Fed’s Evans Says 4% US Growth Achievable But With Deep Economic Changes

Aggressive fiscal and other policies could for a time achieve President-elect Donald Trump’s goal of 4 percent growth, but it cannot be sustained without deeper changes to the economy, Chicago Federal Reserve President Charles Evans said on Thursday.

At this point, he said, the economy is near full employment and the labor market is “pretty good…if you have the skills,” Evans said at a meeting of the American Council of Life Insurers.

But an aging population, weak productivity growth, and declining labor force participation pose constraints that the new administration will find hard to work around.

“The U.S. economy could experience a burst of 4 percent growth for a year,” Evans said while speaking on a panel. But “it is not possible to just birth a large cohort of 25-year-olds.”

Evans did not mention Trump’s proposals specifically. But he became the latest in a series of Fed policymakers to quietly warn that this may not be the best moment to launch a major fiscal plan or throw too much stimulus into the economy.

The new administration is taking over “at a time of arguably full employment,” Evans said. “The resource slack has been dealt with.”

via Kitco

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza