Trump says AI and new Fed chair can replay 1990s boom; economists are skeptical
Mar 1st 2026
President Trump and his Fed nominee Kevin Warsh say AI-driven productivity can justify looser monetary policy and a 1990s-style boom, but many economists and Fed officials say the comparison is flawed and the evidence is mixed.
- Trump and Treasury secretary Scott Bessent say AI-driven productivity gains plus a Fed chair like Kevin Warsh can recreate a 1990s-style economic boom.
- Warsh argues AI could boost productivity enough to justify lower interest rates despite his past record as an inflation hawk.
- Many economists say the 1990s analogy is incomplete because productivity effects were slow to show up and Greenspan ultimately raised rates in 1999.
- Federal Reserve officials including Michael Barr and Austan Goolsbee warn that AI gains may not lower policy rates and could even push rates higher through increased investment and borrowing.
- The current economic backdrop differs from the 1990s because of rising deficits, higher trade barriers and tighter immigration, which could limit a repeat of that era.
- If Warsh is confirmed, he could clash with other Fed policymakers over rate policy amid disagreement about how AI affects inflation and growth.