While President Donald Trump has taken victory laps for slashing regulations on banks and other companies, Federal Reserve Chairman Jerome Powell says it’s hard to prove the effort has boosted economic growth.
“It’s really hard to isolate that,” Powell said Wednesday in response to questions at a House Financial Services Committee hearing. “That’s a question that people really struggle with.”
Trump doesn’t seem to be among those struggling with the question. In October, he told members of his cabinet that erasing “ridiculous regulations” has helped strengthen the economy. He and his Republican allies have similarly touted their 2017 tax cuts as an unprecedented boon to U.S. growth.
On a separate question about whether the tax changes have contributed to economic growth, Powell said: In the short term, yes, but in a more lasting sense, we’ll see. Noting that while lower taxes and increased government spending initially goosed the economy, he said “the real hope though would be that there would be supply-side effects over time.”
In considering politicians’ claims about the benefits of killing regulations, it’s important to note that a lot of that activity hasn’t been completed. When it comes to changes for Wall Street and the financial system, the bulk of the revisions aren’t yet in place.
As JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said this week, “if you look at the regulators, I don’t think a lot has changed in the last nine months.”
