Markets

US GDP may fall short of 3% this year because of Boeing's 737 Max woes, Mnuchin says

Key Points
  • Treasury Secretary Steven Mnuchin on Thursday said he's expecting U.S. economic growth under 3% in 2020 thanks in part to Boeing's 737 Max crisis.
  • "I think our projections have been reduced because of Boeing and other impacts," he told the Fox Business Network from the White House.
  • As recently as last month National Economic Council Director Larry Kudlow told CNBC that GDP growth this year should, at minimum, top 3%.
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Treasury Secretary Steven Mnuchin on Thursday said he's expecting U.S. economic growth under 3% in 2020 thanks in part to the toll Boeing's 737 Max crisis is exacting on American exports.

"I think our projections have been reduced because of Boeing and other impacts," he told the Fox Business Network from the White House. "I think we would have hit 3%, but again, Boeing has had a big impact on our exports, being the largest exporter."

"I think that could be 50 basis points or not more," he added.

The economy grew at only 2.3% in 2019, posting the slowest growth in three years. Fourth-quarter growth was 2.1%.

Mnuchin's remarks on Thursday follow rosier projections from Larry Kudlow, President Donald Trump's top economic advisor and the director of the National Economic Council.

As recently as last month Kudlow told CNBC that growth in the nation's gross domestic product this year should, at minimum, top 3%.

"We're now down to 2.5% to 3%. I'm looking for faster growth: I think we're going to get 3% this year," Kudlow said from the World Economic Forum in Davos, Switzerland. "The trade deals will help, the Fed changed policy — that was very, very important."

Though Kudlow, Mnuchin and other administration officials have pointed to two new major trade deals in North America and China for potential growth stimulus, other factors including Boeing's ongoing 737 Max crisis are expected to dampen economic activity in 2020.

Wall Street consensus forecast for 2020 GDP is around 1.8% and the Federal Reserve's forecast is 2%.

For his part, Trump tends to blame Fed policy for weighing on GDP growth in the U.S.

The president blasted Fed Chair Jerome Powell and the central bank's top officials throughout 2018 for hiking borrowing costs, arguing that the higher interest rates undermined the economy's growth potential as well as his bargaining position with trade partners.

— CNBC's Jeff Cox contributed reporting.