U.S. Forecast December 2012

U.S. Forecast

December 2012

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

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

Fo r eca s t fo r t h e Nati o n Forecast 2012 - 2015 December 2012 Report

Published quarterly by the Institute for Economic Competitiveness, College of Business Administration, University of Central Florida Copyright Š 2012 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 Elaine Vogt, Administrative Assistant Melissa Hedtke, Researcher Caleb Leedy, Researcher Ashley Miller, Researcher Casey Moore, Researcher Sangitha Palaniappa, Researcher Nicholas Simons, 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.

H i g h l i g h t s o f t h e 4 Q 2 0 1 2 U . S . FO R E C A ST In this Issue of the U.S. Forecast: • Republicans whiff, fiscal cliff, partisan tiff - does it even make a diff?

• The Economic Policy Uncertainty Index remains above the high average level of uncertainty that has prevailed in this recovery. Real GDP growth is sputtering under the weight of this uncertainty.

H I GHL I GHTS

• Real GDP growth in the 1st quarter of 2012 was revised up to 2.0%, but it slowed to just 1.3% in the 2nd quarter of 2012. The 3rd quarter growth rate is 2.0%, and in the 4th quarter it will slow again to 1.4%. Sputtering seems an appropriate adjective to describe economic growth in 2012.

• Europe is in recession. In the end, either the Euro ceases to exist or member countries form a fiscal union and the Euro survives. It is still highly likely that Greece will exit the common currency.

• GDP growth in 2013 should average 2.0% before growth accelerates to 2.8% in 2014 and 3.2% in 2015, before easing back to 2.8% in 2016.

• Real consumer spending is expected to grow an average of 2.5% during 20132016. Consumer’s balance sheet woes and a slow labor market recovery weigh on spending.

• The Fed has announced QEIII, an open ended round of mortgage backed security purchases, and extended the zero federal funds rate policy until mid-2015. They are unlikely to take additional action to further stimulate the economy.

• A housing market recovery is in the making. The housing market will steadily improve through 2016. During 2012-2016, housing starts will more than double from 767,189 in 2012 to 1,710,045 in 2016.

• Payroll employment growth remains sluggish. Economic and policy uncertainty weigh on the private sector and firms are still hesitant to hire new workers. Consequently, payrolls will only expand 1.4% in 2012. Growth rises in 2013 to 1.6% and to 1.9% in 2015. Payrolls will rise by 1.8% on average 2013-2016.

• Payroll employment will reach prerecession levels in the 3rd quarter of 2014, nearly seven years after the pre-recession peak. Uncertainty and the sputtering recovery continue to hamper the labor market’s recovery.

• Unemployment rates are expected to gradually fall to 6.1% in the 4th quarter of 2016. Underemployment (U-6) remains a serious problem and currently stands at 14.6%.

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Republicans Whiff, Fiscal Cliff, Partisan Tiff

Does it Even Make a Diff?

The election is over, but little has changed.

As we wrote in the 3rd quarter U.S. forecast, the economy is suffering from ennui. This listlessness has been evident in the sluggish pace of economic growth in 2012 and the continued weakness in the U.S. labor market.

Prior to the election it seemed that a Romney victory might have provided a jolt to the economy as it would have signaled a roll-back of two of the Obama Administration’s largest legislative changes, namely health care reform and financial regulatory reform. Both of these laws bring with them a tremendous amount of uncertainty in terms of how they will be implemented and what consequences, both intended and unintended, they will have on the economy.

With the Republicans failing to win the Presidency or control of the U.S. Senate, it appears that both financial regulatory reform and healthcare reform will proceed unimpeded. Knowing the outcome of the election and what path we will be following the next four years does reduce uncertainty to a degree, but Dodd-Frank and Obamacare both engender significant uncertainty of their own.

So the election results will not jolt the economy to a higher growth trajectory, because they simply maintain the status quo. The status quo is slower economic and job growth in the near term.

The fiscal cliff is looming, and while it is hard to imagine a scenario where we plunge off of the cliff, waiting for the solution in the short and long run will be a stomach churning and market dampening process. The rhetoric in the wake of the election sounds an awful lot like the rhetoric that preceded the election.

Will Democrats and Republicans be able to work together to solve the pressing fiscal problems this country faces? If President Obama’s first term is any indication, the answer may be no.

Hope springs eternal though, and while I think the fiscal cliff will be avoided, the outcome in the near term will be a temporary solution. Coming to an agreement on the longer run solution to the deficit and debt crisis will be a more difficult compromise to make. But bipartisan policy is in my view a preferred way to solve our problems, and will lead to less extreme outcomes than those we have seen when one party controlled all three branches of the government.

I have always maintained that both sanity and solutions to our policy problems lie in the middle of the political spectrum and not in the far left or far right.

Economic Policy Uncertainty Remains Elevated Economic policy uncertainty has hampered our economic recovery. Current levels of the Economic Policy Uncertainty Index remain above the average level of policy uncertainty during the economic recovery that began in June of 2009. Current levels of uncertainty and average levels of uncertainty remain above what the average level of uncertainty was during the Great Recession itself.

This higher level of uncertainty post-recession reverses the pattern seen in the wake of the previous two recessions in 1990-91 and 2001. After those two recessions ended, policy uncertainty fell significantly. In the wake of the Great Recession, uncertainty actually rose from already elevated levels during the recession. The levels of uncertainty during this most recent recession were significantly higher than during the prior two recessions.

In short, the already high levels of economic policy uncertainty during the Great Recession got even higher after the recession ended. This fact, perhaps as much as anything else, can explain why the economic recovery we are experiencing is as weak as it has been.

Figure 1 plots the updated monthly Economic Policy Uncertainty Index along with the average level of the index during the phases of recent business cycles. This index has been discussed in our previous forecasts, and the role of policy uncertainty in constraining the economic recovery has been addressed as well. This updated chart reflects the unfortunate fact that current levels of uncertainty still exceed the average level of policy uncertainty this recovery has struggled under since its beginning in June of 2009.

The sharp deceleration in the growth rate of real GDP in 2012 can be attributed, in a large part, to this prevailing level of heightened uncertainty.

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Figure 1. The Economic Policy Uncertainty Index 300

Recession Expansion

250

Expansion 200 Uncertainty Index

Recession

Recession

Expansion

Expansion

150

100

Raw Uncertainty Data

50

Averages

0

Year Source: Scott R. Baker, Nicholas Bloom, and Steven J. Davis, Measuring Economic Policy Uncertainty

Anxious Index The most recent release (4th quarter of 2012) of the Survey of Professional Forecasters by the Federal Reserve Bank of Philadelphia suggests that the 36 forecasters surveyed for the publication are 23.04% convinced that a decline in real GDP will occur in the 1st quarter of 2013. This release reflects forecasters’ rising anxiety amidst a recovery that has lost momentum, a threat of the fiscal cliff knocking the economy back into recession, and a post-election result maintaining the status quo of gridlock. The 3rd quarter anxious index was 16.99% and was the second in what is now a three quarter run-up in the index, reflecting a surge in these economic forecasters’ worries of a recession taking place.

The survey asks 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) is the probability of a decline in real GDP in the quarter after a survey is taken. In the survey taken in the 4th quarter of 2012, the index stands at 23.04%, which means that forecasters believe there is a 23.04% chance that real GDP will decline in the 1st quarter of 2013, up from last quarter’s anxious index of 16.99%.

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U.S. Forecast | December 2012

The forecasters also report a 13.49% chance that we are currently (as of the 4th quarter of 2012) in a recession.

According to the panel, the probability that we will fall back into recession is averaging around 19.7% through the end of the 4th quarter of 2013, which implies the possibility of a recession in the upcoming year has increased slightly since last quarter’s survey.

The rise in anxiety over the future of this economic recovery comes in the wake of another weak report on real GDP growth in the 3rd quarter of 2012 (2.0%). This comes after a 2nd quarter growth rate of 1.3%, which itself was down from 3.0% in the 1st quarter of 2012.

It should be noted that this quarter’s anxious index is the highest it has been since the 3rd quarter of 2009—the quarter that immediately followed the official end of the recession.

Figure 2 plots the historical values of the anxious index and the gray bars indicate periods of recession in the U.S. economy. The current levels of the anxious index have surged over concerns about the strength of the U.S. recovery, the fiscal cliff and the fallout from the ongoing European recession, and ongoing sovereign debt crisis amid the continuing struggle to find a lasting solution.

Are these economists canaries in the coalmine of our economy? Should we all be worried about slipping into

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recession again? This quarter’s reading of the anxious index is higher than the reading for the 4th quarter of 2007 when the Great Recession began. That alone makes the rise in the volume of their chirping all the more worrisome.

recession and 1.3% slower than the first three years after the 1990-91 recession.

As we have already touched upon above and in previous forecast publications, policy uncertainty has played a big role in the underwhelming performance of the economic recovery this time around.

GDP Outlook After a strong finish to 2011, when real GDP growth hit 4.1%, 2012 failed to pick up the mantle and growth was cut in half in the 1st quarter as the economy expanded just 2.0%.

Unfortunately, this was not a temporary lull in growth as the 2nd quarter growth rate came in at an even slower pace of just 1.3%.

The latest read on the 3rd quarter showed the economy went back to the 1st quarter pace of 2.0% growth. The pattern that real GDP growth has followed this year—a quarter of tepid growth, followed by a quarter of paltry growth—looks set to continue in the 4th quarter as we are forecasting another paltry growth rate of just 1.4%. That puts the annual growth rate for 2012 at just 2.1%.

In this recovery, the first three full years of real GDP growth in the economy will average just 2.1%. This is a full 0.5% slower than the first three years after the 2001

Will the economy accelerate in 2013? The prognosis is not good. We are expecting just 2.0% growth again for the full year in 2013. The fiscal cliff may be avoided, but spending cuts and revenue hikes will hamper growth as will the roll out of healthcare reform and Dodd-Frank financial regulatory reform. All of these will be albatrosses around the economy’s neck and will keep growth subdued for yet another year.

In 2014 as uncertainty abates and damage from the housing crisis continues to heal, real GDP growth will accelerate to 2.8%. Growth continues to rise in 2015, reaching 3.2% before easing to 2.8% in 2016.

There are a number of factors that could easily knock the economy off of this projected growth path. The first is the impending “fiscal cliff.”

We do not believe Congress and the President are willing to allow the economy to fall off of the fiscal cliff. Doing so

Figure 2.

The Anxious Index Probability of Decline in Real GDP in the Following Quarter Quarterly, 1968:Q4 to 2012:Q4 100 90 80

60 50 40 30 20 10 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

Probability (percent)

70

Survey Date Institute for Economic Competitiveness

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would clearly knock a recovery that is sputtering its way through the end of 2012 back into a recession. That doesn’t mean they will not walk to the edge of the cliff, where we can peer down into the abyss in a way that will induce a fullfledged case of economic vertigo.

In the end, the crisis will be averted with a lame duck session temporary agreement to extend most tax cuts— avoiding the draconian cuts of sequestration—while creating a plan to include a timetable to address longer term solutions to our fiscal problems. At the end of the process there must be a significant grand bargain that raises revenue, cuts spending, and reforms entitlement programs that are the real core of our fiscal abscess.

The second major risk that could derail our recovery would be the ongoing sovereign debt crisis in Europe. I have written about this crisis in previous forecast releases and described it there and elsewhere as a train wreck in slow motion.

Well, the train wreck continues.

I still fully expect that Greece will leave the common currency in the upcoming year, but if the crisis accelerates and other countries begin to fall out of the Eurozone, the resultant deepening of the EU recession and turmoil in financial markets that this would precipitate will impact the U.S. economy. This could also send us back into recession.

The bottom line in the Eurozone is that one cannot solve a fiscal problem with monetary policy. The purchases of debt by the ECB may quell fears of financial markets temporarily and provide strapped nations with needed liquidity, but they cannot solve the heart of the problem: divergent patterns of government spending and taxation in Northern and Southern Europe.

Consumers are still battling the demons of the housing bust and a lackluster recovery of the labor market, and thus, will not be fully unleashed as far as spending growth is concerned. The next four years of consumer spending growth will be an improvement over the last three when average spending growth is expected to come in at 2.1%.

From 2013 to the end of our forecasting period, average consumer spending growth is forecasted at 2.5%. This seemingly modest uptick in growth rates is amplified by the importance of consumer spending and the share of GDP that consumption represents – just less than 71% of the entire U.S. economy.

Investment is a sector of the economy that is very susceptible to economic policy uncertainty. Investment decisions are by their very nature forward looking. In environments where the future is more occluded than usual by the type of uncertainty that the fiscal cliff, financial 8

U.S. Forecast | December 2012

regulatory reform, and healthcare reform impose on businesses, many firms will put the brakes on projects in 2013 until the path forward becomes clearer.

Fixed investment growth will be nearly cut in half from 2011 to 2013. When the investment environment becomes clearer answers for many questions will become clearer.

Beyond 2013 there should be an acceleration of investment growth to healthy growth rates of 8.0% and 7.0% in 2014 and 2015.

Even in an uncertain world businesses will still invest in projects that can help lower costs or increase productivity.

Investment in computers and peripherals will average growth of nearly 11% through the end of 2016.

As far as residential fixed investment is concerned, 2012 will mark the first of four straight years of double-digit growth as the housing bust is finally being viewed through a rear view mirror. Shrinking inventories and rising prices are sending signals for builders to start building again, but don’t expect to see a repeat of the last construction boom.

The Federal Government Sector will see no booms throughout the forecast horizon and likely well beyond.

While the resolution of the fiscal cliff, as of this writing, is unknown, the writing on the wall is as clear as could be.

Austerity is going to be the standard going forward, and tightened federal budgets will likely persist for years. Real Federal Government spending is expected to contract at an average of 2.2% through the end of 2016.

Many local governments will begin to see budgets ease as we move into 2014 and beyond. This will allow spending to grow modestly after four years of contraction.

C o n s u m e r Spe n d i n g The U.S. consumer has been a stalwart spender for decades. Sure she has taken some hits in recessions past, but she always came out fighting when the recession ended.

