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.
