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CNN
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In poll after poll, Americans have said the economy is their top concern as they prepare to vote in this election.

When you struggle with high inflation for years, this happens to you. Although inflation has cooled significantly since its 40-year peak in 2022, Americans are now paying about 20% more for goods and services than they did before the pandemic, according to Consumer Price Index data.

On the other hand, the labor market, which has been the biggest source of strength in the U.S. economy after the pandemic, has been sending warning signals lately. The unemployment rate is near a three-year high and employers are hiring less. The number of job openings across the economy recently fell to the lowest level since January 2021, according to the Labor Department.

In response to Americans’ economic fears, Vice President Kamala Harris and former President Donald Trump have put forward starkly different policy proposals that they will unveil during Tuesday night’s presidential debate. Their differing approaches could have far-reaching implications for the economy — and for you.

Here’s a look at the potential impact on inflation, jobs and the deficit if Trump or Harris wins in November.

Inflation and jobs

Trump’s controversial tariff policy calls for dramatically higher import tariffs on virtually everything that comes into the country’s ports from overseas. That could raise government revenue – but it could also mean that Americans have to pay higher prices for goods and services. Economists at Goldman Sachs have estimated that every one percentage point increase in the effective tariff rate could raise core inflation, as measured by the price index for personal consumption expenditures, by one-tenth of a percentage point. And Trump is talking about 10 to 20 percent tariffs on most things except Chinese goods – which would be subject to a 60 percent tariff.

Meanwhile, Trump is promising to produce much more oil to lower prices. This is a major cost factor for many companies. Whether he can achieve this is questionable, however. The USA already produces more oil than any other country in history.

In addition, the unprecedented anti-immigration measures that Trump has announced if he returns to the White House could lead to higher inflation, economists say, although Trump recently claimed that prices would “fall dramatically and rapidly” as a result.

If mass deportations occur, companies may have difficulty filling vacancies and would be forced to raise wages and pass these costs on to consumers.

Even deporting 1.3 million workers – fewer than the 10 to 20 million demanded by Trump – would be an “inflation shock,” raising inflation by 1.3 percentage points after three years, according to a study by Australian economist Warwick McKibbin presented at the Peterson Institute for International Economics. Gross domestic product, the most comprehensive measure of the U.S. economy, would be 2.1 percentage points lower – a dramatic drop.

If 7.5 million workers were deported, inflation would be a whopping 7.4 percentage points higher and GDP 12 percentage points lower after three years, according to the study.

Harris warned that the immigration system is “broken,” and on her website her campaign team promises to reinstate the bipartisan border security law. But Harris has not promised mass deportations or tougher measures, as Trump has called for.

For this reason, Goldman Sachs recently told its clients that it expects only a “modest further decline” in net immigration under a Harris presidency.

If Trump wins with a divided government, the supply of immigrants per month will be 10,000 lower than under a President Harris, Goldman Sachs estimates. If the Republicans win in November, Goldman expects the supply of immigrants in America to be 30,000 lower than under a President Harris.

However, Harris’ policies are not inflation-proof.

Her proposed tax credit for first-time home buyers and tripling of the child tax credit for newborns could give consumers more money to spend on goods and services, but that could lead to higher prices they pay for them.

Harris has also proposed a plan that her team says would result in three million housing units. The problem is the timing: If the first-time buyer credit goes into effect before more new housing is available, it could cause housing prices to rise.

“The problem right now is that too many people want too few homes,” Justin Wolfers, a professor of public policy and economics at the University of Michigan, told CNN. “The solution to this is not to give people more money to buy homes. If you don’t fix the supply side, everyone you help is hurting someone else.”

A potential wild card for inflation is the two candidates’ different approaches to the Federal Reserve, the independent central bank that is supposed to control inflation. Harris promised a laissez-faire approach, while Trump said the president should have influence over decision-making – an argument he later backed away from.

Regardless of who wins in November, a significant increase in the federal budget deficit is to be expected.

A budget deficit occurs when the government spends more than it takes in. Currently, the U.S. government has a budget deficit of $1.5 trillion, according to the U.S. Treasury Department. The nonpartisan Penn-Wharton Budget Model projects it will rise to $2.1 trillion by 2034 if the status quo is maintained.

The size of the deficit has a big impact on Americans. The higher the deficit, the riskier it becomes to hold U.S. debt, which tends to grow as the deficit increases. As a result, the government may have to pay higher interest rates to borrow money. That can reduce the amount of investment in other programs the government can make.

Higher interest rates on government debt, typically issued in the form of bonds and Treasury bills, could also lead to higher borrowing costs for Americans, since those rates are tied to the interest paid on investments in government debt.

Several of Trump’s proposed tax measures would significantly reduce government revenue. They include permanently extending the individual and business provisions of his Tax Cuts and Jobs Act, which expires next year. Among other things, this would keep the top individual tax rate at 37%, compared to 39.6% before the law went into effect.

He also proposed reducing the corporate tax rate for domestic manufacturing companies from the current 21% to 15% and abolishing taxes on social benefits for retirees and tips for service workers.

Trump says he wants to use his tariffs to fund these initiatives. But the revenue the government would raise from the tariffs would not be enough to fully offset the lost tax revenue. The Penn-Wharton budget model, which does not take into account Trump’s new proposals from last week or the elimination of the tip tax, estimates that his proposals could add another $5.8 trillion to the deficit over the next decade.

The model also does not take into account the savings that could be achieved by a commission announced by Trump and led by Elon Musk to reduce wasteful government spending.

The tax proposals Harris has put forward so far mostly involve higher taxes that would have a positive impact on the budget deficit. For example, she has advocated raising the top income tax rate to 44.6 percent and the top capital gains tax rate to 28 percent (up from the current 20 percent). And on the corporate side, she is in favor of raising the tax rate to 28 percent.

However, the additional tax revenue the government could generate could be offset by the large tax breaks it is proposing, including an expansion of the child tax credit and a $25,000 first-time home loan.

And like Trump, she has promised to eliminate taxes on tips. She has also promised not to raise taxes on households earning less than $400,000 a year. Both of these would increase the budget deficit.

Overall, Penn Wharton’s budget model estimates that Harris’ proposals could increase the deficit by another $1.2 trillion by 2034.

Neither candidate has proposed a credible solution to the country’s fiscal disaster, said Joshua Gotbaum, visiting economics fellow at the Brookings Institution. “But Harris’ proposal would cause a much smaller mess,” he said.