US President Donald Trump has stated that the US economy could grow\nat rates as high as 20%. Consequently, Trump asserted that such rapid\ngrowth should compel the central bank (the Federal Reserve) to reduce\ninterest rates.<\/p>\n
\u201cWe can achieve GDP figures of 14, 15, 16, and 20,\u201d Trump said during\nan event in the Oval Office earlier this week, as reported by CNBC\nInternational on Wednesday (2\/9\/202cap).<\/p>\n
\u201cSuccess in growth does not cause inflation,\u201d he insisted, suggesting\nthat such Gross Domestic Product (GDP) figures are not impossible.<\/p>\n
Trump\u2019s comments come amidst his continuous efforts to push US\nborrowing costs lower, even as Fed officials face inflation rates that\nremain above the 2% target. Notably, the Fed maintained its benchmark\ninterest rate in the 3.5% to 3.75% range in July. Many Fed observers\nanticipate that the Federal Open Market Committee (FOMC) will raise\ninterest rates at the next meeting in September.<\/p>\n
Has 20% growth ever occurred? In reality, growth approaching the\nlevels suggested by Trump is almost unprecedented in modern US economic\nhistory. According to data from the Bureau of Economic Analysis (BEA),\nreal GDP has recorded an annual growth rate of 20% or more in only one\nsingle quarter since 1974.<\/p>\n
According to BEA data, that quarter was the third quarter (Q3) of\n2020, when the economy surged at an annual rate of 34.9% as various\nbusinesses reopened following widespread COVID-19 lockdowns. This\nrecovery followed an annual contraction of 28% in the previous\nquarter.<\/p>\n
The next highest growth quarter was the first quarter (Q1) of 1950.\nAt that time, real GDP grew at an annual rate of 16.7% as the US and the\nworld recovered from World War II and the baby boomer generation began\nto be born.<\/p>\n
Thus, there is no other quarter in the data series covering nearly\neight decades that reached the 20% mark. So, what is the state of the\neconomy today?<\/p>\n
The current economy is growing far below those levels. According to\nBEA estimates, real GDP increased at an annual rate of 1.5% in the\nsecond quarter (Q2) of 2026, down from 2.1% in the first quarter\n(Q1).<\/p>\n
Quarterly GDP growth is reported as an annualised rate, meaning a 20%\nfigure does not reflect 20% growth within a single quarter. Trump is\nusing the potential for faster growth as additional justification for\n\u201cwhy the Fed should lower and not raise interest rates.\u201d<\/p>\n
\u201cWe should have the lowest interest rates in the world,\u201d Trump said,\nresponding to a journalist\u2019s question regarding the possibility of the\nFed raising interest rates.<\/p>\n
\u201cIn the past\u2026 if we announced good numbers, interest rates actually\nwent down. Now, if you announce good numbers, interest rates go up\nbecause they are so worried about inflation,\u201d he added.<\/p>\n
Strong economic growth does not necessarily lead to inflation. An\neconomy can expand rapidly without significant price pressure if\nproductivity and production capacity increase alongside demand. However,\nwhen demand grows faster than the economy\u2019s ability to produce goods and\nservices, it can drive price increases.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/highly-dubious-trump-confident-us-economic-growth-could-hit-20-1788332226", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }