US real GDP growth in 2035?
I think the most likely 2035 GDP-growth bucket is 1.6% to 2.0%, with 2.1% to 2.5% a very close second. The market looks too bearish on trend-like growth and a bit too focused on downside tail risk.
Analysis
The long-run macro backdrop points to moderate growth, not stagnation and not a boom. Advanced-economy forecasts cluster around roughly 1.8% to 2.3% potential growth, with demographics holding growth down and AI/productivity gains pushing it up, which makes the 1.6% to 2.5% band the natural center of gravity for 2035.
A recessionary 0.0% or below outcome is possible in a single year, but it is a tail outcome unless there is a major shock, and the 3.1% to 3.5% bucket needs a meaningful upside surprise from AI diffusion, investment, and policy. That leaves the most likely outcome as a fairly ordinary trend year around 2%.
Relative to the market, I think the distribution is too pessimistic at the center and too fragmented at the tails. The 13% price on 1.6% to 2.0% looks low given the consensus around trend growth, and the combined weight on the nearby 2.1% to 3.0% buckets should be higher than the market implies.
Arguments
For
- The first bucket sits right on top of the long-run consensus range cited by multiple forecasters.
- AI-related productivity gains provide a credible reason for growth to stay above the weakest buckets.
Against
- A lot can happen over a decade, and a single-year GDP print is inherently volatile.
- The visible market is already giving some weight to downside outcomes, so the upside to the first bucket may be less extreme than it looks.
Key drivers
- Trend potential growth in advanced economies is converging near 2% in most long-run forecasts.
- AI and capital deepening can lift productivity enough to keep 2035 away from the weakest buckets.
Risk factors
- Aging demographics and weak productivity could pull growth into the sub-2% tail.
- A recession, financial shock, or policy mistake in 2035 could push the outcome to zero or below.
Scenarios
Best case
AI adoption and supportive investment lift growth into the 2.1% to 2.5% or even 2.6% to 3.0% buckets, but the first bucket remains highly competitive.
Most likely
Growth lands in a trend-like range around 1.6% to 2.5%, with 1.6% to 2.0% narrowly ahead of 2.1% to 2.5%.
Worst case
A major global downturn, policy shock, or financial crisis pushes GDP growth to zero or below.
Outcomes
| Outcome | AI | MKT |
|---|---|---|
| 1.6% to 2.0% | 28% | 13% |
| 0.0% or Below | 10% | 11% |
| 2.1% to 2.5% | 27% | 8% |
| 2.6% to 3.0% | 20% | 8% |
| 3.1% to 3.5% | 15% | 8% |
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