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UPDATE 1-Fed's Evans says labor constraints may doom bid to boost economy
January 12, 2017 / 3:14 PM / 8 months ago

UPDATE 1-Fed's Evans says labor constraints may doom bid to boost economy

NAPLES, Fla., Jan 12 (Reuters) - Aggressive fiscal and other policies could for a time achieve President-elect Donald Trump’s goal of 4 percent growth, but it cannot be sustained without deeper changes to the economy, Chicago Federal Reserve President Charles Evans said on Thursday.

At this point, he said, the economy is near full employment and the labor market is “pretty good...if you have the skills,” Evans said at a meeting of the American Council of Life Insurers.

But an aging population, weak productivity growth, and declining labor force participation pose constraints that the new administration will find hard to work around.

“The U.S. economy could experience a burst of 4 percent growth for a year,” Evans said while speaking on a panel. But “it is not possible to just birth a large cohort of 25-year-olds.”

Evans did not mention Trump’s proposals specifically. But he became the latest in a series of Fed policymakers to quietly warn that this may not be the best moment to launch a major fiscal plan or throw too much stimulus into the economy.

The new administration is taking over “at a time of arguably full employment,” Evans said. “The resource slack has been dealt with.” (Reporting by Howard Schneider; Editing by Paul Simao and Chizu Nomiyama)

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