Outperforming our Potential

Andrew Bartels shows that the 2013 Comprehensive Revision didn't have much effect on RGDP:

Source: Andrew Bartels

I look at it this way:

Graph #2: Real GDP (red) and Potential GDP (blue)
A Tale of 2009 Dollars versus 2005 Dollars

Real GDP after the revision is better than Potential GDP before the revision. Now that's one helluva change!


How much inflation did it take to push real GDP above potential like that?

Graph #3: 2009-Based Deflator Converted Back to 2005=100
Shows Prices Almost 9% Higher by 2009

Between 8 and 9 percent.

Maybe tomorrow they'll revise Potential GDP to the 2009 base.

Suddenly, everything is different

Bill C reviews the new revisions to GDP at Twenty-Cent Paradigms:

The interesting thing in the release was not the second-quarter numbers, but rather the "comprehensive revision" of all the past data that came with it. The BEA does this about every 5 years to incorporate changes in definitions and methodology. By its new reckoning, US GDP is about $550 billion (3.4%) larger.