Weekly Economic Update: March 6 – March 10, 2017

March 06, 2017

CHART OF THE WEEK

In 2007, CBO projected the U.S. economy would be capable of producing an inflation-adjusted $18.8 trillion of goods and services in 2016. CBO now estimates potential real gross domestic product (RGDP) was a much smaller $16.9 trillion in 2016. Meanwhile, actual RGDP registered only $16.7 trillion. The light blue and purple represent the differences between CBO’s 2007 and 2017 estimates of the economy’s potential, respectively, compared with how it actually performed. If one uses CBO’s 2007 projection as a point of reference, the implication is that America will have an untapped economic potential of $2.1 trillion in 2017.

The 2017 Joint Economic Report, notes the narrowing output gap, but attributes the untapped potential to Obama Administration policies that have constrained the economy (see Chapter 2).

LAST WEEK

News & Commentary Weekly Highlights

Richland Source: Tiberi on Trump: 'Our agenda is bold because Americans demanded a change'
Bloomberg: Trump's Smart Choice for Economic Adviser
Wall Street Journal: U.S. GDP Advanced 1.9% in Final Quarter of 2016
Investor’s Business Daily: Can Trump Slay The Regulatory Beast? Other Presidents Tried And Failed
Bloomberg: Yellen's Shrinking Room for Maneuver

Top Economic Indicator Highlights

PCE Deflator, excluding food and energy, year-over-year percentage change
- Jan-2017: 1.74% Dec-2016: 1.71% Nov-2016: 1.65%.
- The Personal Consumption Expenditures (PCE) index is a more comprehensive measure of price changes than the Consumer Price Index (CPI), and the Federal Reserve uses it for its inflation target of 2 percent.
- Noteworthy: The Fed’s main inflation indicator was up 1.74 percent from this time last year. The uptick makes it more likely that the Fed will increase its target federal funds rate at the upcoming March 14-15 meeting. The futures market attached a 75% probability to this as of last Friday.