Chart of the Day: The US Economy Has Finally Caught Up

I’ll be damned. Wonkblog’s Andrew Van Dam points out today that GDP has finally closed the huge gap with potential GDP that opened up after the Great Recession. He’s right:

I’m not sure I ever believed this would happen, even though CBO predicted exactly this a couple of years ago.

Unfortunately, there’s some bad news embedded here: one or two quarters of GDP above potential is an almost infallible predictor of a recession. All we need now is a housing bubble, a stock bubble, and a spike in oil prices and we’ll have everything in place to kick off 2018.