It looks like Donald Trump was right after all.
When Trump took office with a promise to bring growth up to three percent, many said it could be done. Claims by President Trump and his economic team that they could boost growth to 3 percent were derired as fanciful, unrealistic, or deceptive.
But the most recent Wall Street Journal poll of economists reveals that the average estimate for growth in 2018 has reached 3 percent, up from 2.9 percent last month and up from 2.4 percent a year ago.
“The average forecast predicts by the middle of next year the unemployment rate will drop to 3.6%. If the forecast is realized, it would be the lowest unemployment rate in nearly 50 years,” the Wall Street Journal reports.
That would leave a lot of economic prognosticators with egg on their faces. To take just a few examples:
- “The problem for the Trumpians is that we’ve had eight years of recovery,” Lee Branstetter, a professor of economics at Carnegie Mellon University, told Business Insider in February of 2017. “Now unemployment is well below 5%, and there’s just not a lot of slack in the US labor market. … It’s essentially mathematically impossible to get the growth they’re talking about.”
- “Making up the difference from 2% to more than 3% looks like a pipe dream,” L.A. Times business columnist Michael Hiltzik wrote.
- Marc Goldwein, the policy director of the Committee for a Responsible Federal Budget, told Planet Money that even if “you took the unemployment rate down to zero, you’d not even be close to 3 percent growth.”
- Five Thirty Eight described 3 percent annual growth as “pure fantasy” and reported that “most economists see 3 percent as so unrealistic.”
- “Economists are raising their growth expectations for this year and next, but don’t expect 3% growth during President Trump’s first term, according to a Philadelphia Fed survey published Monday,” Marketwatch reported.
- “Sorry, Mr. Trump, but the only way to get to 3% growth is to hire more Mexicans,” columnist Rex Nutting wrote.
- “Assuming 3% growth is, to put it generously, wishful thinking. Worse, it is deeply misleading–and potentially dangerous,” Simon Johnson declared.
Many of those who doubted Trump could achieve 3 percent growth now doubt the growth can be sustained. In fact, many economists who thought the U.S. would grow much slower in 2018 than it has been now project a slowdown in 2019 and 2020, with some even saying we risk a recession.
The Trump administration has even out-performed its own expectations. The first Trump budget projected that the economy would ramp up to 3 percent by 2021. So hitting 3 percent in 2018 would mean the Trump administration’s error was underestimating the near-term growth potential.
Still, it appears the Trump administration was closer to the mark than its critics. Faced with a barrage of skeptical questions from reporters when he announced the Trump 2018 budget, OMB direct Mick Mulvaney said reporters were wrong to insist the administration’s projections were overly-optimistic.
“That assumes a pessimism about America, about the economy, about its people, about its culture that we’re simply refusing to accept,” Mulvaney said. “We believe that we can get to 3 percent growth.”
And now so do the economists surveyed by the Wall Street Journal.