On Wednesday the White House released the annual Economic Report of the President. No surprise, Democrats like Jason Furman, who served as the top economic adviser in the Obama White House, say President Trump’s economic forecasts are much too optimistic. Mr. Trump says that his tax cuts and deregulation will restore robust growth and Mr. Furman calls the Trump growth estimates “absurd.”
The national press corps, which spends a good deal of time cataloging every inaccurate statement from Mr. Trump, may be particularly receptive to the Furman message. But as they dig into this issue, they ought to give some credit where it’s due.
Specifically, reporters may want to consult Table S-9 in the economic report Mr. Trump released last May. The press will note that the President and his economic team predicted 2.3% real economic growth for the calendar year 2017.
Based on the current reading from the Commerce Department released last month, the Trump forecast was right on the money.
Like all such government numbers, this reading on U.S. GDP is scheduled to go through potential revisions, so we’ll have to wait and see if the Trump call stands up. But from all the data available at this point, the rookie and his advisers have a solid read on the economy.
As for Mr. Furman, he’s right to note that our economy needs immigrants to return to its vibrant growth. But he’s already proven he doesn’t understand the impact of heavy taxes and regulation. As Larry Lindsey described in the Journal in 2016, Mr. Furman and his predecessors who oversaw economic forecasts in the Obama White House routinely expected their policies to work much better than they did:
The average annual growth rate from 2010-16 (again assuming 2% real growth for 2016) was 2.1%. The administration’s multiyear forecasts averaged a 71% overestimate from this figure. Compounding growth at 3.6% annually means a 28% larger economy after seven years. Compounding at only 2.1% means 15.7% growth. If the administration’s growth projections were accurate, the GDP would be about $1.8 trillion larger. That’s roughly $6,000 for every man, woman and child in the U.S.
If not absurd, the Obama forecasts were certainly far off target.
This article by James Freeman titled The Amazing Trumpkin? first appeared in the Wall Street Journal on February 22, 2018.