As I already mentioned, both the tax legislation signed into law in January and the sharp spending cuts associated with sequestration will likely significantly hinder GDP growth this year.
Indeed, the Congressional Budget Office has estimated that these changes in fiscal policy would reduce GDP growth by 1-1/2 percentage points this year relative to what we  BIS central bankers’ speeches  3  otherwise would have achieved.3 Looking further ahead, fiscal policy seems likely to remain restrictive at the federal level.