U.S. Forecast July 2012 by UCF College of Business

U.S. Forecast

July 2012

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

Dean’s Message Greetings! As you can see by the photo, there is a new face addressing you this quarter. I would like to take this opportunity to introduce myself. About University of C e n t r a l F lo r i da ( U C F )

I am the new Dean of the college. I have joined UCF from the University of Nevada, Las Vegas, where I served as Dean and Management Professor for the past five years. I am very excited about my new position and am looking forward to the challenges and opportunities before me. I am especially interested in working with Sean Snaith and the Institute for Economic Competitiveness. I must admit however, that when I realized this forecast was titled, “Fifty Shades of Gray,” I turned 50 shades of red and wondered just what type of research he does! After reading through the publication I was relieved to see it is indeed an economic forecast. Sean is very clever in the way he communicates his message. One of the things that I like most about being a dean is that I get to communicate with all types of people. While I enjoy reaching you through these messages, I also encourage you to read my weekly blog at www.bus.ucf.edu/dean and follow me on Twitter @pauljarley to get to know me even better.

About the College of B u s i n e s s A d m i n i s t r at i o n

Communication is a two-way street so I would love to hear from you as well. Please feel free to contact me on Twitter or at pjarley@bus.ucf.edu with your thoughts and suggestions. As you get to know me, I’d like to get to know you. Thank you for continuing to support us during our transitional period and I look forward to addressing you again. After Fifty Shades of Gray…no telling what next quarter will bring! Enjoy the rest of your summer,

P aul Jarley Paul Jarley Dean

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 July 2012 Report

Published quarterly by the Institute for Economic Competitiveness, College of Business Administration, University of Central Florida Copyright ÂŠ 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 Alexandra Betrone-Harpst, Researcher Sangitha Palaniappa, Researcher Casey Moore, Researcher Nicholas Simons, Researcher This forecast was prepared based upon assumptions reflecting the Institute for Economic Competitivenessâ&#x20AC;&#x2122; 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 2 Q 2 0 1 2 U . S . FO R E C A ST In this Issue of the U.S. Forecast: • Fifty Shades of Gray: The U.S. economic recovery, bound by the restraints of uncertainty and submissive to European sovereign debt crisis, slowly plods on beneath an overcast sky. • The Economic Policy Uncertainty Index dropped off significantly after the previous two recessions. But it has increased in the wake of the Great Recession. Is this the explanation for our lackluster, three year old recovery?

H I GHL I GHTS

• Only in Physics is momentum conserved. Real GDP growth in the 4th quarter of 2011 was 3.0%, but in the first half of 2012 it looks to have slowed to just 1.9%. • The Greek elections are merely another act in the tragedy of the Euro. There are two possible outcomes to the crisis: The Euro ceases to exist or member countries form a fiscal union and the Euro survives. Without the latter, the former will inevitably happen. • GDP growth in 2012 and 2013 should average 2.1% before growth accelerates to 2.7% in 2014 and then 3.2% in 2015. • Consumer spending growth will continue to be hampered by balance sheet woes and labor market slack. During 2012-2015 that average growth will be just 2.2%. • Inflation is expected to remain subdued through the end of 2015. This fact, and the deceleration of the recovery, will leave the door open for further intervention by the Federal Reserve. QEIII is looking more and more likely. • The housing market will steadily improve through 2015. During 2012-2015, housing starts will nearly double from 758,953 in 2012 to 1,517,898 in 2015. • Payroll employment growth remains sluggish. Economic, political, 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 and 1.3% in 2013. Growth rises in 2014 and 2015 to average 1.5%. • Payroll employment will not reach pre-recession levels until the 4th quarter of 2014. Uncertainty is holding the labor market captive; 2012 will not be the year it is released. • Unemployment rates have dropped due in a large part to a shrinking labor force participation rate. Eventually, discouraged workers will return to the labor force, and this will put a floor beneath the unemployment rate. Thus, unemployment rates are expected to stay above 8% until 2014. Underemployment remains a serious problem and currently stands at 14.8%.

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Bound by the restraints of uncertainty and submissive to the European debt crisis, the U.S. recovery plods onward beneath overcast skies.1 For those of you hoping this forecast would allow you to indulge in a brand new genre of literature, call it econorotica, I hope you won’t feel cheated by the title of this section as you read on. I do, however, plan to explain in explicit terms the economic room of pain in which we now find ourselves.

implement it, the hiring or investment will increase profits and a business would make the decision to go ahead and hire or undertake the investment.

Fifty Shades of Gray

The current state of the U.S. economic recovery, now three years old, is as far from titillating as we could get. Real GDP growth was just 0.9% in the 1st quarter of 2012. This is a sharp slowdown from the 4th quarter of 2011 real GDP growth of 3.0%. The 2nd quarter is not likely to be any improvement over the first. The second half of the year will likely be slightly better but nothing to get your blood boiling.

One of the key reasons the economy is wavering yet again has been the masochistic policies that have been implemented over the past several years. These policies have created a cloud of uncertainty that has restrained economic growth and left the private sector bound by the unanswered questions embodied in them.

Healthcare reform has been one of the big policy-related reasons that the economy and the labor market in particular have been growing so slowly. The Supreme Court’s decision does little to change this fact.

The “fiscal cliff” the economy is currently heading toward, expiration of tax cuts at the end of 2012 and the mandated spending cuts slated to begin in 2013, adds to the air of the unknown.

When businesses are looking at decisions about hiring or investing, two broad areas are considered. First, what will the hiring/investment do to revenue, and secondly, what are the costs of hiring/investing? If an employee or investment project can bring in more revenue than it costs to employ or

1 By reading this headline you have given your implicit agreement to a contract that requires you to read the report in its entirety. Please do not ask what the consequences of breaking this contract would be.

These hiring and investment decisions are forward looking and thus businesses must incorporate projections of future economic conditions and policy into the decision process. What will employment costs be in the future? What are the applicable tax rates? What path will interest rates follow? What is the expected demand for their product(s) or service(s)? These, as well as other relevant questions must be answered.

Of course, no one has perfect foresight of what the future will hold, so these types of decisions are always made in face of some uncertainty. However, as the level of uncertainty increases, these decisions become less clear and firms become less willing to pull the trigger on projects or hiring. In an increasingly uncertain world, turtles pull their heads back into their shell, armadillos curl up into a ball, and opossums, well, play possum. Faced with high levels of uncertainty, businesses will stay put, delaying both projects and hiring. Policy uncertainty in the wake of the Great Recession is much higher than in previous recoveries and is hindering economic and employment growth. This has been an assertion that I and others have made in explaining our lackluster recovery, now three years old. Quantifying and measuring this uncertainty and its impact on economic activity and employment has been anecdotal until just recently.

A recent paper2 by Scott R. Baker, Nicholas Bloom, and Steven J. Davis, Measuring Economic Policy Uncertainty, creates an index that quantifies policy uncertainty and examines the effect that this uncertainty has on the economy. In the very likely case that you do not read this study, let me summarize its findings: Higher economic policy uncertainty reduces GDP growth, private investment, and employment growth.

The economic policy uncertainty index itself is based on three components. One component measures newspaper coverage of policy-related uncertainty, the second gauges the number of federal tax code provisions set to expire in future years and the third uses disagreement among economic forecasters in the Survey of Professional Forecasters (from 2 www.policyuncertainty.com/media/BakerBloomDavis.pdf Institute for Economic Competitiveness

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Figure 1. The Economic Policy Uncertainty Index 300 Recession

250

Recession

Uncertainty Index

Expansion

200

Expansion

Recession Expansion

Expansion

150

100

Raw Uncertainty Data

Averages

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

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

which the Anxious Index below is taken) as a proxy for uncertainty. Again, I will spare you the details of the construction of the index, but the authors created a monthly series that starts in 1985 and ends with May 2012.

The data covers a span that includes three national recessions and two full and two partial economic recoveries. The three recessions include the 1990-1991 contraction, the 2001 contraction, and the 2007-2009 Great Recession. Examining the behavior of the economic policy uncertainty index over the business cycle is an informative exercise and one I think that provides great insight to the nature of our current economic recovery, which despite being three years old, continues to remain subdued. Figure 1 displays the economic policy uncertainty index and also demarcates periods of recession and expansion in the U.S. economy. One stylized fact that emerges from perusal of the data is clear: in periods of recession, economic policy uncertainty rises sharply. This should come as no surprise. When the economy enters into a recession, both fiscal and monetary policies are employed in an attempt to shorten the length and depth of the downturn. The exact nature of these fiscal policies, the types of programs, when they begin and when they end, as well as the implementation of these programs, are all unknown. Monetary policy as well becomes less certain as the Federal Reserve takes action to counter the recession and lessen its impact while markets carefully await and then analyze any statements or policy actions taken by the Fed. 6

U.S. Forecast | July 2012

As the recession plays out, the economic policy cards played by fiscal and monetary policymakers are laid on the table. Once the hand of these policy makers is revealed, and the economy emerges from the recession because of or despite the policies that are enacted, policy uncertainty is quickly reduced. Figure 1 also plots the average levels of uncertainty during the recessions and recoveries that are covered in the index sample period. During recessions, average levels of policy uncertainty jump up, but as the recovery gets underway, uncertainty diminishes. Well, this is true at least for the 1990-91 and 2001 recessions, but the Great Recession is a glaring exception to this pattern.

The level of policy uncertainty is much higher in this recession than in the previous two, but that should come as no surprise given the nature of this severe downturn in the economy. What is surprising is what has happened to economic policy uncertainty after the recession had ended. Average levels of uncertainty not only did not diminish after the recession had ended, it actually increased from the already high levels of economic policy uncertainty prevailing during the recession. In fact, the average level of uncertainty in this recovery is nearly 79% higher than in the previous recovery and nearly 88% higher than the recovery following the 1990-91 recession. The current economic recovery has clearly been bound at the wrists and ankles by economic policy uncertainty. Will these restraints be loosened as 2012 progresses and the

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presidential election is over? One would hope so, because policy uncertainty is proving to be a sadistic master and the pain of our submissive recovery is being felt by us all.

