Mind the Output Gap!
The output gap is a powerful tool that currently indicates the U.S. economy has potential for expansion, which could support equities in the foreseeable future.
  • The output gap measures the difference between actual economic output, or gross domestic product, and potential output. Negative numbers imply the economy is operating below its potential. Positive numbers indicate the economy is operating above its most efficient pace and may overheat.

  • Each of the past three U.S. recessions occurred after the output gap turned positive. Now, however, the U.S. output gap is modestly negative, signaling that the economy has room to expand and support equities.

The views expressed are the views of Fred Alger Management, Inc. as of June 2017. These views are subject to change at any time and they do not guarantee the future performance of the markets, any security or any funds managed by Fred Alger Management, Inc. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities. . 

Fred Alger & Company, Incorporated 360 Park Avenue South, New York, NY 10010 / www.alger.com

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