US real GDP growth in 2035?

With no recent news available, the best guide is the long-run structure of US growth: trend real GDP growth is usually driven by labor-force growth, productivity, and the absence of a major recession or supply shock. By 2035, a plausible baseline is continued moderate expansion rather than either stagnation or a breakout boom. That makes the 1.6% to 2.5% area the center of gravity, with 2.1% to 2.5% slightly more likely than 1.6% to 2.0% because nominal policy volatility and periodic investment/productivity gains can keep realized growth a bit above the long-run average in a mature expansion year.

The main case against very high growth is demographic drag and the tendency for mature advanced economies to revert toward lower trend rates over time. Sustained 2.6% to 3.0% real growth is possible, but it usually requires unusually strong productivity, elevated labor-force growth, or a strong cyclical rebound. Likewise, the negative-growth bucket should remain relatively limited unless 2035 happens to coincide with a recession, financial shock, or policy mistake, which is certainly possible but not the base rate.

Against the market, I think the 14% price on the top 2.1% to 2.5% bucket is a bit too low relative to its centrality in a reasonable long-run forecast. The market appears to be over-weighting low-growth and downside outcomes, perhaps because investors extrapolate the low-growth regime that has often characterized mature-cycle economies. My distribution is therefore meaningfully more constructive on moderate growth and somewhat less bearish on the tail-risk outcomes than the market implies.