CryptocurrencyInvestingBanksReal Estate

The Trump Administration is blaming Boeing for the hit to GDP, but the math doesn’t add up

February 7, 2020, 12:22 AM UTC

The economy is sagging. Treasury Secretary Steven Mnuchin admitted to it in an interview with Fox Business.

“I think our projections have been reduced, because of Boeing and other impacts [like the coronavirus outbreak], so it will be lower,” Mnuchin said. “We would have hit 3%.”

Blaming Boeing and its 737 Max woes for some reduction of GDP growth isn’t unreasonable. But the loss is small compared to the size of the entire economy and 3% annual GDP growth was never close to being in the cards.

Boeing’s 2019 revenue was down $24.6 billion from the prior year. Some business segments were up but the biggest one—the commercial airplanes division that is responsible for the Max—saw a year-over-year drop of $25.2 billion.

The current estimate of 2019 GDP is $21.4 trillion. In that context, Boeing’s $25.2 billion annual shortfall represents about 0.1%.

If the economy was running at a 3% growth rate, that could technically be enough for Boeing to push things over the edge. But it hadn’t been. The Bureau of Economic Analysis shows that annual GDP growth was 2.4% in 2017, a relatively blistering 2.9% in 2018, and a humbler 2.3% last year.

Signs of slowing growth abound, and a 3% number isn’t close to realistic.

“Without the coronavirus and without Boeing, the economy might be able to sustain a 2% pace,” said Gregory Daco, chief US economist for Oxford Economics USA. “Without them, it might fall below 2%—and 3% is a myth.” What drives economies are population increases, productivity growth, and fiscal stimulus.

Back in 2018, when GDP growth was nearly 3%, that came only after the tax changes of 2017, which provided a temporary stimulus. A longer one would have needed the corporate investment in equipment and workers that proponents promised. Instead, most of the money went into share buybacks and other ways to improve stock performance.

“In the current environment with moderate productivity growth, cooling demographics [and heavily reduced immigration], and businesses being cautious about what they invest, the potential of the economy is 2% or slightly under 2%,” Daco said.

In the end, the Trump administration might be lucky to see 2% growth. But by the time the numbers are in to judge how GDP fared in 2020, election season will have come and gone.

More must-read stories from Fortune:

—All of your questions on filing taxes in 2020, answered
—Trying to make sense of Tesla’s unbelievable run
—Inside the A.I. startup that’s transforming activist investing
—Stock scammers are using coronavirus to dupe investors, SEC warns
—WATCH: Biggest investing opportunities and risks for 2020

Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.