- In August 2020, the Congressional Budget Office projected a wide 6.6 percentage point gulf between actual and potential GDP in 2020.
- The CBO also in August 2020, projected that the output gap would persist for the entire decade.
- The latest February 2021 CBO projection now shows that the output gap would fully close by late 2024.
- The consensus among financial market participants is that neither enormous deficits nor a rebound in economic activity will spur the Federal Reserve to alter its accommodative policy.
- The February 2021 CBO projection does not take into account any extra growth that could result from the new proposed $1.9 billion stimulus bill.
For further details see:
An Update Of The Output Gap