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.