Trend growth of 1.9%, near-term growth modestly above trend

摘要

On the supply side of the economy, we project potential, or trend, GDP growth of 1.9% per year through 2029, but there is a shift in the contributions to growth away from growth in the labor force and towards growth in productivity. Growth of full-employment (or "potential") productivity is projected to rise from near 1% in 2018 to roughly 1.7% by 2023 (see chart). However, most of that increase is accounted for by an assumed increase in the growth of total factor productivity (TFP, see Key Forecast Assumptions). The contribution from capital deepening, consistent with our forecast of business fixed investment, averages around 0.8 percentage point (see chart). Growth of the labor force slows both because population growth slows and a near-term cyclical rise in the participation rate gives way to a secular decline driven by aging of the population (see chart).