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JP Morgan's Feroli: Trump Needs 'Miracle' to Hit 3 Percent Growth Goal

JP Morgan's Feroli: Trump Needs 'Miracle' to Hit 3 Percent Growth Goal
(Dollar Photo Club)

By    |   Tuesday, 16 May 2017 08:19 AM

A host of economic landmines reportedly may prevent President Donald Trump from achieving the 3 percent economic growth he has promised. One economist bluntly predicts that the president would need a “productivity miracle” to hit the target.

“Two stubborn obstacles stand in his way,” The Wall Street Journal reported. “The work force isn’t producing enough new workers, and the productivity of those working isn’t growing fast enough,” WSJ.com reported.

“In the long term, an economy can’t expand faster than the combined growth rates of its working population and their output per hour. That combined number, in many economists’ projections for the next decade, is about 1.8%. This is also the long-run growth rate projected for the economy by Federal Reserve officials,” the Journal reported.

“Mr. Trump’s advisers say their policies can deliver 3% to 4% growth year after year, the kind of prosperity the U.S. saw during the 1980s and 1990s—in effect expanding what is considered the economy’s long-term potential,” the Journal reported.

Without faster growth in workers, the labor force would need to churn out goods and services much more productively to give the economy room to grow at a 3%-a-year rate over an extended period. The trend is the opposite. Workers’ output per hour in the nonfarm business sector has been increasing only by 0.7% a year since 2010.

Many economists see that picking up in coming months, perhaps doubling. Meeting Trump’s objective, though, would need “the type of growth we often refer to as productivity miracles,” said Michael Feroli, chief U.S. economist at J.P. Morgan Chase & Co.

With the unemployment rate now at 4.4% and operating at a level economists consider to be “full employment,” meaning the economy produces as many jobs as it can without spurring inflation, the labor market provides little room for the kind of economic surge that marked the 1980s.

“Strong growth during the Reagan years was driving unemployment from 10% to full employment. We can’t do that trick again,” said Joel Prakken, senior managing director of Macroeconomic Advisers, a forecasting firm.

Meanwhile, many other respected economic voices are predicting robust growth and additional stock-market gains amid Trump's blueprint to truly "Make America Great Again."

David Horowitz, author of the best-selling book "Big Agenda: President Trump's Plan to Save America," told Newsmax TV that the market rally since Republican Donald Trump won the election has more room for gains as the president pushes his pro-business agenda.

“There's more upside. Starting from when he was president-elect he started this stock market boom,” he told Newsmax TV's “The Income Generation Show.”

“There will be corrections. There are going to be setbacks along the way like the healthcare which they hurried too fast. If you're looking over the long term of this administration I think the stock market is going to love Trump,” Horowitz said.

Horowitz said the president will push forward with tax cuts and regulatory changes promised during the election.

“I don't think Trump's agenda is going to be stopped in its tracks. What people forget, I mean, it's all this inside-the-beltway chatter, all of it hysterical. The anti-Trump forces are truly deranged. You can't forget how he resonates with the people,” Horowitz said on "The Income Generation," which airs on Newsmax TV every Sunday at 10 am ET.

(Newsmax wires services the Associated Press, Bloomberg and Reuters contributed to this report).

© 2019 Newsmax Finance. All rights reserved.

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A host of economic landmines reportedly may prevent President Donald Trump from achieving the 3 percent economic growth he has promised.
JP Morgan, Feroli, Trump, Miracle, Economic, Growth
Tuesday, 16 May 2017 08:19 AM
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