I’m sorry but it’s time to type out, yet once more, how we calculate the annual growth rate for the real GDP, and no, there’s no imaginary quarterly or annualized growth rate for the real GDP. Now that we’ve reviewed, the financial inanity of the current administration is highlighted by policies which are in direct variance with the stated goal of increased economic growth of 3%.
There are two numbers we absolutely need in order to have economic growth: Labor force increases; and, Labor Productivity increases. The labor force is obvious, how many people of working age are in the workforce. Productivity pertains to how much can be produced by those workers. For more information see this article from the St. Louis FED. Suffice it to say that if the labor force growth is 0.5% and the productivity growth rate is o.5% then the economic growth rate will be 1%.
There are a couple of bits of Reality we need to introduce at this point in time: (1) The baby boom is over. (2) We are poised to severely limit our immigration.
“As of 2015, the number of baby boomers ranges from 74.9 million to 82.3 million, depending on whether the generation begins with the birth year 1943 or 1946.” [CNN] No matter which year one assumes for the beginning, it was over by 1964-65. Growth in the labor force has not, and may rationally not, increase at levels seen when the Boomers hit the job market. And, now they are exiting. Those born in 1965 are now 52, with about 13 years left before retirement; those born during or before 1952 are presumably retired already. So, what is happening now?
“The US fertility rate has been in a steady decline since the post-World War II baby boom. Back at its height in 1957, the fertility rate was 122.9 births per 1,000 women. The latest quarterly CDC data also indicate the larger pattern of women having babies later in life. As birth rates increased among women in their 30s and 40s, the rate among teenagers and women in their 20s dropped.” [CNN]
“Trump in his first weeks in office has launched the most dramatic effort in decades to reduce the country’s foreign-born population and set in motion what could become a generational shift in the ethnic makeup of the U.S. Trump and top aides have become increasingly public about their underlying pursuit, pointing to Europe as an example of what they believe is a dangerous path that Western nations have taken. Trump believes European governments have foolishly allowed Muslims with extreme views to settle in their countries, sowing seeds for unrest and recruitment by terrorist groups.”
This seems a polite way to say that the Trump administration would like very much to limit immigration to white Western Europeans. If we don’t allow immigration from Mexico and Central American nations, and we severely limit immigration from predominantly Muslim nations, then what’s left?
And, in terms of increasing the labor force, here’s where the policy and the reality clash. If we want an increase in the birth rate in order to increase our labor force, then the women having those babies are more likely to be foreign born immigrants to the US. [Pew] We don’t get to have it both ways — limiting immigration both limits the number of people available for immediate employment, and the number of little people who will grow up to be a portion of our labor force. Once more with feeling, if we limit immigration we necessarily limit our economic growth.
One of the amazing things about conservative/trumpism ideology is the notion that elements diametrically opposed to one another may somehow be massaged by empty rhetoric into actuality. Somehow, we are supposed to believe that we can have 3% economic growth while limiting our immigration unrealistically, and while continuing the urbanization of the country. Only in the fever swamp of right wing ethnocentric white supremacist thinking is this going to “happen.” And, the happen part is in quotation marks because this is Neverland.
So, no — we don’t get the deficit reduced by cutting taxes on corporations, millionaires, and billionaires. No, we don’t get a balanced budget by cutting non-defense discretionary spending, and NO we don’t get 3% economic growth by unrealistically impeding immigration. 2 + 2 does not equal 7.