Pro-Euro Parties Win the Election in Greece, That Means the Euro Crisis is Over, Right? The recent election in Greece has put into power a coalition of parties that support the austerity measures required as part of the Greek bailout, thus forming a government that for now is willing to do what is necessary for Greece to remain in the Euro zone. While this most certainly has prevented an imminent exit for Greece from the common currency, we should look at the election results as more of a stay of execution rather than a full out pardon for the Euro in Greece.

The crisis in Europe is beginning to have the feel of the Bill Murray movie, Groundhog Day. Repeatedly the crisis has reached a rolling boil only to have the heat turned down for a short time by the latest round of historic agreements to stave off the crisis only to flare up once again. U.S. financial markets appear to be beholden to the crisis surging and retreating with every ebb and flow of the sovereign debt drama. To be certain, the stakes are high for Europe, the U.S., and the global economy. A catastrophic end to the Euro would plunge the continent deeper into

recession, knock the tepid U.S. recovery off its tracks, and send shock waves across the globe.

There are, in the end, two possible outcomes to this crisis. First is that the Euro collapses and is tossed onto the scrap heap of history joining other failed attempts at fixed exchange rate regimes. The second is that the remaining countries of the Euro form a fiscal union to guarantee uniform fiscal policy across the Euro zone, thereby eliminating the source of the current crisis.

Neither of the two outcomes to the Euro crisis can occur without pain or sacrifice. If the history of the continent is any indication of its future (the past century has not been a continual campfire kumbaya for the countries of Europe), the former may be more likely than the latter.

Anxious Index The most recent release (2nd quarter of 2012) of the Survey of Professional Forecasters by the Federal Reserve Bank of Philadelphia suggests that the 35 forecasters surveyed for the publication are just 12.16% convinced that a decline in real GDP would occur in the 3rd quarter of 2012. This quarterâ&#x20AC;&#x2122;s result continues a three quarter trend that seems to reflect a soothing of these forecastersâ&#x20AC;&#x2122; worries of a double-dip recession taking place. The survey asks panelists to estimate the probability that real GDP will decline in the quarter in which the survey

Figure 2. The Anxious Index Probability of Decline in Real GDP in the Following Quarter Quarterly, 1968:Q4 to 2012:Q2 100

80 70 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)

Survey Date Institute for Economic Competitiveness

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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 1st quarter of 2012, the index stands at 12.16%, which means that forecasters believe there is a 12.16% chance that real GDP will decline in the third quarter of 2012, down from last quarter’s anxious index of 13.41%.

The forecasters also report just a 9.80% chance that we are currently (as of the 2nd quarter of 2012) in a recession. According to the panel, the probability that we will fall back into recession is averaging around 15.4% through the end of the second quarter of 2013, which implies the possibility of a recession in the upcoming year has remained relatively constant since last quarter’s survey. The easing of anxiety over the future of this economic recovery comes in the wake of a weak report on real GDP growth in the 1st quarter of 2012 (1.9%) after a fourth quarter growth rate of 3.0%. The graph below plots the historical values of the anxious index and gray bars indicate periods of recession in the U.S. economy. The current levels of the anxious index remain subdued despite concerns over the strength of the U.S. recovery and the potential fallout from the ongoing European sovereign debt crisis amid the ongoing struggle to find a lasting solution.

GDP Outlook After a worrisome start to 2011, the second half of the year showed some economic growth that was much improved, and in the 4th quarter of 2011 real GDP growth was a respectable 3.0%.

Unfortunately, respectable GDP growth left the building in 2012. 1st quarter real GDP growth came in at a tepid 1.9% and the 2nd quarter looks likely to be on par with the first. Recent economic reports on consumer sentiment and manufacturing are starting to paint a picture of the third quarter that does not look promising as far as a significant acceleration of growth is concerned. We expect growth of 2.2% in the 3rd quarter and 2.3% in the 4th. As mediocre as this growth is, here is hoping the recent and forthcoming set of economic reports does not quickly render these projections as too rosy. Looking beyond 2012, the picture begins to brighten, but not immediately. 2013 looks to have growth on par with 2012 at 2.1% but in 2014 and 2015 growth accelerates to 2.7% and 3.2% respectively. While consumption has exhibited a very modest acceleration during the recovery, the pace of consumer spending growth has remained well below the pace of growth in previous recoveries. Consumption spending 8

U.S. Forecast | July 2012

growth in the six years after the end of the 2001 recession averaged 2.9%, but we are projecting that through the end of 2015, consumption spending growth will average just 2.2%. Given that consumption spending represents roughly 70% of U.S. GDP, the 0.7% gap between average consumption spending growth in the two recoveries means a significant drag on overall economic growth during this recovery. Consumers are still facing significant drags on spending as a result of a housing market that continues to languish and has left consumer balance sheets ravaged by the housing bubble’s bursting. Add to this the labor market’s poor performance thus far into the recovery, and you have a tremendous ballast upon the U.S. consumer, leaving her impaired as far as carrying the torch of the economic recovery this time around. If we wish to grasp at straws in trying to find a positive aspect for U.S. consumers, we would have to look to the recent run-up and subsequent pullback in oil and gasoline prices. In the spring, oil and gasoline prices marched higher as tensions in the Middle East escalated over the Iranian nuclear program and the threat of military intervention by Israel or by Israel and the U.S. jointly seemed to be a growing possibility. The fears of a future disruption in global oil supplies and thus fear of higher future prices of oil pushed current prices higher as demand is stoked by expectation of future price.

The beating of the drums of war has become muted since then and the burgeoning crisis in Europe and slowing U.S. economic recovery have all helped bring prices down from the peaks earlier this year. Higher gas prices are like a tax on consumers, so declining gas prices are thus a tax cut that frees up disposable income for spending on other things besides gasoline.

Energy continues to be the most botched policy in the United States since the 1970’s. Mistakes continue to be repeated and have condemned us to be the victims of the volatility of energy prices and the geopolitics of some of the world’s most unstable and unfriendly regimes. Since we are apparently unable to learn from history, it should come as no surprise that we continue to repeat it. The November election is now the focal point of Washington DC, and it is unlikely that we will see any additional fiscal policy action this year beyond the extension of emergency unemployment benefits and the payroll tax cut. The fiscal cliff we are approaching at the end of 2012 and beginning of 2013 will become the purview of a lame duck Congress and potentially a lame duck President. Business investment growth remains the strongest component of GDP growth as businesses are still sitting on mounds of retained earnings after several years of record profitability. Spending by businesses in areas that boost

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productivity and thus dampen costs remain attractive areas for firms to invest, as uncertainty on the revenue side of the profit equation is still elevated. This profit growth will not continue through 2015, but levels of profits will remain significantly higher than in the last recovery.

The federal government sector will remain a drag on GDP growth on the federal level throughout the entire forecast horizon. Record budget deficits and an increasingly worrisome national debt have pushed the rarely seen notion of fiscal austerity into the harsh spotlight of political awareness. As a result, real federal government spending is forecast to contract at an average rate of -2.6% during 20122015. Prosperity continued to thrive in the Washington, DC metro area during the recession as government spending exploded, but this trend is unlikely to persist going forward. The number of looming fiscal deadlines that are on the horizon at the end of 2012 and beginning of 2013 pose a challenge to the economy and to the need for austerity. These deadlines include the scheduled expiration of the Bush tax cuts as well as the end of the recently extended payroll tax cut and emergency unemployment benefits. The Super Committeeâ&#x20AC;&#x2122;s failure to reach an agreement last year means automatic spending cuts also will materialize starting in 2013 if some other agreement cannot be reached to get our federal budget reigned in and get a handle on the burgeoning national debt.

State and local governments have been hit hard by the recession and housing crisis, and despite significant federal support via the stimulus act, steep cuts, layoffs, and in some cases tax hikes, have all been employed to bridge budget gaps. In some cities, like Stockton, CA bankruptcy has become necessary as governments face shrinking revenues and excessive burdens of pensions and medical benefits for public employees that are far in excess of what is available in the private sector. As the economy continues to recover slowly, the burden of these state and local governments will become less onerous. State and local government spending growth will still be declining in 2012 and 2013 but will turn slightly positive in 2014 and 2015.

C o n s u m e r Spe n d i n g The U.S. consumer continues to grapple with the twin forces of the languishing housing market and a labor market that has been painfully slow to recover. Lost wealth, weak job creation, and persistently high levels of unemployment and underemployment are burdens the consumer is likely to have to deal with for several more years to come. U.S. consumers have been historically ravenous when it comes to spending behavior as the economy exits from recession into expansion. Pent-up demand is consumer

spending that is held off during recessions due to uncertainty about the economy, personal finances, or employment security. Given the depth and the length of the Great Recession there was/is a significant amount of pent-up demand in the U.S. economy. Unfortunately, the venting of this pent-up demand has not been a continuous process, but one that has been periodic and staccato as consumers continue to nurse the wounds from the housing and financial crisis and face a labor market that is underperforming. Bursts of spending growth are followed by some retrenchment.

The one sector that has seen steady improvement is light vehicle sales which we forecast will hit nearly 16.1 million in 2015, up from a low of 10.4 in 2009 which was goosed by the cash for clunkers program. Nursing along an older vehicle has limits, and as replacement need built over the recession, the seeds for light vehicle sales growth were being sown. Before we become too ebullient about this sector of consumer spending, we should note that the average level of light vehicle sales is still 2 million vehicles less than the previous economic recovery. Energy prices have been yo-yoing in 2012 and this always plays havoc with consumer spending and consumer confidence. We are currently on a downswing of the energy price yo-yo and how low they might dip remains yet unknown. This decline in energy prices is one minor silver lining of the slowing U.S. economic recovery and global anxiety over the European debt crisis. The labor market is showing some signs of a weakening in its recovery. Job growth is expected to continue in the next few years, but an acceleration of job growth is still likely another two years away. Payrolls are not likely to hit their pre-recession levels until 2015, seven years after they peaked.

