Sunday, April 30, 2017

Closure, on schedule

CBO assumes that any gap between actual GDP and potential GDP that remains at the end of the short-term (two-year) forecast will close during the following eight years.

On the first of March 2010, under the title The Trillion Dollar Gap, Mark Thoma showed this graph of real and potential GDP:

Here is where things stand today, some seven years later:

The trillion dollar gap has just about closed -- not by bringing real GDP up, but by bringing potential GDP down.

No comments: