Federal Reserve Chairwoman Janet Yellen cast doubt Thursday on President Trump’s goal of raising U.S. economic growth to 3 percent annually, and suggested that the target is likely out of reach.
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“I think it’s something that would be wonderful if you could accomplish it, I’d love to see it, I think it’s challenging,” Yellen told Sen. Bob Corker, R-Tenn., at a Senate Banking Committee hearing.
“I think it would be quite challenging,” she emphasized.
The problem, Yellen said, is that given the current slow growth in the U.S. population, it would require much faster productivity growth to achieve 3 percent annual gross domestic product growth. In other words, if there are not going to be more workers, each worker must produce more.
Productivity growth would have to accelerate to over 2 percent annually, Yellen said, up from an average of closer to 1 percent in recent years.
“It’s hard to raise productivity growth,” the central banker emphasized.
In a Wall Street Journal op-ed Thursday, Trump budget director Mick Mulvaney outlined a plan to raise productivity through what he termed “MAGAnomics” — MAGA being a reference to Trump’s “Make America Great Again” slogan.
The administration’s plan for raising productivity, according to Mulvaney, includes reforming taxes, curbing regulations, and rebuilding infrastructure.
