Photo by Scottsdale Mint on Unsplash

My rates! What happened to my rates? Partisan and independent voters ranked the economy the most important issue in the 2024 election.

Here's how the Trump Administration and Republican Congress could affect America's household finances starting in 2025.

1. Low-Interest Rate Environment

American households and businesses are still feeling the squeeze from higher prices across the board since 2020. While inflation has cooled substantially since June 2022, it’s still hovering above pre-pandemic levels. 

Voters suffered from sticker shock all the way to their county voting places. Public opinion surveys persistently found US adults weary of inflation, even as prices began to settle down.

The connection to Biden’s Administration stuck in voters’ minds.

After saying "Bidenomics" in speeches 101 times from June through October of 2023, President Joe Biden dropped the term entirely last November.

With inflation low enough for the central bank to start easing interest rates again and job growth slowing meanwhile, the Federal Reserve bank started to cut rates again in September. That will make borrowing cheaper for consumer spending as well as corporate balance sheets. 

The intended result is for businesses to go on a hiring spree and consumers to go back to the robust spending that keeps America’s economy turning.

This is an economic decision and not a political one. So it’s not exactly up to Trump or the Republicans to influence. It’s made by the Federal Reserve Open Market Committee with a 1913 mandate from Congress.

The government requires the Fed to set rates that maximize employment and target an average inflation rate of 2% each year to motivate Americans to buy goods and services from each other.

Trump does like low rates, however, and has vowed to push for lower rates as president like he did in his first time. When The Fed lowered rates in Sept. 2019, the president took to Twitter to howl at Fed Chair Jerome Powell for not cutting them all the way to zero percent.

2. More Trump Tax Cuts

Last time Republicans controlled Washington, Americans got a big tax cut.

Critics in the Democratic Party and even some in the GOP said the cuts favored the wealthy more than the middle class. According to the Washington Examiner, “Trump tax cuts also lowered taxes for middle- and lower-income households, including by lowering income taxes for lower brackets, expanding the child tax credit, and doubling the standard deduction.”

But during the presidential debate this year, Vice President Kamala Harris said at one point, “When you look at his economic plan, it’s all about tax breaks for the richest people.”

“My opponent, on the other hand, his plan is to do what he has done before, which is to provide a tax cut for billionaires and big corporations, which will result in $5 trillion to America’s deficit,” she said later in the debate.

While that figure is pretty close to the CBO’s estimate, according to the Washington Examiner, “The Trump tax cuts did benefit the wealthy, but they also benefited nearly every American because they lowered taxes across the board.”

“An analysis by the Tax Policy Center, a left-of-center Washington think tank, found that 80.4% of taxpayers received tax cuts, across the income spectrum,” the Examiner reports. “

Even if there’s some substance to the criticisms of Trump’s tax cuts along the lines that they resemble Reagan’s supply-side economics, this time around the former president has promised tax breaks that focus on households with fixed and lower incomes.

That includes tax breaks on tips earned, retirees Social Security checks, and on overtime pay. That could help households on fixed income budgets to keep up with the 2020s' rising prices.

In addition to the Trump tax cuts however, Republicans are also talking about making steep cuts to Medicaid.

On Wednesday, House Budget Chair Rep. Jodey Arrington (R-TX) told reporters his caucus is looking at $100 billion in cuts to SNAP food stamp benefits and another $160 billion in cuts from tougher eligibility requirements. That could make life harder on households with limited income.

3. More Trump Tariffs

In his first term, Trump enacted brutal tariffs on imports from China, Mexico, and Europe. This time around he has more tariffs planned. These could be a mixed bag for the economy.

While certain domestic industries will enjoy lower costs with the shelter from foreign government-subsidized exports to the US, their customers will also have to pay higher prices for their products instead of the subsidized imports, adding to their burden of price inflation.

Trump’s first term was marked by tension with former Trump Treasury Secretary Steven Mnuchin, who sought to moderate Trump's tariff policies so as not to shock markets.

This time around, the president-elect is signaling an even tougher tariff policy by looking for someone who won’t be as timid about bringing the tariff hammer down on imports.

“The next Treasury secretary must be 100 per cent aligned with President-elect Trump’s policy on tariffs,” said the Coalition for a Prosperous America, a pro-tariff think tank in a post on X Sunday.

“Former [US Trade Representative] Robert Lighthizer is a steadfast champion for the US economy and the best choice to carry out President Trump’s trade agenda,” the group said.

Workers in steel, automotive, and other manufacturing industries could enjoy better wages and fewer layoffs, as retirees and investors who hold stocks in those companies might find more support from Trump’s tariffs for their savings.

