3 reasons dire economic predictions on Trump's policies were wrong: Brookings

President Donald Trump's economic policies have not produced the recession or steep inflation many economists warned about, and the Brookings Institution points to three main reasons those predictions have not yet come to pass. First, Brookings says the negative impacts were overestimated.

The Federal Reserve proved difficult to influence, tariffs were not as steep as feared, and the pass-through to consumers has been smaller than expected. Ben Harris suggested mainstream economic models may be wrong and that the profession could have overstated the value of immigration, free trade, Fed independence, and a sustainable fiscal outlook.

Second, offsetting fiscal and corporate forces have supported demand. Brookings highlighted the One Big Beautiful Bill Act and heavy corporate spending on AI development; it noted AI capex accounted for 40% of GDP in 2025, Goldman Sachs sees disposable incomes up about 0.4% in the first half of 2026 because of the OBBBA, and foreign investors have pledged billions to spend in the US.

United States

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