DAVOS, Switzerland (Reuters) - The U.S. economy may grow faster this year than many projections, U.S. Treasury Secretary Steve Mnuchin said on Tuesday, pointing to the positive impact of trade deals and the possible return of Boeing’s 737 Max aircraft into service.
U.S. growth slowed last year, and the International Monetary fund on Monday predicted a further drop in the coming years, partly due to weaker global trade and the waning effect of fiscal stimulus.
“We’ll hear projections from the IMF and others but I think peoples’ projections are too low for 2020,” Mnuchin told the World Economic Forum in Davos, Switzerland.
Mnuchin argued that business confidence was solid and that recent trade deals with China, Mexico and Canada would boost growth. He added that Boeing possibly resolving problems with its flagship aircraft could also lift the economy.
Mnuchin dismissed arguments that fiscal policy could become a drag on growth, but did admit that the U.S. needs to slow down the increase in spending.
“There is no question, over the next few years, we are going to be have to be careful in looking at slowing down the rate of growth of government spending,” Mnuchin said.
“It’s not necessarily cutting, it’s basically slowing down the rate of growth of government spending,” he added.
When asked about the Federal Reserve’s interest rate policy, Mnuchin would not be drawn. Earlier in the day, President Donald Trump had criticized the Fed, saying he thought it was lowering rates too slowly. Mnuchin said his boss was allowed to critique Fed policy, but he - as Treasury Secretary - was not.
Reporting by Balazs Koranyi and Alessandra Galloni; Editing by Alexander Smith