Steep inflation has haunted Americans as our number one bogeyman over the last two and a half years.

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“We’ve experienced high inflation over the last three years because of how much money we flooded into our financial system as a response to the COVID-19 pandemic,” explains CFP and MBA Scott Sturgeon of Oread Wealth. “These include stimulus checks, PPP loans, quantitative easing and other pandemic-era policies that lingered too long. The more dollars there are pursuing the same goods and services, the more those goods and services will increase in price as a response.”

Trump’s proposed policies prove a mixed bag for their impact on inflation. Some would likely reduce it, while others would exacerbate it. Consider the push and pull of each as you prognosticate future inflation rates.

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Deflationary Policies Under Trump

Sara Routhier, finance expert with FreeAdvice.com, sees a slow road ahead. “If Trump wins, it will most likely take two to three years to recover from the inflation we have seen over the last few years. If Harris wins the election, there is a good chance that inflation will continue to rise.”

Learn More: Trump Wants To Eliminate Income Taxes: How Would That Impact You If You Are Retired?

So which of Trump’s policies will help reduce inflation?

Slower Immigration

“Trump’s tighter immigration policies should help reduce inflation,” observes Routhier. “The government would spend less on undocumented immigrants’ housing, medical expenses, and other assimilation costs.”

Reduced government spending isn’t the only reason why slower immigration would also slow inflation. Immigration fuels population growth, which in turn fuels economic growth through higher demand for goods and services. Inflation goes hand in hand with hot economic growth, so reducing population growth and consumer demand should tamp down on inflation.

Greater Domestic Energy Production

At rally after rally, Trump has promised to “drill baby drill” to increase domestic oil and gas production. Greater energy supply drives down energy prices, helping to reduce inflation.

Melanie Musson, a finance expert with Clearsurance.com, points to lower US energy prices and fewer foreign imports. “If Trump is elected again, you can expect a shift away from foreign dependence, similar to his first presidency.”

Reduced Federal Spending (Maybe)

More government spending means more money flooding into the economy. Read: inflation.

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Historically, Republican candidates have proposed slimmer government spending, which can help cut inflation. That said, Donald Trump is by no means a classical conservative.

Trump’s first administration continued to spend more each year, outspending the Obama Administration in every year per The American Presidency Project.

You could make a case that a second Trump Administration would increase federal spending at a slower pace than a Harris Administration. But that argument rests on the “lesser of two evils” for exacerbating inflation, as opposed to a policy solution.

Trump Policies that Would Increase Inflation

Many of Trump’s policy proposals would increase inflation rather than continue taming it.

Pressuring Lower Interest Rates

Despite appointing Jerome Powell as the chair of the Federal Reserve, Donald Trump has been his fiercest critic. He told Fox Business earlier this year that he wouldn’t reappoint Powell, and accused him of being “political.”

In fact, Trump has gone so far as claiming the power to fire a sitting Fed chair, as reported by The Hill. He has repeatedly campaigned this year on lowering interest rates — which of course fuels inflation.

“Higher interest rates have helped cool inflation by cooling down an overheated economy,” explains Sturgeon. And racing to slash interest rates too quickly can drive inflation rates right back up again.

Tariffs

It doesn’t take an economist to see that adding new taxes on imports makes those imported goods more expensive. Retailers don’t just eat those higher costs — they pass them on to consumers. “Broad tariffs typically raise prices for everyday goods,” explains Paul Tyler from annuity provider Zinnia.

Trump initially called for a 10% blanket tariff on all imports, which he has more recently raised to 20% as reported by CNBC. On Chinese imports, that rate would jump to 60%.

That spells inflation on imports, for everyday consumers.

Tax Cuts

Tax cuts stimulate the economy by leaving consumers and companies more money to spend, grow, and hire.

To juice the economy, Trump has proposed extending the provisions from the Tax Cuts and Jobs Act of 2017 indefinitely, and reducing the corporate tax rate from 21% to 15% (see this analysis by the Tax Foundation).

Sometimes the economy does need stimulating. But when the economy is overstimulated — like it’s been for the last three years — that stimulus leads to inflation.

Reduced Federal Regulation

Government regulation works like a throttle on the economy. When the government tightens regulation, it squeezes the flow of goods and services, while loosening regulation increases the flow.

Like reducing taxes, reducing regulation stimulates the economy, which is in turn inflationary.

Dana Miranda, Certified Educator in Personal Finance and author at Healthy Rich, sees regulation as a check on retailers raising prices. “Corporate price gouging can be a major factor in inflation, and it can be addressed with regulation by federal agencies. Harris has proposed regulatory and tax increases on corporations. Trump’s policies favor corporations and likely wouldn’t wrangle inflation any better than it is now.”

Final Thoughts

Each candidates’ policies would have a mixed effect on inflation. Don’t expect either candidate to wave a magic wand and make inflation disappear.

Instead, expect a slow march back to 2% inflation — or a fast drop if the economy falls into recession.

Editor’s note on election 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: I’m a Finance Expert: Here’s How Long It Will Take To Recover From Inflation If Trump Wins

Hong Kong must provide a “clear direction” for how it wants to develop its Islamic finance sector before Malaysia can provide the expertise needed to tap into the Middle East market, the country’s envoy to the financial centre has said.

In an exclusive interview with the Post, Consul General Muzambli Markam also said Hong Kong had “a lot of potential” to turn itself into a Muslim-friendly market but that more effort was needed to accommodate Middle Eastern consumer behaviour.

