Trump says Kevin Warsh at the Fed would Drive U.S. Growth to 15%

Quick overview

The U.S. president believes his pick to replace Jerome Powell could drive the economy to record growth levels ahead of the midterm elections. However, Senate confirmation faces hurdles due to a DOJ investigation into Powell.

U.S. President Donald Trump said that Kevin Warsh, his choice to lead the Federal Reserve (Fed), could deliver economic growth of 15%—an extraordinarily optimistic target that underscores the pressure the White House would place on Warsh if he is confirmed.

Speaking to the U.S. press, Trump said Warsh had finished second in his previous search for a Fed chair and renewed his attacks on current Fed Chairman Jerome Powell. He blamed former Treasury Secretary Steven Mnuchin for Powell’s appointment. “My Treasury secretary wanted him so badly,” Trump said of Powell.

“And I didn’t feel good about him, but sometimes you listen to people—and it was a mistake, a really big mistake,” the Republican president added.

15% growth

Trump went on to say that if Warsh “does the job he’s capable of,” the U.S. could “grow at 15%,” or “even more than that.” He added: “It’s going to be tremendous, and he’s a very high-quality person.”

However, Trump did not clarify whether he was referring to year-over-year growth or another metric. The U.S. economy is currently projected to grow about 2.4% this year and has averaged roughly 2.8% annually over the past five decades.

A 15% annual GDP growth rate has only occurred in exceptional circumstances since the 1950s, including the third quarter of 2020, when the economy rebounded sharply as businesses reopened after pandemic lockdowns.

Possible delay in Senate confirmation

Warsh’s Senate confirmation, scheduled for May, could face delays. Republican Senator Thom Tillis of North Carolina has pledged to block any Fed nominations while the Trump administration continues a Department of Justice (DOJ) investigation into Powell over alleged misuse of funds tied to a renovation project at the Federal Reserve’s headquarters.

When Kudlow asked Trump whether the DOJ investigation justified delaying Warsh’s nomination, Trump replied: “I don’t know—we’ll have to see what happens. I’ve been fighting with Tillis for a long time, so much so that he ended up resigning.”

Seemingly unconcerned about the potential delay, he added: “If it happens, it happens.”

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Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.

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