- President Donald Trump and his top economic officials promised US GDP growth could sustainably hit or exceed 3%.
- But according to Federal Reserve Chairman Jerome Powell, the central bank’s projections show that 2018 GDP growth will come in just shy of Trump’s promise.
- The Fed and Wall Street economists also project GDP growth will fall short of the 3% goal in 2019.
- The official release of full-year 2018 GDP growth is scheduled for Thursday.
Since the early days of President Donald Trump’s time in office, the White House has been unified on one big economic promise: the US would achieve 3% annual GDP growth.
Throughout the last year Trump’s advisers have maintained the country is on track to meet that goal, which was once thought aggressive. Kevin Hassett, the chairman of Trump’s Council of Economic Advisers, even said on February 19 that his prediction of 3.1% GDP growth for 2018 will be “spot on.”
Trump’s original goal was 4% annual growth, an even more difficult bar to reach, but the president and top economic officials have since adjusted those promises to the current 3% mark.
But regardless of the moving goalpost, it’s looking more and more likely that Trump may not see 3% annual growth after all.
The Fed’s Monetary Policy Report, released on Friday, estimated US GDP for 2018 would not hit the 3% mark. Federal Reserve Chairman Jerome Powell reiterated this projection during testimony to Congress on Tuesday.
“Based on the available data, we estimate that gross domestic product (GDP) rose a little less than 3% last year following a 2.5% increase in 2017,” Powell said.
As the Fed noted, the projected growth reflects “a noticeable pickup from the pace in recent years,” but it is still just shy of the president’s promise.
As recently as mid-February, fourth quarter GDP was projected to come in at a level that would have put the US at or above 3% annual growth for 2018. But an unexpected drop-off in December’s retail sales report, released on February 15, tanked the Fed’s and Wall Street’s expectations for fourth quarter GDP and threatened to push 2018 GDP growth under Trump’s 3% target.
As it stands, the Atlanta Fed’s GDPNow estimate for the fourth quarter sits at 1.8% – which would likely leave full year growth at 2.9%. According to Bloomberg data, Wall Street economists also expect 2018 GDP growth to hit 2.9% and projections for fourth quarter growth have tanked since the retail sales report.
Despite falling short of Trump’s goal, 2.9% annual growth would still match 2015 for the highest annual growth rate since the recession.
Most economists also don’t expect Trump to capture the 3% goal in 2019 either.
The Fed projects 2019 growth to come in at 2.5%, well below the target. And most major Wall Street economists also project 2019 growth to fall well below the 3% threshold. According to Bloomberg’s average of 87 economists, Wall Street expects 2.5% GDP growth for this year.
But while Powell and the Fed’s estimates point to Trump falling just shy of the 3% goal, we don’t know for sure what the final outcome will be. The official GDP report for the fourth quarter and full-year 2018 is scheduled for release on Thursday. Additionally, based on the Atlanta Fed’s projection, a little upward surprise could still get Trump to 3% growth.
Only then will we know if Trump’s biggest economic promise was fulfilled or if the president came up tantalizingly short.
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