Saturday, December 21, 2013

Latest Economic Growth Data Give Cheer to Market Monetarists, or, What is the NGDP Gap and Why do we Care?

The headlines for the latest report on U.S. economic growth mostly focused on the revised 4.1 percent growth rate for real GDP. As the following chart shows, that made it the best quarter in two years, and only the second quarter since the recovery began in which growth hit the 4 percent mark or better. A deeper look into the tables put out by the Bureau of Economic Analysis reveals another number that will bring even more holiday cheer to at least some economists:  Nominal GDP growth has also begun to accelerate and the NGDP gap has finally started to close.

What is the NGDP gap and why do we care?
If you’re a real econ wonk, you can skip this section. Otherwise you’re probably wondering just what the NGDP gap is, and why we should care. Here goes. >>>Read more

Follow this link to view or download a classroom-ready slideshow with more charts of the latest GDP data.

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