The unemployment rate will follow a slow path downward, the slope of which will be a function of the path followed by labor force participation rates. At what point does payroll hiring begin to inspire those who have dropped out of the labor force to get back into the job hunt? In 2012, we expect that the decline in participation rates will turn around and thus prevent unemployment rates from falling very much over the course of the year. Declining labor force participation rates have exaggerated the drop in the unemployment rate thus far in the recovery but going forward they will put a floor underneath the unemployment rate preventing it from rapidly declining.

Investment Nonresidential fixed investment spending grew to double digits in the 2nd and 3rd quarters of 2011 before cooling in the 4th quarter and even further in the 1st quarter of 2012. Institute for Economic Competitiveness

U . S . F o r eca s t Businesses have been earning record profits for several years and interest rates are historically low, but uncertainty, as we discussed earlier, has many moving forward on investment spending intermittently. Policy uncertainty remains elevated and will likely weigh on these investment decisions through the remainder of 2012 and into 2013 as well. Spending will then accelerate into 2014 and 2015 with investment growing at 7.1% and 7.9%.

The cost of borrowing is likely to remain subdued for an extended period given the Fed’s extended commitment to low interest rates. We expect the 10-year Treasury yield to remain below 3.0% through the end of the third quarter of 2014 after which we expect the Fed will begin the process of hiking interest rates and pulling back the reins on monetary stimulus. However, with the past several years of record profits, many firms will have the wherewithal to finance investment spending internally and without the need to turn to credit markets.

We are expecting that business spending on equipment and software will grow at an annual average rate of 7.5% in 2012 through 2015. Investment in computers and peripherals will continue to be strong due to pent-up investment demand, companies seeking cost reduction, and productivity-focused IT plans. During the recession, businesses had to focus on the cost side of the profit equation out of necessity since declining revenues were outside of their control. Even as revenues have begun to grow again, the cost-centric mentality persists. This type of investment will experience average growth of 14.6% in 2012 through the end of 2015. The commercial real estate sector experienced a burst of activity in investment in nonresidential structures with robust growth in 2011Q2 and 2011Q3 before contracting in Q4. We expect growth to continue to decelerate in 2012 and contract slightly in 2013. Commercial developers remain cautious and credit flows into the sector have not been restored, thus there is little near term impetus for investment in structures. Demand for retail and office space will be held in check by wealth-depleted consumers and middling job growth. Investment in non-residential structures will come roaring back in 2014 and 2015 with growth of 7.0% and 10.0%. Investment in transportation equipment grew robustly in 2010 (57.4%) and 2011 (28.3%) and will grow in double digits in 2012 and 2013 before decelerating to a 2.1% growth rate in 2015. This type of investment will have an average growth rate of 9.7% during the four years from 2012 through 2015 with a deceleration of growth into the single digits in 2014 and 2015. Continued venting of pent-up demand, replacement need, and persistent low interest rates will bolster light vehicle sales which will grow from 2011 levels of 12.7 million to a level slightly below 16.1 million in 2015. This 10

U.S. Forecast | July 2012

level is still over 800,000 vehicles below the peak sales during the previous expansion.

Residential fixed investment growth has been negative for six straight years through 2011. The subpar recovery, the languishing labor market, and mortgage underwriting difficulties have all contributed to the ongoing woes of the housing market. In 2012, things are starting to turn around as residential fixed investment growth turns positive this year and is expected to grow by 11.4% from depleted levels. It will average 15.6% growth through 2013-2015 with a peak growth rate in 2015 of 18.1%. In that final year of our forecast, real residential fixed investment will still be over $213 billion lower than its 2005 peak of $775 billion. Housing starts reached their nadir in 2009 at 0.554 million and have bounced along a soft bottom since that time. Inventories of new homes have fallen significantly and existing inventories are being absorbed, though the question of how large the shadow inventory is still remains unanswered. We expect starts to accelerate beginning in 2012 before hitting nearly 1.52 million in 2015.

G o v e r n m e n t Spe n d i n g 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 in the near-term. A national debt that stands in excess of $15.8 trillion (103% of GDP) also looms large and is a growing threat to the U.S. economy.

The pending expiration of several tax cuts, including the Bush Tax cuts and the payroll tax cut, look even more threatening for a recovery that has yet again begun to sputter. While I do not expect any action on these tax cuts until after the election in November, I do think they will all be extended for another year probably by the newly elected congress and President. Another element of the “fiscal cliff” are the mandated across the board spending cuts that are set to begin in 2013, triggered by the deficit super committee’s failure to reach an agreement on deficit reduction. There is a lot of difficult work that has yet to be done to address current and future debt and deficit problems. Politically, these issues are going to require difficult compromises and politically painful decisions to be made, the type of decisions that politicians have been putting off for years. Fixing our deficit and debt problem must include substantive entitlement reform.

At the risk of sounding like a broken record, what we need is a plan along the lines of the Simpson-Bowles deficit reduction committee report which included significant reform to entitlements, Social Security, and Medicare. It

U . S . F o r eca s t also included a simplification of the tax code that would result in an increase in revenues without tacking additional taxes onto an already broken system that grants tax exemptions to the politically connected.

Simplifying the tax code would also reduce the very real economic cost of paying taxes; actually doing the record keeping, form completion, etc. By the IRSâ&#x20AC;&#x2122;s own reckoning (one must think it is thus understated) it takes 22 hours to complete the work necessary to file a 1040 tax return. Nearly three days of man and woman power just to pay your taxes! That is insane and a waste of precious resources that could be used to produce goods and services.

The national debt as previously mentioned is over $15.8 trillion and rising. This represents a debt of over $139,000 per taxpayer and over $50,000 per citizen. Trillion-dollar federal budget deficits are a hallmark of the Obama administration, who we are forecasting will have run average deficits of $1.285 trillion during 2009-2012. Though we are forecasting deficits to stay above the trillion-dollar level through 2012, in 2013, we are forecasting the federal budget deficit to shrink to $796 billion, $641 billion in 2014, and $587 billion in 2015. Though we are projecting deficits to get smaller, the additional debt that will be added to the national debt over these three years will exceed $2 trillion pushing the national debt total well over $18 trillion. These numbers unfortunately are not sustainable as the government continues down a path that will ultimately lead us to Athens, Greece.

Ne t E x p o r t s Overall trade growth will continue through the end of our 2015 forecast period. However, real export and import growth will decelerate in 2012. Both domestic and foreign factors will weigh down on export and import growth, which are expected to be 4.4% and 4.1% this year, respectively.

Average real export growth is expected to be 5.5% through 2012-2015, with a slowdown in 2012 as the European debt crisis has brought recession to Europe and has weighed down the value of the Euro. Real imports will expand over the same period with an average growth of 4.0%. Decelerating imports is a function of the continuing wealth effects faced by consumers, a still languishing labor market, and the deceleration in the pace of the recovery.

recovery. Once this crisis of uncertainty has begun to abate, we expect the dollar will begin to depreciate again in 2014 and 2015 and still large and persistent imbalance in the U.S. economy. The current account deficit will be fairly stable through the end of our forecast horizon, averaging $502 billion during 2012-2015. We expect net exports to average -$410 billion during 2012 through the end of 2015.

U n e m p loy m e n t The labor market in the United States showed signs of improvement in the first quarter of the year with respectable gains in payroll employment, but that has quickly given way to anemic job growth thus far in the 2nd quarter. The unemployment rate had been on a steady march downward, but with the caveat of a falling labor force participation rate. The national unemployment rate ticked up in May by 0.1% to 8.2%. As workers become discouraged by a job search that does not bear fruit and, out of frustration, stop looking for a job; they become what are known in the parlance of the Bureau of Labor Statistics (BLS) as discouraged workers. Anyone who is not working and has not looked for work in the previous four weeks drops out of the labor force. These workers are then no longer counted as being unemployed in the headline unemployment rate known as U-3, the unemployment statistic that is the focus of most media and political scrutiny. Their hopelessness actually makes the headline unemployment rate decline.

The BLS does have alternative measures of labor market weakness. The broadest measure of unemployment (U-6) takes into account these 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 14.8% in May; up from the April 2012 level of 14.5% but down from its peak of 17.2% in October of 2009. It will be several years before we see the unemployment rate fall back into a range consistent with the full employment level. By the end of 2015, the unemployment rate will still stand at 6.9%.

In 2012 and 2013, the U.S. dollar will appreciate vis-Ă vis major trading partners helped in part by the recession and continuing 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 global economic

Institute for Economic Competitiveness

utomobile J u l y 2 0 1 2 and Light Truck Sales (Millions Vehicles)

Charts

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

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 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

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Auto Sales Light Truck Sales

Change in Real Business Inventories 150.0

(Billions of 2000 Dollars)

100.0 50.0 0.0 -50.0 -100.0 -150.0 -200.0

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Change in Real Business Inventories Institute for Economic Competitiveness

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

Consumer Prices (% Change Year Ago)

6.0 4.0 2.0 0.0 -2.0

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Consumer Price Index Core Consumer Price Index

Federal Budget Surplus 500.0

(Billions of Dollars)

0.0 -500.0 -1000.0 -1500.0

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Federal Budget Surplus

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

U.S. Forecast | July 2012

(%)

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Fed Funds Rate

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

Real GDP Growth and Federal Funds Rate (%)

10.0 5.0 0.0 -5.0 -10.0

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Quarterly Growth Rate Real GDP Fed Funds Rate

Industrial Production (2002=100)

110.0 105.0 100.0 95.0 90.0 85.0 80.0

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Industrial Production

Private Fixed Nonresidential Investment 2200.0

(Billions of Dollars)

2000.0 1800.0 1600.0 1400.0 1200.0 1000.0 800.0

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Private Fixed Nonresidential Investment Institute for Economic Competitiveness

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

Manufacturing Employment 18.0

(Millions)

17.0 16.0 15.0 14.0 13.0 12.0 11.0

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Manufacturing Employment

Money Supply

40.0

(Annual Growth Rate %)

30.0 20.0 10.0 0.0 -10.0

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Annual Growth Rate of M2 Annual Growth Rate of M1

Total Nonfarm Payroll Employment 140.0 138.0 136.0 134.0 132.0 130.0 128.0 126.0 124.0

U.S. Forecast | July 2012

(Millions)

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 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

60.0

40.0

20.0

0.0

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Price of Oil WTI Consumer Sentiment

Real Disposable Income and Consumption 8.0

(% Change Year Ago)

6.0 4.0 2.0 0.0 -2.0 -4.0

-200 -300 -400 -500 -600

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Real Disposable Income Consumption

Trade Balance and Real Exchange Rate

1.40 1.30 1.20 1.10

-700 -800

1.00 0.90 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Trade Balance (Billions $) Left axis U.S. Dollar Real Exchange Rate (2000 = 1.0) Right axis

0.80

Institute for Economic Competitiveness

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

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 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

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Unemployment Rate

Yield Curve 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0

U.S. Forecast | July 2012

(%)

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 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.

