WASHINGTON — President Donald Trump is holding out the prospect of 6 per cent 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 per cent .
A look at the president's remarks at a Cabinet meeting Wednesday:
—"So we're at 3.3 per cent GDP. I see no reason why we don't go to 4 per cent , 5 per cent , and even 6 per cent ."
—Speaks of GDP "getting up to 4, 5, and even 6 per cent , because I think that's possible."
Federal Reserve officials and most mainstream economists expect economic growth to hew closer to 2 per cent . There are no signs the economy is capable of delivering a phenomenal and rarely achieved growth rate on the order of 6 per cent .
The U.S. economy last cleared that hurdle in 1984 — and only for a fleeting year, at 7.3 per cent . 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 per cent , 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 per cent , 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 per cent , 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 per cent , 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 per cent for the year. Over the past 12 months, the economy has actually grown by a less impressive 2.3 per cent .
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Josh Boak, The Associated Press