Trump Seeks 4% Annual GDP Growth, High End of Prior Goals
Trump Seeks 4% Annual Economic Growth, High End of Prior Goals
(Bloomberg) -- President-elect Donald Trump’s policies aim to achieve annual economic growth of 4 percent, the high end of previous goals set by him and his team, according to the White House website updated as he took the oath of office on Friday.
“To get the economy back on track, President Trump has outlined a bold plan to create 25 million new American jobs in the next decade and return to 4 percent annual economic growth,” the website reads in a page titled “Bringing Back Jobs And Growth.” The strategy includes lower tax rates and less regulation, it says.
Another page reiterates pledges Trump made on trade policy during the campaign, saying the president’s strategy “starts by withdrawing from the Trans-Pacific Partnership and making certain that any new trade deals are in the interests of American workers.” Trump is also “committed to renegotiating” the North American Free Trade Agreement.
The U.S. economy has expanded at an average annual rate of 2.1 percent since the last recession ended in June 2009. Economists expect gross domestic product to grow 2.3 percent both this year and next year, according to the median estimates in a Bloomberg survey. The last time U.S. growth topped 4 percent in a full calendar year was in 2000, at 4.1 percent.
Trump in September called for a “national goal” of 4 percent economic growth while also saying his plans would create an average of 3.5 percent expansion over 10 years. His Treasury secretary nominee, Steven Mnuchin, told lawmakers Thursday in his confirmation hearing that “we should be able to get to” a sustained rate of 3 percent to 4 percent growth.
Economists are largely skeptical that the U.S. can grow at such a pace for a sustained period, even with assistance from fiscal stimulus or other policies. The Federal Reserve sees the economy’s long-term potential growth rate at about 1.8 percent.
The 10-year target of 25 million jobs, which Trump announced in September, is also seen as a stretch, given that the labor market is already considered relatively tight. The most jobs ever created over such a period were the 24.4 million added in the 10 years ending in March 2001, according to data compiled by Bloomberg. The worst stretch was the decade through March 2010, when about 2 million jobs were lost.
Trump’s target indicates 2.5 million new jobs a year, which would exceed the 2.16 million positions added in 2016. Instead, analysts expect a slowdown: about 2 million jobs added this year and 1.8 million in 2018, based on median estimates in a Bloomberg survey this month.
“We will follow two simple rules: buy American and hire American,” Trump said in his inauguration speech.
To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net. To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Brendan Murray