2004

2005

2006

3.5 3.1 3.3 7.3 2.8 2.7 6.2 7.9 9.9 11.5 10.9 -2.7 21.0 10.6 29.0 1.1 2.5 5.0 -16.7 16.6 1.4 9.9 9.6 11.1 4.1 -0.2

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

History 2007 2008

2010

2011

2012

Composition of Real GDP, Percent Change 1.9 -0.3 -3.5 3.0 1.7 2.2 0.2 -2.6 1.4 2.0 2.3 -0.5 -1.9 2.0 2.2 5.0 -4.9 -5.2 7.2 8.2 1.9 -1.2 -1.8 2.9 1.7 2.0 0.5 -1.4 1.0 1.4 6.5 -0.7 -17.8 4.6 8.8 3.3 -4.2 -15.7 14.6 10.5 8.1 2.2 -3.6 9.9 6.2 14.1 8.4 -2.2 30.9 16.9 11.5 -4.7 -7.6 12.6 -1.7 4.0 -3.8 -20.7 7.1 12.8 -4.1 -23.0 -44.2 57.4 29.1 30.6 -3.3 -23.6 -1.0 5.4 -18.2 -12.7 -22.7 -0.9 35.1 14.0 6.7 -21.3 -15.0 4.5 10.0 -3.6 -30.9 -23.7 -4.1 18.1 25.8 5.0 -31.9 -5.5 39.0 11.6 1.0 -14.9 7.2 6.2 8.4 -34.4 21.9 23.5 15.2 13.2 -18.8 -25.9 -6.5 -18.7 -23.9 -21.8 -4.2 -1.2 9.3 6.3 -9.3 11.4 6.7 2.4 -2.7 -13.5 12.6 5.0 1.3 7.2 6.0 4.5 -1.9 1.4 0.0 -0.9 -1.8 -2.2

Billions of Dollars 12246.9 12623.0 12958.5 13206.4 13161.9 12703.1 13088.0 13315.1 11853.3 12623.0 13377.2 14028.7 14291.6 13938.9 14526.6 15094.0

2.1 1.9 2.3 8.2 1.9 1.5 6.2 7.8 6.8 14.9 0.4 6.5 17.6 17.2 18.5 2.0 4.7 14.2 3.6 -5.7 5.7 11.4 4.4 4.1 -2.8 -2.0

3.3 3.4 2.1 4.9 3.1

3.2 3.2 2.5 3.0 2.9

41.5 2.7 2.3 76.2 58.3 95.2 16.867 1.949 5.914 5.5 1.1 -413 -629

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

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))

1.35 1.37 1.89 3.43 4.27 5.11 5.84 1131 18.0 1.020 -8.1

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 4.88 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

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)

9937 6.0 8889 6.1 9153 3.4 3.6 923 40.2

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

Forecast 2013 2014

2.1 2.2 2.5 4.4 2.4 2.2 5.6 7.8 8.4 14.0 10.8 10.0 11.8 4.2 8.9 -0.4 7.4 1.2 -5.7 -6.3 5.8 12.8 4.5 4.4 -2.9 -0.8

2.7 2.8 2.2 3.8 1.3 2.2 7.1 7.1 9.2 15.3 14.7 3.6 4.3 2.9 3.2 7.0 15.5 7.4 -1.0 0.8 14.0 16.0 5.8 3.4 -2.8 0.1

2015

3.2 3.2 2.0 4.0 1.3 2.0 7.9 7.2 7.1 14.1 8.7 7.6 5.1 6.2 2.9 10.0 19.0 13.1 1.8 2.6 12.2 18.1 7.3 3.9 -2.0 0.6

13595.0 13882.0 14257.9 14720.6 15662.9 16207.3 16888.8 17722.8

Prices & Wages, Percent Change, Annual Rate 2.9 2.2 1.1 1.2 2.1 2.9 3.8 -0.3 1.6 3.1 2.3 2.3 1.7 1.0 1.7 3.9 6.4 -2.5 4.2 6.0 3.1 2.9 1.5 1.9 2.2

2.8 2.7 1.8 3.6 3.8

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. $)

2009

1.6 1.6 2.1 0.3 1.9

1.3 1.2 1.7 0.1 2.1

1.5 2.3 2.0 2.1 2.5

1.6 1.9 2.0 1.4 2.6

Other Measures 61.7 79.4 95.1 2.4 4.0 0.6 -11.3 5.4 4.1 65.5 71.2 75.0 -143.8 60.7 44.3 66.3 71.8 67.4 10.401 11.555 12.741 0.554 0.586 0.612 3.868 3.704 3.797 9.3 9.6 9.0 -4.4 -0.7 1.2 -1416 -1294 -1297 -377 -471 -473

88.7 0.5 3.9 77.9 61.9 76.2 14.2 0.8 4.2 8.1 1.4 -1135 -496

87.0 0.7 2.3 78.7 45.0 78.6 14.7 0.9 4.5 7.9 1.3 -796 -457

99.4 1.4 3.1 79.2 37.9 79.4 15.5 1.2 4.7 7.6 1.4 -641 -512

98.5 1.7 3.9 80.2 50.2 81.2 16.1 1.5 5.0 7.1 1.6 -587 -543

Financial Markets, NSA 0.16 0.18 0.10 1.93 1.37 0.15 0.14 0.05 1.82 0.47 0.32 0.18 2.80 2.19 1.93 1.52 3.67 3.26 3.21 2.79 4.27 4.07 4.25 3.91 6.04 5.04 4.69 4.46 1221 947 1139 1269 -17.2 -18.9 21.6 11.5 0.888 0.926 0.898 0.846 -4.1 4.8 -2.8 -5.8

0.1 0.1 0.2 0.7 1.8 2.9 3.8 1332 5.1 0.9 4.9

0.1 0.1 0.2 1.0 2.1 3.2 4.0 1419 6.6 0.9 4.6

0.2 0.2 0.4 1.7 2.9 4.0 4.8 1473 3.8 0.9 -1.9

1.8 1.8 2.2 3.0 3.8 4.5 5.6 1518 3.1 0.9 -1.7

Incomes 11930 12374 -4.2 3.7 10789 11180 -2.1 3.6 9883 10062 -2.3 1.8 5.2 5.3 1183 1408 24.5 21.2

13411 3.2 11915 2.8 10318 1.3 3.7 1669 12.7

13932 3.9 12265 2.9 10519 2.0 3.2 1835 10.0

14558 4.5 12794 4.3 10770 2.4 3.4 1763 -3.9

15265 4.9 13399 4.7 11079 2.9 4.1 1691 -4.1

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

12460 4.6 11025 5.8 10119 2.4 5.4 1051 -18.6

12991 5.0 11594 3.7 10184 1.2 4.7 1480 5.2

Institute for Economic Competitiveness

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 2004

2005

2006

2007

Forecast 2008

2009

2010

2011

2012

2013

2014

2015

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

12246.9 12623.0 12958.5 13206.4 13161.9 12703.1 13088.0 13315.1

13595.0 13882.0 14257.9 14720.6

12181.3 12573.0 12899.3 13177.6 13200.6 12852.7 13028.9 13284.6

13539.9 13838.9 14222.0 14672.5

8515.8

8803.5

9054.5

9262.9

9211.7

9037.5

9220.9

9421.3

9637.7

9876.9 10090.8 10296.7

Durables

1060.9

1123.4

1174.2

1232.4

1171.8

1108.3

1188.3

1285.4

1391.2

1452.5

1507.5

1567.5

Nondurables

1892.8

1953.4

2005.0

2042.9

2019.1

1983.4

2041.3

2075.8

2114.3

2165.7

2192.7

2220.7

Services

5562.7

5726.8

5875.6

5990.1

6017.0

5935.5

5991.8

6076.1

6166.8

6301.0

6440.2

6567.8

1263.0

1347.3

1455.5

1549.9

1537.7

1263.2

1319.2

1435.5

1524.1

1610.1

1724.5

1860.7

917.3

995.6

1071.1

1106.8

1059.4

889.7

1019.4

1125.7

1213.4

1307.8

1400.9

1501.8

443.1

475.3

516.3

558.2

569.7

548.3

602.6

639.7

683.4

741.0

808.9

866.6

Computers & Peripherals

70.6

78.9

97.1

110.7

119.5

115.7

150.9

176.4

202.6

230.8

266.1

303.7

Communications Equipment

81.7

83.2

93.8

104.4

99.1

91.0

102.4

100.4

100.7

111.5

127.9

138.9

Industrial Equipment

147.4

159.6

172.9

179.9

172.9

137.1

146.6

165.2

175.9

193.4

200.3

215.6

Transportation Equipment

161.1

181.7

198.2

190.2

146.9

77.8

122.7

157.8

185.1

206.9

215.8

226.7

25.1

22.0

20.6

26.8

26.0

19.4

19.2

20.1

23.0

24.0

24.7

26.2

40.8

48.2

51.6

42.1

36.5

28.2

27.9

37.7

44.4

48.3

49.9

51.3

346.7

351.8

384.0

438.2

466.4

367.3

309.1

323.2

329.1

327.7

350.8

385.8

137.1

135.9

144.2

158.6

152.7

105.9

80.0

76.6

80.2

86.1

99.5

118.5

Manufacturing

25.5

29.9

33.0

39.0

48.6

50.8

34.6

32.0

36.2

36.6

39.3

44.5

Power & Communication

46.2

45.2

48.7

67.8

74.0

74.5

63.2

67.7

69.9

65.9

65.2

66.4

Mining & Petroleum

69.9

77.1

88.3

93.6

101.5

65.8

76.7

93.6

88.1

82.6

83.2

85.4

Other

67.4

63.7

69.6

80.3

90.4

73.5

54.2

50.5

53.4

56.5

64.4

72.2

729.5

775.0

718.2

584.2

444.4

345.6

330.8

326.4

363.5

410.1

475.7

561.6

Exports

1222.6

1305.1

1422.1

1554.4

1649.3

1494.0

1663.2

1774.2

1851.5

1934.5

2047.0

2195.9

Imports

1910.4

2027.8

2151.5

2203.3

2144.0

1852.9

2085.0

2187.7

2277.9

2378.6

2458.7

2554.4

865.0

876.3

894.9

906.1

971.1

1029.5

1075.9

1055.0

1025.5

995.9

967.8

948.6

1497.1

1493.6

1507.2

1528.1

1514.2

1487.0

1453.8

1424.4

1413.0

1414.0

1422.0

Nonresidential Fixed Investment Equipment & Software Information Processing Equipment

