Trump's regulatory, tax reform programs could boost productivity, says Fed’s Kaplan

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Federal Reserve Bank President Robert Kaplan said on Thursday that several of President-elect Donald Trump's plans will likely boost productivity and growth. He, however, warned he would be scrutinizing Trump's policies on immigration, trade, and repealing Obamacare.

The regulatory and tax reform, as well as infrastructure investment, according to Kaplan, could benefit the U.S economy. He also said he was still in wait-and-see mode on the economic effect of many of Trump's policies, which included the repeal of Obamacare. He said the retraction of the Health Law "could hurt consumers' willingness to spend."


Kaplan has a vote on Federal interest policy this year. When asked what he thought of Trump's plan to build a wall on the U.S.-Mexico border, he said that immigration and trade have historically boosted U.S. growth, as reported by Reuters.

Earlier, Federal Reserve officials worried that the fiscal and tax plans sketched out by the incoming Trump administration could cause longer inflation and debt problems that they might have to counteract through a short-term economic boost.

In an array of appearances, Fed regional bank presidents, agreed in principle that the policies President-elect Donald Trump is likely to pursue will increase economic growth - through the consumption and investment spurred by tax cuts, the boost to business from lighter regulations and direct spending.

In a recent survey of businesses in the southeast, said Atlanta Federal Reserve President Dennis Lockhart, executives expressed "optimism around the prospect of fiscal stimulus, tax reduction, spending on infrastructure and some amount of deregulation."

Meanwhile, speaking to the American Council of Life Insurers, Chicago Federal Reserve President Charles Evans questioned that if "at this point, the economy does not really need much short-term help".

According to him, it needs longer term strategies to expand a labor force constrained by issues like lagging productivity and population aging. The U.S economy could experience a burst of four percent growth for a year or two or more, Evans said, adding that the new administration is taking over "at a time of arguably full employment."

But unless this is accompanied by a sustainable structural improvement in labor and productivity growth, such GDP growth would ultimately lead to more restrictive financial conditions, he said.

Tags
Donald Trump, Robert Kaplan, Federal Reserve Bank, U.S. Economy
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