GDP Growth Remains Below Potential Growth

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Thursday, 18 July 2013 04:33

The NYT piece discussing Federal Reserve Board Chairman Ben Bernanke's testimony before the House Financial Services Committee noted at one point the Fed's assessment that growth is proceeding at a "modest to moderate pace." It would have been worth noting that growth has been less than 2.0 percent for the last three years and is likely to remain below 2.0 percent at least for 2013.

This is below standard estimates of the economy's potential growth rate, which is put at 2.2 percent to 2.4 percent. In other words, the economy is falling further behind its potential level of output at the current pace of growth. It would have been worth including the comparison to potential growth.