Inflation and Economic Slack

Does Strong Growth Fuel Inflation? Fed Debates Whether Old Model Still Applies
https://www.wsj.com/economy/central-banking/does-strong-growth-fuel-inflation-fed-debates-whether-old-model-still-applies-a9e3cdbc
WSJ’s Nick Timiraos on output gap:
“The workhorse models that Fed and private-sector economists use to forecast inflation compare total demand for goods and services with the total supply, called “potential output.” When demand is below potential, the resulting output gap places downward pressure on inflation. When demand is above potential, that negative output gap puts upward pressure on inflation. 
Most economists believe the output gap is currently close to zero, if not negative”.
 
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Timiraos has output gap backwards. In fact, the output gap is currently positive. When aggregate demand or actual real GDP is above potential, you get a positive output gap. 

As the IMF notes:

https://www.imf.org/external/pubs/ft/fandd/basics/pdf/jahan_output.pdf

“The output gap is an economic measure of the difference between the actual output of an economy and its potential output. Potential output is the maximum amount of goods and services an economy can turn out when it is most efficient—that is, at full capacity. Often, potential output is referred to as the production capacity of the economy.
Just as GDP can rise or fall, the output gap can go in two directions: positive and negative. Neither is ideal. A positive output gap occurs when actual output is more than full-capacity output. This happens when demand is very high and, to meet that demand, factories and workers operate far above their most efficient capacity. A negative output gap occurs when actual output is less than what an economy could produce at full capacity. A negative gap means that there is spare capacity, or slack, in the economy due to weak demand”.

 
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Typically, economists measure output gap as noted below.

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DATA ISSUES:

We cannot use FRED database to check output gap right now because the Real GDP has been updated to constant 2017 dollars while CBO's Potential GDP estimate is reported in constant 2012 dollars. You cannot directly compare the two.