Unfortunately, the growth of of Final Sales of Domestic Product was only 2.8 percent, and so continued to fall further behind the growth path of the Great Moderation. If money expenditures had continued to grow at the 5.4 percent growth path of the Great Moderation, the value in the third quarter of 2010 would have been $16,721 billion. The current value of money expenditures is 13 percent below the growth path of the Great Moderation, and the gap continues to grow.
With the adjusted growth path for money expenditures, the gap between its current value and target value is smaller. It is now 8.4 percent. To return to the adjusted growth path, it would
would need to increase by 13.8%. The target for the third quarter of 2011 would be $16,415 billion.
A 13.8 percent growth rate for money expenditures is quite rapid. After one year, the growth rate would return to the noninflationary 3 percent rate.