Don’t expect faster economic growth in the quarters ahead, even if President Trump does enact a pro-growth agenda, a Federal Reserve official cautioned Wednesday.
James Bullard, the president of the Federal Reserve Bank of St. Louis, said in an interview on Bloomberg TV that economic growth is likely to putter along at a 2 percent rate at least for the next year.
“I think the idea that there’s a lot of growth just around the corner in the U.S. is probably not the right model to have in mind,” the economist said.
Trump has repeatedly said that he wants to raise the rate of economic growth to 3 percent annually. Bullard said Wednesday that he applauds the idea of enacting policies to speed up growth in the gross domestic product, but noted that “so far, not too much has been implemented.”
Even if some of those provisions were put in place — Trump has said that tax reform, regulatory reform, and infrastructure will boost growth — the faster growth wouldn’t kick in until late 2018 or early 2019 at the earliest, Bullard said. “We’re probably not going to move too far off the 2 percent growth path” in the medium term, he mused.
GDP growth did accelerate to a 2.6 percent annual rate in the second quarter, according to the Bureau of Economic Analysis. Since the report was published, Trump has touted the number and boasted that future numbers will be even better.
Yet, the central bank sees growth finishing the year around the 2 percent growth rate that has prevailed in recent years.
Trump’s budget proposal, which projected the effects of all his policies being put into place, showed economic growth rising in the latter years of his first term.
