Former Federal Reserve Chairman Ben Bernanke says the U.S. economy could face a challenging slowdown as the Trump administration’s fiscal stimulus fades after two years, including a “Wile E. Coyote” moment in 2020.
Bernanke said the $1.5 trillion cut in personal and corporate taxes and a $300 billion increase in federal spending is making “the Fed’s job more difficult all around” because it’s happening even amid very low U.S. unemployment.
“What you are getting is a stimulus at the very wrong moment,” Bernanke said at the American Enterprise Institute on Thursday, according to Bloomberg News. “The economy is already at full employment.”
The stimulus “is going to hit the economy in a big way this year and next year, and then in 2020, Wile E. Coyote is going to go off the cliff,” he added.
The Hill added:
In April, the Congressional Budget Office projected that spending would result in U.S. gross domestic product (GDP) expanding by 3.3 percent in 2018 and 2.4 percent in 2019, in comparison to the 2.6 percent growth in 2017. However, the office projected GDP growth to slow to 1.8 percent in 2020.
Bernanke is currently working as a fellow at the Brookings Institution after serving as chairman of the Federal Reserve from 2006 to 2014, under both the George W. Bush and Obama administrations.