An economist has expressed the view that the U.S. is headed for a recession in the next two years as excessive fiscal stimulus from the President Donald Trump administration takes the economy into unsustainable territory
Adam Posen, president of the Peterson Institute for International Economics,, told the media GDP (gross domestic product) growth targets of 3% or more are unobtainable given current productivity and employment rates in the U.S. Add to that intended tax cuts and financial deregulation under Trump and the country will find itself trapped in a boom-bust cycle, Posen said.
He points to the workforce stateside growing at 0.5%, with productivity at 1%, thus diminishing the chances of growth reaching 3-4%
"If unemployment is, unfortunately, about as low as it's going to go, you can't pick this up."
What's more, the Federal Reserve is already trying to manage signs of a growing U.S. economy by gradually increasing interest rates. Earlier this month, it hiked rates by 25 basis points, its first such move this year and only the third since the financial crisis. However, further increases are expected this year, with Posen anticipating three extra hikes by December and more still in 2018.
