Mnuchin Calls IMF's U.S. Forecast Conservative as He Chases 3%by and
Reiterates cutting taxes, regulation are keys to agenda
Gentle tone of talk with Lagarde contrasts with harsh campaign
Treasury Secretary Steven Mnuchin called the International Monetary Fund’s outlook for the U.S. economy a “little conservative” as he repeated the Trump administration’s goal of getting to 3 percent growth or faster.
“The U.S. economy is well positioned,” Mnuchin said Saturday in a conversation with IMF Managing Director Christine Lagarde during the organization’s spring meetings in Washington. “We’ve been in a period post financial crisis where we’ve just been in sub-optimal growth. We believe we can get to 3 percent or more sustainable economic growth.”
The Trump administration is planning tax cuts and increased infrastructure spending to help achieve its goal of lifting economic growth. The IMF in updated forecasts this week left its U.S. economic growth forecast unchanged at 2.3 percent this year, while raising the global outlook slightly to 3.5 percent. The IMF expects 2.5 percent expansion for the U.S. in 2018.
Despite Lagarde’s status as the head of an international organization that espouses globalization, and Mnuchin’s position as Treasury secretary for a president who rode to victory in part by harshly criticizing such forces, the conversation was gentle and the pair joked at times throughout the half-hour event.
Mnuchin said the administration is focused on policies that help the U.S. economy and also support global growth. The president and officials are reaching out to business leaders and seeking to implement reforms that will pay for themselves with growth, he said.
Whether U.S. growth shows a sustainable pickup may depend in part on an economic shake-up promised by candidate Donald Trump that hasn’t quite taken shape since he took office. While Trump has ordered reviews of key trading relationships, he’s backed down from a promise to label China a currency manipulator and a Nafta revamp has faced delays.
Mnuchin has anchored his goals as Treasury secretary -- which include tax reform and regulatory relief -- to doubling the pace of domestic growth to as much as 4 percent. Economists are mostly skeptical that pickup will happen, as those surveyed by Bloomberg see expansion of about 2.2 percent to 2.3 percent through 2019.
Mnuchin is regularly reminded of the legacy of economic growth the Trump administration wants to solidify. A framed copy of a newspaper article announcing Mnuchin as Trump’s choice as Treasury chief hangs on his office wall in the Treasury Department, with a signed note from Trump that mentions “5% GDP.”