Committee for a Responsible Federal Budget, How Fast Can America Grow? May 18, 2017: “Official projections show real economic growth will average less than 2 percent annually over the next decade. However, some policymakers have suggested economic growth could be restored to its historic average of above 3 percent per year or even increased to 4 percent or more per year. Faster growth would be a welcome boon for the economy, the federal budget, and household incomes; policymakers should pursue a growth-oriented agenda. Yet, while policymakers should aspire to and work toward faster growth, it is important that they do not over promise or assume it prematurely.  In the context of an aging population, achieving rapid economic growth represents a major challenge. In this paper, we explain that:

• Economic growth is projected to be 1.8 percent over the next decade, which is more than a percentage point below historic levels. This is a reasonable assumption due to a slowdown in the growth of labor, capital, and productivity.
• The aging population is the biggest driver of slower growth. It is responsible for three-quarters of the decline in projected labor force participation and may also be partially responsible for a slowdown in capital and productivity growth.
• While it may be possible to temporarily boost economic growth through demand-side “stimulus,” there is no plausible path to sustained 4 percent growth.
• Even achieving sustained 3 percent growth – a worthy aspirational goal – would be quite challenging. There is little precedent to suggest labor, capital, or productivity growth alone will be enough to generate 3 percent economic growth.
• To grow the economy by 3 percent annually, productivity growth, capital growth, and prime-age labor force participation would all need to return to the levels of the booming 1990s – an unlikely scenario given recent trends…”