The Congressional Budget Office (CBO), which tends not to see the world through the same rose-coloured glasses as politicians tasked with making the economy get better, is out with some new forecasts. We found this chart — which shows the so-called GDP output gap (the difference between the GDP, and what it could be if unused capacity were being utilized — to be quite amusing. not only does not show a fast comeback, but the impact of the stimulus looks almost pitifully small. (The full CBO report is embedded below)
Meanwhile, another institution that’s not playing along on team Green Shoots is the San Fran Fed, which is out with a report on consumer deleveraging. Basically, as long as households are paying off credit cards, seeing the value of their house decline, saving more, etc., it’s almost impossible to imagine a recovery. And we’re just not at the bottom point. The charts below (via Zero Hedge) tell the story.
And here’s the CBO report: