Fiscal stimulus brought about by the new administration may not kickstart growth as aggressively as many think, San Francisco Federal Reserve President John Williams told CNBC on Thursday.
“More fiscal stimulus, I think, will have a modest effect on economic growth over the next couple of years,” the nonvoting Fed official told “Power Lunch.”
President-elect Donald Trump has proposed steep increases in infrastructure spending that he says will stimulate the economy.
Though Williams said he raised his predictions for fiscal stimulus under a Trump presidency, his growth predictions landed well under many analyst estimates that put growth over the next several years to 2 percent and above, with some even calling for 5 percent.
“My view, in terms of the demographic and productivity trends that we’ve been seeing for the last decade or so is that growth is likely to be 1½ to 1¾ percent,” Williams said.
However, investments in a few key areas could brighten those prospects, Williams added.
“If we can find ways to do lot more investment in our people, in technology, more broadly in infrastructure, I think we can shift that upwards,” he said. “But right now, my view is that a lot of the fiscal stimulus that people have been talking about would have a relatively modest effect.
source”cnbc”
