The Federal Reserve officials disagree on the tax cut advocates’ statement that economic growth will offset the proposed rate reductions.
Despite the sharp increase in 2018 GDP projections, central bank policymakers see that gains will be muted in the coming years. They also think that it’s more aligned with the post-financial crisis trend.
The recent meeting the Fed had, resulted in different estimates. The Fed increased estimates for 2018 to 2.5 percent from a previously 2.1 percent. It then said that the estimates would fall in the coming years to 2.1 percent and 2 percent.
U.S. President Donald Trump and his team of economic advisors, as well as the Republican congressional leadership, pitched the tax plan in hopes of generating economic gains of 3 percent and up.
“It’s clear from [the estimates released Wednesday] that the Fed doesn’t think that Trump’s tax cuts will give a substantial long-run boost to growth. This is about as close as the Fed will get to saying the policy was mist.”
U.S. industrial production increased 0.2 percent in November following a stoppage due to Hurricane Nate. This caused a bounce-back in oil and natural gas extraction.
The Fed announced on Friday that there was an increase of 2 percent in the mining activity last month. Then, they added that manufacturing activity rose 0.2 percent.
The factory sector was supported by machinery and primary metals production. The overall growth of the industrial output can be largely credited to restarting oil and natural gas drilling.
Utility production dropped 1.9 percent.
Total industrial production rose 3.4 percent within the past 12 months.
Factories are also showing signs of strength along with greater mining activity. They are also maximizing their capacities as well as hiring more people.
According to the employment report manufacturers released last week, they were able to add 189,000 jobs in the past year.
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