White House says U.S. could reach 3% growth rate
WASHINGTON — The White House’s top economist said Wednesday the U.S. could achieve annual growth rates of 3 percent through the next decade if President Donald Trump’s policies on regulations and infrastructure are enacted.
The Council of Economic Advisers released its annual economic report, which praises the effects of the tax cuts and tax overhaul signed into law by Trump last December. The report forecasts an overall average annual growth rate of 2.2 percent through 2028.
But with the “full implementation of the Administration’s agenda,” including the implementation of the tax law, additional cuts to regulation and a sweeping infrastructure plan, the projected growth rate reaches 3 percent through the next decade, said the report.
Wall Street economists generally expect the administration’s tax cuts will accelerate growth this year and next, to between 2.5 percent and 3 percent. But they expect the impact to fade by 2020.
Robert Kaplan, president of the Federal Reserve Bank of Dallas, said Wednesday that the economy will likely expand 1.75 percent to 2 percent in 2020.
Fed officials have indicated they expect to raise short-term interest rates three more times this year. Higher rates are intended to cool borrowing and spending.
Slower population growth and weak gains in productivity — a measure of the economy’s efficiency — are also weighing on the economy’s long-term growth rate, Kaplan said.
Kevin Hassett, chairman of the CEA, argues that the administration’s slashing of the corporate tax rate to 21 percent from 35 percent will spur more corporate investment in software, machinery and other equipment. That investment, in turn, should boost productivity and enable a faster expansion, Hassett said.
The report forecasts that productivity will grow at a 2.6 percent pace in the next decade, above its average rate of 2 percent in the past 50 years. The report repeats the administration’s estimate that the tax bill is expected to raise average household income by $4,000. An estimate by the nonpartisan Tax Policy Center estimated the average household income would rise $1,600 in 2018 because of the tax cuts.
