US real GDP growth in 2035?
My base case is that U.S. real GDP growth in 2035 lands in the high-1% range, with the 1.6% to 2.0% bucket the single most likely outcome and meaningful tail risk of a 2.1% to 2.5% print. I think the market is slightly too concentrated on the lower-growth outcomes and underweights the chance that productivity and cyclical normalization keep growth a bit above the CBO-style anchor.
Analysis
The best anchor in the provided material is the CBO-based long-run expectation that real GDP growth slows to about 1.8% through 2035. That is not a recessionary outlook, but it does imply a mature expansion with demographic drag, slower labor-force growth, and only modest productivity gains. Recent actual prints also fit that frame: 2026 has shown volatility, with one quarter at 2.1% annualized and the next at 1.5%, which is consistent with an economy that can oscillate around a sub-2% trend rather than settle into a sustained 3% regime.
On that basis, the most likely outcomes are concentrated around 1.6% to 2.0% and 2.1% to 2.5%, with the former slightly more likely because the official baseline sits near 1.8% and near-term forecasts remain around 1.9%. Still, the odds of slipping into 1.1% to 1.5% are not trivial because long-run trend growth can undershoot when fiscal drag, tighter financial conditions, or weaker labor supply compound. A 2.6% to 3.0% result is possible, but it requires a sustained upside surprise in productivity, investment, or immigration-driven labor-force growth that is not the central scenario in the sources provided.
Compared with the current market, I think the distribution is somewhat mispriced at the margin. The market appears to overweight the lowest growth buckets and underweight the center of mass around 1.6% to 2.5%, likely reflecting a broad macro-bearish bias. I would still keep the sub-2% band as the modal outcome, but not as overwhelmingly as the market implies; the more important correction is that a middling 2% handle is more plausible than the pricing suggests.
Arguments
For
- Arguments for Yes: The official long-run baseline available here is close to 1.8%, which supports a high probability for a sub-2.0% growth outcome.
- Arguments for Yes: Recent GDP prints and sticky-inflation forecasts are consistent with a slow-growth environment rather than a reacceleration above 2.5%.
Against
- Arguments against Yes: Medium-term private forecasts show room for growth to drift above 2% as the economy normalizes, especially if productivity surprises to the upside.
- Arguments against Yes: The market may be correctly anticipating that 2035 is far enough out for today’s cyclical slowdown to fade and be replaced by a more stable, if still modest, expansion.
Key drivers
- The CBO-style long-run baseline centers near 1.8%, making a mid-to-high 1% outcome the most defensible anchor.
- Recent quarterly GDP data and near-term private forecasts point to slow but positive growth rather than either stagnation or a return to 3% trend.
Risk factors
- An unexpected productivity boom or stronger labor-force growth could push the result into the 2.6% to 3.0% range.
- A prolonged period of weak investment, tighter policy, or supply-side damage could pull growth down into the 1.1% to 1.5% bucket or lower.
Scenarios
Best case
Productivity and labor supply improve enough that 2035 real GDP growth lands in the 2.1% to 2.5% range, with a nontrivial shot at 2.6% to 3.0% if the expansion is unusually strong.
Most likely
Growth settles near the CBO-style baseline, making 1.6% to 2.0% the most likely bucket, with 2.1% to 2.5% the main challenger.
Worst case
Trend growth continues to erode and 2035 comes in at 1.1% to 1.5%, with downside pressure from weak labor-force growth and soft capital deepening.
Outcomes
| Outcome | AI | MKT |
|---|---|---|
| 2.1% to 2.5% | 28% | 10% |
| 1.6% to 2.0% | 40% | 9% |
| 2.6% to 3.0% | 12% | 9% |
| 3.1% to 3.5% | 5% | 8% |
| 1.1% to 1.5% | 15% | 7% |
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