President imagines 6 percent growth of U.S. economy
By JOSH BOAK
WASHINGTON — President Donald Trump is holding out the prospect of 6 percent growth in the U.S. economy. Put that down to puffery.
By most signs, economists say the country will be lucky to achieve consistent annual growth much over 2 percent.
A look at the president’s remarks at a Cabinet meeting Wednesday:
r “So we’re at 3.3 percent GDP. I see no reason why we don’t go to 4 percent, 5 percent, and even 6 percent.”
r Speaks of GDP “getting up to 4, 5, and even 6 percent, because I think that’s possible.”
Federal Reserve officials and most mainstream economists expect economic growth to hew closer to 2 percent. There are no signs the economy is capable of delivering a phenomenal and rarely achieved growth rate on the order of 6 percent.
The U.S. economy last cleared that hurdle in 1984 — and only for a fleeting year, at 7.3 percent. This was a different time, when baby boomers were at prime working ages, instead of today when they’re starting to retire. The Federal Reserve had boosted growth by steadily slashing a key interest rate from its 1981 peak of 20 percent, while the Fed today is slowly increasing the same rate. Also, the national debt was much lower.
There’s no clear path to the Gross Domestic Product growing close to 6 or 5 percent, or even 4. The tax cuts Trump may soon sign into law would probably max out at roughly $250 billion in 2020. Yet to generate growth of 6 percent, those cuts would have to spur a massive $1.2 trillion gain to GDP. His administration has failed to produce a single analysis showing how this would be possible, while outside analysts say the tax cuts are unlikely to generate anything close to what Trump has said.
During the July-September quarter, the U.S. economy expanded at an annual rate of 3.3 percent, a healthy number. Strong growth over the past two quarters largely reflects the more robust global economy, something the U.S. president has had little to do with.
The quarterly number means that if the economy expanded over a year at the same pace as in the July-September period, economic growth would stand at 3.3 percent for the year. Over the past 12 months, the economy has actually grown by a less impressive 2.3 percent.