3% GDP Growth Not Happening… Without More Immigrants

Now that’s she’s running for Governor, Rep. Kristi Noem has probably forgotten her ridiculous campaign pledge to drive 9.1% GDP growth with voodoo economics (the voodoo consisting of sticking pins in the working class). Her President-Elect has scaled his economic growth goals down from 5%–6% to 3.5%, maybe 4%.

Real economists say Noem and Trump both fail to recognize the new normal of slower economic growth:

The median estimate from economists surveyed by the National Association for Business Economics calls for the American economy to grow 2.2 percent in 2017, up from a forecast 1.6 percent this year and unchanged from the previous survey in September.

…80 percent of those surveyed believe the potential growth rate of the American economy will remain at 2.5 percent or lower over the next five years [“Get Used to It: Economists See ‘New Normal’ of Slow Growth,” AP via KELOLand.com, 2016.12.05].

Trump calls that cynicism; realistic economists call it an honest read of an aging workforce and declining productivity:

Two forces will make that tough: an aging population and stagnant productivity.

For years, Wall Street and government forecasters have waxed pessimistic on the economy’s capacity for sustained growth, pointing to multiple reasons it has diminished since the 1990s. Perhaps most important, demographic trends have produced slower growth in the working population. And the U.S. and other advanced economies are grappling with sluggish gains in productivity, for reasons that aren’t wholly clear.

As a result, the nonpartisan Congressional Budget Office predicts roughly 2% annual growth for gross domestic product pretty much as far as the eye can see [Ben Leubsdorf, “Aging Population, Stagnant Productivity Challenge Donald Trump’s Growth Plan,” Wall Street Journal, 2016.12.04].

If we want to hit 3%, we’re going to have to skip the wall and build more bridges—and maybe an expressway—for Mexican workers and other immigrant laborers coming to the U.S.:

Unless we can magically get productivity to improve at the fastest rates in the past 50 years, the only way to get to the gross domestic product to grow at 3% on a sustainable basis would be to hire 33 million workers over the next 10 years. The problem? With the working-age population barely growing, the supply of qualified and willing Americans to hire would quickly run out, which means we’d need to open up the borders and let more immigrants in.

In 2020, for instance, the working-age population is expected to grow by about 600,000, according to the Census Bureau. But to grow GDP at 3%, the economy would need 2.8 million more workers that year, even if productivity rebounds modestly, as assumed by the Congressional Budget Office in its projections about potential growth.

Of course, if Trump has his way on restricting imports from Mexico, there will probably be quite a few unemployed Mexican workers who’d be glad to trek north to take those jobs [Rex Nutting, “Sorry, Mr. Trump, But the Only Way to Get to 3% Growth Is to Hire More Mexicans,” MarketWatch, 2016.12.05].

We can have a wall, or we can have 3% GDP growth. We can’t have both. From Trump, we should expect neither.


5 Responses to 3% GDP Growth Not Happening… Without More Immigrants

  1. mike from iowa

    Using 2011 stats and wingnuts workers plans, if we eliminate all 1.06 2011 abortions and forced each fetus to be born, by the end of Drumpf’s first term there would be 1.06 million 4 year olds ready to toil in Drumpf sweatshops for free. That should help make Drumpf wealthy.

  2. I think we are about ready to find that it is much easier to stand back, toss mud and grouse about the other guy’s plan than it is to actually DO SOMETHING!

  3. Donald Pay

    Anything better than about 3-4% would be a bubble economy, and not likely to last. What people want is a nice predictable economy, not spikes and crashes. Wall Street likes the volatility because they make more money that way, but let’s not let Wall Street run the economy anymore, and screw Main Street and middle class families. Unfortunately, Obama didn’t even attempt to lock up Mnuchin, so now this crock is going to be running things, and rigging it for himself and the other super wealthy.

  4. Roger Elgersma

    OPEC and the Arabs are already talking about raising the price of oil. They were much more favorable to Obama who understands muslims and will have no moral need to support Trump with his attitudes about them. They are not going to be friendly to Trump any time soon. So expect higher oil prices and that will be a serious damper on the economy seeing how abnormally low oil is now. It will not stay that low for sure. Trumps bad mouthing whole groups of people will have results. Remember that Donald when you grow up.

  5. Porter Lansing

    Right, Mr. Pay. A bubble economy. Before the Bush Recession much of the GDP growth was a result of homeowners refinancing and using the money to remodel or expand their home. Then refinancing again on the higher appraisal and doing it again or buying a second rental property. It was called “chasing money” using manipulated credit and spending money you’d not earned. Savings was at a low. Personal bankruptcies skyrocketed. Under Obama things have finally stabilized and our current economy is a very true representation of the mean. People are saving again.