Aircraft Other Equipment Structures Commercial & Health

Residential Fixed Investment

Federal Government State & Local Government

U.S. Forecast | July 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. 2012Q1

Real GDP Nominal GDP

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

1.9 1.7 2.7 14.3 2.3 1.0 1.9 3.9 3.8 -2.1 -4.2 -15.0 27.1 -35.8 29.7 -3.3 8.7 13.6 -7.6 -13.0 -2.5 19.3 7.2 6.1 -5.9 -2.5

2012Q2

1.9 2.0 2.5 2.3 3.4 2.3 5.3 7.0 8.0 28.7 -9.4 4.4 2.9 -1.6 5.9 0.7 13.8 -13.5 -6.7 -1.7 10.6 9.6 3.3 4.6 0.2 -2.1

2012Q3

2.2 2.2 2.6 5.6 2.9 1.9 7.0 9.8 9.5 14.5 17.7 18.8 9.3 28.6 5.0 -0.4 1.0 5.1 -2.2 -3.1 1.7 12.6 3.2 4.9 -1.1 -1.0

2012Q4

2.3 2.3 2.8 5.3 2.9 2.4 5.7 8.5 11.9 23.5 20.8 16.6 5.4 -5.6 -7.6 -2.1 1.8 5.2 -3.1 -8.8 2.2 11.0 3.7 3.3 -3.7 -1.3

2013Q1

2.0 2.1 2.4 3.5 2.3 2.3 4.8 6.8 4.0 3.4 2.5 8.2 26.1 7.9 29.3 -0.9 6.0 1.2 -3.7 -8.6 6.8 12.8 5.3 4.5 -3.6 -0.8

2013Q2

2013Q4

2014Q1

2014Q2

2014Q3

Composition of Real GDP, Percent Change, Annual Rate 1.9 2.0 2.3 2.6 3.1 3.5 2.1 2.3 2.4 2.8 3.1 3.4 2.3 2.5 2.1 2.3 1.9 2.0 3.9 5.9 4.1 2.9 3.0 3.4 2.1 1.3 1.0 0.8 1.0 2.0 2.1 2.1 2.0 2.6 2.1 2.1 5.5 5.5 7.4 6.7 7.8 8.5 8.5 6.6 6.9 6.0 7.9 8.3 8.8 10.4 9.3 9.6 9.6 7.5 9.2 21.0 17.8 14.1 14.5 14.0 13.6 12.5 12.7 19.4 18.2 9.8 9.6 3.0 2.9 0.7 4.0 5.7 17.9 -1.3 2.0 -0.8 6.9 13.1 2.1 -1.2 -0.2 2.2 4.2 9.2 8.5 6.2 4.5 0.4 2.3 3.0 -3.2 2.2 9.0 8.8 7.4 9.0 10.1 11.9 20.2 15.2 13.3 17.0 -10.9 20.6 0.8 9.9 14.8 0.5 -9.0 -13.9 -0.1 1.1 1.8 3.3 -9.7 -4.3 6.8 2.5 -2.3 5.8 3.5 11.1 13.5 17.8 15.2 13.8 12.7 15.9 16.1 14.7 15.0 18.7 5.4 4.5 4.5 4.8 7.3 8.3 4.9 4.9 4.0 2.6 2.3 3.1 -3.2 -3.1 -3.1 -2.9 -2.7 -2.5 -0.2 -0.4 0.0 0.2 0.1 0.3

2014Q4

3.6 3.4 2.3 5.3 1.2 2.2 8.0 7.5 7.1 13.5 8.3 8.0 6.1 7.9 3.1 9.3 19.7 5.7 6.3 -1.7 14.4 21.9 7.6 3.9 -2.2 0.5

2015Q1

3.1 3.0 1.5 2.6 1.0 1.5 9.2 8.4 7.7 14.0 9.6 10.6 6.6 5.1 7.6 11.5 20.3 16.6 4.0 2.5 14.5 20.0 7.7 4.4 -1.8 0.4

2015Q2

3.1 3.1 2.2 4.6 1.4 2.1 7.1 5.9 6.3 15.0 6.0 7.6 0.7 5.3 1.3 10.7 20.2 20.8 -0.6 4.3 9.4 16.8 6.6 4.2 -1.8 0.9

2015Q3

3.1 3.1 2.3 3.8 1.9 2.2 6.9 6.0 6.2 13.8 6.7 6.2 2.0 5.7 -0.7 9.2 18.5 18.1 -3.4 4.9 7.1 15.1 6.5 4.0 -1.7 0.8

2015Q4

3.0 3.2 2.6 6.3 2.0 2.2 6.3 5.2 6.3 14.6 6.7 5.5 -1.6 5.5 -3.2 9.4 19.3 15.0 -6.0 5.8 9.5 11.3 6.3 3.9 -1.4 0.8

Billions of Dollars 13491.00 13553.19 13628.28 13707.57 13777.19 13843.69 13913.88 13993.20 14084.57 14191.33 14314.27 14441.28 14551.38 14664.45 14778.34 14888.03 15454.00 15579.63 15734.83 15883.28 16015.56 16126.65 16269.84 16417.03 16590.88 16777.28 16985.35 17201.74 17414.28 17620.83 17827.86 18028.41

Prices & Wages, Percent Change, Annual Rate 0.8 1.5 1.3 1.6 1.5 1.0 2.2 2.2 2.6 2.6 1.6 1.6 1.8 2.2 2.3 -0.5 2.9 2.5 2.4 2.3 2.1 2.1 2.3 2.8 2.5

1.7 2.5 2.1 1.8 1.7

1.5 0.2 2.4 -5.4 1.8

1.8 -0.4 1.8 -2.8 1.9

1.4 1.3 1.7 0.7 1.9

1.3 1.4 1.7 1.1 2.2

102.9 -0.9 5.4 77.7 67.8 75.5 14.493 0.712 4.047 8.3 2.1 -999 -558

91.4 1.0 2.8 77.7 62.0 76.4 14.057 0.734 4.073 8.2 1.0 -1016 -509

79.3 0.6 1.7 78.0 60.1 76.4 14.114 0.772 4.226 8.1 1.1 -981 -465

81.4 0.7 2.2 78.3 57.8 76.4 14.128 0.817 4.316 8.0 1.4 -927 -452

82.6 0.7 2.7 78.5 54.7 77.9 14.337 0.852 4.452 7.9 1.4 -760 -438

84.9 0.7 1.9 78.7 48.2 78.1 14.636 0.908 4.493 7.9 1.4 -715 -439

0.10 0.07 0.16 0.90 2.04 3.14 3.92 1347 46.1 0.869 2.8

0.14 0.08 0.17 0.72 1.75 2.89 3.76 1333 -4.1 0.888 8.9

0.10 0.05 0.14 0.65 1.63 2.81 3.67 1311 -6.6 0.895 3.5

0.09 0.07 0.20 0.70 1.70 2.82 3.78 1338 8.6 0.895 0.1

0.14 0.09 0.20 0.72 1.65 2.74 3.68 1398 19.1 0.904 4.2

0.14 0.08 0.20 0.93 1.86 2.93 3.71 1413 4.3 0.919 6.6

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)

13217 3.4 11769 2.9 10204 0.4 3.6 1669 55.9

13326 3.3 11853 2.9 10268 2.5 3.6 1636 -7.6

13479 4.7 11970 4.0 10369 4.0 3.9 1669 8.3

13622 4.3 12071 3.4 10431 2.4 3.8 1699 7.3

13733 3.3 12119 1.6 10443 0.5 3.3 1839 37.3

13866 3.9 12199 2.7 10490 1.8 3.2 1826 -2.9

2013Q3

1.5 2.2 2.1 1.7 2.6

1.5 1.7 1.9 0.9 2.6

1.9 1.9 2.0 1.4 2.8

1.6 1.9 1.9 1.4 2.6

1.6 1.8 1.9 1.4 2.6

1.5 1.7 1.8 1.2 2.6

Other Key Measures 88.8 91.6 97.2 99.4 0.7 1.1 1.3 1.8 2.3 2.3 2.6 4.2 78.7 78.8 78.7 79.0 39.9 37.3 33.6 34.0 79.4 79.0 78.4 78.3 14.915 15.025 15.186 15.392 0.970 1.025 1.086 1.162 4.577 4.572 4.534 4.618 7.9 7.9 7.8 7.7 1.4 1.3 1.3 1.4 -697 -695 -668 -677 -463 -486 -509 -510

