December 07, 2013
I’m not kidding. That was in a front page “news” story on the November jobs report. The piece told readers:
“Some economists are forecasting growth as high as 3 percent next year. New data released Friday showing robust hiring in November suggested that the private sector already is gaining momentum.
“The only thing that has to happen is that lawmakers have to do nothing,’ said Mark Zandi, chief economist at Moody’s Analytics. ‘It’s a pretty low bar.'”
According to the Congressional Budget Office the economy is currently operating at a level of output that is approximately 6 percent below its potential. The rate of growth of potential GDP is in the range of 2.2-2.4 percent annually. This means that if the economy sustains the 3.0 percent growth rate that has the Post so excited, it will close this gap at the rate of 0.6-0.8 percentage points a year. That means it will take between 7.5-10.0 years to close the gap, if the Congress follows Zandi’s prescription.
It probably would have been worth including the views of an economist who would have pointed out that this path would imply the loss of between $4.0 trillion and $5.5 trillion in potential output, an amount that is between 100 and 140 times the size of the proposed cuts to SNAP that has been filling public debates. The overwhelming majority of this lost potential output is coming out of the pockets of low and moderate income workers.