Ex Fed chief Bernanke says 3% US growth unlikely

 

The former head of the US Federal Reserve on Monday cast doubt on the Trump administration promise to expand the economy by three percent to create jobs and room for tax cuts.

"On a sustained basis, it's certainly possible but probably not that likely," Ben Bernanke during an appearance on CNBC.

Treasury Secretary Steven Mnuchin, also on CNBC, reaffirmed the administration's view that slashing taxes and regulation would fuel growth of three percent or higher, repeating pledges he made last week when he unveiled a multi-trillion-dollar tax cut plan.

However, economists have said there is scant evidence that tax cuts pay for themselves by generating growth.

The White House website continues to tout Trump's campaign promise of four percent growth.

Bernanke acknowledged tax cuts could lead to faster growth in the short term.

"I think if there's a big tax cut, for example, that lowers tax rates, you might have a bump because of the increased demand," increased consumer spending," he said.

But he said he doubted that could lead to longer-term growth.

"Probably not," he said. "I would take the under on that."

The Commerce Department reported Friday that first-quarter growth had been the lowest in three years at 0.7 percent.

But analysts said the first quarter of the year tends to run below average and this year growth was held down by seasonal adjustment calculations, so growth in the current quarter should be much higher.

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