U.S. Secretary of Commerce Howard Lutnick, Secretary of Health and Human Services Robert F. Kennedy Jr., and Centers for Medicare and Medicaid Services (CMS) Administrator Dr. Mehmet Oz stand behind U.S. President Donald Trump as he speaks about the administration’s health care policy in the Oval Office of the White House on August 31, 2026 in Washington, DC, USA.
Evelyn HochsteinReuter
President Donald Trump said Monday that the U.S. economy could grow at rates as high as 20%, arguing that even such rapid growth should not prompt the Federal Reserve to raise interest rates.
“GDP could be 14, 15, 16, 20,” President Trump said at an Oval Office event announcing a deal aimed at lowering prescription drug prices. “Successful growth does not cause inflation.”
President Trump’s comments come as Federal Reserve officials continue to push for lower borrowing costs even as they battle inflation that remains above their 2% target.
The Fed kept its policy rate unchanged at 3.5% to 3.75% in July, with three policymakers voting against it in favor of raising rates by a quarter of a percentage point. Many Fed watchers expect the Federal Open Market Committee to raise rates at its next meeting in September.
But growth rates close to the levels suggested by Mr. Trump would be virtually unprecedented in the modern U.S. economy.
According to Bureau of Economic Analysis data dating back to 1947, real gross domestic product grew at an annual rate of more than 20 percent in just one quarter. That was in the third quarter of 2020, when the economy boomed at an annualized rate of 34.9% as businesses reopened after widespread coronavirus shutdowns, according to BEA data. The recovery follows an annualized contraction of 28% in the previous quarter.
The next highest period was the first quarter of 1950, when real GDP grew at an annual rate of 16.7% as the United States and the world emerged from World War II and the baby boomer generation was born. No other quarter in the nearly 80-year series has reached 20%.
Today’s economy is growing at a fraction of those rates. According to BEA’s latest estimates, real GDP will grow at an annual rate of 1.5% in the second quarter of 2026, slowing from 2.1% in the first quarter.
Quarterly GDP growth is reported at an annual rate, so the 20% measurement does not represent 20% growth in a single quarter.
President Trump cited the potential for faster growth as another reason the Fed should lower interest rates rather than raise them.
“We should have the lowest interest rates anywhere in the world,” President Trump said in response to a reporter’s question about the possibility of a Fed rate hike. “In the past…when you released good numbers, interest rates went down. Now, when you release good numbers, interest rates go up. People are so afraid of inflation.”
Strong economic growth does not necessarily lead to inflation. If productivity and capacity increase to meet demand, the economy can expand rapidly without significant price pressure. However, when demand increases faster than an economy’s ability to produce goods and services, prices can rise.
