Comparing the economic policies of Mr. Trump and Ms. Harris, a problem arose where both were at a standstill.

In multiple polls, Americans say the economy is their top concern as they prepare to vote in the November election.

The first live debate between the two US presidential candidates, Mr. Donald Trump and Ms. Kamala Harris, officially took place on the morning of September 11. (Source: AFP)

CNN said that having to deal with high inflation for many years has caused the American people to make such a decision.

Inflation in the world's largest economy has cooled significantly since peaking at a 40-year high in 2022. However, Americans are now paying about 20% more for goods and services than they did before the Covid-19 pandemic.

On the other hand, the job market – which has been the biggest source of strength for the US economy after the pandemic – has recently shown warning signs. Specifically, according to the US Department of Labor, the unemployment rate is hovering near a three-year high, and the number of open jobs nationwide has also fallen to its lowest level since January 2021.

In response to public anxiety about the economy, Vice President Kamala Harris and former President Donald Trump have offered very different policy proposals. Their contrasting approaches could have far-reaching implications for the world's largest economy.

Here's a look at what could happen to inflation, employment and budget deficits in the world economy once the White House finds a new owner.

Inflation and employment

Mr Trump’s tariff policy will be controversial. He has proposed imposing significantly higher import taxes on almost all goods from abroad. This could raise government revenue but could also make Americans pay higher prices for goods and services.

Goldman Sachs economists estimate that every 1% increase in real tariffs would increase core inflation by 0.1%.

Meanwhile, former President Trump has also promised to drill more oil, a key factor that could help cool high oil prices. However, the question remains whether he can achieve that. The United States currently pumps more oil than any other country.

In addition, economists say Mr. Trump’s unprecedented immigration crackdown could also lead to higher inflation. If it does, businesses could struggle to hire workers, forcing them to raise wages and pass the cost on to consumers.

Meanwhile, Ms. Harris has warned that the immigration system is "broken" but she has not made as strong a commitment as Mr. Trump on the issue. That is why Goldman Sachs expects "net immigration to decline even more" if Ms. Harris becomes President of the United States.

Economists also say that Ms. Harris' economic program focuses on three pillars: fighting inflation, adjusting the housing market and cutting taxes for families.

The Hill reported that Ms. Harris has announced a plan to ease the cost of living crisis, including a $6,000 tax credit for families with newborns, expanding the existing credit for families with older children to $3,600 a year and providing down payment assistance of up to $25,000 for first-time homebuyers. This is a policy that has received widespread support from economists.

However, this policy could also increase inflation in the world's number one economy. The policy could give American consumers more money to spend on goods and services. And this would cause prices to rise.

Harris is also proposing a plan to create 3 million new homes. According to CNN , the problem is timing. If the first-time homeowner tax credit goes into effect before this new housing hits the market, home prices could skyrocket.

Regardless of who wins in November, the budget deficit will increase significantly. (Source: Getty Images)

Budget deficit - an unsolved problem

CNN also found that no matter who wins the election in November, the budget deficit will increase significantly.

Budget deficits increase when the government spends more than it takes in. The US government currently has a budget deficit of $1.5 trillion, according to Treasury Department data.

The size of the budget deficit has a big impact on Americans. The higher the deficit, the greater the risk of holding debt for the country, and the government may have to pay higher interest rates to borrow money. That can reduce the amount of money available for investment in other programs.

Higher interest rates on government debt — typically sold as Treasury notes and bonds — could also increase borrowing costs for Americans.

Some of Mr. Trump's proposed tax policies would significantly limit the amount of money the government collects.

Meanwhile, Vice President Harris' tax proposals so far have largely involved higher tax rates, which would have a positive impact on the deficit.

For example, she has supported raising the top personal income tax rate to 44.6% and the top long-term capital gains tax rate to 28% from the current 20%. And on the corporate side, she supports raising the tax rate to 28%.

The Democratic candidate, however, has promised to end the tip tax. She has also pledged not to raise taxes on households earning less than $400,000 a year. Both of these issues would increase the deficit. Harris’s proposals could add an estimated $1.2 trillion to the deficit by 2034.

Neither candidate has proposed a credible solution to the country's financial turmoil, said Joshua Gotbaum, a visiting economics scholar at the Brookings Institution.

But on the budget deficit issue, Mr. Joshua Gotbaum leaned toward Ms. Harris, saying: "Her proposals would make the situation less chaotic."

The first live debate between the two US presidential candidates, Mr. Donald Trump and Ms. Kamala Harris, officially took place on the morning of September 11. The two candidates continuously attacked their opponents' policies, as well as defended their own plans.

According to experts, the commitments from both candidates at this time play the most important role in creating an image with voters, because even if they are elected, the journey to make these commitments come true is still quite long.

And whoever wins, the real challenges facing the world's largest economy today will be the big problems they will have to solve.

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