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Discussion: (6 comments)

  1. Jon Murphy

    Is that a typo on the top chart? Should that say a gap of 1.03 trillion, rather than 10.3?

    1. Your figure is the gap in GDP in any one year. Their figure (10.3) is the cumulative gap over the years since the crisis.

  2. Jon Murphy

    There is something else I want to say in response to the first chart.

    So, when the recession first started, the GDP gap was approximately $1 trillion (give or take).

    Between the ARRA, various QEs, and Cash for Clunkers, the government has spent approximately $2.7 trillion. Even if we assume a Keynesian multiplier of 1, the GDP gap should have been covered and then some by now. Instead, the gap is now approximately $1.2 trillion. It would seem, then, that not only does government spending have no multiplicative effect on the economy during this previous recession, it may have even been negative.

    So, for you stimulus folks out there, how can you claim this was a success?

    1. And now, not even understanding the figures they are presenting, you spout of some ridiculously illogical analysis. Brilliant, my man.

  3. The GDP output gap is primarily a function of 2 items in the NIPAs.

    1. Real residential fixed investment. That has to be close to $400 billion below trend since the June 2009 trough. I wonder if Washington gave more to homebuilders through the short term tax loss carry back provisions or renegotiating mortgage terms for underwater homeowners.

    2. Real government consumption and investment. That has to be $200 billion below trend likewise.

  4. 160,000 jobs a month is misleading. Since June 90% of those jobs were governmental jobs…not private sector jobs. Government jobs are not used in unemployment figures. Reality is the unemployment rate went up…not down. If you factor in the number of people who have stopped looking you’re at 9-10%. If you the account for under employment you’re looking at 16% or more as a true unemployment rate.

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