100.8 2.0 4.7 79.4 39.2 79.6 15.614 1.245 4.703 7.6 1.6 -671 -510

100.4 1.9 4.5 79.8 44.7 81.0 15.802 1.338 4.807 7.4 1.7 -666 -518

99.4 1.4 3.8 80.1 49.5 81.0 15.918 1.418 4.864 7.3 1.5 -625 -539

98.1 1.6 3.8 80.2 51.6 81.1 16.051 1.496 4.924 7.1 1.5 -642 -540

97.8 1.6 3.0 80.3 52.6 81.2 16.150 1.559 5.042 7.0 1.6 -648 -542

98.5 1.6 2.7 80.1 47.0 81.6 16.259 1.598 5.077 6.9 1.7 -651 -553

Financial Markets, NSA 0.14 0.14 0.14 0.13 0.08 0.07 0.07 0.07 0.20 0.20 0.20 0.21 1.13 1.30 1.40 1.50 2.33 2.59 2.68 2.78 3.89 3.37 3.67 3.78 4.10 4.43 4.54 4.64 1428 1440 1453 1468 4.3 3.3 3.7 4.4 0.944 0.944 0.926 0.913 11.6 -0.3 -7.2 -5.8

0.15 0.18 0.41 1.72 2.98 4.02 4.83 1481 3.3 0.902 -4.4

0.50 0.55 0.86 2.11 3.29 4.22 5.12 1492 3.0 0.899 -1.4

0.99 1.02 1.35 2.42 3.55 4.36 5.36 1503 3.0 0.900 0.3

1.48 1.50 1.89 2.73 3.69 4.40 5.48 1513 2.8 0.896 -1.7

2.02 2.02 2.45 3.16 3.92 4.54 5.70 1523 2.7 0.892 -1.6

2.55 2.54 3.01 3.57 4.13 4.73 5.94 1534 2.8 0.889 -1.6

Incomes 14132 14319 3.9 5.4 12431 12572 4.0 4.6 10601 10664 2.2 2.4 3.1 3.1 1839 1741 0.6 -19.6

14635 4.7 12866 4.8 10801 2.8 3.4 1773 2.3

14809 4.8 13022 4.9 10887 3.2 3.7 1777 0.8

14991 5.0 13143 3.8 10939 1.9 3.8 1679 -20.1

15174 5.0 13316 5.4 11034 3.5 4.0 1693 3.2

15356 4.9 13487 5.3 11128 3.5 4.3 1699 1.4

15538 4.8 13651 4.9 11216 3.2 4.4 1691 -1.7

13999 3.9 12309 3.7 10543 2.0 3.1 1836 2.3

14469 4.3 12716 4.7 10727 2.4 3.3 1763 5.0

Institute for Economic Competitiveness

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

Table 4. Quarterly Gross Domestic Product

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

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

13491.0 13553.2 13628.3 13707.6 13777.2 13843.7 13913.9 13993.2 14084.6 14191.3 14314.3 14441.3 14551.4 14664.5 14778.3 14888.0 13433.6 13499.3 13573.8 13652.8 13724.4 13797.4 13875.9 13957.8 14052.9 14159.3 14277.1 14398.6 14504.0 14615.1 14727.9 14843.1

9545.6 9605.5 9666.3 9733.4 9791.8 9847.0 9908.8 9959.9 10016.0 10063.1 10113.1 10171.0 10209.3 10264.9 10323.3 10389.2 1371.4 1379.3 1398.0 1416.0 1428.1 1441.8 1462.7 1477.5 1488.2 1499.1 1511.6 1531.3 1541.1 1558.6 1573.1 1597.3

Nondurables

2089.7 2107.3 2122.5 2137.7 2150.1 2160.9 2172.3 2179.4 2185.0 2189.4 2195.0 2201.6 2206.8 2214.6 2225.2 2236.1

Services

6117.2 6151.6 6181.1 6217.3 6252.4 6284.8 6317.7 6349.1 6389.7 6422.9 6456.5 6491.7 6516.3 6549.6 6584.9 6620.6

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

1491.3 1510.8 1536.6 1557.9 1576.3 1597.3 1618.9 1648.0 1674.7 1706.5 1741.5 1775.2 1814.5 1845.9 1876.8 1905.5 1177.8 1198.1 1226.3 1251.5 1272.2 1298.4 1319.3 1341.4 1360.9 1387.1 1414.9 1440.8 1470.1 1491.3 1513.3 1532.5 661.2

674.0

689.5

709.1

716.2

731.4

749.7

766.6

784.4

802.6

817.3

831.4

846.9

860.0

873.1

886.5

187.2

199.4

206.3

217.4

219.2

224.1

235.0

244.8

253.0

261.7

270.5

279.2

288.5

298.7

308.5

319.2

99.3

96.8

100.9

105.7

106.4

109.8

113.1

116.6

121.8

127.1

130.0

132.7

135.7

137.7

140.0

142.3

Industrial Equipment

169.0

170.9

178.4

185.3

189.0

193.4

194.8

196.2

196.5

198.5

201.2

205.1

210.4

214.3

217.5

220.4

Transportation Equipment

181.5

182.8

186.9

189.4

200.7

209.1

208.4

209.5

209.0

212.5

219.2

222.5

226.1

226.4

227.6

226.6

22.4

23.8

23.5

23.9

24.0

24.1

24.3

24.9

25.4

25.7

26.0

26.4

26.7

43.9

44.5

45.0

44.2

47.1

48.1

48.8

49.3

49.4

49.7

50.0

50.4

51.4

51.5

51.4

51.0

329.3

329.9

329.5

327.8

327.1

324.4

326.2

333.3

340.4

346.6

354.1

362.1

372.1

381.7

390.2

399.1

Commercial & Health

78.1

80.6

80.8

81.2

82.4

84.4

86.8

90.9

94.2

97.2

101.0

105.7

110.7

115.9

120.9

126.4

Manufacturing

36.8

35.5

36.0

36.4

36.5

35.5

37.2

37.3

38.2

39.5

40.1

41.7

43.7

45.5

47.1

Aircraft Other Equipment Structures

Power & Communication

71.2

69.9

69.6

69.0

68.4

66.8

64.3

64.5

64.8

65.3

66.3

67.0

66.9

66.3

65.3

Mining & Petroleum

89.3

88.9

88.2

86.2

84.3

82.2

81.3

82.6

83.1

82.6

83.8

83.4

84.0

84.8

85.9

87.1

Other

52.2

53.5

53.7

54.0

54.9

55.4

56.9

58.7

61.2

63.4

65.4

67.7

70.0

71.6

72.8

74.5

349.6

357.7

368.5

378.2

389.7

401.6

416.6

432.5

447.5

463.4

483.7

508.3

532.0

553.1

572.8

588.3

Residential Fixed Investment Exports

1828.7 1843.5 1858.3 1875.3 1899.5 1924.8 1946.0 1967.5 1990.6 2026.1 2066.7 2104.8 2144.2 2178.9 2213.3 2247.1

Imports

2240.6 2266.1 2293.2 2311.8 2337.4 2365.6 2393.9 2417.6 2433.2 2446.8 2465.5 2489.5 2516.2 2542.3 2567.3 2591.8

Federal Government

1029.0 1029.4 1026.6 1017.0 1007.7

State & Local Government

1433.2 1425.5 1421.8 1417.2 1414.3 1413.5 1412.1 1412.1 1412.7 1413.1 1414.3 1415.9 1417.4 1420.6 1423.6 1426.5

