Trump Expects An Economic Miracle From The New Fed Chair

President Donald Trump wants his new pick for Fed chair, Kevin Warsh, to achieve something that has rarely been seen outside of wartime: an economic growth rate of 15%.

“We should be at 15%,” Trump said in an interview with FOX Business aired Monday. “If he does the job that he’s capable, we can grow at 15%. I think more than that.”

Trump has long argued that the Fed should cut rates sharply to stimulate economic growth.

The president did not specify his exact growth metric or the timeframe. However, economic growth is usually expressed as the inflation-adjusted annual rate of growth of the Gross Domestic Product. If that is Warsh’s goalpost, meeting it would take a miracle, or if history is a guide, a disaster.

What Does History Tell Us?

Some economists predict that easing interest rates could lift economic growth, though far below 15%.

Real GDP usually grows at 2%-3% per year. GDP growth has hit double digits only in extreme circumstances, typically when the country is bouncing back from a catastrophe.

The last quarter in which GDP growth was as high as Trump is predicting was when businesses reopened after COVID-19 shelter-in-place orders were lifted. The last year with growth higher than 15% was 1943, in the midst of World War II.

Can Warsh Deliver Economic Growth?

Trump nominated Kevin Warsh to succeed Jerome Powell as Fed chair. Powell’s term ends in May.

Trump appointed Powell to his current post in 2018, but the president has since heavily criticized Powell for not sharply lowering borrowing costs. Fed officials have cut interest rates since 2024, but not to the extent Trump wants, out of concern that slashing rates could ignite inflation, which remains above the Fed’s 2% annual target. Trump argues there is no inflation.

As Fed chair, Warsh will have one major lever to influence the economy, the Fed’s key fed funds rate, which affects borrowing costs on all kinds of loans. However, even his ability to get his way on interest rates is in doubt, since he is just one of 12 members who vote on rates.

The Fed can indeed boost economic growth by lowering interest rates, but it must balance that with its mandate from Congress to keep inflation under control. Other major factors influencing GDP, including consumer and government spending, are outside of the Fed’s control.