Donald Trump and Janet Yellen Look to Be on a Collision Course
The president-elect and his advisers have often spoken of seeking stronger economic growth than the United States has experienced the last several years, perhaps seeking 3.5 percent to 4 percent instead of the sub-2 percent growth that has been the standard since 2009. A white paper by advisers to Mr. Trump released in the fall assessed the view that this lower growth rate reflected demographics and that it amounted to a “new normal,” and declared it “incomplete — and unnecessarily defeatist.”
That view is at odds with both Ms. Yellen’s comments Wednesday and longer-term economic projects that Fed officials have released. For example, the median Fed policy maker viewed the economy’s long-term rate of G.D.P. growth as only 1.8 percent a year, very much in the ballpark that Trump advisers would view as unnecessarily defeatist.
.. It’s possible that what people in Mr. Trump’s orbit view as a desirable boom will look to Ms. Yellen and her colleagues as overheating, and prompt equal and opposite interest rate increases.
.. There are a couple of potential twists in this story. The first would involve potential Trump appointments to the Fed; the second could involve big moves in the dollar.
.. Economists believe a key element of a corporate income tax overhaul advanced by House Republicans, known as a border adjustment tax, would have the effect of creating a huge rally in the value of the dollar compared with other major currencies, perhaps 20 percent or more.
.. it is looking like a distinct possibility that Ms. Yellen could wake up one morning in the year ahead to early-morning tweets directed her way, originating from 1600 Pennsylvania Avenue.