WASHINGTON — A report by President Donald Trump’s Council of Economic Advisers credited the GOP tax cut and the president’s deregulation initiatives for producing 5.3 million jobs since he was elected in November 2016 and predicted sustained robust growth for the next decade.
“There’s ample room for optimism,” Council of Economic Advisers Chief Kevin Hassett told reporters Tuesday.
Trump’s economic advisers calculated 3.1 percent growth in the gross domestic product for 2018. The U.S. economy grew by 2.5 percent in 2017.
Economists outside the White House see a vibrant economy, but they’re not so sure it’s going to last and don’t believe it can sustain the 3 percent of annual growth the president’s economic advisers predicted for the next 11 years.
With unemployment near record lows and wage gains for blue-collar workers, Hassett suggested that Washington move from former President Lyndon B. Johnson’s “War on Poverty” to a new “war for self-sufficiency.”
The administration’s positive spin is shared by American voters.
The realclearpolitics.com polling average shows most voters disapprove of Trump: 53.7 percent disapprove of the job he is doing, while 42.6 percent approve. But they approve of his handling of the economy by a margin of 52 percent to 43.5 percent.
“There’s no question, the economy’s doing really well right now,” said Marc Goldwein of the Committee for a Responsible Federal Budget. “The question is can we extrapolate what’s happening now with economic stimulus into the medium and long term? And the answer is, we can’t because the demographics are baked in the cake.”
The high growth rate “doesn’t match the reality of our aging population,” Goldwein said, adding, “There are parts of the economy that are structural. We know the demographic.”
The report’s projection of 2.6 percent growth in the productivity rate raised questions with Jared Bernstein, a former economic adviser to Vice President Joe Biden and now a senior fellow with the Center on Budget and Policy Priorities.
“I get where they’re coming from because without that assumption, they can’t hit that 3 percent growth rate,” Bernstein said.
Today’s economy has good news, Bernstein noted, such as a tight labor market with some real wage gains. But he warned the boost from the Tax Cuts and Jobs Act is fading.
“I would say that there is clear slowing in the economy and that at the end of the day, as the fiscal stimulus fades,” the growth rate will slow from 3 percent to 2 percent, he said. “Eventually that’s going to slow down job growth.”
But Hassett argued that the gains from the GOP tax-cut bill are only just beginning. “When you cut taxes and make the United States a more attractive place to locate investment, then it takes awhile for all the factories to be built and the people to be hired and trained,” Hassett told reporters.
“I’d say the economy’s doing fairly well,” said Stephen Miller, director of UNLV’s Center for Business and Economic Research, but his center’s projections for economic growth — 2.6 percent for 2019, 2.3 percent for 2020 — are more modest than the 3 percent number in the Trump administration’s report.
“They’re working for the administration, so they’re putting the best picture they can on the story. The tax cuts did help. Cutting regulations did help,” Miller told the Review-Journal.
“Nearly everybody I know of is expecting a slowdown in the growth rate,” Miller added, “not turning into a recession but a slowdown in the growth rate.” And if trade negotiations with China fail, “that could be very problematic for our continued growth.”
Contact Debra J. Saunders at email@example.com or 202-662-7391. Follow @DebraJSaunders on Twitter.
“Overall, assuming full implementation of the Trump Administration’s economic policy agenda, we project real U.S. economic output to grow at an average annual rate of 3.0 percent between 2018 and 2029.”
-2019 Economic Report of the President