Krugman calls it "The Great Shortfall", the massive drop in projections of potential GDP (at a fixed point in the future) depending on when the estimate was mad

Krugman calls it "The Great Shortfall", the massive drop in projections of potential GDP (at a fixed point in the future) depending on when the estimate was made, before or after the financial crisis (ie now). The basic point is that both Europe and the US have "[...] returned to sort-of full employment at a much lower level of real GDP than informed people projected we’d reach before the crisis struck." [1] There are certainly economic implications (eg, should fiscal and monetary policy be tight or loose now), and political implications (is the economy doing really well currently, or not). [1] https://www.nytimes.com/2018/09/30/opinion/the-economic-future-isnt-what-it-used-to-be-wonkish.html https://www.nytimes.com/2018/09/30/opinion/the-economic-futu... EDIT to add: And the bit about the "facts" and "revered leaders" probably alludes to this: Potential GDP is what a country could produce using all its resources (including machines = capital and employees = labour, multiplied with productivity). Why is there a drop? Maybe productivity dropped, maybe capital dropped, maybe employment dropped. The chart wants to imply that employment dropped. However, the chart goes on to imply, the unemployment rate has gone back to pre-crisis levels. Why is that? Because many unemployed people are not counted, and this is convenient for the current administration. That's what I take the chart and OP to be alleging.