Tag Archives: GDP

How The GDP in 2017 Looking is? Not Good

One of the many statistics that economists pore over for clues to future economic performance is potential output, also known as potential gross domestic product. This is a measure not of what the economy is doing, but what it could be doing: an estimate of the maximum amount of GDP the economy can achieve over a sustained period if it’s operating at close to full employment, using all its resources. Any lower, and the economy isn’t working up to its potential. Any higher, and it runs a greater risk of inflation. To help guide policy, economists forecast the output gap—the difference between potential and actual GDP—for years into the future.

On Feb. 28, the Congressional Budget Office revised an estimate for potential GDP for 2017 that it had made in 2007. The new estimate is 7.3 percent lower than the original forecast. This downward revision wipes out $1.5 trillion of potential output, according to Andrew Fieldhouse, fellow at the Century Foundation, a think tank. So instead of forecasting a potential GDP of almost $20.7 trillion, the CBO predicts potential output closer to $19.2 trillion. For years economists have been expecting too much from the economy.

Continue reading “How The GDP in 2017 Looking is? Not Good” »