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Behind the Slowdown of Potential GDP

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By Kurt G. Lunsford, Mekael Teshome, Joel Elvery, Macroeconomic Effects
| clevelandfed.org
The current level of real GDP is 11.4 percent below the forecast that the Congressional Budget Office (CBO) made back in 2007, before the beginning of the crisis. One reason for the lower-than-expected output is that the recovery has been slow and the economy is still producing much less than its potential output level - the level that could be reached if all available capital and labor were being used at a high rate.
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