Trump believes the U.S. economy has the potential to grow by as much as 20%, even though this has only happened once in almost 80 years. He also emphasized that a strong economy doesn't necessarily have to cause inflation or lead to the Fed raising interest rates.
On August 31, 2026, at 4:50 PM, CNBC reported that U.S. President Donald Trump stated that the U.S. economy has the potential to expand at a rate as high as 20%, while asserting that strong economic growth does not necessarily lead to inflation and should not be a reason for the Federal Reserve (Fed) to raise interest rates.
Trump said during an event at the White House on Monday, "We could have GDP of 14%, 15%, 16%, or even 20%. Achieving growth doesn't necessarily lead to inflation."
The comments come as Trump continues to push for lower borrowing costs, even as the Fed continues to face inflation above its 2% target.
At its July meeting, the Fed voted to keep its policy interest rate at 3.50–3.75%, with three members disagreeing and supporting a 0.25 percentage point increase. However, many monetary policy observers anticipate that the Federal Open Market Committee (FOMC) may raise interest rates at its September meeting.
However, if the U.S. economy were to actually expand near the 20% level that Trump claimed, it would be an event almost unprecedented in modern U.S. economic history.
Data from the U.S. Bureau of Economic Analysis (BEA), dating back to 1947, shows that the real GDP of the U.S. has only expanded at an annual rate of 20% or more in one quarter: the third quarter of 2022, when the economy grew by 34.9% year-on-year after businesses reopened following lockdowns during the COVID-19 pandemic.
That sharp recovery came after U.S. GDP contracted by 28% year-on-year in the previous quarter.
The second highest growth rate occurred in the first quarter of 1950, when real GDP expanded by 16.7% annually, during the post-World War II recovery of the United States and the global economy and the start of the baby boom.
Apart from the third quarter of 2020, throughout almost eight decades of BEA data, there has never been a quarter in which the U.S. economy grew by more than 20% annually.
While the U.S. economy is currently expanding at a significantly lower rate than the figures Trump has projected, real GDP in the second quarter of 2026 is expected to grow at an annual rate of 1.5%, slowing from 2.1% in the first quarter, according to the latest estimates from the BEA.
It's important to note that quarterly US GDP growth figures are reported as an annualized rate. Therefore, a reported GDP growth of 20% does not necessarily mean the economy expanded by 20% in a single quarter.
Trump also used the opportunity to call on the Fed to cut interest rates, stating that the U.S. should have the lowest interest rates in the world, and criticizing the notion that when the economy reports strong figures, the market anticipates that the Fed will have to raise interest rates because of concerns about inflation.
"We should have the lowest interest rates in the world," Trump said, adding, "In the past, if we reported good economic figures, interest rates would go down. But now, when good figures are reported, interest rates go up because they are too afraid of inflation."
In economics, strong growth doesn't always lead to inflation. If the productivity and productive capacity of an economy can increase along with demand, the economy can grow rapidly without putting significant price pressure.
However, if demand expands faster than the economy's ability to produce goods and services, it can put upward pressure on prices and lead to inflation.
Reference: cnbc.com
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