Trend Growth

Trend growth means the economy’s expected long-term growth rate under normal conditions. In simple terms, it shows how fast the economy can usually grow over time. Trend growth is important because investors compare actual growth with the long-term trend. Growth above trend may signal strength or overheating, while growth below trend may signal weakness. For example, if an economy’s trend growth is estimated at 2% but GDP grows 4%, the economy may be growing above trend. Trend growth is not the same as one quarter’s GDP growth. It is a longer-term estimate.