Unleashing pent-up demand in a vendetta against the recession, consumption spending could always be counted upon to help hoist the U.S. out of the doldrums and put us back on a path of strong growth.

Where did she go? I miss that consumer and our economy does too.

Looking back at previous recoveries in the U.S. economy since 1970, the pace with which consumption spending grew was always robust and consumers generally led the charge out of recession. In the 70’s and 80’s average real consumption growth of 4%-plus characterized the recoveries. In the 90’s the growth was on average greater than 3.8%.

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How have consumers fared in this recovery? Average real consumer spending growth is just 1.8% since the end of the Great Recession. If consumers are leading, then to borrow a phrase from the political arena, they are leading from behind.

I do not intend to bash our bashful consumers, but consumers must not shrink away from spending or else it will be economic growth that does the shrinking.

Investment Nonresidential fixed investment spending grew at 8.6% in 2011 and is expected to grow 7.5% in 2012. Businesses have been earning record profits for several years and interest rates are historically low, but uncertainty has many firms moving forward on investment spending very cautiously.

Policy uncertainty has risen over the past few months, as we have discussed, and weighs on these investment decisions.

Consequently, investment growth will be just 4.5% in 2013.

Spending will accelerate in 2014 with investment growing at 8.0%, and expand at 7.0% in 2015 before easing further to 4.3% in 2016.

The cost of borrowing will remain subdued for an extended period given the Federal Reserve’s stated commitment through mid-2015 to low interest rates. We expect the 10-year Treasury yield to remain below 3.0% until the fourth quarter of 2014. After this, we expect the Fed will slowly begin the process of hiking interest rates and pulling back the reins on monetary stimulus, slightly ahead of their current commitment date. However, borrowing costs are not what are weighing on investment decisions.

Furthermore, the past several years have seen record profits, and thus many firms have the ability to finance investment spending via retained earnings, and thus have no need to turn to credit markets. Uncertainty is the culprit freezing firms in place and preventing them from pulling the trigger on many projects.

Business spending on equipment and software will grow at an annual average rate of 6.3% in 2012 through 2016.

Investment in computers and peripherals will continue to be strong after wavering a bit in 2012. Companies seeking cost reduction and implementing productivity-focused IT plans will continue to spend at an average annual growth rate of 12.2% during 2013-2016. This type of investment spending reaps benefits regardless of how the revenue side of the profit equation is performing. During the Great Recession businesses had to focus on the cost side of the profit equation as this was the only thing under their direct control. Despite the fact that revenues have begun to grow, the persistence of a cost-centric mentality of U.S. businesses persists. This

is good for the bottom line and it helps to make firms more competitive globally.

Investment in commercial real estate experienced a burst of activity in 2011 and into the first part of 2012.

We expect growth to continue to sharply decelerate in the second half of 2012 and continue to contract into the first half of 2013, before accelerating in the second half of 2013.

Year-over-year investment in structures will decline in 2013.

Commercial developers are still vigilant and credit flows into the sector have not recovered in earnest, so there is little short-term impetus for investment in structures. Wealthdepleted consumers and middling job growth will continue to hold demand for new retail and office space in check.

Investment in non-residential structures will come back in 2014 and 2015 with growths of 9.7% and 7.5% respectively, before growth eases to 4.4% in 2016.

Investment in transportation equipment grew feverishly in 2010 (61.9%) and 2011 (34.4%), and will again grow in double digits in 2012 (21.3%), before decelerating to a 4.9% growth rate in 2015. This type of investment will have an average growth rate of 7.6% during the five years from 2012 through 2016 and in that final year growth will be -1.9%.

Ongoing demand driven by replacement need, consumers increasing confidence, and persistent low interest rates will bolster light vehicle sales that will grow from 2011 levels of 12.7 million to a level slightly over 16.5 million in 2016.

This level is still more than 400,000 vehicles below the sales peak at the height of the housing boom, but the automotive industry should be on solid ground over the next 4.5 years.

Residential fixed investment growth spent six years in a death spiral. The woes of the housing sector are legend and frequently addressed here and elsewhere, but there are clearly signs of a pulse in a sector that has flat-lined for years. In 2012, residential fixed investment growth not only turns positive, but also is expected to grow by 12.5%.

It will average 14.6% growth through 2013-2016 with a peak growth rate in 2014 of 19.7%. In the final year of our forecast, 2016, real residential fixed investment will still be more than $142 billion lower than its 2005 peak of $775 billion. Happy days may be here again for residential housing, but without any irrational exuberance.

Housing starts bottomed out in 2009 at 0.554 million and have bounced along an ill-defined bottom since that time. Inventories of new homes have fallen significantly and existing inventories are being absorbed; investors are buying distressed properties, turning them around, and renting them out as opposed to flipping them. This is helping as far as the housing market’s recovery is concerned. The holding periods for this new crop of investors are measured in years, rather than the months or even weeks as we witnessed Institute for Economic Competitiveness

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during the height of the housing bubble. Housing prices are gaining some traction and non-distressed inventory is moving quickly. There are growing indications of a nascent recovery in housing starting to gain traction. We expect starts to continue to accelerate significantly in 2013, reaching more than 1.7 million in 2016.

G o v e r n m e n t Spe n d i n g Government spending is in the spotlight. The impending “fiscal cliff” has become the focus of fiscal policy. Multiple tax cuts—the Bush tax cuts and payroll tax cuts—are set to expire at the end of 2012. The failure of the deficit reduction super committee to agree on budget cuts last year will trigger across-the-board spending cuts (sequestration), which are set to kick in at the start of 2013.

Sending the economy over the fiscal cliff by letting all these provisions kick in as they are slated to do, would put the economy back into a recession. The recession would not be as deep or as prolonged as the previous one, but this is not something that either party would want to see happen.

Expect to see some postponement of the fiscal cliff, thus buying more time for lawmakers to address the larger fiscal picture. It will be far better to slowly descend the fiscal cliff than to allow partisanship to push us off it.

The U.S. risks a fate like that which has unfolded in Europe if there is not a serious, and thus painful, series of steps taken to avoid the fate of countries like Greece. We are not as bad off as Greece now, but the path we are on will lead us inevitably and inextricably directly to Athens.

The long run solution will require significant changes to entitlement programs (Social Security and Medicare), increased revenue, and decreased discretionary spending.

The President’s bipartisan deficit reduction commission authored a report laying out one potential way forward.

The Simpson-Bowles report lays out a set of policies that are going to be politically painful and difficult to implement, but are by and large just the type of changes that must take place. Running deficits is easy, everyone likes tax cuts and more spending—these things buy politicians favor and, more importantly, votes. Tax hikes and spending cuts are far less popular among constituents and special interest donors.

There is a lot of difficult work that has to be done to address our debt and deficit problems. These issues are going to require difficult compromises and painful decisions, the exact type of decisions that politicians have been putting off for years. Fixing our deficit and debt problem must include fundamental entitlement reform—a long time third rail issue in American politics. If politicians do not muster the 10

U.S. Forecast | December 2012

courage to touch that third rail they risk sending the entire economy off of the tracks.

Even though we have run federal budget deficits from 2009-2012 that we are projecting will exceed $5.1 trillion in total, the economy continues to grow at a sluggish pace.

The debate over whether or not the economic stimulus act worked continues to overshadow any possibility of further fiscal stimulus (aside from averting the fiscal cliff). The national debt that stands in excess of $16.2 trillion (nearly 104% of GDP) also looms large and is a growing threat to the U.S. economy.

The national debt, as previously mentioned, is over $16.2 trillion and rising. This represents a debt of nearly $142,000 per taxpayer and over $51,700 per citizen. Trillion-dollar federal budget deficits are a hallmark of the first term of the Obama administration that we are forecasting will have run average deficits of $1.274 trillion during 2009-2012.

In 2013, we are forecasting the federal budget deficit to shrink to $928 billion, which should continue to shrink to $734 billion in 2014, $650 billion in 2015, and $663 billion in 2016. Though we are projecting deficits to get smaller, the additional debt added to the national debt over these four years will exceed $2.9 trillion, thus pushing the national debt total to over $20 trillion (108% of GDP - assuming interest rates and thus debt service do not surge).

Ne t E x p o r t s The international sector continues to be a growing source of concern with the European Union in a recession that could be deepening as the sovereign debt crisis continuously roils. This crisis does not only threaten the EU but also the global economy as well. This remains the biggest risk to the U.S. economic recovery (after the fiscal cliff), and the crisis is not going to end in the near future.

The European Central Bank has announced that it will buy sovereign debt of countries that are in trouble. This was an important step taken by the ECB to ease the financial consequences of the debt crisis. Even though the debt purchases come with austerity strings attached, in the end as I have oft repeated, you cannot solve a fiscal policy problem with monetary policy regardless of these austerity strings attached to the debt purchases.

Overall trade growth continues through the end of our 2016 forecast period. However, real export and import growth will both decelerate in 2012 as the U.S. recovery has lost momentum, as has the global recovery.

Real export growth is expected to be 5.0% through 2012-2016, even with the slowdown in 2012 as the debt

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crisis that brought recession to Europe has depressed both the value of the Euro—making U.S. exports more expensive—and Europeans’ incomes as well. Real imports will expand over the same period with an average growth of 4.1%. The near term deceleration of import growth is a function of the continuing wealth effects of lost home equity faced by consumers, the still weak labor market, and the significant deceleration in the pace of the U.S. economic recovery that has taken place in 2012.

In 2012 and 2013, the U.S. dollar will appreciate vis-àvis our major trading partners. The strengthening is helped in part by the recession uncertainty due to the sovereign debt crisis in the E.U. that continues to depress the value of the Euro and a continued flight to the quality of U.S. treasuries in the face of escalating uncertainty over the slowing global economic recovery. Once this wave of global uncertainty abates, we expect the dollar will depreciate again in 2014 -2016 at an average annual rate of 1.9% in the wake of still large and persistent imbalances in the U.S. economy. Before the European sovereign debt crisis is over it is highly likely that the Euro will reach parity with the U.S. dollar.

by a single metric such as the headline unemployment rate (U-3). You wouldn’t want your physician only taking your temperature during a physical and based only on that result declaring you healthy.

The BLS does have alternative measures of labor market weakness. The broadest measure of unemployment (U-6) takes into account discouraged workers as well as those who are underemployed—working part-time but not by choice—and workers who are marginally attached to the labor force and have looked for work in the past 12 months, but are not currently looking, yet indicate a willingness to work. Discouraged workers are a subset of these marginally attached workers.

U-6 remains painfully high at 14.6% in October, down 0.1% from September and down from its peak of 17.2% in October of 2009. It will take several years before we see the unemployment rate fall back into a range consistent with full employment. By the end of 2016, the unemployment rate will still stand at 6.1% - nine years from the official start of the recession.

The current account deficit will steadily worsen through the end of our forecast horizon averaging $525 billion during 2012-2016, with a worsening of the deficit in 20142016 as the dollar depreciates. We expect net exports to average -$568 billion during 2012-2016.

U n e m p loy m e n t The labor market in the United States has shown improvement to date. Hurricane Sandy could impart a shock to the November jobs report, but Mother Nature notwithstanding, the labor market remains in a substandard recovery.

Job creation is still weak and the pace of payroll job growth is highly insufficient given that we are still only 50% of the way back toward payroll employment returning to prerecession levels. The labor market is still suffering through the worst pace of job recovery following a recession since 1945.

The national unemployment rate ticked up in October to 7.9%. The jobs report again showed conflicting pictures of the labor market with only 171,000 new workers on business payroll, but an increase of 410,000 people in the household survey who were reporting that they are employed.

The mixed message in recent jobs and labor market report highlights the need to look at more than a single metric of how the labor market is performing. The U.S. labor market is so complex that it cannot be adequately gauged Institute for Economic Competitiveness

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utomobile and Light Truck Sales December 2012 (Millions Vehicles)

Charts

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

F OR E C A ST f o r t h e n a t i o n

U . S . F o r eca s t C h a r t s

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

9.0

2.5

8.0

2.0

7.0

1.5

6.0

1.0

5.0

0.5

4.0 3.0

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 30-Year Fixed Mortgage Rate Housing Starts - Millions

0.0

Automobile and Light Truck Sales 11.0

(Millions Vehicles)

10.0 9.0 8.0 7.0 6.0 5.0 4.0

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 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

(Billions of 2000 Dollars)

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Change in Real Business Inventories Institute for Economic Competitiveness

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Consumer Prices (% Change Year Ago)

6.0 4.0 2.0 0.0 -2.0

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Consumer Price Index Core Consumer Price Index

Federal Budget Surplus 500.0

(Billions of Dollars)

0.0 -500.0 -1000.0 -1500.0

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Federal Budget Surplus

Federal Funds Rate 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 -1.0

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(%)

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Fed Funds Rate

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Real GDP Growth and Federal Funds Rate 10.0

(%)

5.0 0.0 -5.0 -10.0

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 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 80.0

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Industrial Production

Private Fixed Nonresidential Investment 2400.0

(Billions of Dollars)

2200.0 2000.0 1800.0 1600.0 1400.0 1200.0 1000.0

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Private Fixed Nonresidential Investment

Institute for Economic Competitiveness

15

U . S . F o r eca s t C h a r t s

Manufacturing Employment (Millions)

18.0 17.0 16.0 15.0 14.0 13.0 12.0 11.0

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Manufacturing Employment

Money Supply

2600.0 2400.0 2200.0 2000.0 1800.0 1600.0 1400.0 1200.0 1000.0

(Annual Growth Rate %)

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Annual Growth Rate of M1

Total Nonfarm Payroll Employment 145.0

(Millions)

140.0 135.0 130.0 125.0

16

U.S. Forecast | December 2012

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Total Nonfarm Employment

U . S . F o r eca s t C h a r t s

Oil and Consumer Confidence 140.0

Oil ($ Per Barrel) - Left Axis

120

120.0

110

100.0

100

80.0

90

60.0

80

40.0

70

20.0

60

0.0

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Price of Oil WTI Consumer Sentiment

50

Real Disposable Income and Consumption 6.0

(% Change Year Ago)

4.0 2.0 0.0 -2.0 -4.0 -6.0

-200 -300 -400 -500

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Real Disposable Income Consumption

Trade Balance and Real Exchange Rate

1.40 1.30 1.20

-600 -700 -800

1.10 1.00 0.90 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Trade Balance (Billions $) Left axis U.S. Dollar Real Exchange Rate (2000 = 1.0) Right axis

0.80

Institute for Economic Competitiveness

17

U . S . F o r eca s t C h a r t s

Twin Deficits 500.0

(Billions of Dollars)

0.0 -500.0 -1000.0 -1500.0

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 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

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Unemployment Rate

Yield Curve 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0

18

U.S. Forecast | December 2012

(%)

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 1-Year T-Bill Yield 5 Year Treasury Bond Yield 30 year Treasury Bond Yield

U . S . F o r eca s t Tab l e s Table 1. Summary of the Long-Term Forecast of the U.S.

