Calculating Lost Output

http://krugman.blogs.nytimes.com/2009/09/15/macro-situation-notes/?emc=eta1

So, what have we lost in GDP since the Great Recession started? Comparing actual GDP since the recession began with what it would have been if the economy had continued growing at its trend (from 1999 to 2007), we're 8% below where we should be (Krugman attached). That translates into lost output at a rate of well over a trillion dollars per year (as well as mass unemployment).

At the risk of suffering the Nouriel Roubini (he of the Great Recession prediction and the consistent "gloom and doom" forecasts) label, a double dip recession could just make all that worse - Krugman's trend lines for the last recession are pictured and they make the point that, once inventory replacement is out of the way, the bulk of the fiscal stimulus won't be there to rescue the economy. His other trend lines on actual versus "trend" simply picture the trillions we are short in GDP growth.

Let's get back to unemployment. It's that nasty "lagging indicator" that most economists feel will average 10% for 2010. Krugman said in a speech overseas this week that the unemployment problem won't be solved until 2011 (ie. start to come down). I therefor surmise that this little mini comeback that we are experiencing (quarterly GDP growth plugging along at 2%) will not be enough to deflect the much larger drag of "underemployment".

Krugman, Buffet and significant others have consistently taken the position that we need MORE stimulus, not LESS. Doesn't a pernicious unemployment rate above 10% prove that point?