UCF US Forecast November 2016

U.S. Forecast

November 2016

Institute for Economic Competitiveness College of Business Administration University of Central Florida

ABOUT UNIVERSITY OF C E N T R A L F LO R I DA ( U C F )

ABOUT THE COLLEGE OF B U S I N E S S A D M I N I S T R AT I O N

Institute for Economic Competitiveness College of Business Administration University of Central Florida

FO R E C A S T FO R T H E N ATI O N Forecast 2016 - 2019 November 2016 Report

Published quarterly by the Institute for Economic Competitiveness, College of Business Administration, University of Central Florida Copyright Š 2016 Institute for Economic Competitiveness. All rights reserved.

Publications of the Institute for Economic Competitiveness are made possible by the following staff: Dr. Sean Snaith, Director Angela Ayala, Administrative Assistant Diana Merchant, Researcher Leigh Durden, Researcher Maegan Alexis Trinidad, Researcher Coulter Small, Researcher Colin Lancaster, Researcher Brandt Dietry, Researcher This forecast was prepared based upon assumptions reflecting the Institute for Economic Competitiveness’ judgments as of the date it bears. Actual results could vary materially from the forecast. Neither the Institute for Economic Competitiveness nor the University of Central Florida shall be held responsible as a consequence of any such variance. Unless approved by the Institute for Economic Competitiveness, the publication or distribution of this forecast and the preparation, publication or distribution of any excerpts from this forecast are prohibited.

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HIGHLIGHTS

In this U.S. Forecast: •

What a difference a quarter can make. The surprising election outcome has significantly changed the economic outlook for the U.S.

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Details are still sparse, but here is what we know about the Trump administration policies: rolling back a crushing regulatory burden, tax reform, and infrastructure spending should significantly boost economic growth.

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The risk of recession has decreased as a result of these anticipated pro-growth policies, but the Trump stance on international trade could lead to a trade war in a global economic environment that poses the greatest risk of recession for the U.S.

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Average monthly payroll job growth since 2014 has been decelerating—could the new administration stem this trend?

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The rest of the world will continue to be a drag on U.S. growth. A stronger dollar in a world of weak growth and negative interest rates in many countries will boost imports and depress exports as a result; net exports should weigh on the economy through 2019. Trump’s trade policy stance creates significant uncertainty in the foreign sector.

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The Federal Reserve raised interest rates in December of 2015; the next 25 basis point hike will come this December and the pro-growth, pro-inflation policies of the new administration should increase the pace of future increases over the next three years.

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Real GDP growth will slow to 1.6% in 2016, hit 2.8% in 2017 and 2018, and then rise to 3.0% in 2019 as the Federal Reserve tightens interest rates. A recession, though less likely under the new administration, could interrupt the Fed’s plans.

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The housing market continues its recovery. The housing market will slowly improve through 2019 even with rising interest rates. Housing starts will rise from 1.15 million in 2016 to 1.58 million in 2019.

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Average monthly payroll employment growth in 2015 was slower than in 2014, and 2016 growth thus far has averaged less than 2015’s average growth. Uncertainty and regulatory burdens have been hindering payroll job growth, which will slow to 1.8% in 2016 and further slow to a growth rate of 1.5% in 2017, and 1.3% in 2018 before ticking up to 1.5% in 2019.

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Unemployment rates (U-3) are expected to decline to 3.9% in early 2019. Job growth will be enough to keep up with labor force growth until 2019 when unemployment stabilizes. Underemployment (U-6), a persistent problem in this recovery, stands at 9.5% as of October 2016 but will continue to decline through 2019.

•

Inflation will accelerate in 2017 pushing the Fed to move more quickly to raise interest rates. Core CPI inflation will average 2.8% during 2016-2019.

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TH E ECO N O M Y U N D E R A TR U M P AD M I N I STR ATIO N

TRUMPONOMICS 101 H HHHH

One major source of uncertainty that was hanging over the U.S. economy has been resolved.

To the surprise of many, Donald Trump won the 2016 presidential election and will be the country’s 45th president when sworn into office in January 2017.

What does a Trump administration mean for the U.S. economy? A definitive answer is not immediately available, as many of the economic proposals laid out during the campaign remain short on details. However, based on what we do know, most of the proposed economic policy would boost economic growth in the U.S. The one potential, and significant, pitfall would come with regard to international trade policy.

President-elect Trump has vowed to renegotiate trade deals to get more favorable terms for the U.S. and has threatened countries who do not play fair with tariffs. This would be America’s first trade policy that vows to go after countries who manipulate their currencies or provide subsidies to domestic industries, with China specifically being called out for such behavior.

The danger here is that countries subjected to such tariffs could return the favor in kind with a worst case scenario of a trade war breaking out.

Such behavior is self-defeating, harming all parties involved, and the threat of such a mutually assured economic destruction could ultimately allow cooler heads to prevail.

So what are the major planks of President-elect Trump’s economic platform and what impact would they likely have on the U.S. economy?

Tax Reform

Proposals here include a reduction of the number of brackets of the income tax from seven to three.

The three rates would be 12%, 25%, and 33% and every income level would receive a tax cut. The plan would close special interest tax breaks including the carried interest loophole that greatly reduced tax liabilities of hedge funds (details regarding which other special interest tax breaks will be affected are not specified). The plan would cap the level of deductions at $100,000 for single filers and $200,000 for married filers. The standard deduction would rise from $6,300 in 2016 for single filers to $15,000, and from $12,600 in 2016 for married filers to $30,000. This would eliminate the need for many taxpayers to itemize deductions, thus reducing the burden of filing income taxes for most taxpayers.

Business taxes would also change substantively.

Corporate income tax rates would fall from one of the highest in the world at 35% to 15%. A 10% tax would be put in place on repatriation of profits that are currently held overseas by American companies as part of a mitigation program to avoid the high tax rate currently in place. A total of 367 of the Fortune 500 companies currently hold $2.5 trillion in offshore tax havens.1 Bringing this money back to the U.S. would provide both a windfall of revenue to the government as well as a boost to investment spending in the U.S. 1 http://www.ibtimes.com/political-capital/corporations-avoid-taxes offshoring-25-trillion-more-gdp-france-2427041 Institute for Economic Competitiveness

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Other tax policies include allowing for full expensing of plant and equipment for U.S.-based manufacturers and allowing small businesses to pay a 15% rate on business income instead of paying the personal tax rate on this pass-through income.

The fiscal impact of such policies aside, these changes and simplifications of the tax system should work to boost economic growth in the U.S.

Regulatory Reform

Readers of previous issues of our U.S. Forecast publication will recall frequent discussions of how the upward surge of the regulatory burden in the U.S. has weighed down on economic growth, productivity, and job creation over the course of this historically weak expansion.

The roll-back of this regulatory morass that has flourished over the past two administrations is in my mind potentially the most powerful of all the incoming president’s proposed economic policies.

We have written extensively on two of the largest pieces of legislation signed into law in 2010, namely the Affordable Care Act and the Dodd-Frank financial regulatory reform law, and the adverse consequences of these laws for the economy. The policy uncertainty that we have created via Dodd-Frank, the Affordable Care Act, and thousands upon thousands of pages of new rules2 and regulations that have been written— with many more yet to be written—have weighed down on economic growth in this recovery. The promised repeal of most of these two laws will free the economy from the deluge of red tape that has entangled and hobbled economic growth.

It has not just been these two major pieces of legislation that have created this growthasphyxiating regulatory environment; there have been tens of thousands of other rules that have been foisted upon our economy as well. Since 2001 through the end of 2015, 47,661 new rules have 2 http://www.heritage.org/research/reports/2016/05/red-tape-rising-2016 obama-regs-top-100-billion-annually 6

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been handed down by the federal government touching virtually all sectors of our economy.

The Trump administration is calling for a complete regulatory overhaul with the removal of all job-killing and needless regulations. The benefits such an overhaul could reap for the economy could be quite significant; the campaign’s website claimed that overregulation costs the economy $2 trillion a year and reduces wealth per household by $15,000.

How the campaign estimated these effects is not explained, but in our August 2015 U.S. Forecast 3 we discussed an academic research paper that estimated the aggregate impact of federal regulation on economic growth and productivity on the U.S. economy during the period 19492005 and the results were eye-opening. Real GDP in 2005 was $15.1 trillion, but the paper estimated if regulation had stayed at 1949 levels that figure would have been an eye-popping $53.9 trillion. Rolling regulations back to 1949 levels is neither desirable nor feasible, but the paper does demonstrate the large negative consequences that regulation has on the economy, and the plan to roll back this burden will generate significant benefits for the economy.

Infrastructure/Military Investment

The incoming administration has proposed a $1 trillion infrastructure investment that would be accompanied with expanded military spending that creates a two-barreled fiscal stimulus when coupled with the proposed tax cuts. Whether congressional fiscal hawks would get on board with such deficit and debt-expanding policies remains to be seen. The $1 trillion infrastructure plan is nearly a tenfold increase in the level of infrastructure spending that was included in the American Reinvestment and Recovery Act of 2009 (aka the stimulus plan) implemented by the Obama administration.

3 https://issuu.com/ucf business/docs/us-forecast-august-2015

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Unleashing American Energy

Here the administration has put forward what could be classified as an all-of-the-above approach to energy production in the United States. Coal, oil, and natural gas industries would benefit from streamlining regulatory and permitting processes and rolling back regulatory action designed to quash production of some fossil fuels. Coal production in particular has been decimated by regulatory action.

Energy infrastructure projects such as the longsuffering Keystone Pipeline could get jump-started under the Trump administration, more federal land would be open to energy exploration, and permitting processes would be streamlined.

The administration has pledged support for continued research into advanced energy technology without getting into the business of picking winners and losers in this area. Nuclear power could see revitalization under the new administration.

The energy sector has the potential to create hundreds of thousands of high wage jobs, many for the middle class, hundreds of billions of dollars of GDP, and tax revenue at all levels of government.

True energy independence for the U.S. is at long last a real possibility, and freeing ourselves from our energy dependence on geopolitically volatile regions of the world, populated by governments that are less than friendly, could reap other benefits as well. Trillions of dollars and tens of thousands of casualties arising from military action in such regions could be avoided in the future if our economy is no longer dependent on energy exports from such unpredictable parts of the world.

An America First Trade Policy

As mentioned earlier, the Trump administration’s stance toward international trade could be the Achilles’ heel of their economic platform. The Trans-Pacific Partnership, which at one point was called the “gold standard” of trade agreements by Hillary Clinton, now appears to be dead on arrival.

Strong statements—many directed toward China— toward enforcement of violations of existing trade agreements, violations of the rules of the WTO, as well as for alleged currency manipulation (the burden of proof on this charge would be difficult to meet) that would be met with tariffs and taxes, set the stage for potential retaliatory action by China or other countries that were subject to such penalties.

The worst case scenario is an all-out trade war where the U.S. and its trading partners impose tariffs and other barriers to trade upon one another at such levels that international trade is ground to a standstill.

The administration has called for the renegotiation of the North American Free Trade Agreement (NAFTA) with the threat of pulling out of the trilateral trade bloc if Canada and Mexico do not agree to a renegotiation.

Fortunately, both Mexico and Canada have already agreed to talks on the trade deal, but that is not the same as coming to terms with substantive changes in NAFTA itself.

Throughout his campaign, President-elect Trump has made hyperbolic and controversial comments: are his statements and threats on trade issues just more of the same? It could be that all the tough talk is merely a negotiating tactic designed to extract more favorable terms for the U.S. during any NAFTA negotiation. But the response of Mexico or Canada to such threats is unknown and their capitulation to any demands made by the U.S. is not certain.

Finally, much of the railing against trade during the campaign revolved around manufacturing jobs that went overseas and international trade agreements that enabled that process. Even if punitive tariffs were imposed on China, for example, there is little likelihood that the manufacture of goods in China would then come back to the U.S. More likely is that they would move, as many already have, to even lower-cost Southeast Asian countries, such as Vietnam.

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Trade is the one rotten plank in the Trump economic platform and the one most likely to give way under any undue pressure. Outside of trade, the proposed policies of the Trump administration, if they are enacted, should boost economic growth.

Our forecast this quarter reflects this change but the devil, as they say, is in the details. And details on these proposed policies at this point are woefully absent. As details emerge, our forecast will evolve to reflect any new information.

ANXIOUS INDEX Fear of Recession Slips to Lowest Level in a Year The most recent release (4th quarter of 2016) of the Survey of Professional Forecasters by the Federal Reserve Bank of Philadelphia suggests

that the 36 forecasters surveyed for the publication put a 13.95% chance that a decline in real GDP will occur in the 1st quarter of 2017. This quarter’s release reflects a decrease in forecasters’ anxiety over the 3rd quarter’s survey. It should be noted that the survey was taken prior to the presidential election; whether the Trump administration will raise or lower fears of a recession will not be reflected in the Anxious Index until the 1st quarter of 2017 survey.

One section of the Survey of Professional Forecasters asked panelists to estimate the probability that real GDP will decline in the quarter in which the survey is taken, as well as the probabilities of a decline in each of the following four quarters. The anxious index (a term coined by The New York Times reporter David Leonhardt)

Figure 1.

The Anxious Index Probability of Decline in Real GDP in the Following Quarter Quarterly, 1968:Q4 to 2016:Q4 100 90 80

Probability (percent)

70 60 50 40 30 20

0

1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

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Survey Date Source: Survey of Professional Forecasters, Philadelphia Federal Reserve Bank 8

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is the probability of a decline in real GDP in the quarter after a survey is taken. In the survey taken in early November of the 3rd quarter of 2016, the index stands at 13.95, which means that forecasters believe there is a 13.95% chance that real GDP will decline in the 1st quarter of 2017.

The forecasters also report a 9.98% chance that we are currently (as of the 4th quarter of 2016) experiencing a contraction in real GDP—lower than the probability the forecasters assigned for the 3rd quarter of 2016. According to the panel, the probability that real GDP growth will turn negative is averaging around 16.08% through the end of the 1st quarter of 2018, indicating that the forecasters’ assignment of probability for a contraction in real GDP in the upcoming year is the lowest since 4th quarter of 2015.

Figure 1 plots the historical values of the anxious index, where the gray bars indicate periods of recession in the U.S. economy. The current level of the anxious index is still slightly higher than the average level during the economic recovery (13.52).

GDP OUTLOOK As Domestic Barriers to Growth Are Removed the Economy Will Grow Faster Global Risks Still Abound 2016 began with volatility in financial markets with the economy growing at just a 0.8% pace, following an equally weak 4th quarter of 2015 when growth was only 0.9%. Things improved only slightly in the second quarter with real GDP growth of just 1.4%. A contentious and historical presidential campaign occupied most of this year, and the uncertainty surrounding this election was higher than is usually the case. This has weighed on economic growth with investment spending being hit particularly hard.