Table 1. Annual 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.

Oil - WTI ($ per barrel) Productivity (% change) Industrial Production (% change) Factory Operating Rate Nonfarm Inven. Chg. (Bil. of 2005 $) 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. $)

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))

Personal Income (Bil. of $) (% change) Disposable Income (Bil. of $) (% change) Real Disposable Income (Bil. Of 2005 $) (% change) Saving Rate (%) After-Tax Profits (Billions of $) (% change)

2005

2006

2007

History 2008 2009

3.1 3.2 3.4 5.9 3.2 3.0 6.7 8.6 7.3 11.7 1.9 8.3 13.5 -10.0 18.7 1.5 -0.8 17.8 -2.0 10.5 -5.5 6.3 6.8 6.2 1.3 -0.2

2.7 2.6 2.9 4.5 2.6 2.6 8.0 7.6 8.7 23.3 12.8 8.4 9.2 -5.1 7.2 9.2 6.1 10.3 7.9 14.7 9.3 -7.2 9.0 6.1 2.1 0.9

1.9 2.2 2.3 5.0 1.9 2.0 6.5 3.3 8.1 14.1 11.5 4.0 -4.1 30.6 -18.2 14.0 10.0 18.1 39.0 6.2 15.2 -18.7 9.3 2.4 1.3 1.4

Composition of Real GDP, Percent Change -0.3 -3.0 2.4 1.8 2.1 2.0 0.2 -2.3 0.9 2.0 2.0 2.0 -0.5 -1.9 1.8 2.5 1.9 2.4 -4.9 -5.1 6.2 7.2 7.6 6.3 -1.2 -1.8 2.3 2.3 1.2 2.3 0.5 -1.4 1.0 1.9 1.3 1.8 -0.7 -18.0 0.9 8.6 7.5 4.5 -4.2 -16.2 8.9 11.0 7.0 6.3 2.2 -3.9 4.6 5.0 3.4 6.7 8.4 -5.3 3.1 12.3 3.4 9.5 -4.7 -9.4 12.7 -5.7 1.5 8.4 -3.8 -21.2 -0.9 13.3 7.1 6.7 -23.0 -45.6 61.9 34.4 21.3 8.4 -3.3 -25.0 6.9 -0.8 25.5 10.0 -12.7 -23.3 -1.0 41.7 15.7 6.6 6.7 -21.1 -14.7 2.7 9.1 -0.1 -3.6 -30.9 -24.2 -2.1 5.9 5.3 25.8 5.2 -27.8 3.3 17.9 4.8 11.6 1.0 -15.9 -8.9 16.1 -12.6 8.4 -33.9 23.6 23.4 5.2 0.0 13.2 -18.3 -26.4 -6.3 7.9 5.6 -23.9 -22.0 -3.6 -1.2 12.5 16.1 6.3 -9.0 11.2 6.7 3.3 3.2 -2.7 -13.4 12.5 4.9 2.9 4.6 7.2 6.1 4.5 -2.8 -1.6 -2.5 0.0 2.2 -1.8 -3.4 -1.4 -0.3

2010

2011

2012

Billions of Dollars 12623.0 12958.5 13206.4 13161.9 12758.0 13063.0 13299.1 13583.7 12623.0 13377.2 14028.7 14291.6 13973.7 14498.9 15075.7 15675.3

2013

3.2 3.2 2.5 3.0 2.9

2.9 2.9 2.3 3.9 3.1

56.5 1.6 3.3 78.2 49.8 88.6 16.948 2.073 6.181 5.1 1.7 -319 -746

66.1 0.9 2.2 78.5 63.2 87.3 16.504 1.812 5.712 4.6 1.8 -248 -801

72.3 1.5 2.5 78.5 28.7 85.6 16.089 1.342 4.418 4.6 1.1 -162 -710

99.6 0.6 -3.5 74.3 -37.6 63.8 13.195 0.900 3.655 5.8 -0.6 -455 -677

3.21 3.15 3.62 4.05 4.29 4.56 5.87 1207 6.8 1.000 -1.8

4.96 4.73 4.93 4.75 4.79 4.87 6.41 1311 8.6 0.985 -1.4

5.02 4.35 4.52 4.43 4.63 4.84 6.34 1477 12.8 0.930 -5.6

1.93 1.37 1.82 2.80 3.67 4.28 6.04 1221 -17.2 0.888 -4.1

10486 5.5 9277 4.4 9277 1.4 1.6 1228 33.1

11268 7.5 9916 6.9 9653 4.0 2.6 1349 10.1

11912 5.7 10424 5.1 9880 2.4 2.4 1293 -4.2

12460 4.6 11025 5.8 10119 2.4 5.4 1051 -18.6

2.8 2.9 2.8 4.6 2.2 2.7 8.0 7.3 9.2 16.3 12.5 8.3 5.1 3.9 8.0 9.7 21.0 11.3 5.9 2.7 9.5 19.7 4.7 5.3 -3.2 0.2

3.2 3.2 2.5 4.3 1.6 2.5 7.0 6.8 6.9 11.3 11.0 8.5 4.9 5.1 2.8 7.5 22.8 0.5 4.0 -1.8 8.1 17.0 7.2 4.5 -2.2 0.5

2016

2.8 2.9 2.5 4.4 2.0 2.4 4.3 4.3 5.5 11.9 7.6 5.8 -1.9 5.2 -3.0 4.4 17.1 12.2 -3.1 -10.2 5.1 5.8 6.7 3.3 -1.4 0.5

13860.7 14255.4 14715.1 15121.9 16268.7 16990.8 17820.6 18612.7

Prices & Wages, Percent Change, Annual Rate 2.2 0.9 1.3 2.1 1.8 3.8 -0.3 1.6 3.1 2.0 2.3 1.7 1.0 1.7 2.1 6.4 -2.5 4.2 6.0 1.9 2.9 1.5 1.9 2.2 1.9

3.3 3.4 2.1 4.9 3.1

Forecast 2014 2015

1.7 1.4 1.8 1.2 2.0

1.5 1.8 2.0 0.7 2.5

1.6 1.7 2.0 0.4 2.6

1.6 1.9 1.9 1.0 2.8

Other Measures 79.4 95.1 92.2 3.1 0.7 1.1 5.4 4.1 3.7 75.0 77.4 71.2 58.0 36.5 57.0 71.8 67.4 77.9 11.555 12.733 14.4 0.586 0.612 0.8 3.704 3.797 4.1 9.6 9.0 8.1 -0.7 1.2 1.4 -1294 -1297 -1089.4 -442 -466 -482.6

90.1 0.5 2.1 77.9 52.1 85.2 15.3 1.0 4.5 7.7 1.6 -927.7 -455.9

87.3 0.8 2.7 78.4 43.6 86.2 15.8 1.3 5.0 7.3 1.8 -733.9 -515.4

81.6 1.2 3.4 79.3 48.2 89.2 16.2 1.6 5.1 6.7 1.9 -650.3 -563.3

86.6 1.3 2.6 79.3 35.0 87.9 16.5 1.7 5.0 6.3 1.7 -663.4 -612.3

Financial Markets, NSA 0.16 0.18 0.10 0.1 0.15 0.14 0.05 0.1 0.47 0.32 0.18 0.2 2.19 1.93 1.52 0.8 3.26 3.21 2.79 1.8 4.07 4.25 3.91 2.9 5.04 4.69 4.46 3.7 947 1139 1269 1375.5 -18.9 21.6 11.5 8.6 0.926 0.898 0.846 0.9 4.8 -2.8 -5.8 3.6

0.1 0.1 0.2 1.1 2.1 3.2 3.4 1461.3 6.2 0.9 3.7

0.2 0.2 0.3 1.5 2.8 3.9 4.1 1517.9 3.9 0.9 -2.0

1.7 1.6 2.0 2.8 4.0 4.7 5.7 1454.7 -4.1 0.9 -2.2

3.6 3.5 4.0 4.4 4.8 5.3 6.6 1476.2 1.6 0.9 -1.5

61.7 3.0 -11.3 65.5 -137.9 66.3 10.402 0.554 3.868 9.3 -4.4 -1416 -382

11867 -4.8 10722 -2.7 9837 -2.8 4.7 1171 22.8

Incomes 12322 12947 13395.7 3.8 5.1 3.5 11127 11549 11917.8 3.8 3.8 3.2 10017 10150 10295.9 1.4 1.8 1.3 5.1 4.3 3.8 1443 1475 1687 24.6 2.2 14.6

13918.4 14617.1 15348.3 16099.9 3.9 5.0 5.0 4.9 12307.8 12899.4 13532.7 14191.8 3.3 4.8 4.9 4.9 10511.1 10852.4 11203.6 11544.3 2.1 3.2 3.2 3.0 3.5 3.9 4.5 4.9 1807 1726 1617 1520 7.1 -4.5 -6.3 -6.0

Institute for Economic Competitiveness

19

U . S . F o r eca s t Tab l e s Table 2. Real Gross Domestic Product

Table 2. Real Gross Domestic Product History 2005

2006

2007

2008

Forecast 2009

2010

2011

2012

2013

2014

2015

2016

Real GDP Billions 2005 $ Gross Domestic Product Final Sales of Domestic Product

12623.0 12958.5 13206.4 13161.9 12758.0 13063.0 13299.1 13583.7

13860.7 14255.4 14715.1 15121.9

12573.0 12899.3 13177.6 13200.6 12899.7 13010.3 13265.3 13532.0

13798.9 14198.3 14653.0 15072.3

Total Consumption

8803.5

9054.5

9262.9

9211.7

9032.6

9196.2

9428.8

9609.6

9837.6 10111.1 10361.0 10625.0

Durables

1123.4

1174.2

1232.4

1171.8

1109.1

1178.3

1262.6

1357.9

1443.3

1510.1

1574.4

1643.2

Nondurables

1953.4

2005.0

2042.9

2019.1

1982.8

2029.3

2075.2

2100.5

2147.8

2195.9

2231.7

2276.1

Services

5726.8

5875.6

5990.1

6017.0

5930.6

5987.6

6101.5

6178.8

6288.4

6455.7

6614.6

6775.8

1347.3

1455.5

1549.9

1537.7

1259.9

1268.5

1378.2

1479.4

1545.6

1669.3

1785.8

1863.4

995.6

1071.1

1106.8

1059.4

885.2

963.9

1070.0

1143.5

1215.3

1304.5

1392.7

1452.6

475.3

516.3

558.2

569.7

546.4

571.7

600.2

620.7

662.0

722.7

772.7

815.2

Computers & Peripherals

78.9

97.1

110.7

119.5

112.6

116.0

130.3

133.9

145.9

169.6

188.7

211.1

Communications Equipment

83.2

93.8

104.4

99.1

89.3

100.5

94.7

96.0

104.0

117.0

129.8

139.7

Industrial Equipment

159.6

172.9

179.9

172.9

136.2

134.6

152.6

163.1

174.0

188.5

204.5

216.3

Transportation Equipment

181.7

198.2

190.2

146.9

75.9

123.2

164.7

198.7

215.5

226.4

237.5

232.9

22.0

20.6

26.8

26.0

19.1

20.4

19.8

24.5

26.7

27.8

29.2

30.7

48.2

51.6

42.1

36.5

27.9

27.7

39.3

44.9

47.6

51.3

52.7

51.1

351.8

384.0

438.2

466.4

368.1

310.6

319.2

346.8

346.4

380.2

408.8

426.9

135.9

144.2

158.6

152.7

105.8

79.4

77.6

82.1

86.4

104.7

128.4

150.2

Manufacturing

29.9

33.0

39.0

48.6

50.9

36.8

36.9

42.8

44.9

49.9

50.1

56.3

Power & Communication

45.2

48.7

67.8

74.0

74.5

62.5

56.8

65.6

57.2

60.6

62.9

60.9

Mining & Petroleum

77.1

88.3

93.6

101.5

66.1

77.3

94.8

99.2

99.1

101.8

99.9

89.6

Other

63.7

69.6

80.3

90.4

73.9

54.2

50.6

54.5

57.5

63.0

68.1

71.6

775.0

718.2

584.2

444.4

344.8

332.2

327.6

368.6

428.0

512.7

598.8

633.0

Exports

1305.1

1422.1

1554.4

1649.3

1498.7

1665.6

1776.9

1835.5

1893.9

1982.8

2126.3

2268.7

Imports

2027.8

2151.5

2203.3

2144.0

1853.9

2085.2

2184.9

2248.7

2351.3

2475.2

2586.3

2670.7

876.3

894.9

906.1

971.1

1030.6

1076.8

1047.0

1030.0

1004.5

972.4

951.2

938.3

1493.6

1507.2

1528.1

1528.1

1561.8

1534.1

1482.0

1461.5

1457.5

1459.8

1466.9

1474.9

Nonresidential Fixed Investment Equipment & Software Information Processing Equipment

Aircraft Other Equipment Structures Commercial & Health

Residential Fixed Investment

Federal Government State & Local Government

20

U.S. Forecast | December 2012

U . S . F o r eca s t Tab l e s Table 3. Quarterly Summary of the Forecast of the U.S.

Table 3. Quarterly Summary of the Forecast of the U.S. 2012Q4

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.

