The Current Budget and Its assumptions

The current 10-year budget plan put forward by the administration assumes that real Gross Domestic Product in the US will rise at an average annual rate of 3%.

Since 1950 (that is, excluding data covering the Great Depression, recovery from it, the WW2 and immediate post-WW2 years), the average growth rate of GDP over 4-year periods has been trending DOWN, The last 4-year period in which average annual growth in real GDP has exceeded 3% per year is the LATE 1990s.

I would suggest that the likelihood that the next 4 years--let alone the next 10 years--will achieve an average annual growth rate of 3% (or higher) is, well, slight.

Why is that?

First, population growth is slowing. In the early 1950s, population growth was abut 1.6% to 1.8% per year. It's now about 0.7% per year--and falling. It's harder for the economy to grow rapidly if the number of people available to preform the economy's work is growing slowly.

 

Second, productivity (measured as real GDP divided by the number of workers) has not been rising. Productivity growth has hardly been stable, but is has declined from about the beginning of the recession that began in 2007--and the growth in productivity has not rebounded. Since about 2014, it has been around 0.5% per year.

Getting 3% per year growth in real GDP with a more slowly growing population (and that seems unlikely to change anytime soon) and with productivity growth as anemic as it has been for several years...don't count on it.

This completely leaves out of the discussion the specifics of spending priorities in the budget.