The U.S. economy is doing well but not so much to meet the ambitious growth expectations of President Donald Trump, former Federal Reserve Chairman Ben Bernanke said Monday.
Asking if he thought growth could hit 3 percent or better, the two-term central bank leader told CNBC, “On a sustained basis, it’s certainly possible, but not likely.”
Should Congress pass a tax cut, as Trump has proposed, “You might have a bump because of the increased consumer spending,” he said on “Squawk Box.”
However, if he was to bet on whether the economy would break the 3 percent barrier, Bernanke said, “I would take the under on that.”
Bernanke ran the Fed during the financial crisis that exploded in 2008. He is credited with devising some of the programs that brought the U.S. economy back from the brink.
However, he also has faced criticism for advocating low rates that helped fuel risk-taking, and famously doubted whether problems with mortgages given to less-than-qualified buyers would be a problem for the economy. The collapse of subprime mortgages fueled the crisis and the accompanying Great Recession.
The stock market surged during Bernanke’s tenure, but overall economic growth lagged and swelling income disparity helped fuel the rising populist surge in American politics that helped elect Trump in November.
Commenting on how he felt the Fed’s policies have worked out, Bernanke said he was generally pleased.
“I think so far so good,” he said. “It wasn’t too long ago when people on shows like this were saying that we were going to have hyper-inflation and huge stock market bubbles and dollar collapse and all kinds of terrible things were going to come. But in fact it’s gone pretty smoothly.”
Bernanke attributed the slow growth to changing global economic conditions.
“We’re not in the same world we were in 20, 30 years ago,” he said. “In particular, our workforce is growing much more slowly, so just pure demographics, the number of people available to work is not consistent with 4 percent growth.”
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