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The Fed: Why the Trump tax cut may not boost the economy at all

An earlier version of this story gave an incorrect figure for the Congressional Budget Office’s estimate of the effect of the Trump tax cut on GDP.

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Treasury Secretary Steven Mnuchin has said he expects GDP growth would accelerate to 3% in the wake of the tax cuts.

Expectations of a strong jolt to the economy from the $1.5 trillion Trump tax cut “may be overly optimistic,” according to new research from the San Francisco Fed.

Many forecasts believe the tax cut will significantly boost U.S. GDP growth over the next couple of years, the research noted. The Congressional Budget Office projects the tax cut will boost GDP by 0.3 percentage points in 2018.

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