Apr
18

GDP Gap

 Usually the gap between GDP and potential GDP (what GDP would be if all economic resources were fully utilized) is very small. However, during 09Q2, the gap hit $935 billion; 6.5% of GDP. That was the largest gap since 82Q4 when it hit 7.9%. Since mid-2009 the gap has steadily shrunk and is now actually negative, meaning the economy is overperforming! This is why inflation is expected to rise.

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