Back in September, Donald Trump stoked controversy when he argued the Federal Reserve’s low interest rate policy was politically motivated, aimed at helping Democrats in this year’s election. In fact, the minutes detailing the Fed’s September 20-21 meeting succinctly stated why we need to elect Trump president.
At the meeting, “the staff slightly lowered its assumption for potential output growth over the medium term and in the longer run” while meeting participants saw “a slower pace of trend output growth.” Federal Reserve leaders slashed their estimate of long-term potential real growth, which is akin to an economy’s speed limit, down to 1.8% – the first time it has ever dipped under 2%.
Back in 2009, the Fed saw potential real growth of 2.6%. Bear in mind that over the past 60 years GDP growth has averaged north of 3%.
Not only has the Obama economic recovery been the slowest once since World War II, it has caused structural damage to the US economy that puts the nation on a path of decline. Now 2% trend growth may not sound all that different than 3% (a discussion about a 1% change may not seem sexy), but it really does add up over time. Today, the US economy is $18.45 trillion, and over 25 years that incremental 1% would compound to $8 trillion of additional annual output. That is over $20,000 for every man, woman, and child.