Wednesday, January 9, 2013

Potential Real GDP

The CBO calculates a measure of potential real GDP for the US, which is its view of how much the economy could produce if it were operating at full capacity.  Below is a chart of the current output gap based on CBO's numbers.  It's pretty amazing to think that four years into recovery we're still further below our potential than at the trough of every post war recession except for the 1980s.

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