The economy is doing “exceptionally well” as President-elect Donald Trump gets ready to enter the White House, according to Moody’s Analytics chief economist Mark Zandi.

Zandi, speaking at the Consumer Federation of America’s financial services conference on Wednesday, noted some of the glowing areas: Gross domestic product has been growing at around 3%, productivity and business formation rates are strong and the stock market is up.

“The economy can weather a lot of storms,” Zandi said.

But, he added, “I do think there are some potential storms coming” next year under the new administration.

Zandi expects Trump to act quickly on deporting immigrants and implementing tariffs, two moves that could have profound impacts on the U.S. economy.

“I believe President Trump is going to do what he said he’ll do on the campaign trail,” Zandi said. “He’s going to be quite aggressive in pursuing the policies.”

Immigration has played a big role in the economy’s strength, Zandi said.

Others agree. “Recent immigrants have flowed disproportionately into the parts of the labor force that were particularly tight in 2022, contributing to labor supply in places where it was most badly needed,” Goldman Sachs analysts wrote in a note to clients in May.

Meanwhile, tariffs create “a whole lot of uncertainty for businesses,” Zandi said. As a result, they could lead to job losses.

Tariffs are also likely to impact people’s spending, he said.

“It’s going to mean higher costs for consumers, it’s a tax increase,” Zandi said.

Trump‘s universal tariff proposals could cause prices to skyrocket on clothing, toys, furniture, household appliances, footwear and travel goods, according to a recent report from the National Retail Federation.

Trump has said he would impose a 10% or 20% tariff on all imports across the board.

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The NRF found that the impact of the tariffs would be “dramatic” double-digit percentage price spikes in nearly all six retail categories that the trade group examined.

For example, the cost of clothing could rise between 12.5% and 20.6%, the analysis found. That means an $80 pair of men’s jeans would instead cost between $90 and $96.

These new prices would squeeze consumer budgets, especially for low-income households that spend triple as much of their monthly budgets on apparel as high-income households spend, according to the Bureau of Labor Statistics.

Consumers saw inflation pick up slightly in November, as price increases in categories like groceries, gasoline and new cars outweighed a deceleration in others like shelter during the month.

The consumer price index, a key inflation gauge, rose 2.7% last month relative to November 2023, the Bureau of Labor Statistics reported Wednesday. The annual rate was up from 2.6% in October.

“I don’t see an acceleration” of inflation, said Mark Zandi, chief economist at Moody’s. “But I think it’s persistently too strong.”

“It’s not like there’s any smoking gun saying, ‘This is the problem,'” Zandi said. “It’s kind of broad-based, a little on the high side everywhere.”

That said, there are reasons for optimism, according to economists.

Namely, consumers can take “solace” that economic trends underpinning inflation, such as moderating wage growth in the labor market, remain positive, Zandi said.

“We still think we’re on the overall path of disinflation,” despite the appearance of an inflation “revival,” said Joe Seydl, a senior markets economist at J.P. Morgan Private Bank.

Inflation has pulled back significantly from its pandemic-era peak of 9.1% in June 2022.

The U.S. Federal Reserve aims for a long-term inflation target around 2%. (The central bank uses a similar but different inflation gauge than the CPI, known as the Personal Consumption Expenditures Price Index, or PCE.)

“The bulk of this progress is behind us now and inflation may remain stubbornly sticky near current levels for a time,” Rick Rieder, head of BlackRock’s global allocation investment team, wrote in a note Wednesday.

While prices pressures have broadly eased across the U.S. economy, there have been some headwinds in recent months.

Grocery inflation jumped notably in November, from a 0.1% monthly reading in October to 0.5% in November, for example. (For context, a consistent CPI reading of about 0.2% each month would generally be in line with target inflation, economists said.)

Egg prices jumped about 8% during the month alone, and are up 38% in the past year, according to CPI data.

“We saw a bounce back in food prices,” Zandi said. “Part of it is avian flu: Egg prices continue to be very strong.”

