The CBO has a wrong calculation for the output gap. I have a better one. After the 2008 crisis, the CBO showed a large negative gap. My equation did not. I waited for the CBO number to return to my number, which it did perfectly throughout 2019.

Capital Income has been consuming less and saving more in the last two quarters. This trend would lead to a recession.

Looks like some correlation between inflation & year over year number of employed. More workers, more new demand.

Economy is currently at limit of unemployment where either labor share rises, capacity utilization drops or unemployment starts rising. (

The economy is once again heading to the effective demand limit, which last happened in 3rd quarter 2014. Capacity utilization drops and corporate profits become a zero sum game. There are cascading effects which could bring a recession.

In my calculations of utilization of labor and capital, there is a derivative of one equation that tells to what extent capacity and labor is being optimized.

The economy expands in terms of capacity utilization until the effective demand limit is reached.

Some economists are puzzled why low unemployment near the Fed's full-employment rate is not producing inflation. Keynes said it was not a necessary consequence. The key is to understand effective demand.

Just to look back... My model of effective demand performed very well. The line bounced off of the "zero lower bound" of effective labor share.

Where the economy is headed in the medium term? When policy promotes net private benefits, social negative externalities climb higher.

If demand increases, a firm can either increase production or raise prices. When capacity utilization is low, a firm prefers to increase utilization of capacity rather than raise prices... and capacity utilization is currently quite low.

As markets look forward to Trump, nobody sees how close the economy is to the Effective Demand Limit.

Inflation pressures are low and will stay low. This article shows that projected increases in nominal rates will not push inflation much higher.

Using a model of Effective Demand to project a path for the Fed rate now that fiscal stimulus is on the table.

We're heading towards a recession.