Today, the Bureau of Labor Statistics released its monthly “Employment Report” that showed the U.S. added jobs for the 86th consecutive month and unemployment remained in the range of full employment at 4.1%. While the recovery out of the Great Recession was slow, we are currently beyond the recovery phase and into the expansion phase. Just this past month, the economy finally hit a major milestone, reaching its potential growth rate after an output gap that lasted for nine years.
Economists measure the economic health of a country through a measure of economic growth called GDP. In advanced economies like the U.S. where the total level of GDP per capita is already high, potential GDP growth is limited compared to developing countries where productivity gains through better technology and infrastructure are still being implemented. The CBO estimates potential GDP, revising estimates as new information about the labor force and productivity become available. Long-term, this growth rate is estimated at 1.8%.