Necessary Fantasy: White House Estimates 3% Growth For a Decade

Here's one for the "not going to happen" category. Trump believes his policies will lead to 3% sustained growth.

The White House’s budget proposal, to be released Monday, estimates 3% Growth for 10 Years, on average.

The budget proposal projects the economy will grow about 3% annually over the coming decade, though officials now expect a slightly larger near-term boost, with output rising 3.2% next year before declining to 3% in 2021 and 2.8% by 2026, according to projections reviewed by The Wall Street Journal.

Many private forecasters also expect economic growth to pick up this year because of consumer and business spending encouraged by tax cuts signed by the GOP president in December, plus a two-year, $300 billion funding deal signed Friday.

But many don’t see quite as large an increase as the administration, and they don’t see the boost lasting for nearly as long. On Friday, economists at J.P. Morgan said they now expect the economy to grow 2.6% this year and 1.9% next year.

In December, Federal Reserve officials raised their projection of GDP growth for the current year to 2.5%, and for next year to 2.1%. They still see the economy growing around 1.8% over the long run.

Optimists Every One

A single recession in the next 10 years will likely ruin even the 2.0% projections.

Contrary to popular thinking, the increased deficits will not add to growth.

Moreover, a sustained stock market decline is guaranteed to subtract from consumer spending.

Necessary Fantasy

It is uncertain if the Trump forecasters really believe the nonsense they spew.

They had to make rosy projections to get their policies passed.

Had they claimed their policies would lead to 1.8% growth, the Senate would have rejected the tax cuts and spending bills.

The question here is: Are they liars, fools, or both?

I vote both.

Mike "Mish" Shedlock

Comments
No. 1-23
theplanningmotive
theplanningmotive

The real issue is interest rates. With the 10 year yield fifty percent higher than inflation, it will kill consumption by the bottom 90% and when that becomes evident as soon it will, it will kill the stock market and that will kill consumption by the top 5%. We are closer to a recession than 3% growth.

xil
xil

hmm, sounds like the passage of obama's health care bill

xil
xil

"They had to make rosy projections to get their policies passed.

Had they claimed their policies would lead to 1.8% growth, the Senate would have rejected the tax cuts and spending bills.

The question here is: Are they liars, fools, or both?"

AWC
AWC

Passive Investing and Risk Parity,,,well worth a look.

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