Q4 NGDP Growth Was Below Trend

Nominal GDP targeting as a central bank policy picks up a new fan in the form of John Quiggin today, while Goldman Sachs continues its implicit campaign for NGDP targeting by doing an analysis of today’s numbers in NGDP terms. The news is ugly: “The GDP price index increased by just 0.4 percent (annualized) in Q4, far below consensus expectations for a 1.9 percent increase. Nominal GDP growth was therefore quite soft at just +3.2 percent.”

Trend NGDP growth would be 5 percent, for reasonable catchup you’d be hoping to run at something like 7-8 percent for a while. Instead we’re falling even further behind trend. Take this as another indicator that the Federal Reserve’s latest effort to boost the economy is probably too muddled and ineffectual to give us the kind of real shot in the arm it would take to get Americans back to work in a fast way.