U.S. Forecast | July 2012

999.6

991.9

984.3

977.1

970.5

964.5

959.2

954.7

950.4

946.4

943.0

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

Table 5. Annual Employment 2004

2005

2006

History 2007 2008

2009

2010

2011

2012

Forecast 2013 2014

2015

Millions Total Nonfarm Employment

131.419 133.694 136.091 137.595 136.794 130.787 129.856 131.359

133.23 135.008 136.907

139.07

Private Nonfarm

109.801 111.890 114.116 115.375 114.288 108.231 107.368 109.255

111.30 113.181 115.062

117.11

Mining

0.523

0.562

0.620

0.663

0.709

0.644

0.655

0.736

0.78

0.719

0.704

0.69

Construction

6.973

7.333

7.690

7.627

7.162

6.013

5.518

5.504

5.55

5.648

6.008

6.66

Manufacturing

14.315

14.226

14.156

13.878

13.403

11.845

11.527

11.736

11.94

12.166

12.471

12.66

Trade, Transportation and Utilities

25.536

25.960

26.277

26.627

26.296

24.906

24.637

25.017

25.36

25.694

25.842

26.12

Transportation & Warehousing

4.250

4.363

4.469

4.542

4.509

4.240

4.189

4.290

4.39

4.530

4.665

4.81

Financial Activities

8.031

8.153

8.328

8.300

8.143

7.769

7.653

7.681

7.74

7.820

7.779

7.74

Education & Health

16.950

17.370

17.825

18.321

18.838

19.190

19.528

19.884

20.35

20.574

20.861

21.11

Professional & Business Services

16.388

16.952

17.572

17.947

17.740

16.570

16.721

17.330

17.89

18.490

19.155

19.99

3.117

3.061

3.038

3.031

2.984

2.803

2.707

2.658

2.64

2.724

2.796

2.82

Leisure & Hospitality

12.492

12.813

13.109

13.428

13.441

13.074

13.042

13.318

13.62

13.846

13.912

13.83

Government

21.618

21.804

21.975

22.219

22.507

22.556

22.488

22.105

21.94

21.827

21.845

21.96

2.731

2.732

2.733

2.735

2.762

2.831

2.976

2.858

2.81

2.735

2.663

2.61

18.887

19.073

19.242

19.484

19.745

19.725

19.512

19.247

19.13

19.092

19.182

19.35

Information

Federal State & Local

Growth Rates Total Nonfarm Employment

1.10

1.73

1.79

1.11

-0.58

-4.39

-0.70

1.16

1.43

1.33

1.41

1.58

Private Nonfarm

1.28

1.90

1.99

1.10

-0.94

-5.30

-0.78

1.76

1.87

1.69

1.66

1.78

Mining

5.16

9.36

10.03

5.74

6.70

-14.62

11.54

12.35

-1.60

-5.55

-1.15

-2.91

Construction

4.31

5.81

2.36

-1.95

-9.22

-16.60

-3.43

0.74

0.62

3.15

8.46

11.28

-0.05

-0.84

-1.04

-2.05

-5.37

-11.44

0.57

1.96

1.50

2.83

2.07

1.28

Trade, Transportation and Utilities

1.53

1.65

1.14

1.17

-3.28

-4.72

0.65

1.59

1.41

1.16

0.55

1.14

Transportation & Warehousing

2.58

2.48

2.60

0.89

-2.71

-5.67

1.35

2.03

2.74

3.47

2.86

3.20

Financial Activities

0.95

2.13

1.35

-1.31

-2.45

-4.32

-0.32

0.36

1.07

0.79

-0.90

-0.30

Education & Health

2.36

2.51

2.62

2.88

2.56

1.71

1.77

2.00

2.24

0.68

1.48

1.49

Professional & Business Services

2.99

3.74

3.08

1.64

-3.65

-5.19

2.96

3.57

3.19

3.29

4.50

3.74

-2.04

-1.07

-0.93

-0.04

-3.10

-6.04

-2.31

-1.65

1.16

2.71

1.86

0.78

Leisure & Hospitality

2.59

2.15

2.85

2.15

-1.63

-2.49

1.23

2.29

2.12

1.42

-0.20

-0.50

Government

0.62

0.81

1.03

1.16

1.00

-0.20

-0.97

-1.20

-0.60

-0.30

0.31

0.61

-0.37

0.34

-0.21

0.54

1.19

2.40

4.72

-0.92

-2.02

-2.74

-2.43

-1.79

0.77

0.88

1.20

1.25

0.98

-0.55

-1.34

-1.24

-0.39

0.06

0.70

0.94

Manufacturing

Information

Federal State & Local

Institute for Economic Competitiveness

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

Employment (Millions) Total Nonfarm Employment

132.7 133.0 133.4 133.9 134.3 134.8 135.2 135.7 136.1 136.6 137.2 137.7 138.3 138.8 139.3 139.9

Private Nonfarm

110.7 111.0 111.5 112.0 112.5 112.9 113.4 113.9 114.3 114.8 115.3 115.9 116.4 116.8 117.3 117.9

Mining

0.8

0.7

Construction

5.6

5.5

5.6

5.7

5.8

5.9

6.1

6.2

6.4

6.6

6.7

6.9

Manufacturing

11.9

12.0

12.1

12.2

12.3

12.4

12.5

12.6

12.7

Trade, Transportation and Utilities

25.2

25.3

25.4

25.5

25.6

25.7

25.8

25.9

26.0

26.1

26.2

Transportation & Warehousing

4.4

4.5

4.6

4.7

4.8

4.9

Financial Activities

7.7

7.8

7.7

Education & Health

20.2

20.3

20.4

20.5

20.6

20.8

20.9

21.0

21.1

21.3

Professional & Business Services

17.7

17.8

17.9

18.1

18.3

18.4

18.6

18.7

18.8

19.0

19.3

19.5

19.7

19.9

20.1

20.3

2.6

2.7

2.8

Leisure & Hospitality

13.5

13.6

13.7

13.8

13.9

13.8

Government

22.0

21.9

21.8

21.9

22.0

2.8

2.7

2.6

19.2

19.1

19.2

19.3

19.4

Information

Federal State & Local

Growth Rates Total Nonfarm Employment

2.11

1.00

1.13

1.40

1.36

1.40

1.39

1.30

1.32

1.37

1.60

1.68

1.52

1.56

1.67

Private Nonfarm

2.58

1.28

1.53

1.83

1.70

1.75

1.76

1.54

1.53

1.62

1.83

1.90

1.73

1.69

1.72

1.86

Mining

9.94

1.72

-6.31 -12.90

-9.84

-7.36

-3.51

-2.10

-2.12

-0.28

-1.02

-1.21

-2.44

-3.87

-3.24

-2.24

Construction

2.19

-2.32

1.06

1.50

1.80

1.64

3.48

5.48

5.98

7.26

9.06 10.49 11.22 11.13 10.73 10.24

Manufacturing

3.59

1.74

0.86

-0.23

1.25

4.58

2.64

2.70

2.54

2.10

1.78

1.81

1.72

1.08

0.98

1.33

Trade, Transportation and Utilities

1.54

0.90

1.49

1.67

1.31

0.98

1.57

0.77

-0.35

0.30

1.05

1.20

0.97

1.18

1.12

1.28

Transportation & Warehousing

3.32

1.63

2.76

3.26

3.62

3.15

3.82

3.27

2.50

2.57

3.09

3.27

3.50

3.13

3.18

3.01

Financial Activities

0.89

1.17

0.74

1.50

1.65

0.58

0.76

0.19

-1.51

-1.25

-0.31

-0.55

-0.66

-0.29

0.12

-0.36

Education & Health

2.50

2.63

2.64

1.20

0.23

0.68

1.09

0.70

2.54

1.42

1.00

0.96

0.82

1.54

1.56

2.02

Professional & Business Services

4.77

1.92

2.08

4.00

4.22

3.38

2.97

2.60

2.65

4.45

5.49

5.41

4.00

3.81

3.53

3.60

-2.00

-0.40

-0.71

7.77

2.10

5.07

2.79

0.87

5.62

3.18

-1.25

-0.11

3.33

0.41

-0.08

-0.53

3.50

1.18

1.61

2.19

2.09

1.26

0.81

1.53

0.81

-0.35

-0.80

-0.46

-0.35

-1.05

-0.43

-0.17

Government

-0.26

-0.44

-0.90

-0.79

-0.36

-0.38

-0.50

0.05

0.24

0.10

0.36

0.56

0.43

0.63

0.73

0.66

Federal

-1.59

-1.34

-2.43

-2.72

-2.63

-2.77

-2.53

-2.29

-2.13

-1.76

-1.63

State & Local

-0.06

-0.30

-0.68

-0.51

-0.02

-0.03

-0.17

0.45

0.67

0.48

0.73

0.94

0.78

0.95

1.05

0.97

Information Leisure & Hospitality

U.S. Forecast | July 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)

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

GDP

114.5 115.0 115.5 115.9 116.2 116.5 116.9 117.3 117.8 118.2 118.7 119.1 119.7 120.2 120.6 121.1

Consumption

115.3 115.4 115.4 115.7 116.0 116.3 116.8 117.3 117.9 118.5 119.1 119.6 120.2 120.7 121.2 121.7

Durables Motor Vehicles Furniture

89.8

89.6

89.4

89.2

88.9

88.6

88.4

88.2

88.1

88.0

87.9

87.8

87.7

87.6

87.5

87.3

107.0 108.3 108.7 108.9 109.1 109.1 109.1 109.1 109.4 109.7 110.0 110.3 110.6 110.8 111.1 111.3 92.5

92.7

92.6

92.5

92.3

92.1

91.9

91.8

91.9

92.0

92.1

Other Durables

116.0 114.0 114.2 114.4 114.8 115.1 115.5 116.0 116.6 117.3 118.0 118.5 119.0 119.5 119.9 120.4

Nondurables

122.3 121.2 119.9 120.1 120.2 120.0 120.7 121.4 122.3 123.3 124.0 124.4 124.9 125.4 125.8 126.3

Food

120.6 121.0 121.2 121.4 121.6 121.8 121.9 122.3 122.8 123.3 123.8 124.3 124.8 125.3 125.7 126.0

Clothing & Shoes 102.2 103.1 102.9 102.9 102.8 102.8 102.9 103.0 103.3 103.6 103.9 104.0 104.1 104.3 104.3 104.4 Gasoline & Oil

165.8 153.9 142.6 142.1 140.9 137.5 141.0 143.8 146.9 149.8 151.3 150.1 149.5 149.0 148.6 148.4

Fuel

178.8 172.2 158.6 157.9 157.9 155.8 158.3 160.6 163.0 165.3 166.6 165.9 165.6 165.3 165.1 165.0

Services

118.1 118.6 119.1 119.6 120.1 120.6 121.2 121.7 122.4 123.2 123.8 124.5 125.2 125.9 126.6 127.3

Housing

115.3 115.9 116.6 117.2 117.8 118.5 119.1 119.7 120.4 121.1 121.7 122.3 122.9 123.5 124.0 124.6

Electricity

131.3 130.9 130.1 130.0 130.5 131.4 132.4 133.6 134.5 135.2 135.7 136.2 137.1 138.4 139.2 139.8

Natural Gas

80.0

77.4

73.3

72.4

74.7

75.6

79.1

82.0

84.0

85.1

85.6

86.3

87.5

88.9

91.0

92.5

Water & Sewer

143.0 145.9 147.2 148.5 149.8 151.1 152.2 153.3 154.4 155.5 156.6 157.8 158.9 160.2 161.4 162.7

Telephone

103.7 103.9 103.7 103.4 102.7 102.3 101.9 101.4 101.0 100.7 100.5 100.2 100.0

Transportation

123.4 124.2 124.5 124.8 125.2 125.5 125.9 126.4 127.0 127.6 128.2 128.8 129.4 129.9 130.5 131.0

Other Services

124.7 125.8 126.5 127.1 127.7 128.2 128.9 129.5 130.1 130.8 131.6 132.4 133.2 133.9 134.8 135.6

