During his interview with Fox Business Network’s Stuart Varney, Chief Economic Advisor Gary Cohn stated that the economy outlook that Trump has laid out is possible.
He believes that 3% growth for the third and fourth quarter of 2017 is not outrageous and is incredibly easy to achieve. He said that to achieve the goal, his team would be doing their best to make Trump’s plans.
The Wall Street Journal has been following Trump’s plan for some time, and with the administration claiming they can reach 3.2%, Wall Street says it is a “maybe,” especially with the administration’s plans. For starters, Trump’s administration intends to replace the current tax code with an overhauled, simplified version. Then, they plan to encourage investment opportunities, add more jobs to the market, and boost the economy from within. All of these factors, if implemented successfully, suggest Trump’s plan is possible.
February Jobs Report is a Sign of Good Things to Come
President Trump and his administration are pleased with the February jobs report that showed an increase in jobs added to the market. With the job market improving, that is the first step toward Trump’s plan of offering the American people better economic growth in 2017 and beyond.
However, the Federal Reserve has shared their concerns. After all, the increased job count means that they now receive their confirmation to increase interest rates in the United States, which will prevent the country’s economy from overheating.
Janet L. Yellen, the Fed’s chairwoman, is colliding with the beliefs of President Trump and his team. Trump has said that he wants to stimulate growth while the central bank is indicating a restraint on acceleration. Therefore, both parties need to work in tandem to resolve the issue.
For now, the Fed plans to make their first move and thwart Trump’s plans for growth. The bank has stated that they will raise their benchmark interest rate, but they expect that increase to remain below 1%, and the interest rates offered to consumer and businesses for loans will stay quiet when compared to historical rates. However, the Fed is moving months ahead of when they should, because they assume that the market is gaining momentum.
Fed Does Not Want Faster Growth
The reason for the Fed’s increase is that they do not want to see accelerated growth. They have already stated that their estimates show the economy is growing at their maximum sustainable pace. They predicted in December 2016 that the economy would see a 2.1% expansion for 2017, which is faster than the originally predicted 1.8% pace. The predicted speed was considered “sustainable” at that time. The Fed will publish their new predictions in the middle of March.
Administration to Push Tax Reform
The administration is relying heavily on their new tax reform to achieve the third and fourth quarter growth they promise the country. However, the Senate has already made it clear that they will not do a tax reform before their break in August.
During the interview with Fox Business, Trump’s team made it clear that they will work to push the Senate toward a tax reform solution before their break to stay on course for optimum growth levels.