1.4 1.5 2.0 10.6 2.3 0.6 2.3 5.8 5.6 14.0 -13.8 6.5 9.5 47.5 -36.3 -6.0 -5.9 4.5 -2.2 -13.7 -0.9 23.0 2.7 2.6 -6.6 -0.9

2013Q1

2.6 2.0 2.7 5.6 2.6 2.3 4.6 6.9 8.2 15.3 12.5 6.8 9.1 39.5 22.1 -1.3 8.3 1.0 -21.7 2.4 4.0 15.9 5.0 6.8 -4.1 -0.4

2013Q2

1.9 2.0 2.5 5.8 2.1 2.1 6.8 9.1 10.8 19.7 19.8 6.2 16.4 7.0 38.4 0.9 8.4 0.1 -16.4 3.8 7.0 13.4 3.8 6.3 -3.5 0.2

2013Q3

2.3 2.3 2.6 4.0 2.4 2.4 8.2 7.8 10.2 25.2 12.0 7.4 7.5 2.1 29.6 9.2 5.8 24.6 1.7 8.3 13.7 14.3 3.2 5.4 -3.4 0.0

2013Q4

2.6 2.5 2.7 4.9 2.3 2.5 8.9 8.2 9.3 18.3 9.5 13.5 3.4 3.2 4.8 10.9 26.2 9.9 8.8 3.1 8.5 20.0 3.2 6.5 -3.3 0.2

2014Q1

2014Q3

2014Q4

2015Q1

2015Q2

Composition of Real GDP, Percent Change, Annual Rate 2.7 3.1 3.7 3.7 3.0 3.1 2.9 3.3 3.7 3.6 2.9 3.1 2.9 2.8 2.9 3.0 1.8 2.4 3.1 5.2 5.7 6.1 2.2 4.2 2.5 2.0 2.0 1.9 1.1 1.4 3.0 2.6 2.8 2.9 1.9 2.5 7.9 7.7 7.8 7.8 8.2 6.0 6.4 6.6 7.6 7.9 8.0 5.3 9.0 9.1 8.6 7.6 7.3 5.5 13.0 14.6 14.9 11.2 9.1 10.6 11.2 15.2 12.6 11.7 12.7 8.3 6.3 7.9 7.4 8.9 10.4 7.0 3.1 2.1 7.5 7.4 8.4 1.3 3.6 3.5 6.3 3.7 5.1 5.0 7.1 -6.1 1.1 12.1 2.8 1.3 11.9 10.8 8.5 7.5 8.8 7.7 21.7 28.6 22.6 23.0 22.9 23.0 28.4 8.6 -8.1 -9.4 -1.7 5.7 6.9 6.1 15.0 8.1 4.8 -0.3 2.7 0.8 0.0 0.9 2.3 -1.4 8.1 10.3 10.5 8.5 9.0 7.1 19.8 22.4 23.2 21.4 17.4 13.8 4.0 6.1 6.9 6.9 8.3 7.2 5.0 4.8 4.3 5.0 4.9 4.4 -3.2 -3.2 -2.9 -2.4 -2.0 -1.8 0.0 0.3 0.3 0.4 0.5 0.7

2015Q3

3.0 3.0 2.5 3.6 2.0 2.5 5.2 5.3 5.4 11.9 8.6 7.7 1.8 6.0 0.0 4.9 20.2 13.4 -3.7 -9.8 5.6 10.7 6.9 3.9 -1.8 0.5

2015Q4

2.6 2.8 2.5 4.5 1.9 2.4 4.1 4.7 5.2 11.5 7.8 8.5 -1.2 6.2 -1.9 2.6 20.6 10.8 -6.4 -16.8 5.3 7.0 6.5 3.2 -1.5 0.5

2016Q1

2.6 2.8 2.5 5.0 1.9 2.3 3.4 3.5 5.0 11.9 7.5 5.5 -4.7 4.3 -6.3 3.2 17.9 18.1 -5.6 -16.2 3.4 5.8 6.6 2.8 -1.2 0.5

2016Q2

2.7 2.8 2.6 4.3 2.1 2.4 3.9 3.8 5.7 12.0 7.2 4.6 -4.1 4.9 -3.3 4.3 13.8 12.0 0.3 -11.5 5.9 3.3 6.6 2.9 -1.2 0.7

2016Q3

2.9 2.9 2.7 4.3 2.3 2.5 5.2 4.6 6.3 12.3 7.8 3.4 -0.2 4.8 -2.6 6.7 12.6 7.8 -1.4 2.4 6.6 1.7 6.7 3.6 -1.1 0.6

Billions of Dollars 15173 13663.8 13751.3 13815.6 13893 13983 14077.6 14185.5 14314 14444.4 14551.8 14664.7 14773.9 14870.1 14966.6 15065.9 15861.5 16054.5 16179.1 16338.7 16502.4 16681.8 16875 17092.3 17314.2 17524 17725.4 17922.6 18110.5 18307.1 18506.4 18712.8 Prices & Wages, Percent Change, Annual Rate 1.6 1.6 1.5 1.5 1.9 1.9 1.9 1.8 1.6 2.0 2.2 2.3 2.1 1.9 2.1 0.6 1.1 0.9 0.6 1.3 2.9 2.4 2.4 2.5 2.7

0.8 0.7 1.7 1.5 2.0

2.3 1.5 1.8 1.3 2.1

1.2 0.9 1.8 -0.8 2.1

1.7 2.1 1.8 1.4 2.1

1.4 1.7 1.8 0.6 2.3

80.0 -0.4 1.8 77.3 49.8 84.7 14.808 0.832 4.269 7.9 1.6 -1044 -468

89.9 0.6 3.1 77.7 56.6 85.5 15.024 0.901 4.379 7.8 1.5 -904 -444

89.6 -0.1 1.8 77.8 52.5 84.8 15.325 0.959 4.453 7.8 1.7 -862 -444

90.2 0.1 3.4 78.0 48.9 84.8 15.362 1.034 4.562 7.7 1.9 -821 -457

90.5 0.6 1.9 78.2 50.4 85.5 15.477 1.116 4.689 7.6 1.7 -804 -478

89.5 0.7 2.5 78.1 46.6 85.0 15.499 1.184 4.824 7.5 1.7 -769 -506

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))

0.14 0.10 0.19 0.75 1.77 2.93 3.38 1402 -0.1 0.870 -5.5

0.14 0.09 0.20 0.83 1.83 3.00 3.38 1428 7.8 0.884 6.6

0.14 0.09 0.22 1.01 1.92 3.07 3.38 1447 5.3 0.901 7.9

0.14 0.10 0.23 1.21 2.17 3.21 3.40 1473 7.4 0.926 11.5

0.14 0.10 0.24 1.38 2.42 3.51 3.50 1497 6.6 0.923 -1.4

0.14 0.10 0.24 1.41 2.56 3.65 3.64 1499 0.5 0.904 -7.7

Personal Income (Bil. of $) (% change) Disposable Income (Bil. of $) (% change) Real Disposable Income (Bil. of 2005 $) (% change) Saving Rate (%) After-Tax Profits (Billions of $) (% change)

13551 3.2 12046 2.8 10366 2.1 3.7 1691 -7.4

13685 4.0 12130 2.8 10403 1.5 3.4 1816 33.2

13841 4.6 12241 3.7 10478 2.9 3.5 1796 -4.4

13996 4.6 12361 4.0 10539 2.3 3.5 1807 2.4

14151 4.5 12500 4.6 10623 3.2 3.6 1809 0.5

14355 5.9 12659 5.2 10714 3.5 3.7 1708 -20.5

Oil - WTI ($ per barrel) Productivity (% change) Industrial Production (% change) Factory Operating Rate Nonfarm Inven. Chg. (Bil. of 2005 $) 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. $)

2014Q2

1.5 1.3 1.9 -0.8 2.6

1.5 1.4 1.9 -0.9 2.6

1.6 2.0 1.9 1.0 2.7

1.7 1.8 1.9 1.0 2.9

1.7 2.1 1.9 2.2 2.8

1.6 2.1 1.9 1.5 2.8

Other Key Measures 87.9 86.2 85.4 84.5 1.2 1.5 1.4 0.8 2.8 3.7 3.8 3.7 78.2 78.5 78.8 79.1 41.4 42.3 44.3 47.0 85.3 86.5 88.0 88.3 15.728 15.939 16.121 16.133 1.273 1.355 1.452 1.521 5.058 5.110 5.171 5.183 7.4 7.2 7.1 6.9 1.7 2.0 2.2 1.9 -768 -753 -738 -680 -514 -515 -526 -555

80.7 1.2 3.2 79.3 49.8 89.7 16.197 1.587 5.156 6.7 1.9 -706 -560

79.2 1.2 3.1 79.4 51.5 89.7 16.231 1.648 5.161 6.6 1.8 -723 -563

82.2 1.0 2.3 79.4 44.4 89.0 16.293 1.686 5.081 6.5 1.8 -732 -575

83.2 1.2 2.4 79.3 37.2 88.8 16.442 1.693 5.047 6.4 1.7 -732 -593

85.5 1.4 2.4 79.3 32.7 87.7 16.481 1.702 5.021 6.3 1.6 -751 -602

87.7 1.7 2.8 79.3 33.5 87.6 16.575 1.712 4.967 6.2 1.6 -775 -619

Financial Markets, NSA 0.14 0.20 0.33 0.94 0.10 0.15 0.26 0.83 0.23 0.29 0.41 1.11 1.47 1.56 1.68 2.19 2.67 2.83 3.06 3.62 3.79 3.93 4.08 4.44 3.83 4.20 4.57 5.11 1515 1526 1531 1506 4.4 3.0 1.3 -6.4 0.894 0.883 0.876 0.876 -4.4 -5.1 -3.0 0.2

1.41 1.40 1.85 2.65 3.98 4.63 5.65 1459 -12.0 0.871 -2.4

1.94 1.88 2.30 2.97 4.14 4.69 5.93 1427 -8.5 0.867 -1.9

2.48 2.43 2.90 3.42 4.33 4.86 6.10 1427 -0.1 0.863 -1.8

3.03 2.96 3.44 3.90 4.53 5.06 6.35 1438 3.3 0.861 -1.1

3.52 3.42 3.91 4.30 4.75 5.26 6.57 1454 4.4 0.858 -1.4

3.93 3.80 4.27 4.59 4.85 5.35 6.68 1483 8.4 0.855 -1.2

Incomes 14703 14887 5.1 5.1 12978 13143 5.1 5.2 10898 10993 3.5 3.6 4.0 4.1 1733 1741 2.0 1.9

15258 5.1 13446 5.7 11156 4.2 4.5 1621 -4.1

15443 5.0 13629 5.6 11267 4.0 4.8 1608 -3.2

15622 4.7 13795 5.0 11351 3.0 4.9 1601 -1.7

15832 5.5 13942 4.3 11423 2.5 4.9 1521 -18.5

16010 4.6 14104 4.7 11501 2.8 4.9 1526 1.3

16187 4.5 14278 5.0 11587 3.0 5.0 1515 -2.8

14523 4.8 12817 5.1 10804 3.4 3.8 1724 3.8

15070 5.0 13261 3.6 11041 1.8 4.1 1638 -21.6

Institute for Economic Competitiveness

21

U . S . F o r eca s t Tab l e s Table 4. Quarterly Gross Domestic Product

Table 4. Quarterly Gross Domestic Product

2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3

Real GDP Billions 2005 $ Gross Domestic Product Final Sales of Domestic Product Total Consumption Durables

13663.8 13751.3 13815.6 13893.0 13983.0 14077.6 14185.5 14314.0 14444.4 14551.8 14664.7 14773.9 14870.1 14966.6 15065.9 15173.0 13620.0 13686.8 13755.3 13834.1 13919.5 14017.8 14130.7 14258.1 14386.5 14491.0 14601.1 14708.4 14811.6 14915.1 15018.6 15124.9

9678.9 9744.6 9805.0 9867.4 9933.5 10003.9 10073.0 10145.8 10221.7 10266.5 10328.0 10392.2 10457.4 10522.6 10589.6 10659.6 1397.5 1416.8 1436.8 1451.1 1468.5 1479.7 1498.7 1519.7 1542.3 1550.9 1567.1 1581.0 1598.5 1618.2 1635.4 1652.6

Nondurables

2116.6 2130.1 2141.0 2153.9 2166.3 2179.5 2190.6 2201.6 2211.9 2217.8 2225.5 2236.4 2247.0 2257.4 2269.0 2282.3

Services

6200.1 6235.8 6268.4 6305.3 6344.1 6390.5 6432.4 6476.5 6523.2 6554.3 6594.1 6635.2 6674.9 6713.5 6754.2 6796.3

Nonresidential Fixed Investment Equipment & Software Information Processing Equipment Computers & Peripherals Communications Equipment

1486.7 1503.3 1528.3 1558.6 1592.2 1622.8 1653.3 1684.7 1716.6 1750.9 1776.5 1799.0 1817.0 1832.4 1850.0 1873.5 1158.9 1178.3 1204.4 1227.2 1251.5 1271.0 1291.4 1315.1 1340.4 1366.4 1384.2 1402.1 1418.2 1430.5 1443.8 1459.9 625.3

