The output gap is the difference between what an economy is producing and what it can produce. At the first wave peak of the COVID-19 induced economic crisis, the output gap was initially estimated to be about 15% of GDP at the end of the first quarter of 2020. However, an aggressive Federal “stimulus” program reduced this to a still considerable 10% of GDP by the end of the second quarter of 2020, according to the Congressional Budget Office. Since then, the output gap has continued to shrink, to an estimated 3% of GDP by the end of 2020.


James Gerard Moses

James Moses is owner & research director of Primary Research Group Inc. He has an MA in international economics and political economy from Columbia University.

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