Trump administration believes AI can duplicate the economic boom of the 1990s
Trump is replacing current Fed chair Powell with Warsh who is expected to cut rates
Many economists doubt the 1990s economic boom can be replicated today
The economic context today differs significantly from the 1990s
Even Greenspan eventually raised rates in the late 1990s despite productivity gains
📖 Full Retelling
President Donald Trump, Treasury Secretary Scott Bessent, and Trump's nominee for Federal Reserve chair Kevin Warsh expressed confidence in Washington on February 27, 2026, that artificial intelligence could spark an economic boom reminiscent of the 1990s, with the administration seeking to drive down interest rates to fuel growth while economists remain skeptical of the comparison. The Trump team draws parallels between today's AI revolution and the internet boom of the 1990s when productivity surged, unemployment fell, and inflation remained contained under Fed Chair Alan Greenspan's leadership. Trump has repeatedly criticized current Fed Chair Jerome Powell for not cutting rates aggressively enough and believes Warsh, with his 'Greenspan-like mind,' will implement policies that unleash economic growth without triggering inflation.
Many economists challenge the administration's historical narrative and economic projections, noting that the current economic landscape differs significantly from the 1990s when budget surpluses, globalization, and declining trade barriers created favorable conditions. Critics argue that even Greenspan's Fed eventually raised rates in the late 1990s despite productivity gains, and that today's environment of rising debt, trade barriers, and potential inflationary pressures could prevent similar outcomes. Some economists suggest that recent productivity improvements may stem from pandemic-era investments in automation rather than AI specifically, and question whether AI will deliver the transformative economic impact the administration anticipates.
The confirmation of Warsh as Fed chair could set the stage for a significant shift in monetary policy, as he appears to have moderated his previous inflation hawk stance to align with Trump's desire for rate cuts. However, potential future colleagues on the Fed's interest-rate committee have expressed differing views on the late 1990s analogy, with Chicago Fed President Austan Goolsbee noting that Greenspan's insight was that productivity gains meant the Fed could hold off on raising rates, not necessarily slash them. The economic challenges facing Warsh include a federal debt projected to reach 120% of GDP by 2035, a stark contrast to the budget surpluses Greenspan enjoyed, and a world where globalization has given way to de-globalization under Trump's trade policies.
Productivity is the efficiency of production of goods or services expressed by some measure. Measurements of productivity are often expressed as a ratio of an aggregate output to a single input or an aggregate input used in a production process, i.e. output per unit of input, typically over a specif...
The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of financial panics (particularly the panic of 1907) led to th...
An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed. Interest rate periods are ordinarily a year and are often annualized when not. Alongside interest rates, three other variables determine total interest: principal sum, compounding f...
# Artificial Intelligence (AI)
**Artificial Intelligence (AI)** is a specialized field of computer science dedicated to the development and study of computational systems capable of performing tasks typically associated with human intelligence. These tasks include learning, reasoning, problem-solvi...
Trump expects Fed pick, AI to bring replay of '90s boom. Economists have doubts Trump, Treasury secretary, Fed choice say the economy can party like it’s 1999. By PAUL WISEMAN AP economics writer February 27, 2026, 7:02 PM WASHINGTON -- President Donald Trump, his Treasury secretary and his choice to lead the Federal Reserve believe they can coax the U.S. economy into partying like it’s 1999. They are putting their faith in artificial intelligence to duplicate what happened when another technology arrived in the 1990s: the internet. Back then, the American economy surged as businesses became more productive, unemployment tumbled and inflation remained in check. Trump is confident that his nominee to become Fed chair, Kevin Warsh , can unleash an even greater economic bonanza by jettisoning what the president sees as the central bank’s hidebound reluctance to slash interest rates. Many economists are skeptical. The world looks a lot different today than it did when the Spice Girls ruled radio and “Titanic’’ dominated the box office. And the story the Trump team is telling — that a visionary Fed chair, Alan Greenspan, fueled the ‘90s boom by keeping interest rates low — is incomplete at best. “The administration is offering a rather distorted version of what actually happened in the 1990s,’’ economist Dario Perkins of TS Lombard said in a commentary. Nonetheless, the Trump administration believes history can repeat itself. All that's been missing, in the president’s view, is a Fed chair with Greenspan’s foresightedness. Trump has repeatedly attacked current Fed chief Jerome Powell, whose term as chair ends in May, for his reluctance to lower rates aggressively while inflation hovers above the central bank’s 2% target. Treasury Secretary Scott Bessent said on social media in January that the president sought to replace Powell with someone with “an open, Greenspan-like mind." "Our nation can see productivity boom like we did in the ’90s when we are not encumbered by a F...
