WSJ mean survey forecast relative to 2023-2024 trend.
Figure 1: GDP (bold black), 2023-2024 stochastic trend (blue), WSJ July mean (tan), WSJ 20% high/low band (gray lines), GDPNow of 7/17 (light blue square), all in bn.Ch.2017$ SAAR. Source: BEA, WSJ, Atlanta Fed, and author’s calculations.
To some extent, the mere fact of output running above potential is a restraint on output growth. That said, it’s possible to run hot for quite some time without growth slowing to below trend:
https://fred.stlouisfed.org/graph/?g=1KJNn
Couple of things. The potential output series is from January, before any of the felon-in-chief’s picoes had been put into effect. Both tariffs and reducing the supply of immigrant labor will reduce potential, so the next estimate is likely to show a slower potential growth trend.
As potential output is reduced by policy, the restraint on actual growth is increased.
The other thing is that potential output is slippery. We need to estimate total factor productivity and each input factor in order to estimate potential. TFP is quite variable around trend, and trend is variable, too. Same can be said for inputs, though we can at least measure inputs more or less directly.
TFP:
https://fred.stlouisfed.org/series/RTFPNAUSA632NRUG