Here is the updated graph of real GDP, potential real GDP and Effective demand.
The dark blue line of Potential real GDP (as calculated with Effective demand principles) is staying low. The trend line is stable. You can actually see a post by Tim Duy today that shows how stable this trend line is for real GDP.
When I look at this graph and see that the Effective demand line is moving vertical at around $14.1 trillion, I see that when real GDP reaches $14.1 trillion there will be a bump against the effective demand limit. Business will be fighting for profit share. It will be interesting because it is an environment for a contraction.
Here is the updated long-run potential real GDP trend line. We have returned to natural growth after years of bubble inflated values. The natural growth path is the exponential growth curve.
Anyone who thinks that real GDP will return to the bubble values without a bubble and without a rise in labor share is delusional.
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