"The real missing gap has been productivity so we've got to get some investment back into the U.S. economy, some capital investment, which has really been lacking since the financial crisis," he said.
Trump seems willing to put investments back into the country's economy in a "number of different ways," which is partly why we've seen favorable reactions in the market, he noted. "You see bond prices going up and investor enthusiasm, maybe a little bit of relief for the banks which I think is a good thing."
"What pillar would be most effective to help with investing back in the economy?" CNBC's Carl Quintanilla asked.
While Trump's plans to spend on new infrastructure would create new jobs and increase productivity, tax reform seems to be the "missing ingredient that can help drive some of the capital investment back," Immelt answered. "That's the difference between a 3% GDP growth of the U.S. and a 2% GDP growth."
If the president could "just solve a few things in the U.S.," then we would find there's "lots of pent-up demand and opportunities for growth," Immelt claimed.
Shares of General Electric were lower in early afternoon trading on Tuesday.
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