Recent developments

The U.S. economic expansion remains on track and it has entered its ninth year. January marked the 103th
month of growth for the U.S. economy. By May, the current economic expansion will become the second
longest on record.1 The unemployment rate sits at 4.1%, the lowest level since December 2000, suggesting
the economy has reached, or nearly reached, full capacity.2

In 2017, the U.S. economy achieved a milestone: the output gap closed. This is the first time that the
output gap, or the difference between the actual GDP (based on data by the U.S. Department of Commerce’s
Bureau of Economic Analysis) and the potential output (calculated by the U.S. Congressional Budget Office),
has not been negative since 2007. Potential GDP is the maximum amount of output an economy can turn out
when it is most efficient—that is, at full capacity.

2017: the year-in-review

The U.S economy entered 2018 with healthy momentum after posting its best year of growth since 2015.
Gross domestic product expanded 2.5% in the fourth quarter of 2017 compared with a year earlier (and
2.6% compared to the preceding quarter), according to the «advance» estimate released by the Bureau of
Economic Analysis (the first of three estimates). Growth in 2017 was held back by a particularly slow first
quarter (chart 1). Many forecasters expect growth will be supported this year by solid consumer and
business confidence, stronger conditions overseas and tax cuts at home.