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CBO: What Accounts for the Slow Recovery?

CBO: What Accounts for the Slow Recovery?

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Published by Patricia Dillon
11-14-12
Specifically, CBO estimates that about two-thirds of the difference between the growth in real GDP in the current recovery and the average for other recoveries can be attributed to sluggish growth in potential GDP.

 

According to CBO’s analysis, the unusually slow growth of output over the 12 quarters following the last recession in large part reflects slower growth in potential output than has occurred on 
average following other 

recessions since the end of World War II.

 Potential output is determined primarily by three factors: potential employment, 

potential total factor productivity, and the productive 

services available from the capital stock in the economy.


A key underlying reason why the overall demand for 

goods and services by governments, businesses, and 

households has increased more slowly than usual in this recovery—and thus why real GDP has increased more slowly relative to potential GDP—has been the 


limitations faced by the Federal Reserve in providing support to the economy.


 
11-14-12
Specifically, CBO estimates that about two-thirds of the difference between the growth in real GDP in the current recovery and the average for other recoveries can be attributed to sluggish growth in potential GDP.

 

According to CBO’s analysis, the unusually slow growth of output over the 12 quarters following the last recession in large part reflects slower growth in potential output than has occurred on 
average following other 

recessions since the end of World War II.

 Potential output is determined primarily by three factors: potential employment, 

potential total factor productivity, and the productive 

services available from the capital stock in the economy.


A key underlying reason why the overall demand for 

goods and services by governments, businesses, and 

households has increased more slowly than usual in this recovery—and thus why real GDP has increased more slowly relative to potential GDP—has been the 


limitations faced by the Federal Reserve in providing support to the economy.


 

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Published by: Patricia Dillon on Nov 17, 2012
Copyright:Attribution Non-commercial

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Infation-Adjusted Gross Domestic ProductAter Recessions
Percentage Dierence rom End o Recession1014612168024101220468
Average RecoveryCurrent Recovery
Quarters Ater End o Recession
CONGRESS OF THE UNITED STATESCONGRESSIONAL BUDGET OFFICE
CBO
 What Accounts for the Slow Growth of  the Economy  After the Recession?
NOVEMBER 2012
 
CBO
Note
Some figures use white vertical bars to indicate periods of recession. (A recession extends fromthe peak of a business cycle to its trough.)
Pub. No. 4346

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