With the labor force growth of 0.9 percent and productivity gains of 0.2 percent, America's physical limits to noninflationary growth are currently estimated at a pathetic 1.5 percent.
As a result, we have an accelerating inflation in a slowing economy. Last year's growth rate of 1.6 percent was an entire percentage point below the economy's pace of advance in 2015. In spite of that, the core consumer prices picked up to 2.3 percent (from 1.9 percent), the Fed's core inflation target (private consumption expenditure index) accelerated to 1.7 percent (from 1 percent), and unit labor costs (the floor to medium-term inflation rates) shot up to 2.6 percent (from 2 percent).
And with all that, the U.S. structural unemployment rate now stands at 4.9 percent, which means that the 15.2 million people currently out of stable employment cannot reconnect with steady jobs without major structural changes to labor and product markets.
That is President Trump's key challenge. He might as well forget about his re-election bid, launched last Saturday in that airport hangar at Melbourne, Florida, unless he can rapidly and substantially increase the economy's noninflationary growth rate to get most of these 15 million people back to work.