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Trump's economic stimulus will fade in 2020, when Wile E. Coyote will 'go off the cliff,' Bernanke says

Former Fed Chairman Ben Bernanke.
Cameron Costa | CNBC
Key Points
  • The economic effect of President Trump's $1.5 trillion tax cut and $300 billion bump in federal spending will wear off in two years and then "in 2020 Wile E. Coyote is going to go off the cliff," former Fed Chairman Ben Bernanke said Thursday.
  • The timing would line up inconveniently for Republicans with the next presidential election.
  • The Congressional Budget Office forecasts have GDP at 3.3 percent this year, 2.4 percent next year and then 1.8 percent in 2020.
Former US Federal Reserve Chairman Ben Bernanke in 2009.
Getty Images

The economic effect of President Donald Trump's $1.5 trillion tax cut and $300 billion bump in federal spending will wear off in two years and then "in 2020 Wile E. Coyote is going to go off the cliff," former Federal Reserve Chairman Ben Bernanke said this week.

The stimulus is coming at "the very wrong moment," Bernanke said Thursday during a panel discussion at the American Enterprise Institute, as reported by Bloomberg. "The economy is already at full employment."

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That would line up inconveniently for Republicans with the next presidential election. Congressional Budget Office forecasts have the stimulus lifting economic growth this year to 3.3 percent and then 2.4 percent in 2019. But it slows to 1.8 percent in 2020.

The stimulus also makes the Fed's job more difficult, Bernanke said. The central bank is in the process of raising rates to more normal levels after a decade of historic lows as the economy recovered from the financial crisis.

Here's the full Bloomberg News report.

Former Fed Chairman Ben Bernanke.
Cameron Costa | CNBC