As the countdown to President-elect Donald Trump’s second inauguration begins, middle-class families find themselves at a financial crossroads, filled with both opportunity and uncertainty. While concerns may not be immediate, one thing is certain: Significant changes are on the way.
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Daniel P. Ray, CEO of PinnacleQuote, said the middle class should look to what will change in tax policies, healthcare economics and job markets. These areas could have the “most immediate and the most far-reaching impact on household finances.”
With each new policy proposal, the landscape shifts, and it’s crucial to know how these changes could impact your family’s budget and lifestyle. Here are five financial concerns the middle class should have before inauguration day.
Tax Policies Bring Uncertainty Ahead
Experts warn that any tax cuts promised by Trump may not help middle-income earners.
Changes to tax policies can impact take-home pay, deductions and credits that so many families depend on, according to Shirley Mueller, founder at VA Loans Texas. “But homeowners who benefit from mortgage interest deductions should keep their eyes on any proposed tax reforms that might impact these savings,” she said.
The middle class should know that any new tax cuts could lead to future budget deficits that might require “future tax hikes or cuts to services,” Ray said. And families might be relieved by new tax laws while others may feel the sting of less deductions that “could hurt take-home pay.”
That’s why it is essential for families to plan for changes.
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Healthcare Costs Face Uncertain Future
Healthcare is a huge issue, as the coming Trump administration may consider changes to the Affordable Care Act (ACA).
“Such policies may result in families paying higher premiums or not having access to affordable coverage,” explained Ray.
This is particularly troubling for low and middle-income households that already feel the financial pinch from rising medical costs.
As it is now, the enhanced ACA subsidies provided by the Biden presidency are scheduled to lapse by 2025. If Trump does not renew them, nearly 4 million people would find their premiums going up while having less affordable coverage options.
Job Market Dynamics Hold Potential Risks
Another concern is the job market. Some consolation, however, lies in the promises of growing domestic manufacturing jobs, though this doesn’t necessarily mean positions will be created immediately.
“Middle-class workers in terms of manufacturing workers or service-based industries may be affected by some of the shifts that industries have to make to respond to new economic priorities,” Mueller said.
In the past, wage growth did not keep up with job creation. This means it might be some time before increases in wages match inflation, even as more jobs become available. Saving, managing and living within their means is the best thing that families can do, Mueller advised.
Inflationary Pressures Create Growing Concerns
Trump’s claim that his economic policy proposals would defeat inflation is rejected by many economists, who argue they would only compound it, AP News reported. His plans to impose steep tariffs on imported goods, deport millions of migrant workers and demand a voice in the Federal Reserve’s interest rate policies would probably drive up prices.
CBS News reported an expert prediction that these plans could add up to 1 percentage point to inflation rates.
Trump’s economic policies could bring higher prices across many sectors, meaning middle-class families should be prepared to pay more for necessities. Middle-class families already struggling with high inflation rates could struggle even more as the prospect of further increases presents itself.
Workers in retail, service and other vulnerable sectors may be uncertain as a result of sudden changes in the economy.
Tariffs Could Raise Consumer Costs
Trump has stated an intention to impose tariffs on imported goods, which many experts predict would increase costs for all consumers across the board. The average middle-class family will spend almost $1,700 more each year in costs from these tariffs, according to CBS News.
These tariffs wouldn’t just affect rich exporting countries; they could also be a back door to a much higher import tax on things like electronics and groceries. Lower- and middle-income households are most likely to suffer from these increased costs.
When making a budget, they should consider how these changes will affect their financial health as a whole.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: The Trump Economy Begins: 5 Financial Concerns the Middle Class Should Have Before Inauguration Day
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