B[Trump said the U.S. economy may grow at a rate of 20%. The U.S. Bureau of Economic Analysis estimates that real GDP growth in the second quarter was only 1.5% on an annualized basis.] On September 1, U.S. President Trump said on Monday that the U.S. economy could grow at a rate of as high as 20%. At the same time, he believed that even such rapid economic growth should not prompt the Federal Reserve to raise interest rates. “Our GDP growth could be 14%, 15%, 16%, even 20%,” Trump said at an event in the Oval Office of the White House aimed at unveiling an agreement to reduce prescription drug prices. "Economic growth does not mean it will cause inflation."
However, economic growth approaching the levels proposed by Trump is almost unprecedented in modern American economic history. According to data from the U.S. Bureau of Economic Analysis (BEA) dating back to 1947, there has only been one quarter in history in which U.S. real GDP has reached or exceeded 20% on an annualized basis. That was in the third quarter of 2020, when the U.S. economy quickly restarted as the COVID-19 lockdown measures were lifted, and real GDP annualized growth reached 34.9%. In the previous quarter, the U.S. economy shrank at an annual rate of 28%. The current economic growth rate in the United States is far from Trump’s goal. According to the latest estimates from the U.S. Bureau of Economic Analysis, real GDP growth will be 1.5% in the second quarter of 2026, down from 2.1% in the first quarter. A[Economics Nobel Prize winner Krugman commented on the latest speech of the Chairman of the Federal Reserve: Very traditional, not radical, which is good] August 31st, Nobel Prize winner in economics and American economist Paul Krugman said in a media interview on August 29, local time, that Federal Reserve Chairman Warsh’s speech was “utterly conventional” and did not release any radical policy signals. Krugman believes that "the important thing about Wash's speech is not what he said, but what he didn't say." Krugman noted that in the past few months, Warsh had raised concerns about the need for a different measure of inflation and suggested that the current inflation situation might not be that concerning. But in the speech, Warsh clearly sided with traditional inflation measures, which are still above the Fed's 2% inflation target. "So, compared to his previous statements, this speech is at least more hawkish." Krugman said.
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