Outgoing fed chair Janet Yellen and her team don’t believe that the GOP and Trump administration’s hallelujahs of an economic miracle are actually going to come true.
That much is clear from the fiscal policy group’s outlook for the future. Although the short-term estimate for 2018 has been raised from 2.1% as of September to the current 2.5%, they’re leaving the long-term growth prospect at the same 1.8% that it was three months ago.
The median project released Wednesday is a whole lot less than the Trump administration’s pencilled-in budget figure of 3%.
Yellen’s caution around the true impact of the tax cuts is in stark contrast to what Trump was saying at the same time across town, at the White House.
He is essentially suggesting that growth could hit as much as 4% or more, something that Yellen says would be a “challenging” rate to achieve.
Meanwhile, three interest rate hikes have been planned for next year, which means payroll gains could moderate over the course of those increases.
Yellen does see some positive impact from the tax cuts, such as the labor markets remaining strong.
Though obviously not as enthusiastic about Trump and the GOP about the “economic miracle” that might pass into law very soon, she’s upbeat about the trajectory of the economy that she’s leaving in the hands of Fed Governor Jerome Powell, her designated successor, as of February 3, 2018.
Says Yellen: “The risks are balanced, and there’s less to lose sleep about now than has been true for quite some time.”
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