Sunday, July 29, 2018

Paul Krugman on March 1, 2017: We Can't Achieve [Trump's goal of] 3% GDP Growth

Click here to read the original Cautious Optimism Facebook post with comments

2 MIN READ - The Cautious Optimism Correspondent for Economic Affairs and Other Egghead Stuff (COCEA) takes a stroll down memory lane in light of the recent 4.1% GDP 2Q18 growth report from the Commerce Department.

Of course if Nobel Laureate Paul Krugman meant that the U.S. economy could not achieve 3% sustainable growth because it might jump over 4% from time to time, well then we give him due credit for his keen insight even if it lacked verbal clarity.

But of course that’s not what he meant—as evidenced by his remark that “You could make me total dictator and do everything I believe would work and it still wouldn’t get you up by more than a few tenths of a percent [above 2%].”

Now there’s a Krugman comment we can all agree with wholeheartedly: He absolutely couldn’t achieve 3% himself, just not for the reasons he thinks.

ps. The average real GDP growth rate going back to 2Q17, Trump’s first complete quarter in office, is now 2.88%. Therefore a 3.6% growth rate in the next quarter would raise the average to 3% over the six quarters Trump has been in office. This compares to:

2009: -0.43% (Great Recession)
2010: 2.55%
2011: 1.63%
2012: 1.48%
2013: 2.63%
2014: 2.73%
2015: 2%
2016: 1.88%

Average across eight years: 1.81%
(source: Bureau of Economic Analysis)

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