The Trump budget banks on 3% economic growth for several years in a row. 3% is a step down from the 6, 5, and 4 percents he promised last year. But it’s still a step up from what the International Monetary Fund says the U.S. will get:
The IMF reduced its forecast for U.S. growth this year to 2.1 percent, from 2.3 percent in the fund’s April update to its world economic outlook. The Washington-based fund also cut its projection for U.S. growth next year to 2.1 percent, from 2.5 percent in April.
The world’s biggest economy will probably have a hard time hitting Trump’s target of 3 percent annual growth as it’s faced with problems ranging from an aging population to low productivity growth, and with a labor market already back at full employment, the fund said in its annual assessment of the U.S. economy released Tuesday [Andrew Mayeda, “IMF Cuts U.S. Outlook, Calls Trump’s Growth Target Unlikely,” Bloomberg, 2017.06.27].
IMF doesn’t count the Trump budget in its analysis but says any Trump stimulatory effect “is likely to be less than that projected in the budget and will take longer to materialize.”
The Congressional Budget Office agrees that the U.S. economy is going to grow at 1.9% a year for the next ten years:
CBO’s economic forecast—which underlies its budget projections—indicates that, under current law, the economy will expand through 2018 at a pace that leads to further tightening of the labor market. Greater demand for workers will put downward pressure on the unemployment rate and upward pressure on the rate of labor force participation. As the amount of unused productive resources in the economy shrinks, inflation and interest rates are projected to rise. In the later part of the 10-year projection period, annual output growth is projected to average 1.9 percent, constrained by a relatively slow increase in the size of the nation’s labor force [CBO, “An Update to the Budget and Economic Outlook: June 2017,” 2017.06.29.].
The White House could study the IMF and CBO reports and work on passing some serious policy proposals to deal with the changing demographics and economic conditions underlying these somewhat ho-hum economic projections. But the White House is too busy exaggerating and misreading economic data for easy Tweets for that kind of grown-up policymaking.