So, Where's the GDP Disaster?

by: Casey Mulligan

Last October, when we were told that spending and incomes were about to collapse, I predicted that "real GDP will not drop below $11 trillion (chained 2000 $)."

Here is a graph () of real GDP during this recession, through September 2009.

Admittedly, I had no appreciation last October for the labor market distortions that were emerging (by early November I started to realize that -- see this post), which allowed me to incorrectly predict in October that payroll employment would not drop below 134 million (now it is amount 131 million). But a lot of people (such as the Obama adminstration) overestimated employment and underestimated unemployment, even with the benefit of the data released and public policies implemented after I made my forecast.