637.7

654.3

670.4

685.4

700.3

715.8

730.6

744.2

757.5

767.7

777.8

787.7

797.4

808.5

820.9

130.8

135.6

141.8

150.0

156.4

161.3

166.8

172.7

177.4

181.3

185.9

191.2

196.4

202.0

207.8

214.0

95.7

98.5

103.1

106.0

108.5

111.4

115.4

118.9

122.2

125.9

128.5

131.2

133.6

136.1

138.4

141.1

Industrial Equipment

166.4

169.2

171.7

174.8

180.4

183.2

186.7

190.0

194.1

199.0

202.4

206.1

210.4

213.2

215.6

217.5

Transportation Equipment

202.6

207.0

215.1

219.0

220.8

222.5

223.7

227.7

231.8

236.5

237.3

238.4

237.7

234.8

232.4

232.2

24.2

26.3

26.7

26.9

27.1

27.3

27.6

28.0

28.2

28.6

28.9

29.4

29.8

30.1

30.5

30.9

41.1

43.2

46.8

50.0

50.6

51.4

50.6

50.8

52.2

52.6

52.8

52.8

52.5

51.7

51.2

50.9

340.9

339.8

340.5

348.1

357.3

367.4

376.9

384.7

391.7

400.1

407.6

412.5

415.1

418.4

422.8

429.7

Commercial & Health

81.6

83.2

84.9

86.1

91.3

95.9

102.1

107.5

113.2

119.2

125.5

131.4

137.7

143.5

148.2

152.6

Manufacturing

43.3

43.4

43.4

45.8

46.9

50.0

51.0

49.9

48.7

48.5

49.2

50.8

52.1

54.3

55.9

56.9

Aircraft Other Equipment Structures

Power & Communication

62.5

58.7

56.2

56.4

57.6

58.6

59.4

61.6

62.8

63.5

63.5

62.9

61.8

61.0

61.0

60.8

Mining & Petroleum

96.6

97.2

98.1

100.1

100.9

101.6

101.8

101.8

102.0

102.6

102.2

99.6

95.2

91.0

88.3

88.8

Other

55.1

55.6

56.6

58.4

59.6

60.8

62.3

63.9

65.2

66.6

67.7

68.7

69.6

70.1

71.1

72.3

391.4

406.0

419.0

433.3

453.5

474.4

499.0

525.7

551.8

574.4

593.3

608.6

618.9

627.6

632.7

635.4

Residential Fixed Investment Exports

1846.7 1869.3 1887.0 1902.1 1917.3 1936.1 1965.0 1998.2 2031.8 2072.6 2109.1 2144.7 2178.9 2214.2 2249.6 2286.5

Imports

2262.6 2299.8 2335.5 2366.1 2403.5 2433.1 2461.9 2487.8 2518.1 2548.3 2575.6 2600.5 2620.7 2638.6 2657.8 2681.6

Federal Government

1028.4 1017.7 1008.7

State & Local Government

1458.1 1456.8 1457.5 1457.5 1458.1 1458.0 1459.2 1460.3 1461.8 1463.5 1466.2 1468.1 1469.7 1471.4 1473.9 1475.9

22

U.S. Forecast | December 2012

999.9

991.5

983.4

975.4

968.3

962.5

957.6

953.2

948.8

945.3

942.4

939.5

936.9

U . S . F o r eca s t Tab l e s Table 5. Annual Employment

Table 5. Annual Employment 2005

2006

2007

History 2008 2009

2010

2011

2012

2013

Forecast 2014 2015

2016

Millions Total Nonfarm Employment

133.694 136.091 137.595 136.794 130.787 129.856 131.359

133.26

135.336 137.765

140.44 142.846

Private Nonfarm

111.890 114.116 115.375 114.288 108.231 107.368 109.255

111.28

113.356 115.723

118.29 120.558

Mining

0.562

0.620

0.663

0.709

0.644

0.655

0.736

0.78

0.751

0.736

0.71

0.673

Construction

7.333

7.690

7.627

7.162

6.013

5.518

5.504

5.54

5.682

6.131

6.85

7.462

Manufacturing

14.226

14.156

13.878

13.403

11.845

11.527

11.736

11.94

12.073

12.293

12.52

12.721

Trade, Transportation and Utilities

25.960

26.277

26.627

26.296

24.906

24.637

25.017

25.35

25.730

26.016

26.34

26.727

Transportation & Warehousing

4.363

4.469

4.542

4.509

4.240

4.189

4.290

4.38

4.483

4.642

4.81

4.969

Financial Activities

8.153

8.328

8.300

8.143

7.770

7.653

7.681

7.74

7.832

7.942

7.90

7.832

Education & Health

17.370

17.825

18.321

18.838

19.190

19.528

19.885

20.33

20.627

20.957

21.32

21.870

Professional & Business Services

16.952

17.572

17.947

17.740

16.570

16.721

17.330

17.90

18.599

19.401

20.38

21.051

3.061

3.038

3.032

2.984

2.803

2.707

2.658

2.63

2.648

2.681

2.74

2.762

Leisure & Hospitality

12.813

13.109

13.428

13.441

13.074

13.042

13.318

13.64

13.925

14.016

14.00

13.958

Government

21.804

21.975

22.219

22.507

22.556

22.488

22.105

21.98

21.980

22.042

22.15

22.288

2.732

2.733

2.735

2.762

2.831

2.976

2.858

2.81

2.754

2.685

2.63

2.588

19.073

19.242

19.484

19.745

19.725

19.512

19.247

19.17

19.226

19.357

19.52

19.699

Information

Federal State & Local

Growth Rates Total Nonfarm Employment

1.73

1.79

1.11

-0.58

-4.39

-0.70

1.16

1.45

1.56

1.79

1.94

1.71

Private Nonfarm

1.90

1.99

1.10

-0.94

-5.30

-0.78

1.76

1.85

1.87

2.09

2.22

1.92

Mining

9.36

10.03

5.74

6.70

-14.62

11.54

12.35

0.50

-2.59

-2.63

-4.80

-4.36

Construction

5.81

2.36

-1.95

-9.22

-16.60

-3.43

0.74

0.53

4.22

10.29

11.52

7.15

-0.84

-1.04

-2.05

-5.37

-11.44

0.57

1.96

1.49

1.44

2.03

1.79

1.42

Trade, Transportation and Utilities

1.65

1.14

1.17

-3.28

-4.72

0.65

1.59

1.41

1.52

0.97

1.30

1.52

Transportation & Warehousing

2.48

2.60

0.89

-2.71

-5.67

1.35

2.03

2.08

3.27

3.43

3.56

3.23

Financial Activities

2.13

1.35

-1.31

-2.45

-4.32

-0.32

0.36

1.00

1.58

0.79

-0.98

-0.66

Education & Health

2.51

2.62

2.88

2.56

1.71

1.77

2.00

2.16

1.18

1.71

1.97

2.74

Professional & Business Services

3.74

3.08

1.64

-3.65

-5.19

2.96

3.57

3.13

4.42

5.01

4.23

3.01

-1.07

-0.93

-0.04

-3.10

-6.04

-2.31

-1.65

-0.74

1.15

2.33

1.31

0.65

Leisure & Hospitality

2.15

2.85

2.15

-1.63

-2.49

1.23

2.29

2.37

1.94

-0.20

0.15

-0.53

Government

0.81

1.03

1.16

1.00

-0.20

-0.97

-1.20

-0.04

-0.01

0.33

0.61

0.64

Federal

0.34

-0.21

0.54

1.19

2.40

4.72

-0.92

-1.50

-2.49

-2.42

-1.84

-1.44

State & Local

0.88

1.20

1.25

0.98

-0.55

-1.34

-1.24

0.18

0.35

0.72

0.95

0.92

Manufacturing

Information

Institute for Economic Competitiveness

23

U . S . F o r eca s t Tab l e s Table 6. Quarterly Employment Table 6. Quarterly Employment 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3

Employment (Millions) Total Nonfarm Employment

133.9 134.5 135.0 135.6 136.2 136.8 137.4 138.1 138.8 139.5 140.1 140.8 141.4 142.0 142.6 143.1

Private Nonfarm

111.9 112.5 113.0 113.7 114.2 114.8 115.3 116.0 116.7 117.4 118.0 118.6 119.2 119.8 120.3 120.8

Mining

0.8

0.8

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

Construction

5.6

5.6

5.6

5.7

5.8

5.9

6.0

6.2

6.4

6.6

6.8

7.0

7.1

7.3

7.4

7.5

Manufacturing

12.0

12.0

12.1

12.1

12.1

12.2

12.3

12.3

12.4

12.5

12.5

12.5

12.6

12.7

12.7

12.7

Trade, Transportation and Utilities

25.5

25.6

25.7

25.8

25.9

25.9

26.0

26.0

26.1

26.2

26.3

26.4

26.5

26.6

26.7

26.8

Transportation & Warehousing

4.4

4.4

4.5

4.5

4.5

4.6

4.6

4.7

4.7

4.8

4.8

4.8

4.9

4.9

4.9

5.0

Financial Activities

7.8

7.8

7.8

7.8

7.9

7.9

7.9

8.0

8.0

7.9

7.9

7.9

7.9

7.8

7.8

7.8

Education & Health

20.5

20.5

20.6

20.7

20.7

20.9

20.9

21.0

21.1

21.1

21.3

21.4

21.5

21.6

21.8

21.9

Professional & Business Services

18.1

18.3

18.5

18.7

18.9

19.0

19.2

19.5

19.8

20.1

20.3

20.5

20.7

20.8

21.0

21.1

2.6

2.6

2.7

2.7

2.7

2.7

2.7

2.7

2.7

2.7

2.7

2.7

2.8

2.8

2.8

2.8

Leisure & Hospitality

13.7

13.8

13.9

14.0

14.0

14.0

14.0

14.0

14.0

14.0

14.0

14.0

14.0

14.0

14.0

13.9

Government

22.0

22.0

22.0

22.0

22.0

22.0

22.0

22.0

22.1

22.1

22.1

22.2

22.2

22.2

22.3

22.3

2.8

2.8

2.8

2.7

2.7

2.7

2.7

2.7

2.7

2.6

2.6

2.6

2.6

2.6

2.6

2.6

19.2

19.2

19.2

19.2

19.3

19.3

19.3

19.4

19.4

19.4

19.5

19.5

19.6

19.6

19.7

19.7

Information

Federal State & Local

Growth Rates Total Nonfarm Employment

1.57

1.52

1.66

1.87

1.73

1.68

1.67

2.00

2.16

1.90

1.87

1.84

1.80

1.69

1.63

1.59

Private Nonfarm

1.85

1.92

1.98

2.22

2.01

1.92

1.95

2.34

2.48

2.17

2.09

2.06

2.03

1.89

1.83

1.76

-8.72

-3.71

-6.53

-2.41

2.02

-3.84

-1.60

-2.26

-2.93

-3.33

-4.30

-5.90

-6.05

-6.11

-5.05

-3.81

Construction

2.65

3.17

2.80

4.11

6.50

7.52

9.35 11.07 11.68 11.93 11.69 10.84

9.74

8.73

7.61

6.31

Manufacturing

-0.12

0.72

2.51

1.74

0.74

2.51

1.81

1.57

2.15

2.25

1.63

1.37

1.85

1.69

1.51

1.32

Trade, Transportation and Utilities

2.10

1.23

1.37

1.89

1.54

0.36

0.83

1.29

1.40

1.03

1.31

1.42

1.40

1.44

1.46

1.72

Transportation & Warehousing

1.29

1.16

3.92

4.05

3.95

3.27

3.12

3.41

3.89

4.08

3.41

3.54

3.21

3.13

3.10

3.43

Financial Activities

0.96

1.13

0.97

1.98

2.24

1.42

1.43

0.71

-0.42

-0.92

-1.15

-0.77

-1.06

-1.21

-0.86

-0.31

Education & Health

2.23

1.21

0.53

1.76

1.20

2.46

1.15

1.48

1.75

1.34

2.15

2.04

2.34

2.82

3.14

2.49

Professional & Business Services

3.11

5.22

4.38

4.09

4.00

3.04

4.68

5.96

6.35

4.99

4.48

4.07

3.40

2.96

3.20

2.94

-1.02

-1.90

6.96

1.56

-2.03

0.08

1.61

4.08

3.52

1.30

1.17

0.96

1.82

0.72

0.46

1.00

Leisure & Hospitality

2.46

2.12

2.42

1.58

1.62

0.97

-0.52

-0.94

-0.30

0.46

-0.47

0.20

0.42

-0.25

-1.16

-0.60

Government

0.14

-0.50

0.02

0.12

0.30

0.45

0.22

0.23

0.43

0.47

0.72

0.64

0.60

0.59

0.56

0.64

-1.44

-2.39

-2.53

-2.53

-2.53

-2.53

-2.52

-2.41

-2.24

-2.24

-1.75

-1.75

-1.62

-1.50

-1.50

-1.37

0.38

-0.22

0.40

0.51

0.70

0.87

0.61

0.60

0.80

0.85

1.06

0.97

0.90

0.88

0.84

0.91

Mining

Information

Federal State & Local

24

U.S. Forecast | December 2012

U . S . F o r eca s t Tab l e s Table 7. Quarterly Implicit Price Deflators (2000=100)

Table 7. Quarterly Implicit Price Deflators (2005=100)

2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3

GDP

116.1 116.7 117.1 117.6 118.0 118.5 119.0 119.4 119.9 120.4 120.9 121.3 121.8 122.3 122.8 123.3

Consumption

116.2 116.6 116.8 117.3 117.7 118.1 118.6 119.1 119.6 120.1 120.5 121.0 121.5 122.1 122.6 123.2

Durables Motor Vehicles Furniture

89.0

88.7

88.4

88.1

87.9

87.8

87.6

87.5

87.4

87.3

87.2

87.0

86.9

86.7

86.6

86.4

108.8 108.9 108.9 108.9 109.0 109.2 109.5 109.8 110.0 110.3 110.6 110.8 111.0 111.2 111.4 111.6 91.6

91.4

91.1

90.8

90.6

90.4

90.4

90.3

90.3

90.3

90.3

90.3

90.3

90.3

90.2

90.1

Other Durables

115.7 116.0 116.3 116.5 116.9 117.4 118.0 118.5 119.0 119.5 120.0 120.4 120.8 121.2 121.6 122.0

Nondurables

122.0 122.1 121.5 122.0 122.2 122.3 122.4 122.6 122.9 123.4 123.5 123.8 124.6 125.2 126.0 126.7

Food

121.6 123.0 123.6 123.9 123.8 123.6 123.5 123.6 123.8 124.2 124.6 125.0 125.5 126.0 126.4 126.9

Clothing & Shoes 104.0 104.4 104.8 105.1 105.3 105.5 105.7 105.9 106.0 106.2 106.2 106.3 106.3 106.3 106.3 106.4 Gasoline & Oil