But businesses and consumers who buy these goods could see their prices go up without competition from cheaper imports subsidized by foreign governments.

4. Department of Government Efficiency

The new Department of Government Efficiency is a presidential advisory commission.

It’s not an actual cabinet-level executive department, but an office that may operate under the Federal Advisory Committee Act to advise the new president-elect on his second term goals to streamline the government and get taxpayers the best deal for their investment. 

Via DOGE, Trump has appointed Elon Musk and former GOP primary rival Vivek Ramaswamy to advise the government on cost-saving measures that will help save taxpayers money.

In addition to forming the DOGE, Trump has promised to make sweeping cuts to government agencies, including entirely eliminating the Dept. of Education. That could return some portion of the government’s multi-trillion-dollar yearly budgets to households and businesses. 

But making the government more efficient along these lines wouldn’t exactly be an efficient process itself. It will require cooperation from Congress, which has the “power of the purse” to allocate spending to various government departments and agencies under Article I of the Constitution.

That will be no easy task. Although Republicans have a majority in both houses of Congress after the 2024 elections, the new administration will still need some Democrats’ votes to accomplish its ambitions.

Tesla and SpaceX CEO Elon Musk says that he wants to see $2 trillion in budget cuts, but in the end it will come down to a vote of Congress, so his proposals will have to be good. Musk is also notorious for setting unrealistic goals to motivate himself and then break down the process for achieving them into a number of smaller 5-minute tasks to pencil into his day planner.

The Clinton Administration streamlined government through a research and advisory committee similar to DOGE from 1993 - 2000. In 2024 dollars, it spared the taxpayer some $248 billion in savings without disrupting the federal government. 

One of Musk’s more unusual ideas related to government efficiency is to introduce word limits for the entire US federal code, agency policy documents, and legal filings and decisions.

5. Trump's Pro Cryptocurrency Agenda

The cryptocurrency industry is revolutionizing finance using the Internet, the same way the World Wide Web began to revolutionize publishing through social media in the 2010s and business through e-commerce in the 2000s.

Trump and his allies in politics are very pro-cryptocurrency and favor a more hands-off policy for cryptocurrency users and businesses than many leading Democrats in Washington.

This will be good for crypto, but critics say that retail crypto investors could get hurt by the lack of consumer protections such as FDIC insurance. They also fear that automated financial infrastructure that can be used anonymously will be abused by criminals and terrorists.

The use of military grade encryption techniques to secure cryptocurrency transactions over the blockchain has alarmed government agencies and consumer watchdog groups. 

But US and international law enforcement agencies have found that the public and transparent nature of the blockchain has made it easier for authorities to investigate and solve financial crimes than the vast, walled keeps of private, corporate banks.

As it turns out, because the blockchain leaves an imminently reliable record of transactions out in the open on the Internet for anyone with a computer to access, it’s difficult for all but the wiliest cybercriminals to use cryptocurrency without leaving a trace for authorities to find them.

Because of its decentralized, autonomous, and anonymous or pseudo-anonymous nature, it is impossible to be sure exactly what percentage of Americans own or use cryptocurrency. Meanwhile, estimates of current US crypto adoption rates range wildly.

According to a May 2024 report by the Federal Reserve, only 7% of Americans own cryptocurrency. According to a Sept. 2024 study conducted by Security.org, some 40% of US adults use or own cryptocurrency. Meanwhile, some 63% of Americans aren’t confident in the reliability and safety of cryptocurrency, according to an Oct. 2024 Pew Research study.

While no Americans have to take on the risk of owning cryptocurrencies unless they elect to do so of their own accord, they may find some benefit in the macroeconomic effects of the $3 trillion cryptocurrency market when they go to pay for the usual consumer basket of goods and services.

Crypto markets incentivize users to save their money instead of spending it. As a result, that money does not add to the velocity of circulating money in the economy, which puts upward or inflationary pressure on prices.

This helps the Federal Reserve to keep prices from spiraling while continuing to ease lending costs for borrowers and prevent the central bank’s worst nightmare scenario of deflationary debt devaluation that could spin the economy into an intractable recession or depression.

6. Trump Deregulation

Trump deregulation plans could both help and hurt the housing market. Housing prices have never been higher and the availability of new homes for sale has never been lower, with homeowners locked into super low 2020-era lending rates.

The once and future president also plans to deregulate Wall Street to increase merger and acquisition deals. This could help retirees with money invested in Wall Street through pensions, but may hurt current workers who could suffer from layoffs