Can President Trump deliver on his economic promises? The administration is forecasting 3.2% annual growth in America’s gross domestic product over the next 10 years. Most analysts’ forecasts are far lower—in the range of 2%, the rate that has prevailed since the end of the 2007-09 recession.
Generally, White House forecasts are prepared by highly capable career professionals at the Council of Economic Advisers, the agency I led from 2006-09. How is it possible for serious forecasters to convert 2% growth into the administration’s rosier picture of better than 3%? The answer is threefold: Productivity growth must return to its long-term average or better; slowing labor growth caused by an aging population must be offset; and tax cuts that favor investment must have the predicted positive effects.
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