Trump’s stimulus plus potential Fed cuts create inflation risks, as housing listings surge across Florida, Texas, and D.C.
Sectors & Industries
June 30, 2025
Table of Contents
If the Fed cuts rates just as Trump’s $4.2T “Big Beautiful Bill” floods the economy, inflation risks could reaccelerate. The bill front-loads $2.2T in borrowing over five years—well before any fiscal offsets begin—potentially boosting disposable income as tariffs raise prices and labor markets remain tight. Morgan Stanley projects the 2026 deficit will hit 7.1% of GDP even without monetary easing.
This policy mismatch—looser rates paired with deficit-driven demand—threatens to reverse disinflation. Though GDP just turned negative and consumption is weakening, fiscal stimulus layered atop easier Fed policy could trigger a renewed inflation spike. Powell has warned federal debt is unsustainable and tariff pass-through remains a wild card. If the Fed cuts too soon, it risks fueling demand and falling into a new policy trap.
Active listings of homes for sale are up 300% since 2022 in Florida - known to be a bellwhether for the broader housing market. Likewise, listings are up 100% in Washington D.C. and 400% in Texas. Rising inventory cools housing prices by providing competition amongst sellers.
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