155.7 151.0 142.8 144.5 144.3 143.4 142.0 140.7 139.4 139.5 136.0 134.5 137.3 138.5 140.6 142.8

Fuel

166.0 162.3 158.4 160.2 160.2 159.9 159.3 158.5 157.7 158.0 155.6 154.5 156.7 158.0 159.9 161.9

Services

119.7 120.3 121.0 121.6 122.2 122.9 123.7 124.4 125.0 125.7 126.4 127.0 127.6 128.3 129.0 129.7

Housing

117.1 117.7 118.4 119.2 119.9 120.6 121.4 122.1 122.7 123.3 124.0 124.6 125.2 125.7 126.3 126.9

Electricity

129.9 131.1 132.5 133.9 135.5 136.8 138.0 139.0 139.9 141.2 142.4 142.7 142.5 142.6 143.1 143.6

Natural Gas

79.8

81.3

84.6

87.6

91.0

94.8

98.6 102.0 104.3 105.1 103.1

99.0

95.7

93.7

94.7

94.4

Water & Sewer

149.3 150.8 152.3 153.6 154.9 156.2 157.5 158.7 159.9 161.2 162.4 163.7 165.0 166.2 167.5 168.8

Telephone

103.2 102.7 102.4 102.1 101.8 101.5 101.2 101.0 100.7 100.4 100.1

Transportation

124.0 124.6 124.9 125.4 125.9 126.5 127.0 127.6 128.1 128.7 129.2 129.7 130.3 130.9 131.5 132.1

Other Services

126.1 126.6 127.2 127.8 128.4 129.0 129.7 130.5 131.2 132.0 132.7 133.5 134.3 135.1 136.0 136.9

99.9

99.6

99.4

99.1

98.9

Institute for Economic Competitiveness

25

U . S . F o r eca s t Tab l e s Table 8. Percent Change in Implicit Price Deflators

Table 8. Percent Change in Implicit Price Deflators

2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3

GDP

0.8

2.3

1.2

1.7

1.4

1.6

1.6

1.5

1.5

1.9

1.5

1.5

1.6

1.7

1.7

1.6

Consumption

0.7

1.3

0.8

1.6

1.3

1.6

1.6

1.6

1.6

1.9

1.4

1.5

1.9

1.7

1.9

1.9

Durables

-1.8

-1.0

-1.5

-1.3

-1.2

-0.5

-0.5

-0.6

-0.5

-0.5

-0.5

-0.7

-0.7

-0.8

-0.7

-0.8

Motor Vehicles

-1.2

0.5

-0.3

0.2

0.3

0.9

1.0

1.0

1.0

1.0

0.9

0.8

0.8

0.7

0.8

0.8

Furniture

-2.2

-1.0

-1.2

-1.2

-1.1

-0.6

-0.4

-0.3

-0.1

0.1

0.1

0.0

-0.1

-0.2

-0.2

-0.3

Other Durables

3.2

1.3

0.9

0.9

1.1

1.9

1.9

1.7

1.7

1.8

1.6

1.4

1.4

1.3

1.3

1.3

Nondurables

-2.1

0.3

-2.0

1.8

0.4

0.4

0.5

0.6

0.8

1.7

0.3

0.9

2.7

2.0

2.4

2.4

Food

2.2

4.7

2.1

1.0

-0.5

-0.6

-0.2

0.1

0.6

1.4

1.4

1.3

1.4

1.5

1.5

1.5

Clothing & Shoes

0.7

1.8

1.4

1.0

0.9

0.8

0.8

0.6

0.5

0.6

0.3

0.2

0.1

0.0

0.1

0.1

-18.3 -11.4 -20.2

5.1

-0.7

-2.4

-3.7

-3.7

-3.6

0.2

-9.5

-4.5

8.7

3.4

6.3

6.4

Gasoline & Oil Fuel

-5.9

-8.5

-9.4

4.6

0.2

-0.7

-1.7

-1.9

-1.9

0.5

-5.7

-2.9

5.7

3.4

5.1

5.0

Services

2.1

2.1

2.2

2.0

2.0

2.4

2.4

2.3

2.2

2.3

2.1

2.0

2.0

2.1

2.2

2.2

Housing

1.9

2.1

2.5

2.5

2.5

2.5

2.5

2.4

2.1

2.1

2.0

2.0

1.9

1.9

1.8

1.8

Electricity

2.2

3.6

4.3

4.4

4.8

3.9

3.5

3.1

2.6

3.7

3.5

0.9

-0.7

0.2

1.5

1.4

15.5

7.8

17.5

14.6

16.8

17.5

17.1

14.6

9.1

3.3

-7.5 -14.7 -12.7

-8.4

4.4

-1.2

Water & Sewer

4.5

4.1

3.9

3.6

3.4

3.3

3.3

3.2

3.1

3.2

3.2

3.1

3.1

3.1

3.1

3.0

Telephone

0.0

-2.2

-1.0

-1.2

-1.3

-1.2

-1.1

-0.7

-1.2

-1.1

-1.1

-0.9

-1.2

-1.1

-0.9

-0.8

Transportation

0.9

1.8

1.2

1.5

1.5

2.1

1.7

1.6

1.6

2.0

1.6

1.6

1.8

1.9

1.9

1.9

Other Services

0.9

1.7

1.8

1.9

1.9

1.9

2.1

2.6

2.3

2.2

2.3

2.5

2.4

2.4

2.5

2.7

Natural Gas

26

U.S. Forecast | December 2012

U . S . F o r eca s t Tab l e s Table 9. Annual Implicit Price Deflators (2000=100) Table 9. Annual Implicit Price Deflators (2005=100) History 2005 2006 2007 2008 2009 2010 2011 2012

Forecast 2013 2014 2015 2016

GDP

100.0 103.2 106.2 108.6 109.5 111.0 113.4 115.4

117.4 119.2 121.1 123.1

Consumption

100.0 102.7 105.5 108.9 109.0 111.1 113.8 115.8

117.1 118.9 120.8 122.9

Durables Motor Vehicles

100.0 98.4 100.0 100.1

96.4 99.6

94.6 97.8

92.8 91.6 90.8 89.6 97.9 104.0 107.5 108.9

88.3 87.6 87.1 86.5 108.9 109.6 110.7 111.5

Furniture

100.0

98.9

98.1

97.8

Other Durables

100.0 101.8 105.5 109.1 110.4 110.9 114.3 115.2

116.4 118.2 120.2 121.8

Nondurables

100.0 103.2 106.5 112.6 109.2 112.6 119.4 122.1

122.0 122.6 123.8 126.4

Food 100.0 101.7 105.6 112.1 113.4 113.7 118.2 120.9 Clothing & Shoes 100.0 99.6 98.6 97.9 98.8 98.1 99.8 103.4

123.6 123.6 124.8 126.7 104.9 105.8 106.2 106.3

Gasoline & Oil Fuel

100.0 112.8 123.9 144.9 105.5 124.8 156.9 160.1 100.0 114.2 123.5 168.4 114.3 134.1 171.6 171.7

145.6 141.4 136.8 141.7

Services Housing Electricity Natural Gas

100.0 100.0 100.0 100.3

110.6 112.2 114.4 116.4 118.8 110.2 112.2 112.2 113.8 116.2 124.2 128.1 128.3 130.7 130.4 116.1 90.3 88.5 86.0 77.8

121.3 124.0 126.7 129.3 118.8 121.7 124.3 126.6 133.2 138.4 142.2 143.3 86.1 99.9 100.7 94.3

Water & Sewer

100.0 104.9 110.3 116.7 123.9 131.8 138.6 146.4

152.9 158.1 163.1 168.1

Telephone Transportation Other Services

100.0 100.6 102.4 104.0 105.5 104.9 103.3 103.5 100.0 104.2 106.6 112.5 115.7 118.1 121.4 123.8 100.0 104.1 107.4 112.5 115.4 119.1 122.3 125.6

102.2 101.1 100.0 99.0 125.2 127.3 129.5 131.8 127.5 130.1 133.1 136.5

99.6

103.4 103.6 112.1 102.7

107.0 107.3 116.7 102.5

93.7

92.4

92.2

91.0

90.3

90.3

90.2

160.3 158.9 156.2 160.9

Institute for Economic Competitiveness

27

U . S . F o r eca s t Tab l e s Table 10. Percent Change in Implicit Price Deflators

Table 10. Percent Change in Implicit Price Deflators 2006

2007

History 2008 2009

2010

2011

2012

2013

Forecast 2014 2015

3.5 2.9 3.3 1.9 -1.3 -1.8 1.0 -0.7 -0.3 -0.1 -0.2 3.2 4.5 0.5 1.5 1.7 -1.3 0.2 31.8 -0.8 33.1 -0.3 3.8 3.1 2.5 4.4 10.2 8.6 44.9 -18.3 5.0 4.9 0.2 1.2 4.9 2.5 4.7 4.0

2.6 3.5 -1.9 0.5 -1.5 2.5 6.4 4.7 -1.2 30.4 28.5 3.5 3.0 5.3 3.5 5.2 1.5 3.4 3.3

2.1 0.5 1.8 1.4 -2.1 -1.1 -4.0 5.5 0.3 -2.0 3.4 1.3 1.0 2.8 7.0 -1.7 -0.9 1.4 5.1 26.7 23.2 -0.3 3.0 1.4 2.6 0.9 8.4 -0.3 19.1 -17.9 6.7 6.0 2.0 0.7 6.0 2.0 5.0 2.2

1.8 1.5 -2.0 3.6 -4.3 0.6 2.3 1.3 -1.4 13.3 16.0 1.8 0.3 0.5 -0.9 5.8 -1.0 1.5 2.9

2.0 2.5 -0.5 3.4 -0.1 3.2 5.9 5.1 4.4 19.7 27.2 1.9 1.9 2.5 -2.0 4.9 -1.3 3.3 3.0

1.8 1.4 -1.6 0.4 -0.5 0.3 1.0 1.2 2.3 -0.2 -2.9 2.1 2.1 -1.5 -3.9 6.0 0.0 1.2 2.0

1.7 1.3 -1.2 0.2 -1.1 1.0 0.1 1.8 1.3 -6.8 -3.3 2.1 2.4 4.3 14.2 3.8 -1.4 1.5 1.8

1.6 1.6 -0.5 1.0 -0.3 1.8 0.6 0.0 0.7 -3.4 -1.5 2.3 2.4 3.3 14.6 3.2 -1.1 1.8 2.2

2005 GDP Consumption Durables Motor Vehicles Furniture Other Durables Nondurables Food Clothing & Shoes Gasoline & Oil Fuel Services Housing Electricity Natural Gas Water & Sewer Telephone Transportation Other Services

1.6 1.6 -0.6 0.9 0.0 1.5 1.4 1.4 0.3 -1.3 -0.6 2.1 2.0 1.8 -7.9 3.2 -1.1 1.7 2.4

2016

1.7 1.9 -0.8 0.8 -0.3 1.3 2.3 1.5 0.1 5.6 4.6 2.2 1.8 1.1 -1.2 3.1 -0.9 1.9 2.6

Table 11. Personal Income and its Components

Table 11. Personal Income and its Components History

2005

2006

2007

2008

Forecast 2009

2010

2011

2012

2013

2014

2015

2016

Personal Income Wages & Salaries

10485.9 11268.1 11912.3 12460.2 11867.0 12321.9 12947.3 13395.7

7065.1

7477.0

7855.9

Personal Income Billions Current Dollars 13918.4 14617.1 15348.3 16099.9 8068.3 7799.4 7970.0 8295.2 8588.6 8927.2 9349.9 9815.2 10276.9

Other Labor Income Nonfarm Income Farm Income Rental Income Dividends

931.6 1025.9 43.9 178.2 555.0

960.2 1103.6 29.4 146.5 702.2

980.5 1052.6 37.8 143.7 791.9

1052.4 1046.1 51.8 231.6 783.4

1067.2 939.5 39.9 289.7 533.3

1097.3 1059.1 44.3 349.2 581.7

1139.0 1102.8 54.6 409.7 676.3

1172.1 1147.3 58.4 458.2 729.2

1218.1 1206.9 65.8 496.9 789.9

1285.2 1287.9 61.9 519.1 832.7

1365.1 1368.1 62.9 511.8 857.3

1452.0 1425.1 64.5 491.7 851.8

Interest Income 987.0 Transfer Payments 1508.6 445.2 Personal Social Insurance Tax

1127.5 1605.0 475.1

1265.1 1718.5 499.6

1382.0 1879.2 517.2

1093.3 2140.1 506.3

1016.6 2284.3 515.2

1008.8 2319.3 424.4

991.2 2373.6 436.4

995.1 2452.9 480.7

1058.6 2595.3 526.1

1200.6 2734.0 609.9

1395.7 2888.5 671.9

Percent Change, Annual Rate Personal Income Wages & Salaries Other Labor Income Nonfarm Income Farm Income

5.5 5.6 6.5 4.3 -11.1

7.5 5.8 3.1 7.6 -32.7

5.7 5.1 2.1 -4.6 28.3

4.6 2.7 7.3 -0.6 39.9

-4.8 -3.3 1.4 -10.1 -20.7

3.8 2.2 2.8 12.7 12.0

5.1 4.1 3.8 4.2 23.5

3.5 3.5 2.9 4.0 7.0

3.9 3.9 3.9 5.2 14.3

5.0 4.7 5.5 6.7 -5.9

5.0 5.0 6.2 6.2 1.7

4.9 4.7 6.4 4.2 2.7

Rental Income Dividends Interest Income Transfer Payments

-10.9 -0.6 19.4 6.3

-23.8 26.8 10.9 6.7

32.7 7.6 13.7 7.6

66.4 -9.1 2.6 10.1

12.6 -29.2 -21.9 15.3

16.3 28.2 -2.1 6.0

22.4 11.7 -1.8 0.2

9.5 7.8 -0.8 3.4

8.3 8.0 3.0 3.5

2.0 4.0 9.0 6.0

-3.1 2.1 15.6 5.2

-3.5 -2.2 16.1 5.9

5.9

6.7

5.2

2.0

-2.0

2.7

-12.9

3.3

11.5

10.1

17.8

10.5

Personal Social Insurance Tax

28

U.S. Forecast | December 2012

U . S . F o r eca s t Tab l e s Table 12. Personal Consumption Expenditures (Current Dollars)

