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Mind the Gap

Via Mark Thoma:

Actual Real GDP vrsus Potential Real GDP 1

This is why we’re not going to see a return to full employment unless we have a period of unusually-fast growth. A mere return to the pre-crash GDP growth rate is going to leave the economy well below its potential output. Under the circumstances, easier money is called for and people need to stop worrying about inflation. Obama should seriously consider filling some of these Fed vacancies.

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