One economist predicts mortgage rates as high as 10% under Trump

If you think inflation and interest rates are sky-high now, you "ain’t seen nothing" yet. At least that’s what former Treasury Secretary Larry Summers told The Atlantic earlier this month.

Summers called Trump’s policies the most “self-evidently inflationary” platform he’s ever seen. These are strong words coming from someone who accurately called post-Covid inflation.

“I have little doubt that with the Trump program, we will see a substantial acceleration in inflation unless somehow we get a major recession first,” said Summers in his interview.

He later posted to X that mortgage rates could rise to as much as 10% “as inflation expectations rose and long-term interest rates increased” under another Trump presidency.

Summers takes issue with a lot of the policies from Trump’s playbook.

He expresses concern about Trump’s intention to reshape the Federal Reserve, extend his 2017 tax cuts, raise tariffs, reverse policies that reduce junk fees, and restrict new immigration.

Summers says all of these policies, should Trump follow through on them, will place immense upward pressure on inflation.

“It is hard to imagine a policy package more likely to create stagflation than measures that directly raise prices (through tariffs), undermine competition, enlarge deficits, and excessively expand the money supply,” added Summers.

Economists share concerns, but the public still sides with Trump on the economy

A growing chorus of voices are raising red flags about Trump’s economic agenda.

Economic expert Matthew Yglesias recently wrote that Trump’s “macroeconomic populism” could result in a “genuine fiscal catastrophe." Meanwhile, The Washington Post reported in January that Trump’s policies could reignite inflation.

Last month, the non-partisan Peterson Institute for International Economics released a study indicating that the tariffs proposed by Trump on imports could significantly increase expenses for consumers.

Despite these warnings, public perception remains largely in favor of Trump on the economy. A recent Reuters poll showed that 40% of respondents believe Trump had better economic policies compared to 30% who preferred Biden.

Economists, however, say that the Biden administration is a victim of the times, having had to deal with the first global pandemic in modern history, as well as two major wars fueling energy inflation.

To be fair, Summers didn’t hold back on his criticism of Biden either. He told The Atlantic that he doesn’t think Biden’s policies will help the Federal Reserve pull off lowering inflation down to its target of 2%.

“The Biden administration and the Fed both did make … consequential errors of failing to do macroeconomic arithmetic for which the economy is still paying,” he says.