The average rate of annual real GDP growth from 2010 through 2015 has been just 2.2%.

Our forecast for average real GDP growth from

2016-2019 is higher at 2.5%, with a projected acceleration after a particularly weak 2016. As discussed above, a shift from policies that have weighed down this economic recovery to those that should catalyze it will drive the acceleration.

The likelihood of a recession taking place during our forecast horizon is still at an elevated risk, despite policies that should remove domestic barriers to growth. These changes do little to alter the global economic environment that remains fraught with expansion-killing pitfalls. If the trade policies of the new administration lead to punitive tariffs being levied on China, for example, this could be the pinprick that pops that country’s debt bubble, leading to a recession that could become global.

For over seven years now, we have waited for an acceleration of economic growth that has always been promised and projected to be just around the corner, but when we got to that corner, again and again, faster growth proved to be nothing more than an illusion and the product of wishful thinking. The 2016 presidential election appears to be an event that could provide this long-awaited acceleration.

There is no illusion about the outlook for 2016; we are expecting real GDP growth to be just 1.6% for the full year. The weakness in the first half of the year will not be fully offset by the relatively stronger growth in the second half. Average quarterly growth of 1.1% in the first six months of 2016 will be followed by growth of 2.9% in the second half of the year.

In 2017, we are expecting real GDP growth to accelerate to 2.8%. This forecast was revised up by 0.6 of a percentage point from our August 2016 U.S. Forecast. Growth will stay at 2.8% in 2018 before accelerating to 3.0% in 2019. The projected growth rate for 2019 would be the first time the U.S. economy experienced annual growth at 3.0% or higher since 2005.

As details of the economic policies pursued by the Trump administration become available, the Institute for Economic Competitiveness

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possibility that economic growth could accelerate at an even faster pace, exceeding 3.0% and possibly breaching 4.0%, is an outcome that seemed unlikely just a few months ago but could very well come to pass.

The election will also have consequences for Fed policy. After raising the federal funds rate by 25 basis points in December of 2015, the Fed is poised to do so again this December. As a result of the anticipated policies of the Trump administration, the Fed will likely quicken the pace of interest rate hikes going forward. As always, data will drive both the timing and the magnitude of these changes, but the once-a-year, 25 basis point rate hike pattern of the past two years will fall by the wayside in 2017.

We expect the federal funds rate to increase roughly four times a year in 2017, 2018, and 2019, with the anticipated target rate reaching 3.00% by the third quarter of 2019. The path will deviate from this if growth accelerates faster than projected or if there is a recession triggered by any of the global risks that are current threats to the economic expansion.

CONSUMER SPENDING Consumers Continue to Carry the U.S. Economic Recovery The U.S. consumer is now playing the biggest role in supporting the economic expansion. In the 2nd quarter of 2016, real consumer spending growth was 4.3%, and despite this strong growth, real GDP growth in the quarter was a tiny 1.4%.

Consumption contributed 2.88 percentage points to 2nd quarter GDP growth. In absence of this outsized effort, real GDP growth would have been negative.

Continued gains in employment, more rapidly rising wages, and improving household balance sheets should continue to provide a solid underpinning for continued consumer spending growth. Tax cuts and spending programs proposed 10

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by the Trump administration should also boost consumer spending growth. These improving fundamental and growth-oriented policies, however, are probably not sufficient to keep spending growth at the levels we saw in the 2nd quarter, but faster consumption spending is on the horizon.

However, the next three quarters should show a strengthening of consumer spending growth. In the 3rd quarter of 2016, consumption spending growth of 2.1% will accelerate to 3.6% in the 4th quarter, as holiday spending is looking better this year. In the first quarter of 2017, consumer spending growth should decelerate to 2.7% before slipping slightly to 2.6% in the second quarter.

Consumer spending is a critical part of supporting real GDP growth if this recovery is going to continue. The other main sectors of the economy have faced headwinds that suppress growth. Business investment has been a drag, government spending is adding little to boost GDP growth currently, and net exports will continue to pull down growth rather than propping it up as it mildly did in the first half of 2016. Trump’s economic policies could change this mixture, but consumers will still be the big driver of this expansion going forward.

While the fundamentals of consumer spending continue to solidify, the labor market continues its recovery amid signs that job growth may be losing some steam. Stronger wage and salary growth are showing signs of reappearing, with annual wage growth in October hitting the highest pace in seven years. October’s wage growth hit 2.8% after the labor market had been hovering around 2.2% for several years.

Global economic and financial market uncertainty began to erode consumer confidence in 2016 despite positive developments in other areas.

As a result, consumer-spending growth is expected to decelerate to around 2.6% for 2016. Going forward, tax policy and other policies stimulating economic growth ushered in by the Trump administration will boost consumer spending

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growth. Consumption spending growth is expected to rise to 2.9% in 2017, staying at that pace in 2018 and then accelerating to 3.4% in 2019.

INVESTMENT Thus far in 2016, real nonresidential investment growth has come in at -3.4% in the 1st quarter, 1.0% in the 2nd quarter, and 1.1% in the 3rd quarter. Purchases of aircraft again contracted by a significant amount, declining by -43.5% in the 1st quarter; however, in the 2nd quarter, those purchases soared to 64.5%. For the full year, aircraft spending is expected to contract 16.4% after additional volatility in the second half of 2016.

The contraction in investment spending also reflects the negative impact of falling oil prices.

Consumers may be enjoying the prices at the pump, but oil producers are cutting back on investment as the rig count in the U.S. continues to drop; the total rig count in the U.S. has decreased 26.2% year over year. During 2015, investment in mining and petroleum equipment contracted by 30.9% and is expected to further contract in 2016 by 42.7%.

It is not just aircraft and oil rigs that are driving the weakness in investment spending. There is a more fundamental problem with investment in this recovery, and we have discussed the role of uncertainty and the rapid growth in the regulatory burden as additional probable causes of this weakness. This environment worsened with the presidential political cycle that compounded the environment of uncertainty, but with the outcome now known and the likelihood that this regulatory burden will be lightened in the upcoming years, the environment for investment spending should improve markedly.

In 2015, the pace of real private nonresidential fixed investment growth decelerated to 2.1%. The weak start to 2016 in an environment of increasing uncertainty will result in a further deceleration of investment spending growth to -0.1%. Now that

the presidential election is over, some uncertainty will fade and, with answers to many questions in hand, business investment growth will accelerate to 5.8% in 2017, 5.3% in 2018 and 5.4% in 2019.

Interest rates are currently still very low, even as the Fed has begun to push up the federal funds rate at what looks to be a faster pace than was previously expected. Overall, interest rates have begun to rise in a process that will stretch until 2019, unless, of course, a recession throws a wrench into those plans.

Business spending on equipment and software will grow at an annual average rate of 4.1% from 2016 through 2019. Investment spending growth in computers and peripherals will accelerate in 2017 to 6.5% as upgrade cycles kick in after spending had contracted in 2015 and is only expected to grow 0.8% in 2016. Spending on communications equipment should expand at an average annual rate of 5.7% during 2016-2019, while industrial equipment purchases average 6.2% growth over the same time frame.

Investment in nonresidential structures growth has fluctuated wildly over the past several years.

The wild ride continued during 2014 and 2015.

After growth jumped to 10.4% in 2014, it turned negative in 2015 with growth coming in at -4.4%. This will be followed by another year of negative growth in 2016 at -3.1%. Investment in nonresidential structures will slowly grow in 2017, 2018, and 2019 with growth of 7.7%, 4.4%, and 2.8%, respectively. Plunging oil prices are causing a sharp two-year contraction in Mining and Petroleum structures growth, which is expected to average -36.8% during 2015-16. Investment in this sector should rebound sharply in 2017 to a 49.3% growth rate.

Investment growth in transportation equipment maintained the momentum of the previous year in 2015 with growth of 13.5%. Prior to 2014, this sector experienced four years of very strong doubledigit growth averaging 38.5%. In 2016, however, transportation equipment investment is expected to contract 3.2%. The contraction will be short lived, Institute for Economic Competitiveness

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as spending is expected to bounce back to 7.8% in 2017. This type of investment will have an average growth rate of 4.4% during the four-year period spanning 2016 through 2019. Growth during 20172019 will average 7.0%.

Residential fixed investment growth surged to 11.7% in 2015 after slumping to 3.5% in 2014.

Growth will average 5.6% through 2016-2019, accelerating to a peak growth rate in 2018 and 2019 of 7.0%. In the final year of our forecast (2019), real residential fixed investment will be dampened by both higher mortgage rates—which are expected to average 5.8% on a 30-year fixed mortgage that year—and slower price appreciation. In 2019, real residential fixed investment will be just over $700 billion—$172 billion less than its 2005 peak.

We expect housing starts to accelerate over the next several years, reaching a level below 1.58 million in 2019. Average levels of annual housing starts from 2016-2019 will be 1.4 million. In 2019, housing starts are expected to show an increase of 1.03 million starts from their 2009 nadir.

GOVERNMENT SPENDING In 2015, federal government spending growth turned positive, but only very slightly, after four years of contraction. 2016 will continue this growth, as federal government spending will grow 0.7% and will then expand at 0.4% in 2017. Beyond 2017 and through 2019, federal government spending is expected to continue to grow, expanding at an annual average pace of 0.4%.

Over the 2016 to 2019 time horizon, state and local governments will oversee spending growth at an average rate of 1.1%.

The course of fiscal policy going forward will likely be altered significantly by the outcome of the presidential election. But without specifics on particular policies and programs changing, the current forecast would be largely speculated by a large amount at this point. As more details become available, we will be revising these projections in future forecasts.

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The federal budget deficit will rise in 2016 and in each subsequent year in our forecast horizon after four years of shrinking from nearly $1.3 trillion in 2011 to $439 billion in 2015. We are forecasting deficits to widen significantly in 2016, as anemic economic growth cannot compensate for greater spending for entitlements and reversals of the sequester, thereby pushing the deficit to $587.4 billion. In 2017, the deficit will decline to $547.3 billion before easing again in 2018 when it hits $470.1 billion. The deficit grows much larger in 2019 as entitlement spending pushes it to $539.5 billion. Like federal spending growth, policies of the new administration will likely impact these projected deficits in a significant way.

The U.S. continues to travel down a dangerous fiscal path that will ultimately lead to a crisis if we continue on this road. What Greece experienced in 2010, and is still suffering the consequences of, is an example of how painful these entirely avoidable fiscal crises can be. The existing structure of entitlements coupled with the demographics of an aging Baby Boomer generation ensure that if no changes are made to these programs and how they are funded, we will eventually face a fiscal meltdown. Because the onset of such a crisis is still well beyond any political horizon, it is highly unlikely that the needed and admittedly politically unpalatable changes will be implemented in the near future.

Although we are projecting deficits through 2019 that are smaller than the $1 trillion-plus deficits that were the norm in 2009-2012, the additional debt added to the national debt over the next four years will be nearly $2.14 trillion, pushing the national debt total to over $21.9 trillion before interest. As interest rates in the economy rise, the burden of servicing this debt will rise as well, consuming an even greater share of federal tax revenues, further squeezing discretionary spending between this debt service and entitlement spending.

Tax cuts and spending programs implemented by the Trump administration could push this debt to even higher levels that we are currently projecting.

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Currently, the national debt is over $19.8 trillion and rising. This represents a debt of nearly $166,240 per taxpayer and over $61,133 per citizen.

The unfunded liabilities of the U.S. are even more alarming. These include Social Security, Medicare parts A, B and D, Federal debt held by the public, and federal employee and veteran benefits, representing more than $104.2 trillion in liabilities, boiling down to $872,207 per taxpayer.

NET EXPORTS Net exports became a drag on real GDP growth in the U.S. in 2014, shaving off 0.15 percentage points from growth that year, and even more in 2015, when net exports shaved 0.71 percentage points off of real GDP growth last year. This drag is expected to last through the end of our 2019 forecast horizon. The same caveat that applies to much of the forecast with regards to policies enacted by the Trump administration could materially alter the forecast for international trade.

The U.S. dollar has appreciated for four straight years against our major trading partners, including an outsized 16.2% appreciation in 2015. In 2016, this trend reversed itself, albeit temporarily. As the Fed raises interest rates and the U.S. economy experiences faster growth, the dollar will again appreciate in 2017 and 2018 before depreciating in 2019. The size of the depreciation is anticipated to be much smaller than the appreciation of the six to seven years preceding it; thus net exports will continue to be a drag on GDP growth.

Over time, a stronger dollar boosts imports and reduces exports by making our goods and services more expensive to foreigners and at the same time making imported goods and services less expensive to U.S. consumers. This results in a worsening of the trade deficit, though the effects of currency changes take time to work on actual trade flows resulting in what is known as the J-curve effect on net exports.

Overall, export growth continues through the end of our 2019 forecast horizon and is expected to accelerate during that time frame. Growth will remain mild in 2016 before jumping in 2017. Real export growth from 2016-2019 will average 3.5%, while real import growth will average 5.6% over the same time frame.

Real net exports will average -$685.7 billion during 2016-2019, with the trade balance worsening in each successive year and coming in at -$874.7 billion in 2019. The sizeable appreciation of the dollar during 2012-2015 and 2017-2018 along with weaker global growth relative to the U.S. will dampen demand for U.S. goods and services abroad and simultaneously stimulate the consumer’s appetite for imported goods and services in the U.S.

U N E M P LOY M E N T The national headline unemployment rate (U-3) in October dipped from the September reading of 5.0% to 4.9%, which is the average unemployment rate over the past twelve months. The unemployment rate remained dipped as both the number of unemployed and the labors force shrank.

195,000 people left the labor force in October as the labor force participation rate decreased from 62.9% to 62.8%. The number of unemployed people fell by 152,000 in October.

The October jobs report showed continued growth in payroll jobs with businesses adding 161,000 jobs after September’s 191,000 job gain.

The 161,000 gain in payroll employment in October pulls down the average growth in monthly payrolls for 2016 at 181,000. Average payroll job growth for 2015 came in at 229,000, which was down from 2014’s average growth of 251,000. Job growth decelerated last year and continues to do so thus far in 2016. Despite the spurt in job growth this June and July, the slowing in the pace of hiring has been consistent in 2016.

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U . S . F orecast

The October labor force participation rate of 62.8% remains depressed and is at its lowest point since March 1978. Since the end of the recession, the labor force participation rate has declined almost 3.0 percentage points. This fall in the labor force participation rate has exaggerated the decline in U-3, the headline unemployment rate, making the labor market appear to be healthier when looking at this measure.

