The White House’s 2020 budget proposal on Monday is based on much rosier estimates of growth than last year, an optimistic view that contradicts most economists.
Despite widespread expectations that the US economy will slow from the three percent expansion seen last year, officials in President Donald Trump’s administration say growth will accelerate this year.
The budget proposal submitted to Congress forecasts 3.2 percent growth in 2019, and 3.1 percent in 2020, even higher than last year’s estimates.
Yet most economists say the fading impact of the tax cuts passed in late 2017 means the US economy will lose steam this year.
Amid the US-China trade war, which has raised some input prices and generated uncertainty, and slowing growth in Europe and China, the International Monetary Fund in January cut its forecast for US growth to 2.5 percent this year, and 1.8 percent in 2020.
In a CBS interview broadcast Sunday, Federal Reserve Chairman Jerome Powell said ‘growth this year will be slower than last year,’ although it will continue at a healthy pace.
Trump’s budget includes a request for $8.6 billion for a border wall and $2.7 trillion in cuts to non-defense programs, elements that drew immediate criticism from Democrats in the House of Representatives, which will have to approve the spending plan.