Table 12. Personal Consumption Expenditures (Current Dollars)

2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3

Consumer Expenditures by Type Billions Current Dollars

Consumer spending on… all goods & services

11247.4 11361.4 11454.0 11572.8 11688.6 11819.3 11949.4 12083.0 12221.0 12331.2 12448.4 12571.2 12708.3 12843.1 12986.6 13134.3

durable goods

1243.2 1257.3 1270.4 1278.8 1290.3 1298.6 1313.4 1329.8 1347.8 1353.8 1366.1 1376.0 1388.8 1403.3 1415.6 1427.6

furniture and appliances

272.5

275.3

278.0

281.6

284.9

287.8

290.2

292.1

293.5

294.4

296.4

296.9

297.7

298.5

299.4

298.9

information processing equipment

106.2

103.3

104.1

104.9

106.0

106.7

107.8

109.2

110.6

111.6

113.2

114.6

115.9

116.7

117.7

118.9

motor vehicles and parts

409.5

419.2

425.7

425.6

429.4

430.8

438.8

448.1

459.1

459.9

465.0

469.8

477.5

486.8

494.0

502.0

other durable goods

133.9

135.1

135.8

137.0

138.0

138.6

139.4

140.3

141.4

142.3

143.3

144.1

144.9

145.6

146.2

146.9

nondurables clothing & shoes fuel oil & coal gasoline & motor oil

2582.9 2601.6 2601.5 2628.6 2646.4 2665.3 2682.2 2699.6 2717.7 2736.6 2748.3 2768.0 2799.9 2827.0 2858.6 2892.4 373.7

375.6

379.0

381.7

383.8

385.1

386.3

388.9

390.4

389.9

392.3

395.2

397.6

398.0

400.9

21.7

23.0

22.5

22.8

22.9

22.9

22.9

22.9

22.8

22.9

22.5

22.4

22.7

22.9

23.2

404.2 23.4

402.2

395.8

376.6

382.0

381.2

378.8

374.4

369.6

365.4

363.9

353.7

350.3

358.1

360.8

366.1

372.7

887.0

893.8

900.5

906.9

913.6

921.0

928.8

936.2

944.1

951.8

food

840.0

849.9

857.9

866.2

872.8

879.9

other nondurable goods

945.2

957.4

965.5

975.8

985.6

998.6 1011.6 1024.6 1038.6 1052.9 1066.1 1079.2 1092.7 1109.2 1124.4 1140.3

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

9678.9 9744.6 9805.0 9867.4 9933.5 10003.9 10073.0 10145.8 10221.7 10266.5 10328.0 10392.2 10457.4 10522.6 10589.6 10659.6

durable goods

1397.5 1416.8 1436.8 1451.1 1468.5 1479.7 1498.7 1519.7 1542.3 1550.9 1567.1 1581.0 1598.5 1618.2 1635.4 1652.6

furniture and appliances

297.5

301.3

305.2

310.0

314.6

318.2

321.2

323.5

325.2

326.0

328.1

328.7

329.7

330.7

332.0

331.7

information processing equipment

202.1

199.7

204.8

210.2

216.0

221.4

228.0

235.5

243.3

250.2

258.5

266.7

274.5

281.5

289.2

297.5

motor vehicles and parts

376.4

384.8

391.1

390.8

394.0

394.4

400.8

408.3

417.2

416.9

420.6

424.1

430.1

437.7

443.4

449.7

other durable goods

111.8

112.5

112.9

113.8

114.4

114.4

114.6

115.0

115.5

115.7

116.1

116.5

116.8

117.2

117.3

117.7

nondurables clothing & shoes fuel oil & coal gasoline & motor oil

2116.6 2130.1 2141.0 2153.9 2166.3 2179.5 2190.6 2201.6 2211.9 2217.8 2225.5 2236.4 2247.0 2257.4 2269.0 2282.3 359.4

359.6

361.6

363.3

364.5

365.0

365.5

367.4

368.4

367.3

369.3

371.8

374.0

374.3

377.0

13.1

14.1

14.2

14.2

14.3

14.3

14.4

14.4

14.5

14.5

14.4

14.5

14.5

14.5

14.5

380.0 14.5

258.4

262.1

263.8

264.3

264.3

264.2

263.6

262.7

262.1

260.9

260.0

260.5

260.7

260.5

260.3

260.9

food

691.0

691.1

694.1

699.0

705.3

712.0

718.1

723.3

727.6

730.2

733.0

736.6

740.2

743.3

746.8

750.2

other nondurable goods

806.7

814.2

818.4

824.4

829.5

835.7

841.0

846.2

851.8

857.3

861.6

866.2

871.0

878.1

884.2

890.8

2.6

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

2.0

2.7

2.5

2.5

2.7

2.8

2.8

2.9

3.0

1.8

2.4

2.5

2.5

2.5

2.5

10.2

5.5

5.6

4.0

4.8

3.1

5.1

5.6

6.0

2.2

4.2

3.6

4.4

4.9

4.3

4.2

8.6

5.2

5.1

6.4

5.9

4.6

3.7

2.9

2.0

1.1

2.5

0.7

1.2

1.2

1.6

-0.3 11.5

32.6

-4.8

10.2

10.6

11.1

10.0

11.9

13.1

13.4

11.3

13.3

12.6

11.7

10.1

11.0

motor vehicles and parts

9.0

8.9

6.5

-0.3

3.3

0.4

6.5

7.5

8.8

-0.3

3.5

3.3

5.7

7.1

5.2

5.7

other durable goods

1.8

2.3

1.6

3.0

2.3

0.0

0.6

1.3

1.7

0.9

1.5

1.2

1.2

1.1

0.7

1.1

nondurables

2.3

2.6

2.1

2.4

2.3

2.4

2.0

2.0

1.9

1.1

1.4

2.0

1.9

1.8

2.1

2.3

clothing & shoes

3.8

0.2

2.2

1.9

1.3

0.6

0.5

2.1

1.1

-1.1

2.1

2.7

2.3

0.4

2.8

3.3

fuel oil & coal

-7.5

31.8

1.6

1.2

0.9

1.9

1.0

1.1

0.9

0.5

-0.8

1.0

0.8

0.2

-0.9

-0.5

gasoline & motor oil

-0.9

5.8

2.7

0.7

-0.1

-0.1

-0.9

-1.4

-0.8

-1.8

-1.4

0.7

0.4

-0.3

-0.3

0.9

food

2.0

0.0

1.7

2.9

3.6

3.9

3.5

2.9

2.4

1.5

1.5

2.0

2.0

1.7

1.9

1.8

other nondurable goods

3.6

3.8

2.1

3.0

2.5

3.0

2.6

2.5

2.7

2.6

2.0

2.1

2.3

3.3

2.8

3.0

Institute for Economic Competitiveness

29

U . S . F o r eca s t Tab l e s Table 13. Personal Consumption Expenditures (2000 Dollars)

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

2006

2007

2008

Forecast 2009

2010

2011

2012

2013

2014

2015

2016

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

8803.5

9301.0

9772.3 10035.5

9845.9 10215.7 10729.0 11123.4

durable goods

1123.4

1155.0

1188.4

1108.9

1029.6

1079.4

1146.4

1216.5

1274.2

1322.4

1371.2

1420.8

261.3

271.5

271.3

257.9

235.4

241.3

251.7

267.3

279.9

290.9

296.3

299.0

furniture and appliances information processing equipment motor vehicles and parts other durable goods nondurables clothing & shoes fuel oil & coal

11519.2 12018.2 12514.8 13061.6

67.0

75.3

86.1

84.9

82.4

91.7

94.7

100.6

104.6

108.6

113.8

118.3

408.2

394.8

399.9

339.3

316.0

342.7

373.6

402.3

425.0

444.2

468.0

497.3

99.5

109.9

118.8

117.9

111.1

116.0

125.8

131.4

136.5

139.9

143.6

146.6

1953.4

2069.8

2175.5

2272.8

2164.8

2285.5

2478.4

2564.3

2619.5

2691.2

2763.2

2876.1

314.0

327.3

335.4

330.9

317.0

331.6

349.2

367.4

380.0

387.7

393.8

402.6

20.0

20.6

21.8

25.9

20.6

22.3

24.5

21.9

22.8

22.9

22.6

23.3

gasoline & motor oil

283.8

314.7

343.0

384.5

278.7

330.1

403.8

413.1

383.9

372.0

356.5

369.7

food

644.5

674.2

711.2

746.4

742.3

760.6

810.2

831.4

861.7

890.3

917.6

947.9

other nondurable goods

691.1

733.0

764.1

785.1

806.1

840.8

890.7

930.5

971.1

1018.3

1072.8

1132.8

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

8803.5

9054.5

9262.9

9211.7

9032.6

9196.2

9428.8

9609.6

9837.6 10111.1 10361.0 10625.0

durable goods

1123.4

1174.2

1232.4

1171.8

1109.1

1178.3

1262.6

1357.9

1443.3

1510.1

1574.4

1643.2

261.3

272.5

274.4

262.8

240.7

257.5

272.5

290.1

307.8

322.0

328.1

331.6 293.5

furniture and appliances information processing equipment motor vehicles and parts other durable goods nondurables clothing & shoes fuel oil & coal