Some of this decline in the overall labor force participation rate is due to retiring Baby Boomers, since the overall participation rate is calculated based on the population of everyone 16 years or older, but these demographics do not fully explain the decline. If we look only at prime workers from age 24 to 54, we still see a significant decline in their labor force participation rates. In October 2016, this participation rate stood at 81.7%, down from 83.3% as the recession got underway. We can conclude that there exists a much greater slack in the labor market than the headline unemployment rate would suggest, and it is not solely attributable to retiring Baby Boomers.

The Bureau of Labor Statistics (BLS) produces alternative measures of labor market weakness, including the broadest measure of unemployment (U-6). U-6 takes into account discouraged workers (currently 487,000 workers), as well as those classified as underemployed (currently 5.8 million workers)—working part-time but not by choice— and workers who are marginally attached to the labor force that have looked for work in the past 12 months but are not currently looking, yet indicate a willingness to work (1.21 million workers). None of these 8.4 million-plus workers are counted in the headline unemployment rate of 4.9%.

14

U.S. Forecast | November 2016

U-6 remains elevated at 9.5% as of October 2016, down 0.2 percentage points from the September 2016 level but unchanged from October 2015 levels.

The current level of U-6 is down 7.6 points from its peak of 17.1% in April 2010. U-6 remained in double digits for more than seven years. It has been in single digits for thirteen months running as of October.

While the labor market is still improving, it is improving at a rate that appears to be slowing, and significant slack still remains. As that slack is taken up, we can expect wage and salary growth to strengthen, as it has recently been showing signs of doing—a development that has been eight years in the making.

Oil and Consum 140.0

Oil ($ Per Barre

120.0 100.0 80.0 60.0 40.0 20.0 01 02 03 04 05 06 07 08 09 10 Price of Oil WTI

CHARTS

0.0

U . S . F orecast C harts

30-Year Mortgage Rates and Housing Starts (Mortgage rates - Left axis, %)

8.0

2.5

7.0

2.0

6.0

1.5

5.0

1.0

4.0

0.5

3.0

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 30-Year Fixed Mortgage Rate Housing Starts - Millions

0.0

Automobile and Light Truck Sales 12.0

(Millions Vehicles)

10.0 8.0 6.0 4.0

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Auto Sales Light Truck Sales

Change in Real Business Inventories 150.0 100.0 50.0 0.0 -50.0 -100.0 -150.0 -200.0 -250.0

16

U.S. Forecast | November 2016

(Billions of 2000 Dollars)

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Change in Real Business Inventories

U . S . F orecast C harts

Consumer Prices (% Change Year Ago)

6.0 4.0 2.0 0.0 -2.0

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Consumer Price Index Core Consumer Price Index

Federal Budget Surplus 500.0

(Billions of Dollars)

0.0 -500.0 -1000.0 -1500.0

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Federal Budget Surplus

Federal Funds Rate 6.0

(%)

5.0 4.0 3.0 2.0 1.0 0.0 -1.0

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Fed Funds Rate Institute for Economic Competitiveness

17

U . S . F orecast C harts

Real GDP Growth and Federal Funds Rate (%)

10.0 5.0 0.0 -5.0 -10.0

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Quarterly Growth Rate Real GDP Fed Funds Rate

Industrial Production 115.0

(2002=100)

110.0 105.0 100.0 95.0 90.0 85.0

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Industrial Production

Private Fixed Nonresidential Investment 3000.0

(Billions of Dollars)

2500.0 2000.0 1500.0 1000.0

18

U.S. Forecast | November 2016

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Private Fixed Nonresidential Investment

U . S . F orecast C harts

Manufacturing Employment 18.0

(Millions)

17.0 16.0 15.0 14.0 13.0 12.0 11.0

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Manufacturing Employment

Yield Curve 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0

(%)

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 1-Year T-Bill Yield 5 Year Treasury Bond Yield 30 year Treasury Bond Yield

Money Supply

40.0

(Annual Growth Rate %)

30.0 20.0 10.0 0.0 -10.0

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Annual Growth Rate of M2 Annual Growth Rate of M1 Institute for Economic Competitiveness

19

U . S . F orecast C harts

Total Nonfarm Payroll Employment (Millions)

155.0 150.0 145.0 140.0 135.0 130.0 125.0

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Total Nonfarm Employment

Oil and Consumer Confidence Oil ($ Per Barrel) - Left Axis

140.0 120.0

100

100.0

90

80.0

80

60.0

70

40.0

60

20.0 0.0

110

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Price of Oil WTI Consumer Sentiment

50

Corporate Retained Earnings 1000.0

(Billions of Dollars)

800.0 600.0 400.0 200.0 0.0 -200.0

20

U.S. Forecast | November 2016

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Corporate Retained Earnings

U . S . F orecast C harts

Real Disposable Income and Consumption (% Change Year Ago)

6.0 4.0 2.0 0.0 -2.0 -4.0

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Real Disposable Income Consumption

Real After Tax Profits 2000.0 1800.0 1600.0 1400.0 1200.0 1000.0 800.0 600.0 400.0

(Billions of Dollars)

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Real After Tax Profits

Real Investment Equipment & Software 1300.0 1200.0 1100.0 1000.0 900.0 800.0 700.0 600.0 500.0

(Billions of Dollars)

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Real nonresidential investment-equipment & software

Institute for Economic Competitiveness

21

U . S . F orecast C harts

-400

Trade Balance and Real Exchange Rate

1.50 1.40

-500

1.30

-600

1.20

-700

1.10

-800

1.00 0.90 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Trade Balance (Billions $) Left axis U.S. Dollar Real Exchange Rate (2000 = 1.0) Right axis

0.80

Twin Deficits 500.0

(Billions of Dollars)

0.0 -500.0 -1000.0 -1500.0

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 U.S. Federal Budget Surplus Current Account

Civilian Unemployment Rate 10.0

(%)

9.0 8.0 7.0 6.0 5.0 4.0 3.0

22

U.S. Forecast | November 2016

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Unemployment Rate

U . S . F orecast T ables Table 1. Annual Summary of the Long-Term Forecast of the U.S.

Table 1. Summary of the Long-Term Forecast of the U.S.

Gross Domestic Product Final Sales of Domestic Product Total Consumption Durables Nondurables Services Nonresidential Fixed Investment Equipment & Software Information Processing Equipment Computers & Peripherals Communications Equipment Industrial Equipment Transportation Equipment Aircraft Other Equipment Structures Commercial & Health Care Manufacturing Power & Communication Mining & Petroleum Other Residential Fixed Investment Exports Imports Federal Government State & Local Government

Real GDP Nominal GDP

GDP Deflator Consumer Prices Excl. Food & Energy Producer Prices, Finished Goods Employment Cost Index - Total Comp.

2009

2010

2011

-2.8 -2.0 -1.6 -5.3 -1.8 -0.9 -15.5 -22.5 -8.3 0.7 -12.7 -22.2 -49.0 -40.0 -27.4 -18.9 -30.9 5.2 1.6 -27.7 -18.3 -20.7 -8.7 -13.6 5.7 1.6

2.5 1.1 1.9 6.1 2.2 1.2 2.6 15.9 10.0 11.2 13.6 -0.2 80.2 26.9 17.4 -15.7 -24.1 -27.7 -15.9 21.7 -26.3 -2.4 11.9 12.8 4.4 -2.7

1.6 1.7 2.3 6.1 1.8 1.8 7.6 13.6 1.6 -1.8 2.0 21.0 37.6 28.4 33.0 2.3 -0.3 -1.6 -7.6 26.4 -9.1 0.7 6.9 5.6 -2.7 -3.3

2012

2013

2014

2015

Composition of Real GDP, Percent Change 2.2 1.7 2.4 2.6 1.6 2.1 1.5 2.5 2.4 2.0 1.5 1.5 2.9 3.2 2.6 7.4 6.2 6.7 6.9 5.3 0.6 1.7 2.6 2.7 2.4 0.8 0.6 2.3 2.8 2.3 9.1 3.5 6.0 2.1 -0.1 10.9 4.6 5.5 3.6 -2.1 6.0 4.9 2.6 4.0 2.7 7.0 0.1 0.9 -0.4 0.8 4.9 10.5 3.9 7.7 1.8 9.4 -1.5 3.5 1.9 3.2 23.5 12.8 13.1 13.5 -3.2 7.5 8.5 13.3 20.8 -16.4 21.8 5.8 15.7 2.2 -20.5 13.3 1.4 10.4 -4.4 -3.1 8.6 3.5 12.9 10.2 14.9 15.7 4.1 12.8 32.3 -4.9 21.4 -4.3 17.5 -10.9 4.6 12.7 1.8 5.6 -30.9 -42.7 9.5 4.3 7.1 10.7 7.4 13.5 12.0 3.5 11.7 4.4 3.4 3.5 4.3 0.1 0.5 2.2 1.1 4.4 4.6 0.7 -1.9 -5.8 -2.5 0.0 0.7 -1.9 -0.8 0.2 2.9 1.0

Billions of Dollars 14418.8 14783.8 15020.6 15354.6 15612.2 15982.3 16397.2 14418.7 14964.4 15517.9 16155.3 16691.5 17393.1 18036.7

1.2 1.6 1.0 4.2 1.9

2.1 3.1 1.7 6.0 2.2

61.7 3.1 -11.4 65.6 -146.0 66.3 10.402 0.554 3.868 9.3 -4.3 -1416 -384

79.4 3.3 5.5 70.8 65.9 71.8 11.555 0.586 3.705 9.6 -0.7 -1294 -442

95.1 0.1 2.9 73.7 36.6 67.4 12.743 0.612 3.792 8.9 1.2 -1297 -460

94.2 0.9 2.8 74.6 72.7 76.5 14.435 0.784 4.125 8.1 1.7 -1089 -447

Other Measures 97.9 93.3 48.7 0.3 0.8 0.9 1.9 2.9 0.3 74.5 75.4 75.5 73.0 62.2 88.1 79.2 84.1 92.9 15.530 16.455 17.4 0.928 1.001 1.1 4.475 4.338 4.6 7.4 6.2 5.3 1.6 1.9 2.1 -680 -484 -439 -366 -392 -463

Federal Funds Rate (%) 3-Month Treasury Bill Rate (%) 1-Year Treasury Note Yield (%) 5-Year Treasury Note Yield (%) 10-Year Treasury Note Yield (%) 30-Year Treasury Note Yield (%) 30-Year Fixed Mortgage Rate (%) S&P 500 Stock Index (% change) Exchange Rate, Major Trading Partners (% change (negative = depreciation))

0.16 0.15 0.47 2.19 3.26 4.07 5.04 947 -18.9 1.000 4.8

0.18 0.14 0.32 1.93 3.21 4.25 4.69 1139 21.6 0.970 -2.8

0.10 0.05 0.18 1.52 2.79 3.91 4.46 1269 11.5 0.912 -5.8

0.14 0.09 0.18 0.76 1.80 2.92 3.66 1380 8.9 0.946 3.8

Personal Income (Bil. of $) (% change) Disposable Income (Bil. of $) (% change) Real Disposable Income (Bil. Of 2009 $) (% change) Saving Rate (%) After-Tax Profits (Billions of $) (% change)

12095 -3.2 10943 -0.5 10943 -0.4 6.1 1203 22.4

12477 3.2 11238 2.7 11055 1.0 5.6 1470 23.4

13255 6.2 11801 5.0 11331 2.5 6.1 1428 -2.9

13915 5.0 12404 5.1 11688 3.1 7.6 1683 18.1

Forecast 2017 2018

2.8 2.7 2.9 6.4 2.3 2.5 5.8 5.2 6.1 6.5 6.2 4.9 7.8 27.2 4.5 7.7 8.1 -3.8 -1.1 49.3 5.2 4.1 4.5 5.3 0.4 0.8

2.8 2.5 2.9 5.8 2.2 2.6 5.3 6.2 8.2 8.3 7.9 6.3 6.5 5.5 13.6 4.4 8.3 1.6 -1.9 9.4 3.3 7.0 4.8 8.3 0.5 1.0

2019

3.0 2.9 3.4 8.3 2.9 2.8 5.4 7.3 7.9 6.9 6.8 10.2 6.6 6.6 11.1 2.8 7.2 -6.4 -1.1 4.7 3.3 7.0 4.3 8.3 0.4 1.5

16657.8 17116.1 17587.6 18108.2 18576.8 19586.2 20687.3 21818.4

Prices & Wages, Percent Change, Annual Rate 1.8 1.6 1.8 1.1 1.4 2.1 1.5 1.6 0.1 1.4 2.1 1.8 1.7 1.8 2.3 1.9 1.2 1.9 -3.3 -1.0 1.9 1.9 2.1 2.1 2.2

0.8 -0.3 1.7 -2.6 1.4

Oil - WTI ($ per barrel) Productivity (% change) Industrial Production (% change) Factory Operating Rate Nonfarm Inven. Chg. (Bil. of 2009 $) Consumer Sentiment Index Light Vehicle Sales (Million units) Housing Starts (Million units) Existing House Sales (Million units) Unemployment Rate (%) Payroll Employment (% change) Federal Surplus (Unified, FY, bil. $) Current Account Balance (Bil. $)

2016

2.6 3.2 2.6 3.6 2.8

2.8 3.5 3.1 1.6 3.2

2.4 3.1 2.9 2.2 3.4

44.5 0.2 -1.0 75.0 14.0 90.6 17.4 1.2 4.8 4.9 1.8 -587 -488

56.1 1.4 1.5 75.2 9.9 94.7 17.8 1.3 5.0 4.5 1.5 -547 -488

48.5 1.4 3.4 76.0 61.0 97.8 18.0 1.4 5.0 4.2 1.3 -470 -430

52.6 1.7 3.2 76.6 81.9 101.3 18.7 1.6 5.3 3.9 1.5 -539 -510

Financial Markets, NSA 0.11 0.09 0.1 0.06 0.03 0.1 0.13 0.12 0.3 1.17 1.64 1.5 2.35 2.54 2.1 3.45 3.34 2.8 3.98 4.17 3.9 1643 1931 2061 19.0 17.7 6.9 0.977 1.010 1.2 3.3 3.4 16.2

0.4 0.3 0.6 1.3 1.8 2.6 3.6 2105 2.2 1.2 -0.4

1.2 1.1 1.4 2.0 2.4 3.1 4.2 2387 13.5 1.2 0.5

1.7 1.6 2.0 2.6 3.0 3.5 5.0 2558 7.2 1.2 3.0

2.7 2.6 3.0 3.4 3.7 4.1 5.8 2674 4.6 1.2 -1.5

Incomes 14810 15459 5.2 4.4 13023 13520 5.1 3.8 11931 12343 3.5 3.5 5.6 5.8 1730 1584 2.5 -8.3