Food prices are generally volatile, so one month of elevated grocery-inflation data shouldn’t set off alarm bells, Zandi said. However, it will be an important category to watch as groceries “probably matter most” to the majority of households relative to pricing, he said.

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New vehicle prices rose 0.6% from October to November, according to CPI data. Those for car insurance rose just 0.1% over that period, but are up 13% over the year.

In 2021, car prices spiked amid a shortage of semiconductors essential to manufacture them. That led to a severe vehicle shortage and high inflation. Later, prices fell as dealers rebuilt their inventories. Now, some price volatility is natural as the market settles back into equilibrium, Seydl said.

Car prices feed into motor vehicle insurance: When prices are elevated, insurers’ cost to replace vehicles after a car accident is also much higher. Insurers also typically need approval from regulators to raise consumer premiums, which takes time.

Airline prices, like those of autos, are also “finding a bottom,” Seydl said. Actual fares are roughly where they were before the Covid-19 pandemic, according to CPI data.

“We haven’t really had any airfare inflation from 2019 to today,” Seydl said. “We have just seen a lot of volatility.”

Labor costs are the primary input for health care inflation, he said.

While wage growth has broadly eased across much of the economy — generally lessening the likelihood that businesses will raise prices to compensate for labor — the health care sector still has a labor shortage, making price strength “pretty resilient,” Seydl said.

Prices for medical care services were up 0.4% from October to November, and by 4% over the year.

As the largest CPI component, housing also continues to prop up overall inflation readings. Shelter accounted for 40% of the monthly CPI increase, according to the Bureau of Labor Statistics.

However, it has declined notably: The shelter index increased 4.7 percent over the last year, the smallest 12-month increase since February 2022, BLS said.

Inflation for rent and owners’ equivalent rent (an estimate of the rental price a homeowner could command for their property) saw their smallest one-month increases since July 2021 and April 2021, respectively.

A number of factors can get your mortgage application denied. So-called “unverifiable income” is one of them. 

Mortgage lenders want to know if you’re financially capable of paying back the loan. One way they’ll do that is by requesting documents like your federal income tax returns, W-2 and current pay stubs, according to Freddie Mac. 

Any money that you earn that isn’t tied to a form like a W-2 or 1099 can make it difficult for a lender to verify your annual income, said Jacob Channel, an economist at LendingTree. 

For instance, income you earn from a rental property you own may be tricky for a mortgage lender to verify, he said. The same can be said for things like gifted cash for a down payment or side hustle earnings.

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It’s a more common problem than you might expect.

About 12% of recent prospective homebuyers were denied a mortgage because a lender could not verify their income, according to the 2024 Profile of Homebuyers and Sellers report by the National Association of Realtors.

The NAR polled 5,390 buyers who purchased a primary residence between July 2023 and June 2024.

In such instances where you have different forms of income or are self-employed, it may be worth looking into non-conventional mortgage options, said Melissa Cohn, regional vice president of William Raveis Mortgage in New York. 

“The good news is that there are programs available for people who don’t qualify conventionally,” she said. “But it is a little bit more expensive.”

For example, you may have to sustain higher-than-usual mortgage rates.

Here’s what you need to know.

Such loans verify income differently. If you’re self-employed, a non-QM lender can use bank statements to calculate the income that may qualify for the loan instead of a pay stub, tax return or W-2, she said.

“They might also look at what kind of assets you have,” Channel said.

Other banks and lenders will accept the most recent 1099 and do not rely upon tax returns if you’re self-employed in a business you own, Cohn said.

But, be careful. While it may be easier to qualify through income, such loans can be more costly, said Brian Nevins, a sales manager at Bay Equity, a Redfin-owned mortgage lender. 

“You may have to jump through more hoops in order to get those mortgages,” Channel said.

For example, you may need a higher credit score or be required to provide a bigger down payment.

The loan may also come with a rate higher than that of a conventional loan. That’s because non-QM loans do not follow the criteria of qualified mortgages set by the Consumer Financial Protection Bureau.

In the first half of 2024, the average initial 30-year interest rate for non-QM loans was 6.7%, compared to 6.4% for a qualified loan, according to data from CoreLogic.