The US economy could overheat and blow up because of excessive government stimulus, a banking chief has warned.
Goldman Sachs chairman and CEO Lloyd Blankfein said “the odds of a bad outcome have gone up” as a result of president Trump’s $1.5trn tax cuts, $300bn in extra spending, and the planned $200bn infrastructure package.
“Don’t forget, all of these deficits have to be paid for,” he told CNN Money, saying the economic stimulus could be “too much of a good thing”.
Blankfein said it wasn’t his “base case”, but that if the economy started to overheat, the US Federal Reserve would have to take action.
“I’d be planning for the contingency that this turns out to be a worse time than people are thinking,” said Blankfein.
“With the Fed raising rates, with the withdrawal of QE, with the budget deficit widening out, I wouldn’t say this is the time I would max out on my risk.”