15975 3.3 14011 3.6 12646 2.5 5.7 1640 4.1

16755 4.9 14651 4.6 12949 2.4 5.2 1790 9.2

17695 5.6 15424 5.3 13392 3.4 5.7 1997 11.5

18760 6.0 16318 5.8 13900 3.8 6.0 2095 5.0

14074 1.2 12396 0.0 11528 -1.4 5.0 1688 0.3

Institute for Economic Competitiveness

23

U . S . F orecast T ables Table 2. Real Gross Domestic Product

Table 2. Real Gross Domestic Product History 2009

2010

2011

2012

Forecast 2013

2014

2015

2016

2017

2018

2019

Real GDP Billions 2009 $ Gross Domestic Product Final Sales of Domestic Product Total Consumption

14418.8 14783.8 15020.6 15354.6 15612.2 15982.3 16397.2

16657.8 17116.1 17587.6 18108.2

14566.3 14722.2 14979.0 15292.3 15521.1 15912.9 16300.6

16633.3 17089.9 17509.6 18009.0

9847.0 10036.3 10263.5 10413.2 10565.4 10868.9 11214.7

11511.2 11842.0 12183.1 12600.2

Durables

1023.3

1085.7

1151.5

1236.2

1312.7

1401.1

1498.1

1577.5

1678.3

1775.1

1922.6

Nondurables

2175.1

2223.5

2263.2

2277.5

2316.1

2376.4

2439.3

2497.6

2553.9

2609.3

2686.1

Services

6648.5

6727.6

6851.4

6908.1

6951.3

7114.2

7310.3

7478.4

7666.1

7868.9

8089.7

1633.5

1673.8

1802.3

1964.2

2032.9

2155.6

2200.2

2197.7

2326.3

2449.3

2582.0

644.3

746.7

847.9

939.2

982.3

1035.7

1072.5

1049.4

1104.4

1172.4

1257.8

256.1

281.4

285.9

303.1

317.7

326.0

338.7

347.7

368.8

399.0

430.5

Computers & Peripherals

76.8

84.7

83.0

88.5

88.5

89.2

88.8

89.3

95.2

103.1

110.2

Communications Equipment

79.4

90.2

91.8

96.3

106.2

110.3

118.2

120.1

127.4

137.5

146.7

152.1

151.3

183.3

199.8

196.7

203.5

207.3

214.0

224.5

238.6

263.0

70.6

127.5

173.9

213.1

240.6

271.8

308.1

298.2

321.2

342.0

364.6

17.7

22.1

27.9

29.2

31.7

35.3

42.0

34.8

44.0

46.5

49.5

30.8

36.2

48.1

58.1

61.3

70.8

71.9

57.2

59.4

67.5

74.9

438.2

366.3

374.7

423.1

428.8

472.9

452.1

438.0

471.8

492.5

506.2

126.7

95.2

94.7

102.8

106.4

120.1

132.3

151.9

164.1

177.8

190.5

Manufacturing

56.3

40.8

39.1

44.9

46.7

52.8

69.1

65.6

63.2

64.1

60.0

Power & Communication

95.8

80.4

74.1

89.7

85.7

98.6

86.2

89.8

88.8

87.2

86.3

Mining & Petroleum

75.0

87.8

110.9

123.8

126.0

133.0

91.4

50.6

74.0

79.8

83.6

Other

84.5

62.0

56.2

61.5

64.1

68.7

75.9

81.5

85.7

88.5

91.4

392.3

382.4

384.5

436.5

488.3

505.4

564.5

588.2

612.2

655.2

700.8

Exports

1587.7

1776.6

1898.3

1963.2

2031.5

2118.3

2120.6

2130.6

2226.0

2331.9

2432.7

Imports

1983.2

2235.4

2357.7

2410.2

2436.4

2544.0

2660.5

2680.3

2821.6

3054.7

3307.4

Federal Government

1217.7

1270.7

1236.4

1213.5

1142.8

1113.8

1113.9

1121.6

1125.6

1131.0

1136.1

State & Local Government

1871.4

1820.8

1761.0

1728.1

1714.1

1718.1

1768.2

1785.1

1799.8

1817.8

1844.9

Nonresidential Fixed Investment Equipment & Software Information Processing Equipment

Industrial Equipment Transportation Equipment Aircraft Other Equipment Structures Commercial & Health

Residential Fixed Investment

24

U.S. Forecast | November 2016

U . S . F orecast T ables Table 3. Quarterly Summary of the Forecast of the U.S.

Table 3. Quarterly Summary of the Forecast of the U.S.

Gross Domestic Product Final Sales of Domestic Product Total Consumption Durables Nondurables Services Nonresidential Fixed Investment Equipment & Software Information Processing Equipment Computers & Peripherals Communications Equipment Industrial Equipment Transportation Equipment Aircraft Other Equipment Structures Commercial & Health Care Manufacturing Power & Communication Mining & Petroleum Other Residential Fixed Investment Exports Imports Federal Government State & Local Government

Real GDP Nominal GDP

GDP Deflator Consumer Prices Excl. Food & Energy Producer Prices, Finished Goods Employment Cost Index - Total Comp.

2016Q1

2016Q2

2016Q3

2016Q4

2017Q1

0.8 1.3 1.6 -0.6 2.1 1.9 -3.4 -9.5 -3.0 4.7 -7.2 -3.8 -11.5 -43.5 -24.6 0.1 22.6 -10.7 0.6 -32.7 4.2 7.8 -0.7 -0.6 -1.5 3.5

1.4 2.6 4.3 9.8 5.7 3.0 1.0 -2.9 -4.9 11.5 -28.3 9.4 -4.8 64.5 -30.8 -2.1 12.6 -8.5 6.8 -57.4 22.1 -7.8 1.8 0.2 -0.4 -2.5

2.9 2.3 2.1 9.5 -1.4 2.1 1.1 -2.7 10.2 0.9 32.3 1.1 -11.7 -39.7 -27.9 5.4 25.8 8.1 -1.9 -31.5 2.0 -6.2 10.0 2.3 2.5 -0.7

2.9 3.2 3.6 7.9 3.4 3.0 8.2 11.1 5.8 10.2 -0.8 5.5 25.3 102.7 10.9 5.9 2.5 -5.4 -2.6 60.0 9.3 3.3 -2.9 1.9 0.2 2.2

3.0 3.0 2.7 4.0 2.7 2.5 7.4 6.7 6.5 5.5 7.6 5.2 10.3 43.1 18.2 11.2 4.7 -7.6 -1.2 134.2 4.3 7.1 7.1 7.2 0.6 1.4

2017Q2

2017Q3

2017Q4

2018Q1

2018Q2

2018Q4

Composition of Real GDP, Percent Change, Annual Rate 2.8 2.8 2.5 2.7 2.6 3.2 2.6 2.5 2.2 2.3 2.3 3.0 2.6 2.8 2.5 2.8 2.9 3.4 5.4 6.5 4.9 3.8 5.7 8.7 2.0 2.3 1.6 2.4 2.2 2.2 2.3 2.4 2.3 2.8 2.7 3.0 6.8 5.5 5.1 5.2 5.2 4.8 6.1 4.7 5.6 6.3 6.3 7.0 5.6 7.0 7.8 9.3 8.1 9.0 5.7 7.6 7.1 13.2 4.3 9.0 7.8 7.5 8.2 8.1 8.3 7.2 3.9 5.6 6.6 5.6 5.9 7.3 10.3 3.8 5.6 7.0 6.9 6.3 26.9 1.5 3.5 3.7 5.3 6.3 12.6 11.6 10.9 16.3 14.0 14.4 10.8 7.9 4.8 3.6 3.9 1.1 6.6 7.5 7.3 10.2 9.6 6.6 -7.4 0.3 2.8 6.0 4.9 -2.8 -1.9 0.3 -3.1 -3.5 -0.7 -1.7 100.3 37.6 15.6 -5.3 -2.2 -7.0 2.1 2.2 2.3 5.1 2.9 3.7 8.6 7.9 7.8 5.9 5.4 8.7 5.5 5.1 4.4 4.4 5.1 4.8 7.6 7.4 8.1 8.3 9.7 8.2 -0.3 -0.7 0.5 0.6 0.9 1.3 0.6 1.1 1.0 1.0 0.7 1.4

3.3 3.2 3.6 9.1 2.6 3.0 5.5 7.9 8.7 7.3 7.3 10.3 7.6 6.5 13.9 1.7 7.4 -8.4 0.7 -2.0 2.7 7.5 4.4 7.1 0.3 1.6

2019Q1

2019Q2

2019Q3

2019Q4

3.2 3.1 3.9 9.6 3.6 3.0 6.2 8.6 8.9 9.4 6.7 12.3 8.4 7.2 13.0 3.2 5.7 -7.4 -2.8 12.7 4.7 7.0 4.2 9.4 0.4 1.6

2.6 2.6 3.2 7.6 3.0 2.5 5.6 7.1 6.6 5.0 6.2 11.6 6.7 6.7 8.3 3.7 7.4 -5.1 -1.9 12.5 1.7 6.3 3.7 8.6 0.3 1.8

2.7 2.7 3.2 7.5 3.0 2.5 4.8 5.8 6.2 4.6 5.8 10.1 3.3 6.5 6.2 3.6 8.4 -7.8 0.5 6.1 3.2 7.1 4.3 7.3 0.2 1.5

2.4 2.5 3.0 6.6 2.8 2.5 4.2 5.4 6.1 4.9 6.2 8.2 3.4 5.8 3.8 1.9 7.9 -15.4 1.1 1.0 3.7 5.3 4.6 6.9 0.1 0.7

Billions of Dollars 16525.0 16583.1 16702.1 16820.8 16943.6 17060.4 17177.1 17283.2 17398.1 17510.2 17649.8 17792.3 17934.6 18050.1 18170.4 18277.8 18281.6 18450.1 18651.2 18924.2 19185.4 19447.6 19726.3 19985.5 20258.7 20529.1 20834.7 21126.7 21427.0 21685.2 21953.9 22207.3 Prices & Wages, Percent Change, Annual Rate 2.7 3.0 2.8 2.8 2.8 2.8 3.1 3.8 3.3 4.1 3.1 3.4 2.9 2.8 2.9 3.2 3.1 3.2 2.9 1.6 1.7 1.8 0.2 2.2 3.2 3.1 3.1 3.1 3.2 3.4

0.5 -0.3 2.7 -5.2 2.6

2.3 2.5 2.1 3.6 2.3

1.5 1.6 1.9 1.4 1.9

3.0 4.7 2.6 4.2 2.8

2.6 2.8 2.8 6.4 2.8

33.2 -0.6 -1.7 75.3 47.5 91.6 17.314 1.151 4.717 4.9 1.9 -668 -527

45.4 -0.2 -0.8 74.9 -6.6 92.4 17.074 1.159 4.870 4.9 1.3 -665 -480

44.9 3.1 1.8 75.0 15.4 90.3 17.457 1.138 4.780 4.9 1.7 -702 -447

54.5 1.9 -0.6 75.0 -0.2 88.3 17.774 1.161 4.866 4.8 1.6 -664 -497

56.9 1.0 0.4 75.0 -4.1 93.7 17.588 1.201 4.910 4.7 1.6 -664 -519

57.9 0.8 3.0 75.2 3.4 94.8 17.721 1.247 4.961 4.6 1.3 -643 -502

Other Key Measures 55.6 54.0 51.9 46.8 1.2 1.2 1.5 1.4 4.4 3.4 3.1 2.6 75.3 75.5 75.6 75.7 13.0 27.2 42.7 57.4 94.4 95.8 95.8 96.8 17.896 17.967 17.848 17.896 1.293 1.344 1.378 1.410 4.974 4.970 4.963 4.974 4.5 4.4 4.4 4.3 1.3 1.2 1.1 1.2 -604 -578 -639 -637 -477 -455 -456 -431

Federal Funds Rate (%) 3-Month Treasury Bill Rate (%) 1-Year Treasury Note Yield (%) 5-Year Treasury Note Yield (%) 10-Year Treasury Note Yield (%) 30-Year Treasury Note Yield (%) 30-Year Fixed Mortgage Rate (%) S&P 500 Stock Index (% change) Exchange Rate, Major Trading Partners (%change (negative = depreciation))

0.36 0.29 0.58 1.37 1.92 2.72 3.74 1948 -18.9 1.201 0.9

0.37 0.26 0.57 1.24 1.75 2.57 3.59 2075 28.7 1.153 -15.1

0.40 0.30 0.56 1.13 1.56 2.28 3.45 2161 17.7 1.162 3.2

0.59 0.49 0.83 1.45 1.96 2.68 3.59 2235 14.3 1.154 -2.7

1.01 0.89 1.19 1.76 2.23 2.91 3.93 2301 12.5 1.163 3.0

1.19 1.06 1.39 1.91 2.37 3.00 4.12 2362 10.9 1.171 2.7

Personal Income (Bil. of $) (% change) Disposable Income (Bil. of $) (% change) Real Disposable Income (Bil. of 2009 $) (% change) Saving Rate (%) After-Tax Profits (Billions of $) (% change)

15740 1.3 13807 2.4 12556 2.1 6.1 1551 40.8

15893 3.9 13948 4.1 12621 2.1 5.7 1637 24.2

16047 3.9 14073 3.6 12688 2.2 5.7 1661 6.2

16218 4.3 14215 4.1 12721 1.0 5.1 1712 12.8

16425 5.2 14394 5.1 12818 3.1 5.2 1732 4.7

16649 5.6 14565 4.8 12907 2.8 5.3 1758 6.2

Oil - WTI ($ per barrel) Productivity (% change) Industrial Production (% change) Factory Operating Rate Nonfarm Inven. Chg. (Bil. of 2009 $) Consumer Sentiment Index Light Vehicle Sales (Million units) Housing Starts (Million units) Existing House Sales (Million units) Unemployment Rate (%) Payroll Employment (% change) Federal Surplus (NIPA Bil. $) Current Account Balance (Bil. $)

