Outgoing Congressional Budget Office Director Keith Hall said Wednesday that he expected economic growth to dip in coming years, and that President Trump’s trade war with China is slowing economic growth.
“We certainly expect if they continue for a while for there to be a drag on growth,” Hall said of the tariffs imposed by the U.S. and its trading partners. He added that he expects the CBO to revise down its initial forecast for economic growth this year if Trump further expands the amount of tariffs on Chinese goods. “Tariffs are taxes, taxes slow down the economy, and that’s sort of how this is working. And then on the other side when you have a retaliation that’s another anti-stimulus on the economy.”
Hall made the remarks in an on-air interview with CNBC.
Even if tariffs are lifted and trade disputes settled, Hall said, U.S. economic growth is set to slow.
Hall, a Republican appointee and veteran of the George W. Bush administration’s Council of Economic Advisers, said the boost to the economy from tax cuts and additional government spending is going to fade.
“Right now we’re working through a lot of stimulus from the tax cuts and increased spending,” said Hall. “We really do think that there’s going to be a slowdown to something like under 2% in a couple years.”
Gross Domestic Product grew 2.9% in 2018 and grew at a 3.2% annualized rate in the first quarter of 2019.
Hall also cautioned that federal deficits remain at unusually high levels for a booming economy, a potential sign that the government could have less leeway to react to a future recession.
“We’re in a position that’s really unprecedented. We’re at a time when economic growth is very strong yet deficits are very high,” said Hall. “That’s really never happened before.”
