In this video, I’ll explore whether the Trump administration stands a chance of reaching its goal of 3% economic growth.
On the campaign trail, President Trump said he would get the US to 5% annual economic growth. In office, his team lowered this to 3-4%.
The economy hasn’t growth at 3% in more than a decade. Its recent pace has been 2.1%.
Nonpartisan Congressional Budget office predicts a long-term growth average of about 2%.
Reasons: Slower growth of eligible workers, and a declining productivity rate.
Three years ago, The WSJ published a chart from John Burns Real Estate Consulting. It shows declining growth of the US labor pool.
Potential long-term growth rate is the sum of workforce growth and productivity growth. The workforce is projected by the CBO to expand at 0.5% annually over the next decade and productivity at 1.3%, for growth of 1.8%. That’s the “about 2%” I mentioned earlier.
In May, the WSJ published charts of the two trends, with data from the Labor Department: [chart shown in video]
Turning back to the CBO’s projection of the two components of economic growth, we see that Trump will need to focus on boosting productivity. This chart was also published by the WSJ in May: [chart shown in video]
Can Team Trump boost productivity? Probably not. Demographic trends point to lower human productivity in the decades ahead.
However, a trend completely independent of government policies could come to the rescue: automation.
Better robots and artificial intelligence are more productive than people. Factories are spending millions on upgrades to machines that can do the work of many human employees.
The problem is that even if higher productivity through bots increases economic growth, it will be pointless if people don’t benefit.
This is a tough nut to crack. Here’s hoping for higher growth in a way that helps people.
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