67.0

85.0

105.9

113.6

119.6

143.3

161.6

185.4

207.7

232.0

262.5

408.2

394.4

401.4

346.8

322.6

329.5

347.4

369.4

390.2

405.2

422.9

445.9

99.5

108.2

111.9

106.4

99.0

102.5

106.7

110.6

113.4

114.9

116.3

117.6

1953.4

2005.0

2042.9

2019.1

1982.8

2029.3

2075.2

2100.5

2147.8

2195.9

2231.7

2276.1

314.0

328.7

340.1

338.1

321.0

338.1

350.0

355.4

362.3

366.6

370.6

378.5

20.0

18.0

17.6

15.4

18.0

16.6

14.3

12.7

14.2

14.4

14.5

14.5

gasoline & motor oil

283.8

278.9

276.8

265.3

264.1

264.6

257.3

257.9

263.6

263.1

260.6

260.8

food

644.5

663.0

673.2

666.0

654.8

668.8

685.3

687.6

697.4

720.2

735.0

748.4

other nondurable goods

691.1

717.3

737.5

739.7

727.7

745.6

777.4

798.2

821.6

843.7

864.0

887.8

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

2.8

3.2

1.7

-2.5

-0.3

2.9

1.9

2.0

2.6

2.9

2.3

2.6

durable goods

3.1

7.1

4.6

-12.6

3.5

9.6

6.1

7.6

5.1

5.0

3.6

4.3

furniture and appliances information processing equipment

6.2

1.4

1.2

-9.2

-1.6

8.2

6.1

6.2

5.8

3.4

1.4

0.7

26.8

28.7

21.3

0.8

11.9

18.1

13.9

19.4

7.1

12.7

12.8

11.4

motor vehicles and parts

-6.8

5.8

0.6

-23.5

8.2

11.3

4.2

4.9

4.7

6.0

3.1

5.3

other durable goods

10.8

5.8

4.1

-12.5

1.4

5.5

1.1

5.6

2.3

0.9

1.2

1.0

3.1

2.9

0.8

-3.1

0.4

3.0

1.4

1.7

2.3

2.1

1.6

2.2

nondurables clothing & shoes fuel oil & coal gasoline & motor oil

7.2

3.4

2.3

-3.8

-0.9

7.6

0.7

2.7

1.4

1.1

1.5

2.4

-18.2

3.5

-7.9

9.1

9.6

-8.0

-14.2

0.3

9.9

1.2

0.4

-0.5

-0.6

-0.4

-1.8

-4.0

-1.1

0.2

-1.5

1.6

2.3

-0.8

-0.5

0.3

food

3.6

2.9

0.8

-4.0

2.1

2.1

1.4

0.7

2.1

3.2

1.7

1.8

other nondurable goods

3.3

4.2

1.7

-1.2

-0.1

3.7

3.7

2.6

2.8

2.7

2.2

3.1

30

U.S. Forecast | December 2012

U . S . F o r eca s t Tab l e s Table 14. Business Fixed Investment

Table 14. Business Fixed Investment History

2005

2006

2007

2008

Forecast

2009

2010

2011

2012

2013

2014

2015

2016

Billions Current Dollars Business Fixed Investment

1347.3 1505.3 1637.5 1656.3 1349.3 1338.4 1479.6 1612.6

1697.7 1849.4 2008.0 2121.8

Producers Dur. Equipment

995.6 1071.7 1112.6 1070.0

898.2

962.1 1074.7 1157.4

Nonresidential Structures

351.8

433.7

524.9

586.3

451.1

376.3

404.8

455.2

1231.8 1325.8 1427.3 1494.9 465.9

523.5

580.7

626.9

Non-Farm Buildings

212.9

247.6

297.3

322.0

253.9

177.0

173.8

195.9

216.2

264.1

317.4

378.8

Commercial

112.9

128.4

150.8

149.1

95.5

64.7

65.3

72.0

81.3

106.4

141.5

177.4

Industrial

29.9

35.1

43.7

57.4

61.2

43.3

44.2

52.6

57.9

68.0

71.8

84.2

Other Buildings

70.2

84.1

102.8

115.6

97.1

69.0

64.2

71.3

77.0

89.7

104.2

117.2

Utilities

51.4

61.1

85.6

99.5

98.6

88.4

85.8

100.9

91.0

96.3

101.4

100.7

Mines & Wells

77.1

114.2

130.9

151.7

88.6

101.9

135.6

148.7

148.8

150.4

148.5

135.0

Billions 2005 Dollars Business Fixed Investment

1347.3 1455.5 1549.9 1537.7 1259.9 1268.5 1378.2 1479.4

1545.6 1669.3 1785.8 1863.4

Producers Dur. Equipment

995.6 1071.1 1106.8 1059.4

885.2

963.9 1070.0 1143.5

Nonresidential Structures

351.8

384.0

438.2

466.4

368.1

310.6

319.2

346.8

1215.3 1304.5 1392.7 1452.6 346.4

380.2

408.8

426.9

Non-Farm Buildings

212.9

229.2

260.5

272.0

214.1

153.9

148.3

162.5

171.2

198.7

228.0

260.7

Commercial

112.9

118.4

131.2

124.5

78.3

54.6

53.9

57.5

62.1

77.2

98.2

118.0

Industrial

29.9

33.0

39.0

48.6

50.9

36.8

36.9

42.8

44.9

49.9

50.1

56.3

Other Buildings

70.2

77.9

90.3

99.3

85.6

63.1

57.8

62.5

64.5

71.6

79.4

85.6

Utilities

51.4

56.2

75.6

82.5

82.4

71.1

65.0

73.9

65.9

68.8

70.8

68.6

Mines & Wells

77.1

88.3

93.6

101.5

66.1

77.3

94.8

99.2

99.1

101.8

99.9

89.6

4.5

7.4

9.3

7.4

5.7

Annual Growth Rate Business Fixed Investment Producers Dur. Equipment

8.4

11.7

9.0

-5.8

-18.2

8.2

12.6

6.3

6.9

3.5

-11.2

-8.3

11.1

12.3

4.9

7.6

8.1

6.5

4.4

14.9

25.2

22.0

5.1

-34.5

2.1

15.8

3.5

7.1

12.7

9.5

8.8

7.3

18.7

22.6

-0.1

-33.7

-21.3

15.7

7.0

16.5

21.7

21.4

16.8

Commercial

10.0

15.3

17.3

-11.8

-44.7

-16.8

9.6

7.9

21.6

33.6

32.2

21.0

Industrial

Nonresidential Structures Non-Farm Buildings

13.8

16.1

46.6

23.0

-12.0

-28.8

49.0

5.7

15.5

10.7

12.1

16.4

Other Buildings

1.7

26.0

22.6

6.7

-29.7

-19.5

4.3

7.7

12.4

17.7

14.7

11.1

Utilities

3.8

23.9

54.9

0.8

-4.1

16.0

1.1

13.0

-6.0

9.2

0.8

1.2

51.3

50.0

4.8

24.1

-46.9

66.0

29.9

-2.5

2.4

0.4

-5.3

-3.7

Mines & Wells

Institute for Economic Competitiveness

31

U . S . F o r eca s t Tab l e s Table 15. Government Receipts and Expenditures

Table 15. Government Receipts and Expenditures History 2005

2006

2007

2008

2290.1

2524.5

2654.7

2502.3

Personal Tax and Nontax Receipts

931.9

1049.9

1165.6

1101.3

Corp. Profits Tax Accruals

341.0

395.0

362.8

233.6

98.8

99.4

94.5

94.0

852.6

904.6

945.3

973.1

Forecast 2009

2010

2011

2012

2013

2014

2015

2016

Federal Government Receipts and Expenditures Receipts

Indirect Business Tax and Nontax Accruals Contributions for Social Insurance Expenditures

2226.5

2395.4

2519.6

2686.9

2939.6

3148.4

3363.4

3554.0

857.0

894.2

1075.2

1143.4

1260.0

1353.4

1433.6

1512.9

200.4

305.1

304.2

377.9

442.2

471.9

485.1

491.9

91.4

95.5

107.4

114.2

116.5

130.9

136.9

143.9

949.1

969.8

905.5

938.0

1004.0

1075.8

1188.5

1280.9

2573.1

2728.3

2900.0

3115.7

3455.9

3703.4

3757.0

3754.2

3787.4

3905.5

4073.9

4315.8

Purchases Goods & Services

876.3

931.7

976.4

1080.1

1143.6

1223.1

1222.1

1220.9

1205.5

1185.3

1177.6

1181.5

National Defense

589.1

624.9

662.3

737.8

776.0

817.7

820.8

816.6

806.7

791.2

785.3

787.0

Other

287.3

306.9

314.1

342.3

367.6

405.3

401.3

404.4

398.8

394.1

392.4

394.6

Transfer Payments

1491.3

1587.1

1690.5

1841.9

2157.5

2310.8

2309.4

2317.7

2376.5

2498.0

2624.3

2773.6

To Persons

1078.0

1180.7

1254.2

1385.7

1605.4

1708.6

1735.8

1776.1

1827.1

1893.0

1978.2

2078.7

40.9

35.0

42.2

45.3

53.5

54.7

58.7

58.3

61.0

62.0

63.0

64.0

Grants in Aid to State & Local Gov't

361.2

359.0

380.8

395.5

482.6

531.1

497.8

465.4

470.0

524.3

564.1

611.5

Net Interest

239.0

261.0

291.0

272.1

228.6

251.7

294.7

284.2

277.6

293.9

341.2

426.9

64.1

53.9

50.2

53.6

62.8

62.4

73.8

78.3

73.8

70.2

67.3

63.1

Surplus (+) or Deficit (-)

-283.0

-203.8

-245.2

-613.5 -1229.4 -1308.1 -1237.4 -1067.3

-847.9

-757.1

-710.5

-761.9

Receipts

1730.5

1829.7

1923.1

1944.8

1961.4

2042.5

2064.4

2073.1

2141.6

2261.2

2373.0

2494.6

Personal Tax/Nontax Receipts

1163.1

1249.1

1313.6

1326.4

1264.9

1304.6

1360.8

1403.1

1457.3

1509.0

1566.2

1625.1 395.2

To Foreigners

Subsidies less Surplus of Gov't Entities

State and Local Government Receipts and Expenditures

276.7

302.5

323.1

334.4

287.6

300.6

322.8

334.4

350.6

364.3

381.9

Indirect Business Tax and Nontax Accruals

Corporate Profits

55.0

59.1

57.8

47.4

45.5

44.5

47.6

50.4

57.3

56.9

54.2

51.7

Contributions for Social Insurance

24.8

21.8

18.9

19.0

19.0

18.4

18.3

17.4

17.1

17.8

18.7

19.5

361.2

359.0

380.8

395.5

482.6

531.1

497.8

465.4

470.0

524.3

564.1

611.5

Federal Grants-In-Aid Expenditures

1704.50 1778.63 1910.83 2017.05 2074.63 2132.10 2166.35 2197.03

2249.51 2361.36 2454.35 2557.14

Purchases Goods & Services

1493.6

1586.7

1697.9

1798.0

1823.6

1834.4

1837.7

1848.7

1875.3

1917.4

1969.4

Government Social Benefits

404.8

402.9

433.7

456.7

495.1

528.3

538.5

551.6

578.2

651.9

701.6

752.3

404.8

402.9

433.7

456.7

495.1

528.3

538.5

551.6

578.2

651.9

701.6

752.3

10.9

2.1

0.4

16.2

23.0

30.3

36.2

40.5

40.5

40.0

40.9

45.6 14.4

Transfer Payments Interest Received

2027.3

Net Subsidies

0.3

1.7

16.2

15.3

12.5

14.1

14.4

16.7

16.8

16.0

15.2

Dividends Received

2.1

2.3

2.4

2.9

2.1

2.2

2.3

2.1

2.2

2.3

2.3

2.4

Net Wage Accruals

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

26.0

51.0

12.2

-72.3

-113.2

-89.7

-102.0

-124.0

-107.9

-100.2

-81.4

-62.5

Surplus (+) or Deficit (-)

32

U.S. Forecast | December 2012

U . S . F o r eca s t Tab l e s Table 16. U.S. Exports and Imports of Goods and Services

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

Forecast

2005

2006

2007

2008

2009

-722.7

-769.3

-713.1

-709.8

-388.7

2010

2011

2012

2013

2014

2015

2016

-569.1

-545.3

-592.7

-579.9

-551.1

Billions of Dollars Net Exports Goods & Services

-511.6

-568.1

Current Account

-745.8

-800.6

-710.3

-677.1

-381.9

-442.0

-465.9

-482.6

-455.9

-515.4

-563.3

-612.3

Exports -Goods & Services

1305.1

1471.1

1661.7

1846.8

1587.5

1844.5

2094.2

2183.2

2264.3

2384.2

2578.5

2776.8

Merchandise Balance

-780.7

-835.7

-818.9

-830.1

-505.8

-645.1

-738.4

-740.9

-725.8

-774.9

-781.5

-776.7

Food, Feed & Beverage

58.95

65.98

84.28

108.33

93.93

107.70

126.23

138.51

142.77

139.12

147.29

156.32

Industrial Supplies Excl Petroleum

227.5

267.3

316.2

386.9

293.5

388.5

484.4

480.7

486.1

510.1

545.4

586.3

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

98.4

107.3

121.3

121.5

81.7

112.0

133.1

146.8

149.2

157.2

173.6

186.2

358.4

404.1

433.0

457.7

391.5

447.8

493.2

529.8

557.0

593.1

648.5

706.4

45.5

47.6

45.6

43.9

37.7

43.8

48.4

50.1

51.7

54.3

62.5

70.6

Other

257.0

291.9

314.5

339.8

279.0

332.0

364.7

384.8

399.5

428.4

468.9

507.3

Consumer Goods, Excl. MVP

115.3

129.1

146.0

161.3

149.4

165.2

175.0

180.7

191.2

206.0

219.6

230.1

47.5

50.8

61.3

61.8

54.6

57.4

62.5

66.0

70.7

75.1

80.4

85.7

399.0

446.6

499.7

549.3

522.7

565.9

619.7

640.6

667.3

703.5

763.7

825.8

Imports -Goods & Services

2027.8

2240.4

2374.8

2556.5

1976.2

2356.1

2662.3

2752.4

2809.6

2976.9

3158.3

3327.9

Merchandise

1708.0

1884.9

2000.7

2146.3

1587.5

1947.0

2229.2

2298.0

2331.6

2465.0

2605.5

2736.7

Other Consumer Services

Billions of Dollars

68.1

75.0

81.7

90.4

82.9

92.5

108.3

111.1

111.8

115.6

121.1

124.9

Petroleum & Products

Food, Feed & Beverage

251.9

302.5

346.7

476.1

267.7

353.8

462.3

437.4

357.0

338.3

317.4

335.6

Industrial Supplies Excl Petroleum

266.0

291.4

295.7

318.9

196.8

249.6

293.1

289.8

304.4

333.5

363.3

376.3

Motor Vehicles & Parts

239.5

256.6

256.6

233.2

159.2

225.7

255.2

304.1

322.4

339.5

366.4

384.5

Capital Goods, Excl. MVP

380.8

420.0

446.0

458.7

374.1

450.3

513.4

552.4

582.8

630.5

689.7

738.1

93.3

101.4

105.2

101.2

94.2

117.3

119.7

121.5

125.4

133.2

141.7

150.2

Computer Equipment Other

261.7

290.2

306.5

322.0

249.2

301.8

358.1

393.1

414.5

452.6

500.8

536.8

Consumer Goods, Excl. MVP

411.5

446.1

478.2

486.7

431.4

486.5

517.4

517.0

564.0

610.0

643.0

666.7

Other Consumer

90.3

93.5

95.9

82.3

75.5

88.7

79.6

86.2

89.2

97.5

104.6

110.5

319.8

355.4

374.0

410.1

388.7

409.1

433.0

454.3

478.0

511.9

552.8

591.2

Net Exports Goods & Services

-722.7

-729.4

-648.8

-494.8

-355.2

-419.7

-408.0

-413.1

-457.3

-492.5

-460.0

-402.0

Exports G & S

1305.1

1422.1

1554.4

1649.3

1498.7

1665.6

1776.9

1835.5

1893.9

1982.8

2126.3

2268.7

Imports G & S

2027.8

2151.5

2203.3

2144.0

1853.9

2085.2

2184.9

2248.7

2351.3

2475.2

2586.3

2670.7

Exports G & S

10.3

14.0

14.6

0.5

3.5

14.4

9.0

4.1

4.0

6.9

8.1

7.8

Imports G & S

12.1

5.4

9.0

-1.7

0.9

14.4

11.0

1.6

4.0

6.5

5.7

5.6

Real Exports G & S

6.8

10.5

10.1

-1.7

2.4

8.8

4.3

2.7

3.8

6.0

7.2

6.7

Real Imports G & S

5.3

4.2

0.9

-5.7

-3.3

11.1

3.5

2.1

6.2

4.8

4.1

3.2

Services

Billions 2005 Dollars

Exports & Imports % Change

Institute for Economic Competitiveness

33

In Appeciation

The UCF College of Business Administration would like to thank Alan C. Charron, ‘84, for his generous gift to the Institute for Economic Competitiveness. His support enables the Institute to publish this forecast and will help fund future activities and research. Charron graduated in 1984 with a degree in finance.

He is president of Real Property Specialists, Inc., located in Orlando, Florida.

Founded in 1992, Real Property Specialists, Inc., is a fullservice brokerage company that has built a reputation of providing highly personalized service while being responsive and flexible to its clients' individual needs. They offer a range of commercial real estate services in the Central Florida area including brokerage, appraisal, development, property management and tenant representation.

Real Property Specialists, Inc., has set a new standard of excellence in client service by providing these key advantages over the competition:

Responsiveness. You work directly with a decision

maker who has the flexibility to immediately attend to your needs.

Consistency. We are a unified firm employing team-

members who are committed to the success of our clients.

We pride ourselves on our ability to maintain a dedicated, professional staff that is able to build long-term, comfortable and prosperous relationships with our clients.

Accountability. At Real Property Specialists, our client is the real "Boss." We are accountable to no one other than the client. No company policy interferes with our ability to serve the individual needs of each client.

Experience. The staff at Real Property Specialists is

highly qualified, with most associates having more than a decade of experience in the industry. Our personal portfolio of shopping centers gives us first-hand knowledge of what is important when leasing, managing or selling a property.

Appraisers • Brokers • Consultants 6700 Conroy-Windermere Road, Suite 230 | Orlando, FL 32835 407.291.9000 | www.realpropertyspecialists.com

Sea n M . S n ai t h , P h . 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