Nominal GDP remains far below the trend of the Great Moderation, and the gap continues to grow. It is now up to 13.87 percent. Nominal GDP for the third quarter of 2011 was $15,198.6, and if it had continued to grow on the 5.4 percent growth path of the Great Moderation, it would now be $17,646 billion.
The current level of real GDP, $13,352 billion in 2005 dollars is 6.72 percent below the CBO estimate of potential output, $14,315.1 billion. The output gap shrank! From 6.84 percent in the second quarter! Of course, it is higher than the quarter before that.
The price level, as measured by the GDP chain-type deflator, remains below the trend of the Great Moderation. Its value came in at 113.8 which is 1.8 percent less than the trend value of 115.88. The gap has slightly decreased.
And so, that is the GDP news from the "level" or "growth path" perspective. But most of the world looks at growth rates. Nominal GDP? Who looks at that? Real GDP grew 2.5 percent. Not too good, but not too bad. The inflation rate was 2.5 percent too. Higher than the trend inflation rate for the Great Moderation. But that is just part of the story.