2018Q3

2.4 3.0 3.1 2.0 3.4

2.5 3.2 2.9 2.5 3.3

2.2 3.2 2.8 2.1 3.4

2.3 3.0 2.7 3.0 3.4

2.3 2.9 2.6 2.6 3.4

47.5 1.9 4.1 76.2 69.3 98.7 18.096 1.452 5.010 4.2 1.5 -622 -419

48.0 1.9 3.6 76.6 74.5 100.0 18.298 1.499 5.122 4.1 1.6 -621 -416

49.8 1.9 3.5 76.8 81.6 101.3 18.6 1.5 5.2 4.0 1.6 -665 -450

51.7 1.4 2.6 76.6 83.4 101.2 18.7 1.6 5.3 3.9 1.4 -659 -491

53.5 1.6 2.7 76.5 82.5 101.5 18.7 1.6 5.3 3.9 1.4 -637 -531

55.2 1.5 2.3 76.3 80.0 101.2 18.8 1.6 5.3 3.9 1.2 -628 -567

Financial Markets, NSA 1.22 1.46 1.53 1.51 1.14 1.31 1.39 1.46 1.45 1.69 1.71 1.84 2.02 2.30 2.32 2.43 2.48 2.70 2.81 2.89 3.09 3.28 3.37 3.43 4.27 4.55 4.75 4.84 2417 2468 2506 2546 9.7 8.7 6.3 6.5 1.178 1.179 1.181 1.213 2.5 0.3 0.8 11.2

1.75 1.71 2.10 2.63 3.11 3.60 5.08 2576 4.9 1.224 3.7

2.02 1.99 2.40 2.86 3.29 3.71 5.23 2605 4.5 1.213 -3.6

2.3 2.2 2.7 3.1 3.5 3.9 5.4 2634 4.5 1.2 -3.8

2.6 2.5 2.9 3.3 3.7 4.1 5.7 2657 3.6 1.2 -3.1

2.9 2.7 3.1 3.5 3.9 4.3 5.9 2684 4.1 1.2 -2.0

3.0 2.9 3.3 3.6 3.9 4.3 6.0 2723 5.8 1.2 -2.6

Incomes 17080 17337 5.2 6.1 14910 15134 4.9 6.1 13082 13220 2.9 4.3 5.2 5.6 1863 1922 12.7 13.4

17808 5.6 15513 5.1 13444 3.2 5.7 2027 13.0

18066 5.9 15727 5.6 13566 3.7 5.7 2073 9.4

18375 7.0 15998 7.1 13732 5.0 6.0 2098 5.0

18633 5.7 16213 5.5 13848 3.4 6.0 2097 -0.2

18888 5.6 16425 5.3 13957 3.2 6.0 2097 0.0

19143 5.5 16637 5.3 14065 3.1 6.0 2089 -1.4

16865 5.3 14734 4.7 12988 2.5 5.2 1808 11.8

17569 5.5 15321 5.0 13339 3.6 5.7 1966 9.3

Institute for Economic Competitiveness

25

U . S . F orecast T ables Table 4. Quarterly Gross Domestic Product 2016Q1

Table 4. Quarterly Gross Domestic Product 2016Q2

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

2017Q4

2018Q1

2018Q2

2018Q3

2018Q4

2019Q1

2019Q2

2019Q3

2019Q4

Real GDP Billions 2009 $ Gross Domestic Product Final Sales of Domestic Product Total Consumption

16525.0 16583.1 16702.1 16820.8 16943.6 17060.4 17177.1 17283.2 17398.1 17510.2 17649.8 17792.3 17934.6 18050.1 18170.4 18277.8 16473.5 16579.5 16673.4 16806.6 16932.1 17040.4 17147.5 17239.5 17338.4 17435.8 17563.5 17700.7 17835.8 17949.5 18070.5 18180.2 11365.2 11484.9 11545.8 11648.9 11726.3 11802.0 11883.6 11956.1 12039.3 12126.6 12229.3 12337.4 12454.7 12551.9 12650.3 12743.8

Durables

1524.9 1560.9 1596.7 1627.4 1643.5 1665.4 1691.9 1712.4 1728.6 1752.7 1789.8 1829.2 1871.4 1905.9 1940.7 1972.2

Nondurables

2471.1 2505.4 2496.4 2517.5 2534.6 2547.4 2561.8 2571.8 2587.1 2601.5 2615.8 2632.8 2656.5 2676.5 2696.3 2715.2

Services

7403.9 7458.5 7497.8 7553.4 7599.4 7643.5 7688.4 7733.1 7786.2 7838.3 7896.2 7955.0 8014.8 8064.3 8115.1 8164.5

Nonresidential Fixed Investment Equipment & Software Information Processing Equipment

2179.7 2185.0 2191.2 2234.9 2275.1 2312.9 2343.8 2373.3 2403.4 2434.2 2463.2 2496.3 2534.0 2568.9 2599.0 2626.0 1052.0 1044.1 1036.9 1064.6 1082.0 1098.2 1111.0

1126.2 1143.7 1161.2 1181.0 1203.7 1228.8 1250.2 1267.8 1284.5

345.5

341.2

349.6

354.5

360.2

365.1

371.4

378.4

386.9

394.5

403.1

411.6

420.5

427.3

433.8

440.3

86.9

89.3

89.5

91.7

92.9

94.2

96.0

97.6

100.7

101.8

104.0

105.8

108.2

109.6

110.8

112.1

123.4

113.6

121.8

121.6

123.8

126.2

128.5

131.0

133.6

136.3

138.7

141.2

143.5

145.7

147.7

150.0

Industrial Equipment

209.4

214.2

214.8

217.7

220.5

222.6

225.7

229.3

232.5

235.9

240.1

246.0

253.3

260.3

266.6

272.0

Transportation Equipment

301.3

297.6

288.5

305.2

312.8

320.5

323.5

327.9

333.6

339.2

344.4

350.8

357.9

363.8

366.8

369.8

32.2

36.5

32.1

38.3

41.9

44.5

44.7

45.1

45.5

46.1

46.8

47.5

48.3

49.1

49.9

50.6

63.3

57.7

53.2

54.6

56.9

58.6

60.2

61.8

64.2

66.3

68.6

70.9

73.0

74.5

75.7

76.4

435.2

432.9

438.6

445.0

456.9

468.9

477.8

483.5

487.8

492.5

493.9

496.0

499.9

504.5

509.0

511.4

144.1

148.4

157.2

158.1

159.9

162.5

165.5

168.5

172.6

176.6

179.4

182.6

185.2

188.5

192.3

196.0

Manufacturing

66.3

64.9

66.1

65.2

63.9

62.7

62.8

63.2

64.2

64.9

64.5

63.1

61.9

61.1

59.8

57.4

Power & Communication

89.1

90.6

90.2

89.6

89.3

88.9

88.9

88.2

87.4

87.3

86.9

87.1

86.5

86.0

86.1

86.4

Mining & Petroleum

60.1

48.5

44.2

49.7

61.4

73.1

79.2

82.1

81.0

80.5

79.1

78.7

81.1

83.5

84.7

85.0

Other

77.8

81.8

82.2

84.1

85.0

85.4

85.9

86.4

87.4

88.1

88.9

89.5

90.5

90.9

91.7

92.5

600.7

588.7

579.3

584.0

594.1

606.5

618.2

629.9

639.0

647.5

661.1

673.1

684.6

695.2

707.2

716.4

Computers & Peripherals Communications Equipment

Aircraft Other Equipment Structures Commercial & Health

Residential Fixed Investment Exports

2102.0 2111.3 2162.4 2146.8 2183.8 2213.4 2241.2 2265.6 2290.2 2319.0 2346.4 2371.8 2396.6 2418.4 2444.1 2471.7

Imports

2668.2 2669.7 2685.3 2697.8 2744.8 2795.3 2845.4 2901.0 2959.2 3028.4 3088.8 3142.2 3213.9 3280.8 3339.3 3395.8

Federal Government

1118.7 1117.7 1124.6 1125.3 1126.9 1125.9 1124.0 1125.5 1127.1 1129.6 1133.2 1134.0 1135.1 1135.9 1136.5 1136.8

State & Local Government

1792.6 1781.4 1778.3 1788.1 1794.2 1797.0 1801.9 1806.2 1810.6 1813.6 1819.9 1827.0 1834.3 1842.7 1849.7 1852.9

26

U.S. Forecast | November 2016

U . S . F orecast T ables Table 5. Annual Employment

Table 5. Annual Employment History 2009

2010

2011

2012

Forecast 2013

2014

2015

2016

2017

2018

2019

Millions Total Nonfarm Employment

131.300 130.353 131.941 134.173 136.381 138.939

141.83

144.33

146.49

148.33

150.54

Private Nonfarm

108.747 107.863 109.848 112.254 114.533 117.062

119.83

122.18

124.20

125.91

127.87

Mining

0.643

0.655

0.739

0.797

0.811

0.838

0.77

0.65

0.64

0.66

0.66

Construction

6.017

5.518

5.530

5.646

5.858

6.150

6.44

6.66

6.80

7.05

7.36

Manufacturing

11.848

11.529

11.727

11.927

12.019

12.184

12.32

12.30

12.43

12.48

12.64

Trade, Transportation and Utilities

24.905

24.641

25.071

25.472

25.856

26.376

26.91

27.34

27.56

27.59

27.82

Transportation & Warehousing

4.237

4.192

4.305

4.415

4.496

4.657

4.84

4.90

4.98

5.07

5.13

Financial Activities

7.838

7.695

7.696

7.783

7.886

7.976

8.12

8.29

8.39

8.40

8.45

Education & Health

19.628

19.972

20.322

20.768

21.084

21.436

22.05

22.69

23.12

23.33

23.54

Professional & Business Services

16.574

16.723

17.329

17.933

18.520

19.064

19.66

20.23

21.05

22.14

23.07

2.804

2.707

2.673

2.675

2.706

2.727

2.75

2.77

2.78

2.76

2.77

Leisure & Hospitality

13.074

13.042

13.352

13.772

14.258

14.694

15.12

15.49

15.66

15.76

15.88

Government

22.553

22.490

22.093

21.918

21.849

21.877

22.00

22.15

22.29

22.42

22.67

2.831

2.976

2.860

2.822

2.770

2.733

2.75

2.79

2.81

2.77

2.73

19.722

19.513

19.233

19.097

19.079

19.145

19.25

19.36

19.48

19.65

19.94

Information

Federal State & Local

Growth Rates Total Nonfarm Employment

-4.33

-0.71

1.22

1.69

1.65

1.87

2.08

1.76

1.50

1.25

1.49

Private Nonfarm

-5.22

-0.80

1.84

2.19

2.03

2.21

2.37

1.96

1.66

1.37

1.56

Mining

-14.61

11.68

13.57

2.22

3.02

3.84

-14.73

-12.75

5.54

-0.54

1.26

Construction

-16.57

-3.35

1.93

1.74

4.30

5.47

4.49

2.40

2.53

4.29

4.38

Manufacturing

-11.38

0.65

1.76

1.46

0.96

1.65

0.37

0.04

1.39

0.04

1.83

Trade, Transportation and Utilities

-4.83

0.76

1.97

1.46

1.85

2.01

1.77

1.49

0.24

0.45

0.77

Transportation & Warehousing

-6.16

2.14

2.33

2.63

1.95

4.66

2.58

1.13

1.64

1.62

1.13

Financial Activities

-4.32

-0.90

0.47

1.28

1.22

1.49

1.86

2.10

0.38

0.43

0.48

Education & Health

1.90

1.71

1.91

1.97

1.38

2.10

3.21

2.63

1.33

0.80

0.96

Professional & Business Services

-5.15

2.96

3.56

3.30

3.23

3.13

3.28

2.75

4.82

5.26

3.10

Information

-6.02

-2.35

-0.41

-0.15

1.95

0.26

1.14

0.52

-0.28

-0.03

0.26

Leisure & Hospitality

-2.46

1.26

2.80

3.13

3.63

2.96

3.00

1.64

0.93

0.73

0.78

Government

-0.18

-0.94

-1.38

-0.41

-0.25

0.48

0.44

0.86

0.53

0.72

1.23

2.46

4.80

-0.85

-1.05

-2.52

-0.02

0.67

1.75

-0.20

-1.57

-1.43

-0.53

-1.31

-1.46

-0.31

0.09

0.56

0.40

0.73

0.63

1.05

1.61

Federal State & Local

Institute for Economic Competitiveness

27

U . S . F orecast T ables Table 6. Quarterly Employment

Table 6. Quarterly Employment

2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4

Employment (Millions) Total Nonfarm Employment

143.5 144.0 144.6 145.2 145.8 146.3 146.7 147.2 147.6 148.0 148.6 149.2 149.8 150.3 150.8 151.2

Private Nonfarm

121.5 121.9 122.4 123.0 123.5 124.0 124.4 124.8 125.2 125.6 126.1 126.7 127.2 127.7 128.1 128.5

