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
link to obatperangsangmanjur.net
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.
hmm, sounds like the passage of obama’s health care bill
“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?”
Welfare & entitlement reform would help too, making the safety net a little bit less of a comfortable hammock. Also these municipal jobs with full benefits & pension after 25 years. Healthy people should work into their 70s these days.
no one cares what you think
Hi Realist: I pointed to two items – deregulation and repatriation of funds – as reasons for some optimism. I am not a believer in stimulus. In fact, I believe in the opposite – the crowding out effect of government spending. I disagree with you regards full capacity. There is plenty of room for improvement in workforce participation. Otherwise, we’d be seeing more wage inflation. I also think worries about Trump’s trade policies are over blown. With regards to ‘Trumpian uncertainty’, I think it’s a valuable trait for foreign policy. I don’t see Trumpian uncertainty in his domestic policy. He’s been a fairly consistent paelo-conservative populist for 40 years, but he definitely is for too much spending.
Everyone is not underestimating the impact of deregulation, but most of the doom & gloomers are. Mish doesn’t site it as even a mitigating factor in his pessimism, even though he’s fairly libertarian in his views.
People are underestimating the benefits of deregulation to economic growth. It’s a much greater factor than the tax cuts, which are a double edged sword because of the deficit. The repatriation of cash abroad is another boost GDP will have. Apple alone could add a percent to growth over the next five years with capital expenditures.
2nd “Both”. [roflol]
I think this might be too simplistic a view in an economy this complex. One major problem is that next year’s $1.2T deficit, coupled with the Fed sweeping $600 bil. in bonds off their books at the same time will REALLY test the bond market against a Fed that isn’t going to (and in many ways now just can’t) be nearly as cooperative with the markets as in the past decade. The subsequent rise in rates will probably nullify much of the overall benefit of the added deficit spending (which is completely silly to begin with at this point in the economic cycle), not to mention the rise in interest expense to the government it is going to cause.
I agree they are both liars and fools but mostly I think they are thieves as they mortgage our children’s and grand children’s futures with a burden that cannot be repaid.
If the government spends an extra $150B on infrastructure and defense, that will add about 3/4% to GDP. That is the seen affect and it will be directly measurable. What the unseen will be is a guess.