It would be “quite challenging” for the United States to reach the 3 percent growth target set by President Donald Trump, Federal Reserve Chair Janet Yellen told a Senate panel on Thursday in a hearing focused on regulatory reform and a discussion of lagging productivity.
Trump has pledged to boost annual growth to 3 percent, the average for much of the last 70 years, and predicated an earlier tax plan on reaching that figure.
The Fed, the Congressional Budget Office and others feel that an ageing population and lagging productivity mean the economy’s potential has downshifted to around 2 percent growth or less – a fact that has profound effects on national wealth as the slower pace compounds over time.
“I think it is something that would be wonderful if you could accomplish it,” Yellen said at a Senate committee hearing. “I think it would be quite challenging,” and require a broad set of changes from tax reform to an improved education system that adds to labour productivity.
Yellen’s appearance before the Senate Committee on Banking, Housing and Urban Affairs covered much of the same ground as her session with a House committee on Wednesday where she said the Fed’s plans for further gradual rate increases and a slow drawdown of its balance sheet remain on track.