Mining

0.7

0.6

0.6

0.6

0.6

0.6

0.6

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

Construction

6.6

6.6

6.7

6.7

6.7

6.8

6.8

6.9

6.9

7.0

7.1

7.2

7.2

7.3

7.4

7.5

Manufacturing

12.3

12.3

12.3

12.3

12.3

12.4

12.5

12.5

12.5

12.5

12.4

12.5

12.6

12.6

12.7

12.7

Trade, Transportation and Utilities

27.2

27.3

27.4

27.5

27.6

27.6

27.6

27.5

27.5

27.6

27.6

27.7

27.7

27.8

27.9

27.9

Transportation & Warehousing

4.9

4.9

4.9

4.9

5.0

5.0

5.0

5.0

5.0

5.1

5.1

5.1

5.1

5.1

5.1

5.1

Financial Activities

8.2

8.3

8.3

8.4

8.4

8.4

8.4

8.4

8.4

8.4

8.4

8.4

8.4

8.4

8.5

8.5

Education & Health

22.5

22.6

22.8

22.9

23.0

23.1

23.1

23.2

23.3

23.3

23.4

23.4

23.5

23.5

23.6

23.6

Professional & Business Services

20.0

20.1

20.3

20.5

20.7

20.9

21.2

21.5

21.7

22.0

22.3

22.6

22.8

23.0

23.2

23.3

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

Leisure & Hospitality

15.4

15.5

15.5

15.6

15.6

15.7

15.7

15.7

15.7

15.7

15.8

15.8

15.8

15.9

15.9

15.9

Government

22.1

22.1

22.2

22.2

22.2

22.3

22.3

22.3

22.4

22.4

22.4

22.5

22.6

22.6

22.7

22.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.7

2.7

2.7

2.7

19.3

19.3

19.4

19.4

19.4

19.5

19.5

19.5

19.6

19.6

19.7

19.7

19.8

19.9

20.0

20.1

Information

Federal State & Local

Growth Rates Total Nonfarm Employment

1.85

1.26

1.73

1.62

1.64

1.33

1.28

1.19

1.06

1.18

1.53

1.63

1.63

1.40

1.35

1.15

Private Nonfarm

2.07

1.35

1.74

1.85

1.85

1.48

1.41

1.30

1.16

1.33

1.63

1.74

1.71

1.41

1.37

1.14

-22.29 -20.48

-8.78

-3.09

1.78

3.00

7.37

9.43

0.83

-1.16

-0.99

-0.84

-0.10

0.53

2.01

2.56

Mining Construction

5.66

0.54

0.58

2.66

2.28

2.35

2.25

3.13

4.13

4.14

4.49

4.14

4.45

4.44

4.55

3.81

Manufacturing

0.09

-0.92

-0.38

1.35

0.76

2.48

1.12

1.16

0.54

-0.64

-1.45

1.69

2.18

1.75

1.53

1.82

Trade, Transportation and Utilities

2.31

1.06

1.12

1.41

1.45

-0.17

0.02

-0.35

-0.19

0.46

0.79

0.71

1.23

0.85

0.85

0.13

-0.31

1.38

1.72

1.75

2.30

1.51

1.39

1.38

1.75

2.38

1.15

1.20

1.46

1.29

1.03

0.74

Financial Activities

1.89

2.42

2.29

1.80

1.62

0.25

-0.07

-0.26

0.00

0.46

0.73

0.55

0.77

0.67

0.28

0.21

Education & Health

2.71

2.72

2.54

2.54

1.98

1.12

1.07

1.15

0.85

0.73

1.06

0.58

1.03

0.82

0.99

1.01

Professional & Business Services

1.77

2.56

3.45

3.22

3.61

4.89

5.79

5.00

4.77

4.88

5.87

5.54

4.62

2.86

2.60

2.33

Information

1.55

-0.67

1.21

-0.02

2.65

-1.46

-2.62

0.34

0.14

-1.56

0.79

0.51

-0.44

0.42

0.37

0.69

Leisure & Hospitality

2.73

1.54

2.12

0.19

0.94

1.57

0.75

0.45

-0.09

1.16

0.88

0.96

0.06

1.14

1.03

0.89

Government

0.64

0.75

1.67

0.37

0.46

0.52

0.55

0.58

0.53

0.36

0.95

1.03

1.13

1.36

1.24

1.20

Federal

1.02

1.84

2.57

1.58

0.55

0.41

-0.60

-1.13

-1.70

-1.60

-1.44

-1.54

-1.37

-1.48

-1.46

-1.42

State & Local

0.58

0.59

1.54

0.20

0.44

0.54

0.72

0.82

0.85

0.65

1.30

1.39

1.49

1.76

1.62

1.56

Transportation & Warehousing

28

U.S. Forecast | November 2016

U . S . F orecast T ables Table 7. Quarterly Implicit Price Deflators (2009=100)

Table 7. Quarterly Implicit Price Deflators (2009=100)

2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4

GDP

110.6 111.3 111.7 112.5 113.2 114.0 114.8 115.6 116.4 117.2 118.0 118.7 119.5 120.1 120.8 121.5

Consumption

110.0 110.5 110.9 111.8 112.3 112.8 113.4 114.0 114.5 114.9 115.4 115.9 116.5 117.1 117.7 118.3

Durables Motor Vehicles Furniture

89.6

89.0

88.1

87.7

87.4

87.2

86.9

86.7

86.5

86.2

85.8

85.5

85.2

84.9

84.6

84.4

110.6 109.9 109.4 109.6 109.9 110.2 110.6 111.1 111.7 112.0 112.3 112.6 112.9 113.1 113.4 113.6 85.7

85.1

83.9

83.4

83.2

83.1

82.8

82.6

82.4

82.1

81.9

81.6

81.3

81.0

80.7

80.4

Other Durables

100.6 101.7 100.8 100.7 100.8 101.0 101.1 101.2 101.4 101.4 101.4 101.5 101.5 101.6 101.6 101.7

Nondurables

106.9 107.6 107.8 109.7 109.9 110.2 110.8 111.1 111.4 111.3 111.8 112.3 113.0 113.7 114.3 115.1

Food

110.7 110.2 109.6 109.5 110.2 110.8 111.4 112.0 112.6 113.1 113.7 114.2 114.8 115.4 116.1 116.7

Clothing & Shoes

104.5 104.3 104.2 104.0 104.0 104.0 103.8 103.7 103.7 103.3 103.1 102.9 102.6 102.5 102.4 102.3

Gasoline & Oil

87.5

93.5

93.0 107.0 104.9 103.3 104.9 103.5 101.6

96.7

97.7

Fuel

82.4

87.7

89.4

98.3

99.5 100.6 102.8 105.0 107.2 109.4

99.1 101.2 103.1 102.3 102.0 101.3

98.5 100.5 102.7 104.7 106.9

Services

114.7 115.4 116.1 116.9 117.7 118.5 119.3 120.1 120.8 121.5 122.2 123.0 123.7 124.4 125.2 126.0

Housing

114.3 115.4 116.4 117.5 118.6 119.7 120.7 121.7 122.5 123.4 124.2 124.9 125.7 126.4 127.2 127.9

Electricity

106.9 106.5 107.2 108.8 109.6 111.3 112.7 113.5 114.1 114.7 115.4 116.1 116.6 117.1 117.6 118.4

Natural Gas Water & Sewer Telephone

79.6

80.8

84.9

86.7

95.0

94.7

91.4

90.3

90.7

88.8

86.7

85.3

85.3

83.9

85.2

85.1

136.7 138.5 139.0 140.5 141.6 142.7 143.9 145.3 146.6 148.1 149.6 151.1 152.6 154.2 155.8 157.3 94.6

94.2

93.4

92.8

92.7

92.7

92.6

92.6

92.6

92.6

92.5

92.4

92.4

92.4

92.4

92.5

Transportation

111.1 111.4 111.6 111.7 112.5 113.1 113.7 114.5 115.1 115.7 116.4 117.1 117.8 118.5 119.2 119.9

Other Services

117.8 118.3 119.0 119.5 120.0 120.7 121.5 122.3 123.2 124.1 124.9 125.8 126.7 127.7 128.6 129.6

Institute for Economic Competitiveness

29

U . S . F orecast T ables Table 8. Percent Change in Implicit Price Deflators

Table 8. Percent Change in Implicit Price Deflators

2016Q1 2016Q2

2016Q3

2016Q4

2017Q1 2017Q2

2017Q3

2017Q4

2018Q1 2018Q2

2018Q3

2018Q4

2019Q1 2019Q2

2019Q3

2019Q4

GDP

0.5

2.3

1.5

3.0

2.6

2.7

3.0

2.8

2.8

2.8

2.8

2.4

2.5

2.2

2.3

2.3

Consumption

0.3

2.0

1.4

3.0

1.9

2.0

2.1

1.9

1.8

1.4

1.9

1.9

2.0

2.0

2.1

2.1

-0.9

-2.5

-4.1

-1.9

-1.2

-1.2

-1.1

-1.0

-0.9

-1.5

-1.5

-1.4

-1.5

-1.4

-1.4

-1.3

0.3

-2.6

-1.9

0.6

1.2

1.1

1.6

1.9

1.9

1.2

1.0

1.2

1.0

1.0

0.9

0.9

-1.0

-2.4

-5.7

-2.5

-0.7

-0.9

-1.0

-1.1

-1.1

-1.3

-1.3

-1.4

-1.4

-1.4

-1.4

-1.3

7.8

4.6

-3.5

-0.3

0.5

0.5

0.3

0.5

0.8

0.0

0.0

0.4

0.3

0.1

0.3

0.4

Nondurables

-5.6

2.5

0.8

7.2

0.8

1.0

2.2

1.1

1.1

-0.5

1.9

1.9

2.3

2.5

2.4

2.5

Food

-1.7

-1.8

-2.1

-0.4

2.5

2.1

2.2

2.1

2.2

2.0

2.0

1.9

2.0

2.3

2.3

2.1

3.1

-0.7

-0.3

-0.6

0.0

-0.3

-0.5

-0.4

-0.1

-1.3

-1.1

-0.7

-1.0

-0.6

-0.6

-0.3

Gasoline & Oil

-46.1

30.3

-2.1

75.0

-7.7

-5.9

6.6

-5.2

-7.3 -17.8

4.1

3.2

8.4

8.9

8.1

8.7

Fuel

-39.0

28.0

8.0

51.1

8.6

7.7

-2.9

-1.2

-2.9 -11.2

4.8

4.8

8.7

9.0

8.5

8.7

Services

2.4

2.6

2.6

2.6

2.8

2.8

2.6

2.6

2.4

2.4

2.4

2.4

2.5

2.4

2.5

2.5

Housing

3.0

3.6

3.7

3.8

3.7

3.7

3.5

3.2

2.9

2.8

2.6

2.5

2.4

2.4

2.4

2.4

Electricity

-3.4

-1.7

2.6

6.1

3.3

6.4

5.0

2.9

2.0

2.2

2.4

2.3

1.9

1.5

1.9

2.6

Natural Gas

-8.0

6.1

21.9

8.7

43.8

-1.2 -13.0

-5.0

1.8

-7.9

-9.1

-6.3

-0.2

-6.5

6.6

-0.8

3.2

5.5

1.4

4.4

3.1

3.3

3.5

3.8

3.8

4.0

4.1

4.1

4.2

4.2

4.1

4.0

-1.4

-2.0

-3.2

-2.6

-0.6

0.1

-0.4

0.1

0.1

-0.2

-0.3

-0.3

-0.1

0.1

0.0

0.1

Transportation

3.4

1.2

0.6

0.2

2.9

2.4

2.2

2.6

2.3

2.1

2.5

2.4

2.5

2.4

2.4

2.3

Other Services

1.9

2.0

2.1

1.8

1.7

2.4

2.5

2.9

2.8

2.8

2.8

2.9

3.0

3.0

3.0

3.1

Durables Motor Vehicles Furniture Other Durables

Clothing & Shoes

Water & Sewer Telephone

30

U.S. Forecast | November 2016

U . S . F orecast T ables

Table 9. Annual Implicit Price Deflators (2000=100) Table 9. Annual Implicit Price Deflators (2009=100)

2009

2010

History 2011 2012 2013

2014

2015

2016

Forecast 2017 2018

2019

GDP

100.0 101.2 103.3 105.2 106.9 108.8 110.0

111.5 114.4 117.6 120.5

Consumption

100.0 101.7 104.1 106.1 107.5 109.2 109.5

110.8 113.1 115.2 117.4

Durables

100.0

Motor Vehicles

100.0 105.7 108.9 110.2 110.8 110.8 110.8

Furniture

100.0

88.9

86.8

Other Durables

100.0 100.4 103.6 104.2 104.0 102.3

99.8

100.9 101.0 101.4 101.6

Nondurables

100.0 103.1 109.2 111.8 111.9 112.6 108.9

108.0 110.5 111.7 114.0

Food

100.0 100.3 104.3 106.7 107.8 109.8 111.0

110.0 111.1 113.4 115.7

Clothing & Shoes

100.0

104.2 103.9 103.2 102.4

Gasoline & Oil

100.0 118.2 149.3 154.7 149.7 144.0 106.2

95.3 104.2

98.6 103.7

Fuel

100.0 117.0 148.8 150.7 148.9 148.3 105.5

89.7 102.2

99.9 106.1

Services

100.0 101.7 103.5 105.8 108.3 110.9 113.1

115.8 118.9 121.9 124.8

Housing

100.0 100.1 101.4 103.5 106.0 108.8 112.1

115.9 120.2 123.8 126.8

Electricity

100.0 100.2 101.8 101.8 104.0 107.8 108.4

107.3 111.8 115.1 117.4

Natural Gas

100.1

Water & Sewer

100.0 106.3 111.8 118.0 123.3 127.9 133.6

Telephone

100.0

Transportation

100.0 102.0 104.8 106.8 108.3 109.6 110.1

111.4 113.4 116.1 118.9

Other Services

100.0 103.0 105.6 108.3 111.2 113.9 116.3

118.6 121.1 124.5 128.1

98.6 95.8

97.7 94.2

96.4 94.0

94.6 92.1

92.4

90.5

99.3 101.1 104.6 105.4 105.8 104.4

98.1 99.3

95.1 97.5

85.7 97.7

90.1 97.1

96.4 96.3

85.0 94.1

88.6

87.1

86.0

84.8

109.9 110.5 112.1 113.3 84.5

83.0

82.9

92.8

82.0

87.9

80.9

84.9

138.7 143.4 148.9 155.0 93.8

92.6

92.5

Institute for Economic Competitiveness

92.4

31

U . S . F orecast T ables

Table 10. Percent Change in Implicit Price Deflators

Table 10. Percent Change in Implicit Price Deflators

History 2011 2012 2013

2009

2010

GDP

0.4

1.8

1.9

1.9

Consumption

1.2

1.3

2.7

-0.9

-2.1

5.6

Forecast 2017 2018

2014

2015

2016

1.6

1.5

1.1

1.8

2.8

2.7

2.3

1.8

1.2

1.2

0.4

1.7

2.0

1.7

2.0

-0.5

-1.6

-2.1

-2.4

-1.8

-2.3

-1.1

-1.3

-1.4

2.9

3.3

0.7

0.4

-0.3

-0.1

-0.9

1.4

1.3

0.9

-2.0

-4.4

-0.2

-0.4

-3.0

-3.1

-2.3

-2.9

-0.9

-1.3

-1.4

Other Durables

1.3

0.6

3.2

-0.5

-0.6

-1.9

-2.7

2.1

0.4

0.3

0.3

Nondurables

2.8

2.2

5.9

1.9

-0.5

-0.2

-2.9

1.2

1.3

1.1

2.4

-1.8

1.3

5.1

1.2

0.7

2.7

0.3

-1.5

2.2

2.0

2.2

1.5

-1.4

4.4

2.3

0.1

-0.3

-1.4

0.4

-0.3

-0.8

-0.6

Gasoline & Oil

26.8

13.4

20.4

4.9

-4.5

-10.5

-16.1

14.3

-3.1

-4.5

8.5

Fuel

-0.8

15.7

26.2

3.1

-1.2

-7.8

-29.2

12.0

3.0

-1.1

8.7

Services

1.1

1.5

2.1

2.3

2.3

2.3

2.0

2.5

2.7

2.4

2.5

Housing

0.9

0.3

1.9

2.2

2.4

2.8

3.3

3.5

3.5

2.7

2.4

-0.4

0.5

2.4

-0.6

3.2

3.1

-0.6

0.9

4.4

2.2

2.0

-18.3

-1.2

-1.6

-4.1

2.4

6.4

-12.4

7.2

6.1

-5.4

-0.2

Water & Sewer

6.0

5.7

4.9

6.0

3.8

4.3

4.1

3.6

3.4

4.0

4.1

Telephone

0.6

-1.1

-1.5

0.1

-0.5

-2.2

0.2

-2.3

-0.2

-0.2

0.0

Transportation

2.2

1.5

3.1

1.3

1.7

1.0

0.1

1.4

2.5

2.3

2.4

Other Services

2.4

2.7

2.8

2.2

2.9

2.3

2.0

2.0

2.4

2.8

3.0

Durables Motor Vehicles Furniture

Food Clothing & Shoes

Electricity Natural Gas

32

U.S. Forecast | November 2016

2019

U . S . F orecast T ables Table 11. Personal Income and its Components Table 11. Personal