“We are ready to provide our services to our Hong Kong friends to move forward with Islamic financing and Islamic banking … but we need a clear direction of [where] the policy is headed,” Markam said.

“There’s no point in pushing … [if] there is no interest in Hong Kong,” he said.

Islamic finance, also known as sharia-compliant finance, is a system that operates in accordance with Islamic law and principles, which promote ethical and socially responsible financial practices.

We recently compiled a list of the 10 Best Credit Card Stocks to Buy Now. In this article, we are going to take a look at where Discover Financial Services (NYSE:DFS) stands against the other credit card stocks.

The market for credit card issuance services has expanded significantly over the last several years. At a CAGR of 9.2%, it will grow from $478.09 billion in 2023 to $522.22 billion in 2024, according to the Business Research Company. Over the coming years, a significant expansion in the market size for credit card issuance services is anticipated. At a CAGR of 8.3%, it will increase to $717.7 billion in 2028, as per the research. Contactless payment usage, data security concerns, cryptocurrency emergence, embedded finance, customization, and personalization are all factors contributing to the growth in the projection period.

The credit card market is still changing, mirroring changes in customer preferences and general economic conditions. According to the Q4 2023 Quarterly Credit Industry Insights Report (CIIR), the average credit card debt per borrower at the end of 2023 was $6,360, a 10% rise YoY. This resulted in a total of $1.13 trillion in credit card debt in the United States the same year. Moreover, the average amount owed by households in the 90th percentile is $11,210, with higher-income households often having larger loads.

According to TransUnion, credit card usage continues to rise, with 167.2 million users expected by mid-2023, representing a substantial rise over the last three years. Furthermore, according to the Federal Reserve Bank of San Francisco, credit cards accounted for 31% of all payments in 2022, although less than 10% of Americans typically utilized cash, according to a December 2023 Forbes Advisor survey.

As per the Federal Reserve Board, credit card delinquency rates have been rising gradually and will reach 3.1% by the end of 2023, the highest level since 2011. Additionally, charge-offs rose in Q2 2024 from 4.16% to 4.38%, a record high of 12.5 years that hasn’t been seen since Q4 2011. Meanwhile, according to Forbes Advisor, the average credit card interest rate in March 2024 was 27.89%, putting financial strain on people with balances.

In the future, digital payment methods are expected to gain popularity; according to a survey conducted in August 2023, more than half of customers preferred digital wallets over traditional cards. This change shows that credit card companies will continue to innovate, even as concerns about interest rates and debt levels persist.

Overall, as we have also mentioned in our article, “7 Best American Bank Stocks To Buy According to Hedge Funds,” the U.S. market for digital banking platforms was estimated at $1.04 billion in 2024 and is projected to grow at a CAGR of 9.63% to reach $2.04 billion by 2031.

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Looking forward, according to a report, credit card spending is predicted to increase in the mid-single digits by 2024, while balances will fall to the mid-to-high single digits after a substantial rise since 2022. If labor markets are steady, credit performance measures are expected to decline during 2024 and stabilize by early 2025. Despite lower inflation, key problems include resumed student debt payments, high interest rates, and growing living costs.

Yanni Koulouriotis, CFA, Vice President – Global FIG stated:

Methodology:

We sifted through holdings of credit card ETFs and online rankings to form an initial list of 20 credit card stocks. Then we selected the 10 stocks that were the most popular among institutional investors. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024. We have used the stock’s market cap as a tie-breaker in case two or more stocks have the same number of hedge funds invested.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here)

A business professional in a suit swiping their credit card at the store.

Discover Financial Services (NYSE:DFS)

Number of Hedge Fund Investors: 68 

Market Cap as of September 9: 32.31 billion 

The American bank Discover Financial Services (NYSE:DFS) operates in two different business segments: payment services and direct banking. It is also one of the largest card issuers in the USA. As one of the best credit card stocks to buy, the company produces both credit and debit cards, together with other consumer banking products.

Moreover, it runs the Diners Club, Pulse, and Discover networks. Based on total purchase volume, the Discover network ranks as the fourth-biggest payment network in the US, while Pulse is among the biggest ATM networks in the whole country.

Among its rivals, Discover has continuously produced returns on equity that are among the highest. The company showed resilience in Q2 2024 when it achieved 70% YoY growth in net income to $1.5 billion, mostly from the sale of its portfolio of private student loans and a successful settlement of lawsuits.

Capital One stated earlier this year that it will acquire DFS for $35.3 billion. Consumers may be impacted by the transaction in the future, although the agreement is not anticipated to be finished until late this year or early 2025. The companies are currently seeking permission from authorities and shareholders, and the proposal has already drawn attention from legislators across the political spectrum.

Despite the strong earnings from the American bank, analysts are still fixated on the possible deal. Due to increased competition in the Visa and MasterCard-dominated payment processing market, financial experts feel that the merger could benefit both Capital One and Discover Financial Services (NYSE:DFS). Since issuers would have to compete by providing more alluring credit card advantages, this increased competition may result in improved incentives and rewards for customers.

Barclays maintained its Equal Weight rating on the shares after the Q2 report 2024 and raised the company’s price target on Discover to $137 from $135. In a research note, the analyst informs investors that the company posted a strong beat and that credit is on pace.

Glenn Greenberg’s Brave Warrior Capital is the largest shareholder in the company, with 3,460,972 shares worth $452.73 million.

Overall DFS ranks 8th on our list of the best credit card stocks to buy. While we acknowledge the potential of DFS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DFS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.