Trump Tax Cuts Driving US Economic Growth
The US economy will grow faster later this year and the Fed will raise short-term interest rates at least 3X, according to a survey of economists.
They predicted the annual growth rate of the US economy will speed up to 2.8% this year from 2.5% in Y 2017 because of tax cuts approved by US President Donald Trump.
A boost in hiring will push the unemployment rate to less than 4% by midyear from 4.1% in January, the survey found.
President Trump ran on a pro-business platform of cutting taxes and regulation while spending $1-T on infrastructure like roads and bridges.
Last December, President Trump approved a sweeping tax reform bill that cut corporate tax rates and urged companies to transfer trillions of dollars held overseas back to the US
The economists surveyed expect the Fed to raise rates at its 20-21 March 20 meeting, followed by another hike at its 12-13 June meeting.
The central bank in December raised its target rate to a range of 1.25% and 1.5%. Economists expect the rate to reach 2.2% by year-end.
The average chance of a recession in the next year rose to 14% from 13% in January’s survey.
Tuesday, St. Louis Federal Reserve President James Bullard said recent labor market strength may not lead to faster price increases, contrary to investors whose inflation fears have pushed US stocks lower.
“I caution against interpreting good news from labor markets as translating directly into higher inflation,” Mr. Bullard told a conference in Lexington, Kentucky. “Let’s wait and see what happens.”