2009

2010

Income and its Components

History 2011 2012

2013

2014

2015

2016

Forecast 2017 2018

2019

Personal Income Billions Current Dollars Personal Income

12094.8 12477.1 13254.5 13915.1 14073.7 14809.8 15458.5

15974.6 16754.9 17694.8 18759.8

Wages & Salaries

7787.0

7961.5

8269.0

8609.9

8842.5

9253.5

9693.1

Other Labor Income

1077.5

1114.6

1142.0

1165.3

1199.0

1229.8

1270.5

1325.7

1374.9

1412.5

1463.9

937.6

986.7

1068.1

1179.8

1197.0

1269.2

1336.8

1384.9

1465.2

1563.4

1655.0

35.5

46.0

75.6

61.6

87.8

68.5

40.0

28.9

26.6

30.0

28.2

Rental Income

333.7

402.8

485.3

525.3

567.1

606.1

659.6

704.8

736.1

748.1

749.2

Dividends

553.8

544.6

682.3

835.0

794.5

926.1

951.1

949.1

975.5

1039.1

1126.0

Interest Income

1264.3

1195.1

1231.6

1288.8

1261.6

1300.9

1302.8

1312.8

1381.1

1492.0

1662.6

Transfer Payments

2147.5

2324.7

2360.5

2366.4

2428.0

2540.4

2678.7

2775.8

2879.7

3048.9

3229.3

506.3

514.7

423.9

437.2

577.8

607.6

635.7

661.8

696.9

738.9

781.0

3.3

4.9

5.6

6.0

Nonfarm Income Farm Income

Personal Social Insurance Tax

10064.8 10603.7 11165.6 11780.9

Percent Change, Annual Rate Personal Income

-3.2

Wages & Salaries

-3.6 0.2 -4.2 -21.8

Other Labor Income Nonfarm Income Farm Income Rental Income

3.2

6.2

5.0

1.2

5.2

4.4

2.2

3.9

4.1

2.7

4.6

4.7

3.8

5.4

5.3

5.5

3.4

2.5

2.0

2.9

2.6

3.3

4.3

3.7

2.7

3.6

5.3

8.2

10.5

1.5

6.0

5.3

3.6

5.8

6.7

5.9

30.4

66.2

-18.5

43.2

-21.4

-41.0

-27.4

-6.6

13.1

-5.6

18.4

20.1

20.8

4.4

8.9

7.2

8.7

6.1

3.6

0.5

0.4

-33.4

23.8

23.5

46.4

-8.2

17.4

-1.9

1.7

3.5

8.0

8.2

Interest Income

-9.2

-1.8

3.3

5.1

-2.7

3.4

-0.2

2.7

6.6

9.4

12.1

Transfer Payments

14.4

7.5

0.4

1.2

2.5

5.8

4.5

3.8

4.2

5.8

5.9

Personal Social Insurance Tax

-1.8

2.4

-13.5

5.2

43.9

5.6

4.7

4.0

5.8

5.8

5.6

Dividends

Institute for Economic Competitiveness

33

U . S . F orecast T ables Table 12. Personal Consumption Expenditures (Current Dollars)

Table 12. Personal Consumption Expenditures (Current Dollars)

2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4

Consumer Expenditures by Type Billions Current Dollars

Consumer spending on… all goods & services

12498.0 12692.7 12806.0 13017.7 13167.6 13318.2 13481.7 13626.8 13781.8 13928.4 14111.8 14303.2 14510.5 14696.0 14886.9 15074.7

durable goods

1366.6 1390.0 1407.2 1427.4 1437.2 1451.8 1470.6 1484.8 1495.3 1510.4 1536.5 1564.8 1595.0 1618.7 1642.5 1663.6

furniture and appliances

312.5

317.6

316.7

318.4

319.9

321.0

322.3

324.1

326.0

328.6

332.1

336.4

341.2

346.1

351.1

355.8

information processing equipment

111.5

114.5

115.8

117.1

118.1

119.1

119.8

120.7

121.7

122.9

124.6

126.5

128.2

130.0

131.6

133.3

motor vehicles and parts

455.7

462.5

478.0

489.2

492.0

501.3

516.2

525.6

530.3

539.6

554.7

570.0

585.8

596.0

606.0

613.2

other durable goods

143.6

146.7

146.4

148.5

150.5

152.8

153.5

154.5

155.6

156.1

157.2

158.4

159.8

161.0

162.2

163.6

nondurables clothing & shoes fuel oil & coal gasoline & motor oil food other nondurable goods

2642.0 2695.4 2691.3 2761.7 2786.0 2807.0 2838.6 2857.7 2882.4 2895.0 2924.5 2957.2 3001.0 3042.2 3083.2 3124.0 381.7

385.5

384.6

389.4

393.6

394.8

395.6

396.4

398.7

401.1

401.0

403.0

407.8

411.8

415.1

16.9

19.4

17.8

20.1

21.2

21.6

21.4

21.3

21.0

20.3

20.5

20.7

21.1

21.6

22.0

22.4

237.5

252.0

250.3

290.9

287.1

284.8

290.8

287.7

284.3

274.1

279.7

284.9

294.1

303.3

311.2

318.9

959.7

965.7

972.5

979.5

986.6

994.8 1003.5 1012.3

904.3

916.5

915.4

920.8

930.2

939.1

946.7

953.0

1101.7

1121.9

1123.3

1140.5

1153.9

1166.8

1184.1

1199.4

418.2

1218.7 1233.9 1250.7 1269.0 1291.4 1310.7 1331.4 1352.1

Consumer Expenditures by Type Billions 2005 Dollars Consumer spending on… all goods & services

11365.2 11484.9 11545.8 11648.9 11726.3 11802.0 11883.6 11956.1 12039.3 12126.6 12229.3 12337.4 12454.7 12551.9 12650.3 12743.8

durable goods

1524.9 1560.9 1596.7 1627.4 1643.5 1665.4 1691.9 1712.4 1728.6 1752.7 1789.8 1829.2 1871.4 1905.9 1940.7 1972.2

furniture and appliances

364.7

372.9

377.4

381.8

384.4

386.5

389.0

392.2

395.7

400.1

405.7

412.3

419.7

427.3

435.0

442.2

information processing equipment

179.0

187.9

192.5

196.7

201.4

206.2

210.7

216.1

221.7

228.1

236.3

245.1

253.5

261.9

270.1

278.4

motor vehicles and parts

411.8

420.8

436.9

446.6

447.8

454.9

466.6

473.0

475.0

481.9

494.1

506.3

519.0

526.8

534.5

539.6

other durable goods

143.8

144.8

146.3

148.5

150.4

152.6

153.5

154.5

155.3

156.0

157.4

158.7

160.3

161.7

163.1

164.5

nondurables clothing & shoes fuel oil & coal gasoline & motor oil food other nondurable goods

2471.1 2505.4 2496.4 2517.5 2534.6 2547.4 2561.8 2571.8 2587.1 2601.5 2615.8 2632.8 2656.5 2676.5 2696.3 2715.2 365.4

369.7

369.1

374.3

378.3

379.7

381.1

382.1

384.5

388.1

389.1

391.7

397.3

401.7

405.5

20.5

22.2

19.9

20.3

20.9

21.0

21.0

20.9

20.7

20.6

20.6

20.6

20.6

20.6

20.5

408.9 20.5

271.3

269.5

269.1

271.9

273.8

275.8

277.1

277.8

279.8

283.3

286.3

289.3

292.7

295.5

297.3

298.4

816.8

831.6

835.1

840.8

844.2

847.8

849.9

851.2

852.6

853.8

855.6

857.7

859.6

861.9

864.6

867.6

1008.3 1023.0 1013.6 1020.8 1028.2 1034.0 1043.5 1050.4 1060.2 1066.8 1075.3 1084.8 1097.9 1108.7

1120.3

1131.6

Real Consumer Expenditures Annual Growth Rate Consumer spending on… all goods & services durable goods furniture and appliances

1.6

4.2

2.1

3.6

2.7

2.6

2.8

2.4

2.8

2.9

3.4

3.5

3.8

3.1

3.1

3.0

-0.6

9.5

9.2

7.7

4.0

5.3

6.4

4.9

3.8

5.6

8.5

8.8

9.2

7.4

7.3

6.5

4.8

8.9

4.8

4.7

2.6

2.2

2.6

3.3

3.5

4.5

5.6

6.5

7.1

7.3

7.2

6.6

information processing equipment

17.9

20.0

9.7

8.8

9.6

9.4

8.8

10.3

10.3

11.6

14.3

14.9

13.8

13.3

12.4

12.4

motor vehicles and parts

-8.8

8.7

15.3

8.8

1.1

6.4

10.3

5.4

1.7

5.8

10.1

9.9

10.1

6.0

5.8

3.9

other durable goods

-8.0

2.9

4.1

5.9

5.2

5.9

2.1

2.6

2.2

1.9

3.4

3.4

3.9

3.4

3.5

3.6

2.1

5.6

-1.4

3.4

2.7

2.0

2.3

1.6

2.4

2.2

2.2

2.6

3.6

3.0

3.0

2.8

clothing & shoes

-0.7

4.7

-0.7

5.6

4.3

1.5

1.4

1.1

2.5

3.7

1.0

2.7

5.8

4.4

3.8

3.3

fuel oil & coal

nondurables

25.5

32.6

-41.3

6.8

13.5

0.8

-0.5

-1.7

-3.1

-1.4

-1.2

0.0

-0.1

-0.2

-0.5

-1.0

gasoline & motor oil

4.4

-2.6

-0.7

4.2

2.8

2.9

2.0

1.0

2.8

5.1

4.2

4.2

4.7

3.8

2.5

1.5

food

3.2

7.5

1.7

2.8

1.6

1.7

1.0

0.6

0.6

0.6

0.9

1.0

0.9

1.1

1.3

1.4

other nondurable goods

1.3

6.0

-3.6

2.9

2.9

2.3

3.7

2.7

3.8

2.5

3.2

3.6

4.9

4.0

4.2

4.1

34

U.S. Forecast | November 2016

U . S . F orecast T ables Table 13. Personal Consumption Expenditures

Table 13. Personal Consumption Expenditures (2005 Dollars) History 2009

2010

2011

2012

Forecast 2013

2014

2015

2016

2017

2018

2019

Consumer Expenditures by Type Billions Current Dollars Consumer spending on… all goods & services

9847.0 10202.2 10689.3 11050.6 11361.2 11863.4 12283.7

durable goods

1023.3

1070.7

1125.3

1191.9

1241.7

1294.8

1355.2

1397.8

1461.1

1526.7

1629.9

244.3

250.4

260.7

271.4

281.6

292.1

305.1

316.3

321.8

330.8

348.6

81.2

90.3

91.9

98.6

101.7

104.5

109.2

114.7

119.5

123.9

130.8

motor vehicles and parts

317.1

342.0

363.5

395.8

416.1

442.8

464.8

471.4

508.8

548.7

600.2

other durable goods

105.5

110.0

121.4

127.3

133.1

136.2

141.2

146.3

152.8

156.8

161.7

2175.1

2292.1

2471.1

2547.2

2592.8

2675.7

2656.9

2697.6

2822.3

2914.8

3062.6

306.5

320.6

338.9

354.3

363.6

370.8

379.5

385.3

395.1

401.0

413.2

furniture and appliances information processing equipment

nondurables clothing & shoes fuel oil & coal

12753.6 13398.6 14031.3 14792.1

24.3

26.2

29.2

26.4

26.6

27.8

20.7

18.6

21.4

20.6

21.8

gasoline & motor oil

260.2

307.3

380.4

390.5

385.6

371.2

283.0

257.7

287.6

280.7

306.9

food

770.0

788.9

829.1

848.8

857.5

891.4

900.7

914.3

942.2

969.4

999.3

other nondurable goods

814.2

849.2

893.5

927.3

959.5

1014.6

1073.0

1121.8

1176.0

1243.1

1321.4

Consumer Expenditures by Type Billions 2005 Dollars Consumer spending on… all goods & services

9847.0 10036.3 10263.5 10413.2 10565.4 10868.9 11214.7

durable goods

1023.3

1085.7

1151.5

1236.2

1312.7

1401.1

1498.1

1577.5

1678.3

1775.1

1922.6

244.3

261.5

276.6

288.7

305.8

328.7

351.6

374.2

388.0

403.5

431.1

furniture and appliances information processing equipment

11511.2 11842.0 12183.1 12600.2

81.2

97.2

108.0

125.2

139.4

152.3

167.8

189.0

208.6

232.8

266.0

motor vehicles and parts

317.1

323.4

333.8

359.1

375.7

399.5

419.4

429.0

460.6

489.3

530.0

other durable goods

105.5

108.9

115.1

120.2

126.4

132.9

142.7

145.9

152.7

156.9

162.4

2175.1

2223.5

2263.2

2277.5

2316.1

2376.4

2439.3

2497.6

2553.9

2609.3

2686.1

306.5

322.7

335.3

338.9

344.9

350.6

363.4

369.6

380.3

388.4

403.4

nondurables clothing & shoes fuel oil & coal

24.3

22.4

19.6

17.5

17.8

18.7

19.6

20.7

20.9

20.6

20.5

gasoline & motor oil

260.2

259.9

254.7

252.5

257.6

257.7

266.6

270.5

276.1

284.7

296.0

food

770.0

786.5

795.1

795.7

795.2

811.7

811.3

831.1

848.3

854.9

863.4

other nondurable goods

814.2

833.0

863.2

880.7

908.2

947.8

989.1

1016.4

1039.0

1071.8

1114.6

Real Consumer Expenditures Annual Growth Rate Consumer spending on… all goods & services durable goods

-0.2

3.1

1.5

1.3

2.0

3.5

2.6

2.9

2.6

3.2

3.3

3.0

9.3

4.9

7.3

5.3

8.7

5.5

6.6

5.2

6.8

7.8

furniture and appliances

-2.0

8.3

5.8

3.1

7.5

7.9

6.6

6.0

2.7

5.1

7.2

information processing equipment

12.9

16.8

13.9

16.7

7.3

11.7

7.6

14.9

9.9

13.4

13.6

motor vehicles and parts

7.9

11.0

1.5

7.4

2.5

9.6

2.0

6.5

6.0

7.1

6.6

other durable goods

0.6

5.5

3.2

8.1

3.6

6.1

7.5

1.4

4.0

2.8

3.7

nondurables

0.2

3.3

0.4

0.8

2.6

2.8

2.3

2.4

2.2

2.4

3.1

clothing & shoes fuel oil & coal gasoline & motor oil food other nondurable goods

