Jason Furman points us to his favorite Table 8-2 in the Economic Report of the President, 2018, released yesterday, with particular reference to the productivity assumption.
Figure 1: Nonfarm real output per hour, 1947Q1=1 (blue), Trump Administration forecast of 2.6% (red), historical average (1953Q2-2017Q3) growth rate of 2% (pink). NBER defined recession dates shaded gray. Source: BLS via FRED, NBER, Economic Report of the President, 2018 and author’s calculations.
Note that this is the officially reported series, rather than the average of GDO and GDI used by CEA. The differences are small, however, in estimated trends, so I think this graph is representative.
The 2.6% growth rate forecast is just at the upper end of the 66% confidence interval for an ARIMA(0,1,0) or ARIMA(0,1,2) model, estimated over the 1953Q2-2017Q3 period. The 2.6% growth rate forecast is definitely outside of the 66% interval if the Great Moderation period (1986Q1-2017Q3) period is used.
Here is Table 8-2 from the ERP.
Source: Economic Report of the President, 2018.
For the sake of completeness, here is a closeup of the data, graphed on a log scale, and with the ARIMA(0,1,0) of log nonfarm productivity included.
Figure 2: Nonfarm real output per hour, 1947Q1=1 (blue), Trump Administration forecast of 2.6% (red), historical average (1953Q2-2017Q3) growth rate of 2% (pink), ARIMA(0,1,0) forecast estimated over 1986Q1-2017q3 period (dark gray) +/- 1 standard error (light gray). NBER defined recession dates shaded gray. Source: BLS via FRED, NBER,Economic Report of the President, 2018 and author’s calculations.
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