World Economy

Trump Is Dreaming, Pigs Don't Fly

Trump Is Dreaming, Pigs Don't Fly
Trump Is Dreaming, Pigs Don't Fly

The New York Federal Reserve on Friday raised its estimate of US gross domestic product growth for the fourth quarter of 2017 closer to 4%, based on revisions of prior data that suggested stronger economic activities.

The regional central bank’s “Nowcast” model calculated the economy was expanding at an annualized pace of 3.98% in the fourth quarter, quicker than the 3.92% rate calculated a week ago.

But the fact checkers and economists told it couldn't happen.

CNN: Trump promises 4% growth. Economists say no way.  Donald Trump has a big promise for the US economy: 4% growth. No chance, say 11 economists surveyed by CNNMoney. And a paper published Tuesday by the Federal Reserve Bank of San Francisco backs them up.

"No, pigs do not fly," says Robert Brusca, senior economist at FAO Economics, a research firm. "Donald Trump is dreaming."

The Republican presidential nominee made the promise in a speech in New York in September. "I believe it's time to establish a national goal of reaching 4% economic growth," he said.

So what's realistic? The San Francisco Fed estimates the "new normal" for annual economic growth to be 1.5% to 1.75%. That's far lower than the period from World War II to 2004, when growth typically hovered between 3% and 4%. It's time to embrace the malaise. The era of greatness is done.

AP: Trump imagines 6% growth. Put that down to puffery. By most signs, economists say the country will be lucky to achieve consistent annual growth much over 2%.

A look at the president's remarks at a cabinet meeting Wednesday: Trump: —"So we're at 3.3% GDP. I see no reason why we don't go to 4%, 5%, and even 6%."

Federal Reserve officials and most mainstream economists expect economic growth to hew closer to 2%. There are no signs the economy is capable of delivering a phenomenal and rarely achieved growth rate on the order of 6%.

These aren't facts. They're opinions. But lefties have long ceased being able to distinguish between the two. They shout things that they feel and then insist that anyone who denies them hates science.

Business Insider: Trump is officially making an economic promise that will be nearly impossible to keep. "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% annual economic growth," reads the White House site.

The 4% GDP promise is one that Trump has made before, but now it is the official promise of the White House and the president. The only problem is delivering on this promise will be incredibly difficult.

Currently, the US is stuck in a slow growth pattern since the financial crisis and has been unable to escape the 1.5% to 2.5% annual growth corridor over the past seven years. This is lower than the 3.1% average annual GDP growth seen since 1950.

While there are a number of reasons for this—sluggish corporate investment, Americans saving more of their income, low wage growth, and more—it would take a monumental task to return the US to nearly double its current annual growth rate. Reversing the course of this will be difficult, especially in just four years.

Fortune: Trump thinks the US could see 6% economic growth. The data says otherwise.

According to Bloomberg, Trump claimed that the combination of high consumer confidence, job creation, and tax cuts would create this considerable growth. Trump claimed that he sees “no reason why we don’t go to 4, 5, even 6%.”

Unfortunately, Trump didn’t explain exactly how this jump would happen, and few economists support his claim. In a Bloomberg survey of 80 economists, only one forecast showed a growth above 4%.

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