The White House issues page titled Bringing Back Jobs And Growth claims “President Trump has outlined a bold plan to create 25 million new American jobs in the next decade and return to 4 percent annual economic growth.”

Let’s take a look at GDP trends and the reasons behind those trends to assess the likelihood of Trump’s claim.

US Real GDP Quarterly at Annualized Rate

US Real GDP Per Capita Quarterly at Annualized Rate

Let’s smooth out some of the volatility by using annual GDP growth.

US Real Annual GDP

The trend in real GDP went from over 4% in 1948 to 2% in 2016.

Reasons for Decreasing Growth

  • Rising debt and debt service loads
  • Increasing government interference in the free markets
  • Demographics – Aging boomers
  • Changing attitudes of millennials towards consumption and debt
  • Changing attitudes of millennials towards family formation and housing
  • Untenable pension promises and excessive public union pay
  • Fed’s insistence on 2% inflation in a technological deflationary world
  • Repetitive asset bubbles by the Fed that benefit the banks and already wealthy

    • Some blame falling population rates. The real per capita chart disprove that thesis. A massive influx of baby boomers did not reverse the trend. Yet, aging boomers and their healthcare problems will surely add to the existing problems.

    Former Fed Chair Ben Bernanke blames a “savings glut”.

    Larry Summers proposes “secular stagnation”, an idea also encompassing the excess savings theory.

    Brad DeLong is another economist who blames excess savings.

    Anyone blaming a savings glut is clueless about the true meaning of savings. Widely held notions that inflation is a benefit is also wrong.

    Challenges Unanswered

    My Challenge to Keynesians “Prove Rising Prices Provide an Overall Economic Benefit” has gone unanswered.

    So has my challenge on the Secular Stagnation Theory: Challenge to DeLong, Summers, Bernanke, Krugman.

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