Trump forecasts 3% growth; economists not convinced

Washington, US - President Donald Trump assumes economic growth above three per cent this year in his annual budget proposal, exceeding mainstream analyst forecasts and other key authorities in Washington.

The White House proposal for fiscal 2021 says gross domestic product growth will climb 3.1 per cent in the fourth quarter of 2020 from a year earlier, followed by three per cent expansion in 2021, according to a senior administration official. Growth will step down to 2.8 per cent in the final two years of the decade, in line with prior White House expectations, according to the person who asked not to be named because the proposal is not scheduled to be released until Monday.

The outlook exceeds even the highest estimate of mainstream economists, who see GDP growth easing this year to 1.8 per cent, the median in a Bloomberg News survey of 59 analysts.

The projection also exceeds levels forecast by the Congressional Budget Office, a nonpartisan arm of the legislature. The agency’s latest ten year outlook sees growth decelerating from 2019 to 2.2 per cent in 2020, and coming in just below that for the next decade.

Federal Reserve officials are forecasting two per cent growth in 2020.

The US GDP rose 2.3 per cent in 2019, trailing Trump’s prior promise of 3.2 per cent. The latest budget proposal cites reasons for the miss including the US-China trade war, struggles at airplanemaker Boeing Co, a strike by thousands of workers at General Motors Co and historic flooding in the Midwest, according to the administration official.