higher than that of any of the Group of Seven leading industrialized economies. In the days before the election, the Wall Street Journal ran a story headlined, The Next President Inherits a Remarkable Economy.

Job growth has eased but remains solid, with economists agreeing that October’s meager gain of 12,000 new jobs was an anomaly caused by hurricanes and labor strikes. The price of gas is falling and inflation is down from a four-decade high of 9.1 percent in mid 2022 to close to the Federal Reserve’s target of 2 percent.

Aggressive Fed interest rate hikes helped reduce inflation, and now the central bank is lowering those rates as well, which will make personal and business loans less expensive.

“It’s actually remarkable how well the US economy has been performing with strong growth, a strong labor market, inflation coming down,” Federal Reserve Chair Jerome Powell told reporters last week. “We’re really performing better than any of our global peers.”

But Powell acknowledged what polls and the results of the presidential election have shown.

“We say that the economy is performing well, and it is, but we also know that people are still feeling the effects of high prices. . . . It stays with you because the price level doesn’t come back down,” he said. “It takes some years of real wage gains for people to feel better. And that’s what we’re trying to create.”

Ryan Sweet, chief US economist at Oxford Economics, a global forecasting and analysis firm, agreed it’s still going to be a while before Americans feel better about their own finances and the economy.

“In economist-speak, the inflation genie’s back in the bottle. . . . But that doesn’t resonate with the average Americans,” he said. “They know that the prices of bread, eggs, the price of their rent, is still noticeably higher than it was this time last year, four years ago, eight years ago, and that’s what they’re focused on.”

And whatever happens with inflation and the economy in the shorter run is an extension of the trends greeting Trump as he takes office.

“Presidents inherit economies,” Sweet said. “They don’t necessarily reshape them on day one or in the first 100 days.”

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Jim Puzzanghera can be reached at jim.puzzanghera@globe.com. Follow him @JimPuzzanghera.