6  Specifically, the vertical axis shows each country's deviation of average GDP growth from trend growth (at an annual rate) over 2008:Q4 and 2009:Q1. Trend growth is defined as the average annualized growth rate during 2006 and 2007 of historical GDP data smoothed using the Hodrick-Prescott filter.
The prospect of an increasing fiscal drag on the economy in the face of an already sluggish recovery highlights one of the many difficult tradeoffs currently faced by fiscal policymakers.