BlackRock's Fink Says U.S. on Path to `Exploding' Deficits

(Bloomberg) -- The Trump administration's tax proposals are unlikely to spur enough economic growth to reduce U.S. deficits, BlackRock Inc.'s Larry Fink said Friday.

“We are on the path of exploding deficits,” Fink, chief executive officer of BlackRock, said at the Morningstar Investment Conference in Chicago. “We will have a severe issue if the reform increases deficits."

If the U.S. economy grows at 3 percent a year that may help push deficits down but that's unlikely given the country's demographics, he said. Fink, who runs the world's largest money manager, predicted growth of 2.5 percent to 2.75 percent.

“The whole world is going through a growth spurt. We are not,” he said. “We are growing slower than France. That is pretty terrible.”

If immigration is reduced that would eliminate one of the “major engines of growth,” he added.

Fink made his comments as the Commerce Department today reported that the economy expanded at the slowest pace in three years. Gross domestic product, the value of all goods and services produced, rose at a 0.7 percent annualized rate after advancing 2.1 percent in the prior quarter. Consumer spending, the biggest part of the economy, rose 0.3 percent, the worst performance since 2009.

U.S. corporate executives are “pausing” to see how President Trump's plans progress., Fink said. “What's being proposed by the administration is almost a bucket list of all types of things they'd like to see done,” he said.

On April 19, Fink said lackluster growth of the U.S. economy and uncertainty around the Trump administration's ability to quickly pass key reforms pose a risk to markets.

“There are some warning signs that are getting darker,” Fink said on Bloomberg Television.

To contact the reporter on this story: Sabrina Willmer in Boston at swillmer2@bloomberg.net.

To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Alan Mirabella, Vincent Bielski

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