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Output Gap - Colorado Boom

 
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PostPosted: Sat Sep 27, 2014 12:55 am    Post subject: Output Gap - Colorado Boom Reply with quote

PeakTrader:

http://www.nytimes.com/2014/01/06/business/economy/study-suggests-recovery-in-us-is-relatively-vital.html

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“…current output gap at approximately -4%, using August 2014 CBO estimates…”

According to this chart, per capita real GDP is 9.8% below a long-run trend, or about $6,000 a year too low:

http://www.advisorperspectives.com/dshort/charts/indicators/GDP-per-capita-overview.html?Real-GDP-per-capita-since-1960-log.gif

It looks like a sudden and sustained downshift or roughly an L-shaped recovery.

We have a long way to go, through destruction of potential output or raising actual output, to close the output gap.

However, the U.S. economy has performed better than other major economies, in part, because of its exceptional fundamental strengths.

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In the 1990s, Colorado Democrats and Republicans worked well together. Often, Democrats sounded like Republicans and Republicans sounded like Democrats. There was little hostility. It seemed, Colorado was dominated by moderates and they worked with business to accomplish their goals.

Consequently, in the 1990s, Denver built three pro sports stadiums, a light rail system, a convention center, a large main library with murals of the Old West (where the G-8 meeting was held one year), an international airport, and renovated lower downtown.

In the late 1980s, you could buy a mansion in Denver for $50,000, and there were lots of “For Rent” signs in front of apartments in nice neighborhoods. You could rent a spacious one-bedroom apartment with wooden floors and a view of the mountains for less than $300 a month. In the 1990s, many people moved to Colorado, e.g. from California. The For Rent signs disappeared and rents gradually rose.

Also, the Denver Tech Center, about 20 miles south of downtown Denver, expanded quickly with dozens of new office buildings. There was a homebuilding boom, in the area, and many impressive shopping malls were built. These were “upper-middle” class houses built on empty fields. Thousands of these large houses were built over many miles, to the mountains in the west and towards Castle Rock in the south.

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