-1.0

7.6

1.1

0.9

2.5

3.5

2.2

2.3

2.1

2.5

4.4

7.5

-7.6

-12.6

5.5

14.0

-1.0

7.7

9.1

3.2

-1.4

-0.5

-1.1

2.2

-3.1

-0.9

3.3

1.0

3.0

1.4

2.2

4.1

3.2

2.1

2.1

-0.4

0.6

0.6

1.4

-0.3

3.8

1.2

0.8

1.2

-0.6

3.6

2.8

1.9

4.1

4.6

4.2

1.6

2.9

3.3

4.3

Institute for Economic Competitiveness

35

U . S . F orecast T ables Table 14. Business Fixed Investment

Table 14. Business Fixed Investment History

2009

2010

2011

2012

Forecast 2013

2014

2015

2016

2017

2018

2019

Billions Current Dollars Business Fixed Investment

1633.4 1658.2 1812.1 2007.7 2094.4 2251.0 2311.3

2319.6 2488.0 2660.5 2847.4

Producers Dur. Equipment

644.3

731.8

838.2

937.9

982.8 1040.7 1086.1

Nonresidential Structures

438.2

362.0

381.6

448.0

463.6

530.7

507.3

492.6

547.1

595.5

636.4

Non-Farm Buildings

249.1

173.7

170.2

191.6

203.8

234.4

277.5

309.0

335.1

369.5

396.5

Commercial

95.4

64.7

66.8

75.6

84.2

102.9

115.6

137.8

154.7

176.2

197.2

Industrial

56.3

39.8

39.0

45.8

48.8

57.0

75.9

72.7

72.5

77.4

75.5

Other Buildings

97.4

69.2

64.5

70.2

70.7

74.6

86.0

98.6

107.9

115.9

123.8

104.3

93.3

90.7

112.2

108.9

126.3

114.7

118.4

121.8

124.4

127.4

75.0

86.2

112.3

134.1

139.4

156.3

101.2

52.5

77.4

88.0

97.6

Utilities Mines & Wells

1066.0 1130.3 1207.6 1304.8

Billions 2009 Dollars Business Fixed Investment

1633.5 1673.8 1802.3 1964.2 2032.9 2155.6 2200.2

2197.7 2326.3 2449.3 2582.0

Producers Dur. Equipment

644.3

746.7

847.9

939.2

982.3 1035.7 1072.5

Nonresidential Structures

438.2

366.3

374.7

423.1

428.8

472.9

452.1

438.0

471.8

492.5

506.2

Non-Farm Buildings

249.1

179.3

172.3

188.8

196.0

218.2

253.2

277.5

291.1

308.1

318.8

Commercial

95.4

66.6

67.3

73.9

80.5

95.8

105.5

123.9

135.0

147.9

159.9

Industrial

56.3

40.8

39.1

44.9

46.7

52.8

69.1

65.6

63.2

64.1

60.0

Other Buildings

97.4

71.9

65.9

70.0

68.6

69.3

78.4

87.6

92.7

95.8

98.7

104.3

89.8

82.8

99.1

95.1

108.9

97.4

100.1

99.6

98.1

97.2

75.0

87.8

110.9

123.8

126.0

133.0

91.4

50.6

74.0

79.8

83.6

Utilities Mines & Wells

1049.4 1104.4 1172.4 1257.8

Annual Growth Rate Business Fixed Investment

-14.2

8.6

10.9

6.9

5.8

6.5

1.1

2.6

7.8

6.8

6.9

Producers Dur. Equipment

-11.4

20.2

14.4

8.4

5.8

4.5

4.3

-0.4

6.6

7.4

7.8

Nonresidential Structures

-32.2

-0.6

15.3

7.8

9.5

12.1

-9.6

3.4

12.9

7.1

6.8

Non-Farm Buildings

-34.0

-21.1

14.7

7.3

9.8

20.9

11.7

12.2

8.3

9.8

6.8

Commercial

-44.7

-16.8

14.7

9.9

18.7

20.3

10.9

19.6

11.9

13.7

12.1

Industrial

-11.9

-28.8

37.4

8.1

9.1

37.9

13.0

-4.0

2.5

4.7

-5.1

Other Buildings

-29.7

-19.5

3.6

4.5

1.7

12.0

13.2

16.5

7.4

7.4

6.2

-4.1

19.0

2.4

18.4

17.5

-1.7

10.4

1.4

2.9

2.5

2.6

-42.8

53.6

36.6

1.9

8.0

18.1

-54.8

-16.1

74.2

3.2

12.4

Utilities Mines & Wells

36

U.S. Forecast | November 2016

U . S . F orecast T ables Table 15. Government Receipts and Expenditures

Table 15. Government Receipts and Expenditures History 2012

Forecast

2009

2010

2011

2013

2014

2015

2238.4

2443.3

2574.1

2699.1

3138.4

3288.4

3453.3

2016

2017

2018

2019

3485.0

3686.3

3908.2

4144.2

Federal Government Receipts and Expenditures Receipts Personal Tax and Nontax Receipts

864.5

941.6

1129.1

1164.7

1302.0

1402.3

1532.7

1549.2

1664.5

1788.6

1920.2

Corp. Profits Tax Accruals

200.4

298.7

299.4

363.1

378.1

436.6

455.2

434.9

431.5

426.4

427.6

Indirect Business Tax and Nontax Accruals Contributions for Social Insurance

91.4

96.8

108.6

115.1

124.8

134.6

139.4

134.5

133.8

143.8

149.9

950.8

970.9

904.0

938.2

1091.3

1140.9

1189.6

1232.2

1297.9

1376.2

1454.5

Expenditures

3487.2

3772.0

3818.2

3789.1

3782.3

3901.3

4023.0

4159.8

4308.5

4537.8

4791.6

Purchases Goods & Services

1217.7

1303.9

1303.5

1292.5

1229.5

1218.9

1225.0

1246.0

1278.4

1311.4

1344.6

National Defense

788.3

832.8

837.0

817.8

767.0

746.0

732.0

734.3

753.5

766.0

778.5

Other

429.4

471.1

466.5

474.7

462.5

472.9

493.0

511.7

524.9

545.4

566.1

Transfer Payments

2142.9

2333.2

2327.0

2300.8

2346.2

2448.6

2564.9

2654.2

2764.6

2919.2

3084.6

To Persons

1616.2

1757.9

1779.9

1783.6

1823.5

1882.0

1961.3

2029.4

2108.2

2249.2

2392.3

52.7

53.5

57.6

55.3

53.9

52.4

52.0

52.9

53.9

54.9

55.9

Grants in Aid to State & Local Gov't

To Foreigners

458.1

505.3

472.5

444.0

450.0

494.8

531.2

551.0

580.6

592.1

612.5

Net Interest

330.8

351.0

398.0

401.6

393.4

417.1

411.3

438.8

449.2

500.1

559.3

56.2

57.4

66.7

66.5

69.9

64.5

63.5

69.9

71.1

71.8

72.1

-1248.8

-1328.7

-1244.2

-1090.1

-643.8

-612.9

-569.7

-674.8

-622.1

-629.6

-647.4

Subsidies less Surplus of Gov't Entities Surplus (+) or Deficit (-)

State and Local Government Receipts and Expenditures Receipts

1919.2

1998.5

2030.5

2057.2

2136.8

2227.8

2331.5

2374.2

2492.7

2614.9

2751.0

Personal Tax/Nontax Receipts

1268.1

1305.7

1368.3

1416.1

1481.4

1518.9

1564.6

1595.8

1676.5

1777.0

1882.5

287.8

297.6

324.1

346.7

375.9

384.6

406.1

414.4

439.6

482.5

521.3

45.6

47.7

50.2

52.5

55.5

58.6

60.3

61.6

67.4

74.5

77.8

Corporate Profits Indirect Business Tax and Nontax Accruals Contributions for Social Insurance Federal Grants-In-Aid Expenditures Purchases Goods & Services

18.6

18.2

18.2

18.1

18.5

19.1

19.0

19.3

20.4

21.6

22.9

458.1

505.3

472.5

444.0

450.0

494.8

531.2

551.0

580.6

592.1

612.5

2562.47 2638.93 2728.66

2852.7

2191.15 2235.85 2246.40 2277.93 2327.28 2397.55 2492.83 1871.4

1870.2

1865.3

1866.0

1886.6

1933.2

1993.3

2033.3

2105.4

2185.0

Transfer Payments

566.1

612.0

582.2

558.0

571.3

624.5

679.6

687.8

720.4

735.5

759.5

Interest Received

114.3

123.0

125.9

141.4

141.9

123.0

124.5

129.4

125.6

123.3

125.9

22.8

21.4

17.9

10.8

10.3

12.4

11.9

11.7

10.4

8.4

6.4

2.2

2.3

2.7

3.3

3.6

3.8

4.2

4.8

4.9

4.9

5.0

-271.9

-237.3

-215.9

-220.8

-190.5

-169.9

-161.3

-188.3

-146.2

-113.8

-101.7

Net Subsidies Dividends Received Surplus (+) or Deficit (-)

Institute for Economic Competitiveness

2283.1

37

U . S . F orecast T ables Table 16. U.S. Exports and Imports of Goods and Services

Table 16. U.S. Exports and Imports of Goods and Services History

Forecast

2009

2010

2011

2012

2013

2014

Net Exports Goods & Services

-395.5

-512.7

-580.0

-565.7

-492.0

-508.8

Current Account

-384.0

-442.0

-460.4

-446.5

-366.4

Exports -Goods & Services

1587.7

1852.3

2106.4

2198.2

Merchandise Balance

-509.7

-648.7

-740.6

-741.2

Food, Feed & Beverage

93.91

107.72

126.25

Industrial Supplies Excl Petroleum

293.5

388.6

81.7

112.0

391.5

447.8

2015

2016

2017

2018

2019

-522.0

-486.4

-461.6

-421.2

-482.0

-392.1

-463.0

-487.9

-488.1

-430.5

-509.7

2276.6

2375.3

2264.3

2235.7

2401.7

2572.1

2745.4

-702.2

-752.2

-762.6

-737.7

-741.4

-730.9

-823.3

133.05

136.16

143.72

127.73

131.67

130.66

134.98

139.5

485.3

483.2

492.4

500.4

417.1

392.6

445.3

484.9

523.5

133.0

146.2

152.7

159.8

151.9

152.8

171.0

193.3

212.9

494.2

527.5

534.8

551.7

539.7

518.3

539.2

557.5

569.2

Billions of Dollars

Motor Vehicles & Parts Capital Goods, Excl. MVP Computer Equipment

37.7

43.8

48.5

49.2

48.1

48.8

46.8

45.5

44.7

44.4

43.0

Other

279.0

332.1

365.4

383.9

381.7

389.8

373.4

353.0

369.1

382.9

394.3

Consumer Goods, Excl. MVP

149.3

164.9

174.7

181.0

188.1

198.0

197.3

193.5

209.8

225.7

239.7

Other Consumer Services

55.2

58.6

53.4

55.1

58.6

64.5

64.7

67.6

69.8

73.7

80.0

522.6

572.7

639.5

672.2

713.9

757.2

765.9

779.3

835.8

902.0

980.6

Billions of Dollars Imports -Goods & Services

1983.2

2365.0

2686.4

2763.8

2768.6

2884.1

2786.3

2722.2

2863.3

2993.3

3227.4

Merchandise

1590.3

1949.8

2244.7

2305.8

2301.5

2396.5

2291.1

2213.2

2322.6

2416.1

2602.1

82.9

92.5

108.3

111.1

116.0

126.8

128.8

131.3

128.6

127.4

135.7

Petroleum & Products

267.7

353.6

462.1

434.3

387.8

353.6

197.3

161.0

202.3

172.9

186.7

Industrial Supplies Excl Petroleum

196.6

249.4

292.7

288.8

291.3

316.3

290.4

275.0

310.3

347.8

368.6

Motor Vehicles & Parts

159.2

225.6

255.2

298.5

309.6

329.5

350.1

349.2

355.1

366.1

386.0

Capital Goods, Excl. MVP

374.1

450.4

513.4

551.8

559.0

598.7

606.7

594.0

624.7

656.1

705.0

Food, Feed & Beverage

Computer Equipment

94.2

117.3

119.7

122.3

121.2

122.0

120.2

115.1

116.5

120.1

122.9

Other

249.2

301.9

358.2

389.4

390.8

423.4

431.3

427.6

451.8

476.9

521.6

Consumer Goods, Excl. MVP

429.9

485.1

515.9

518.8

532.9

558.7

596.5

578.8

567.7

575.7

610.3

Other Consumer

80.0

93.1

97.1

102.4

105.0

112.9

121.3

123.9

133.9

170.2

209.7

392.9

415.2

441.6

458.0

467.1

487.6

495.2

508.9

540.7

577.2

625.2

Net Exports Goods & Services

-395.4

-458.8

-459.4

-447.1

-404.9

-425.7

-540.0

-549.7

-595.6

-722.8

-874.7

Exports G & S

1587.7

1776.6

1898.3

1963.2

2031.5

2118.3

2120.6

2130.6

2226.0

2331.9

2432.7

Imports G & S

1983.2

2235.4

2357.7

2410.2

2436.4

2544.0

2660.5

2680.3

2821.6

3054.7

3307.4

Services

Billions 2009 Dollars

Exports & Imports % Change Exports G & S

4.1

15.3

8.7

3.4

5.6

1.9

-6.9

3.2

8.3

7.0

6.6

Imports G & S

0.9

15.0

10.9

0.3

1.2

4.7

-5.9

1.3

5.3

4.8

9.1

Real Exports G & S

3.0

10.1

4.2

2.2

6.0

3.1

-2.1

2.1

5.5

4.7

4.2

Real Imports G & S

-3.6

12.2

3.5

0.3

2.5

6.2

2.6

1.0

7.5

8.3

8.1

38

U.S. Forecast | November 2016

SEAN M. SNAITH, PH.D.

We would like to recognize the following organizations for their support of the Institute for Economic Competitiveness:

UNIVERSITY OF CENTRAL FLORIDA College of Business Administration Institute for Economic Competitiveness P. O . B o x 1 6 1 4 0 0 , O r l a n d o , F l o r i d a 3 2 8 1 6 P H 4 0 7. 8 2 3 . 1 4 5 3 FA X 4 0 7. 8 2 3 . 1 4 5 4 w w w. i e c . u c f . e d u