U.S. Outlook: Why 3.0% GDP growth looks like a long shot

Scott Anderson
Posted by Scott Anderson
Chief Economist

President Trump talks about returning the United States to 3.0% GDP growth or better, and it’s baked into his FY 2018 budget plan to reach that milestone by 2021.

Graph showing recent dip in labor force growth.Many mainstream economists, including myself, believe such a strong growth rate over the medium term is highly unlikely.

For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on June 9.

Key observations:

  • GDP growth in the current expansion has averaged a modest 1.8% per year, the lowest expansion growth rate in the postwar period.
  • Nonfarm productivity growth defined as real output per hour worked was 0.0% at an annual rate in the first quarter.
  • The labor force growth rate over the past 12 months is a modest 0.8%.
  • The Federal Reserve estimates U.S. potential GDP growth today at around 1.6% per year, and that number is likely to slip further without a surge in productivity in the years ahead.

Click here to read my full report.

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