"On the x-axis of the figure below I show the ratio of actual GDP to the CBO estimate of potential GDP. On the vertical axis I show the ratio of nonresidential fixed investment – basically, business investment – to potential GDP. The blue dots show data from 1985 to 2007, during which there was a strong relationship: a depressed economy led to low business investment. The red dots show subsequent data; if anything, business investment has been stronger since the Great Recession began than you might have expected."

pk



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cbo pgdp is really a guess at the NAIRU LEVEL
notice how often actual exceeds potential