Trump says U.S. GDP could grow 20%, pushes Fed to cut rates

On Monday, President Donald Trump claimed the U.S. economy was capable of reaching growth rates as high as 20%, contending at the same time that the Federal Reserve should not respond to such expansion by hiking interest rates.

"We could have a GDP of 14, 15, 16 and 20," Trump said during an Oval Office event focused on prescription drug prices. "Success in growth does not cause inflation."

Growth at those levels would be without modern precedent. In Bureau of Economic Analysis data going back to 1947, only one quarter has ever recorded annualized real GDP growth of 20% or higher: the third quarter of 2020, when the economy expanded at a 34.9% annualized rate as businesses reopened following widespread Covid-19 shutdowns. That surge came directly after the economy had contracted at a 28% annualized pace in the preceding quarter. Second place belongs to the first quarter of 1950, which posted a 16.7% annualized real GDP gain. Across the rest of the roughly 80-year dataset, no single quarter has come close to that threshold.

Today's economy is growing at a fraction of those rates. Real GDP expanded at a 1.5% annualized rate in the second quarter of 2026 , matching the advance estimate but slowing from 2.1% in the first quarter. The personal consumption expenditures price index rose at an annualized 5.3% rate in the second quarter, while core PCE — the Federal Reserve's preferred inflation gauge — came in at 3.6%, both above the Fed's 2% target.

Trump cast the prospect of stronger growth as justification for the Fed to cut, not hike, interest rates. "We should have the lowest interest rates anywhere in the world," he said. "In the old days … if we announced good numbers, interest rates went down. Now, if you announce good numbers, interest rates go up because they're so afraid of inflation."

The Fed held its benchmark rate steady at 3.5% to 3.75% in July, with three policymakers dissenting in favor of a quarter-point increase, according to CNBC. A September rate increase is what much of Wall Street now anticipates from the Federal Open Market Committee at its next gathering.

Robust GDP expansion is not by itself a driver of rising prices. When gains in output and productivity keep pace with consumer spending, price levels can stay relatively flat even during a boom. Inflation tends to rise when demand outpaces the economy's ability to supply goods and services.