Xenophobe Trump Needs Migrants to Hit 3% GDP Growth

To generate growth, the US needs more rather than less people from abroad. The math is simple.

Amidst the barely concealed xenophobia of Trump's presidential campaign, something is becoming more evident the nearer he approaches the Oval Office: His economic promises go against what's been found possible in terms of generating growth relative to employment. To begin, witness another of his "clash of civilizations," "us against them" type remarks after the recent Berlin attacks:

President-elect Donald Trump characterized the gruesome truck attack on a Christmas market in Berlin as part of a systematic campaign by Muslim extremists against Christians, fueling speculation that he views the war on terrorism as a clash of civilizations and not a conflict against extremists. Trump’s late-Monday statement noted that the 12 people killed and 50 wounded were “innocent civilians.” But rather than identifying them as German citizens and tourists, he cast the attack in unusually religious terms.

“ISIS and other Islamist terrorists continually slaughter Christians in their communities and places of worship as part of their global jihad,” Trump said. “These terrorists and their regional and worldwide networks must be eradicated from the face of the earth, a mission we will carry out with all freedom-loving partners.”

I though this commentary from MarketWatch's Rex Nutting particularly useful with regard to accepting more migrants, wherever they may come from. With worker productivity slowing instead of speeding up being the trend of the past few decades, the US economy will need to hire more workers it doesn't currently have to achieve a sustained growth increase. That is, it needs more people--make that a lot more people--from abroad. Suffice to say that the lofty goals Trump sets cannot be achieved lest the United States' labor situation changes fairly significantly in the near future (i.e., over his term):

There are only two ways to get the economy to move faster over a sustained period: Hire more workers, or make the workers we have more productive. Those two factors — working harder and working smarter — determine the economy’s potential growth rate, or its speed limit. Potential growth is the sustainable level of output that the economy can supply, and right now it’s below 2%.

Here’s the economic equation: Potential growth = labor-force growth + productivity growth.

With outsized worker productivity gains being unlikely, then, the only real way is to increase the number of workers to achieve these growth targets. With a diminishing native workforce, the US will need to look abroad for workers:

Unless we can magically get productivity to improve at the fastest rates in the past 50 years, the only way to get to the gross domestic product to grow at 3% on a sustainable basis would be to hire 33 million workers over the next 10 years.

The problem? With the working-age population barely growing, the supply of qualified and willing Americans to hire would quickly run out, which means we’d need to open up the borders and let more immigrants in. In 2020, for instance, the working-age population is expected to grow by about 600,000, according to the Census Bureau. But to grow GDP at 3%, the economy would need 2.8 million more workers that year, even if productivity rebounds modestly, as assumed by the Congressional Budget Office in its projections about potential growth.

Maybe the incoming wall-building, Islam-baiting US president would do well to reconsider his viewpoints. As it stands, his numbers here--like most everywhere else--do not add up.

UPDATE 1: Yes, Q3 growth in the US was just revised upwards to 3.5%, but that hardly qualifies as "sustained" after a number of lackluster quarters. Plus, you have to figure exactly what the unpredictable Trump will do once he gets the keys to the Oval Office.

UPDATE 2: Here's more on how conventional economists see labor productivity growth constraining US growth prospects.