As we know, Donald Trump often speaks in hyperbole. So this statement can be filed in that category.
It may also be a way of putting pressure on Kevin Warsh, whom he has just appointed to head the Fed. "We can grow by 15%, I think more than that" if Warsh "does the job he is capable of doing," he said in an interview with Fox News, recorded on Monday.
In his Fox News interview, Trump does not specify which metric he is referring to. It is unclear whether he means year-on-year growth or cumulative growth. 15% growth per year is a purely fanciful figure. Over the full length of his term (four years), it would take around 3.5% growth each year to reach 15% cumulative growth.
That is a high number, but far more reasonable. And perhaps achievable if AI investment fully delivers, with a productivity boom. That is, moreover, broadly the thesis Kevin Warsh defends, and what, in his view, makes it possible to keep cutting rates.
US growth reached 4.4% in Q3, after 3.8% in Q2. Growth increasingly driven by AI-related investment. According to the Atlanta Fed's GDPNow model, GDP is expected to rise by 4.2% in Q4 2025. We are talking here about quarterly growth at an annualized rate.
Quarterly growth at an annualised rate in the United States. Sources : Bureau of Economic Analysis
The US economy has been growing above its potential for several years now: 2.5% in 2022, 2.9% in 2023, 2.8% in 2024. Potential is instead generally estimated at around 2%.
That also helps explain why inflation remains "somewhat elevated", to use the Fed's wording. Inflation, as measured by the CPI, came in at 2.7% in December. An economy growing above its potential tends to generate inflation.
