US real GDP growth in 2035?
My independent view is that U.S. real GDP growth in 2035 is more likely to land in the 1.6% to 2.5% range than to be at or below zero, with a meaningful but not dominant chance of stronger growth. The market looks too pessimistic on the downside and slightly underweights a broad middle case of moderate expansion.
Analysis
A 2035 GDP growth forecast is really a structural macro bet, not a near-term cycle call. Over a long horizon, the United States has historically tended to generate positive real growth through population growth, productivity gains, capital deepening, and the economy’s ability to absorb shocks, so a flat-or-negative outcome is possible but usually requires a major recessionary regime shift or prolonged policy failure. That makes the 0.0% or Below bucket feel too large relative to the long-run baseline, while the most plausible center of mass sits in modest positive growth rather than very high growth.
The most defensible forecast is a concentration around 1.6% to 2.5%, with some probability on 2.6% to 3.0% if productivity accelerates, AI adoption lifts trend output, and labor force participation stays resilient. At the same time, 2035 is far enough away that structural headwinds matter: aging demographics, possible fiscal constraints, higher real rates, deglobalization, or repeated supply shocks could cap trend growth and keep the economy closer to the lower middle bands rather than the upper bands. That argues for a distribution tilted toward moderate growth, not a breakout boom.
Compared with the market, the strongest disagreement is on the downside. A 15% Yes price implies the market is assigning substantial weight to a broader set of positive-growth outcomes, but the more important point is that the market’s outcome buckets suggest an unusually high chance of very weak or negative growth relative to U.S. historical experience. I think that is mispriced: the base case is still expansion, and while the exact growth rate is uncertain, the odds of avoiding recessionary or near-zero growth in a single year like 2035 look materially better than the market implies.
Arguments
For
- Arguments for Yes: The U.S. economy has strong structural inertia toward positive real growth over multi-decade horizons.
- Arguments for Yes: Productivity gains from automation and AI could support a solid expansion by 2035.
Against
- Arguments against Yes: Aging demographics and slower labor force growth can keep annual GDP growth subdued.
- Arguments against Yes: Long-horizon forecasts are vulnerable to recessions, shocks, and policy errors that could flatten growth.
Key drivers
- Long-run U.S. trend growth is usually positive unless a severe macro or policy shock intervenes.
- Demographics and fiscal constraints likely limit upside, keeping the center of the distribution in moderate-growth bands.
Risk factors
- A major financial crisis, war, or policy mistake could push 2035 growth into the negative bucket.
- A stronger-than-expected productivity regime could shift probability toward the higher positive-growth bands.
Scenarios
Best case
A productivity-led boom lifts 2035 real GDP growth into the 2.6% to 3.0% band or higher, with broad-based investment and stable macro conditions.
Most likely
The economy grows at a moderate pace, with the highest probability sitting in the 1.6% to 2.5% range and some spillover into 1.1% to 1.5% and 2.6% to 3.0%.
Worst case
A recessionary or stagflationary environment leaves 2035 growth at 0.0% or below, driven by weak demand, supply shocks, or financial instability.
Outcomes
| Outcome | AI | MKT |
|---|---|---|
| 1.6% to 2.0% | 22% | 15% |
| 2.1% to 2.5% | 20% | 14% |
| 2.6% to 3.0% | 12% | 14% |
| 0.0% or Below | 7% | 12% |
| 1.1% to 1.5% | 18% | 10% |
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