99.7

99.5

99.2

Institute for Economic Competitiveness

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

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

GDP

1.7

1.5

1.8

1.4

1.3

0.8

1.5

1.3

1.6

1.5

1.9

1.6

1.5

Consumption

2.4

0.3

0.0

1.0

1.1

0.8

1.6

1.7

2.2

2.0

1.7

1.8

1.7

Durables

-1.0

-1.2

-0.8

-1.0

-1.1

-1.3

-1.2

-0.9

-0.4

-0.3

-0.4

-0.5

-0.6

-0.7

Motor Vehicles

-0.4

5.0

1.3

1.0

0.5

0.0

0.2

0.8

1.1

1.0

0.9

0.8

Furniture

1.9

0.8

-0.5

-0.7

-0.8

-0.7

-0.4

-0.1

0.1

0.2

0.3

0.4

0.3

0.2

0.0

Other Durables

1.5

-6.6

0.6

1.0

1.2

1.3

1.7

2.2

2.4

2.1

1.9

1.7

1.6

1.5

1.4

Nondurables

4.2

-3.7

-4.0

0.5

0.3

-0.7

2.4

2.5

3.0

3.1

2.5

1.3

1.6

1.5

1.4

Food

1.3

1.2

0.8

0.6

0.7

0.4

0.6

1.1

1.6

1.7

1.6

1.4

1.3

1.2

Clothing & Shoes

2.4

3.4

-0.6

-0.2

-0.1

0.1

0.7

1.2

0.9

0.6

0.5

0.4

0.3

0.2

Gasoline & Oil

15.6 -25.9 -26.2

-1.4

-3.4

-9.4

10.6

8.2

8.9

8.2

3.9

-3.1

-1.6

-1.3

-1.0

-0.6

Fuel

17.0 -13.9 -28.1

-1.8

0.1

-5.3

6.8

5.7

6.3

5.8

3.0

-1.6

-0.8

-0.6

-0.3

Services

2.4

2.0

1.6

1.5

1.8

1.7

1.9

2.3

2.2

2.1

2.3

2.2

Housing

2.3

2.1

2.2

2.1

2.2

2.3

2.2

1.9

1.8

Electricity

-1.3

-1.1

-2.6

-0.2

1.5

2.8

3.0

3.7

2.9

2.1

1.5

1.3

2.9

3.7

2.5

1.7

-22.6 -12.5 -19.5

-5.0

13.2

5.4

19.7

15.4

10.1

5.4

2.4

3.1

5.8

6.8

9.4

7.0

Natural Gas Water & Sewer

5.7

8.2

3.8

3.4

3.6

3.4

3.1

2.9

3.1

Telephone

1.6

0.9

-0.8

-1.3

-2.4

-1.8

-1.6

-1.8

-1.5

-1.3

-0.8

-1.1

-0.9

-1.0

-0.9

-1.2

Transportation

2.8

2.5

0.9

1.1

1.3

1.0

1.3

1.5

2.1

1.9

1.7

1.9

1.7

1.6

Other Services

3.6

3.4

2.4

1.7

1.9

1.8

2.0

1.9

2.1

2.5

2.4

2.3

2.4

2.5

2.4

U.S. Forecast | July 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)

GDP Consumption Durables Motor Vehicles Furniture Other Durables Nondurables

History 2004 2005 2006 2007 2008 2009 2010 2011

Forecast 2012 2013 2014 2015

96.8 100.0 103.2 106.2 108.6 109.7 111.0 113.3 97.1 100.0 102.7 105.5 108.9 109.2 111.1 113.8

115.2 116.7 118.4 120.4 115.5 116.6 118.8 120.9

101.1 100.0 98.4 98.4 100.0 100.1 99.9 100.0

99.6

96.4 99.6

94.6 97.8

92.9 91.3 90.4 98.2 103.1 106.2

98.9

98.1

97.8

93.7

92.4

89.5 88.5 88.0 87.5 108.2 109.1 109.8 110.9 92.6

92.0

91.9

92.1

101.5 100.0 101.8 105.5 109.1 110.4 110.9 114.3 96.1 100.0 103.2 106.5 112.6 109.3 112.7 119.7

114.6 115.4 117.6 119.7 120.9 120.6 123.5 125.6

Food 98.3 100.0 101.7 105.6 112.1 113.5 113.9 118.4 Clothing & Shoes 100.9 100.0 99.6 98.6 97.9 98.7 98.0 99.7

121.1 121.9 123.5 125.4 102.8 102.9 103.7 104.3

Gasoline & Oil

82.1 100.0 112.8 123.9 144.9 106.1 125.4 158.5

151.1 140.8 149.5 148.9

Fuel Services Housing Electricity Natural Gas

74.6 96.7 97.6 94.2 83.7

Water & Sewer Telephone Transportation Other Services

133.9 114.5 112.3 128.2 88.8

171.7 116.5 113.7 130.6 86.7

166.9 118.8 116.2 130.6 75.8

95.0 100.0 104.9 110.3 116.7 123.9 131.8 100.7 100.0 100.6 102.4 104.0 105.5 104.9 96.5 100.0 104.2 106.6 112.5 115.7 118.1 95.4 100.0 104.1 107.4 112.5 115.4 119.1

138.8

146.1 151.6 156.1 160.8

103.3 121.4 122.4

103.7 102.1 100.6 99.6 124.2 125.8 127.9 130.2 126.0 128.6 131.2 134.4

100.0 100.0 100.0 100.0 100.3

114.2 103.4 103.6 112.1 102.7

123.5 107.0 107.3 116.7 102.5

168.4 110.6 110.2 124.2 116.1

114.1 112.4 112.2 128.0 90.6

158.1 120.9 118.8 132.0 77.9

165.2 123.5 121.4 135.4 85.3

165.3 126.2 123.8 138.6 90.0

Institute for Economic Competitiveness

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 History 2007 2008

2004

2005

2006

GDP Consumption Durables Motor Vehicles Furniture

3.2 3.0 -0.9 1.6 -0.1

3.5 3.3 -1.3 1.0 -0.3

2.9 1.9 -1.8 -0.7 -0.1

2.6 3.5 -1.9 0.5 -1.5

Other Durables Nondurables Food Clothing & Shoes Gasoline & Oil

-0.3 4.9 2.7 -0.5 28.8

-0.2 4.5 1.5 -1.3 31.8

3.2 0.5 1.7 0.2 -0.8

Fuel Services Housing Electricity Natural Gas

41.8 3.2 2.4 1.8 14.7

33.1 3.8 2.5 10.2 44.9

Water & Sewer

5.9 -1.7 1.4 4.4

5.0 0.2 4.9 4.7

Telephone Transportation Other Services

Forecast 2013 2014

2009

2010

2011

2012

2015

2.1 1.8 -2.1 -4.0 0.3

0.7 1.5 -1.1 5.4 -2.0

1.6 1.3 -2.3 2.3 -4.3

2.1 2.7 -0.5 3.6 0.0

1.6 0.9 -1.0 1.7 0.4

1.3 1.3 -1.1 0.2 -0.7

1.5 2.0 -0.4 1.0 0.1

1.7 1.8 -0.6 0.9 0.2

2.5 6.4 4.7 -1.2 30.4

3.4 1.0 7.0 -0.9 5.1

1.4 2.8 -1.7 1.4 24.8

0.5 2.2 1.3 -1.4 13.4

3.3 6.2 5.2 4.4 22.3

-0.9 -0.7 1.0 1.2 -9.5

1.4 1.1 0.7 0.1 1.5

2.2 2.5 1.7 1.0 4.5

1.6 1.5 1.4 0.4 -1.1

-0.3 3.1 4.4 8.6 -18.3

28.5 3.5 3.0 5.3 3.5

23.2 3.0 2.6 8.4 19.1

-0.3 1.6 0.9 -0.2 -18.4

16.2 1.6 0.3 0.5 -1.0

27.3 2.0 1.9 2.3 -0.4

-6.7 1.9 2.2 -1.3 -14.9

1.8 1.8 2.2 2.7 13.4

3.4 2.2 2.2 1.9 5.2

-0.5 2.2 1.9 2.7 7.3

4.9 1.2 2.5 4.0

5.2 1.5 3.4 3.3

6.7 2.0 6.0 5.0

6.0 0.7 2.0 2.2

5.8 -1.0 1.4 3.0

5.0 -1.3 3.4 2.9

5.3 0.1 1.8 2.8

3.3 -1.9 1.3 1.9

2.9 -1.2 1.9 2.2

3.1 -1.0 1.7 2.4

Table 11. Personal Income and its Components

Table 11. Personal Income and its Components History

2004

2005

2006

2007

Forecast 2008

2009

2010

2011

2012

2013

2014

2015

Personal Income Billions Current Dollars Personal Income

9937.3 10485.9 11268.1 11912.3 12460.2 11930.2 12373.5 12991.2

Wages & Salaries Other Labor Income Nonfarm Income Farm Income Rental Income

6693.4 874.6 984.1 49.7 198.4

7065.1 931.6 1025.9 43.9 178.2

7477.0 960.2 1103.6 29.4 146.5

7855.9 980.5 1052.6 37.8 143.7

8068.3 1052.4 1046.1 51.8 231.6

7806.4 1073.1 902.1 39.2 305.9

7971.4 1090.0 984.2 52.2 350.2

8276.6 1111.0 1043.0 65.9 403.9

13411.1 13932.5 14558.1 15265.0 8538.0 1135.4 1091.9 66.1 461.5

8871.6 1183.0 1149.4 74.3 475.3

9248.0 1247.2 1219.4 68.4 469.6

9678.4 1319.7 1293.0 65.6 446.6

Dividends 548.3 Interest Income 860.2 Transfer Payments 1415.5 419.2 Personal Social Insurance Tax

555.0 987.0 1508.6 445.2

702.2 1127.5 1605.0 475.1

791.9 1265.1 1718.5 499.6

783.4 1382.0 1879.2 517.2

598.8 1108.9 2138.1 506.1

717.7 1003.4 2281.2 513.6

792.0 998.1 2336.3 427.0

852.0 996.7 2365.3 444.9

924.0 1030.6 2438.2 493.8

954.6 1108.1 2588.0 537.0

981.1 1271.3 2737.4 619.9

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

6.0 4.9 3.5 10.1

5.5 5.6 6.5 4.3

7.5 5.8 3.1 7.6

5.7 5.1 2.1 -4.6

4.6 2.7 7.3 -0.6

-4.2 -3.2 2.0 -13.7

3.7 2.1 1.6 9.2

5.0 3.8 1.9 6.0

3.2 3.2 2.2 4.7

3.9 3.9 4.2 5.3

4.5 4.2 5.4 6.1

4.9 4.7 5.8 6.0

Farm Income Rental Income Dividends Interest Income Transfer Payments

38.7 -9.4 43.3 0.2 6.0

-11.1 -10.9 -0.6 19.4 6.3

-32.7 -23.8 26.8 10.9 6.7

28.3 32.7 7.6 13.7 7.6

39.9 66.4 -9.1 2.6 10.1

-22.8 18.9 -13.6 -21.7 15.2

32.8 9.2 27.2 -4.5 7.2

28.8 20.9 7.4 -1.1 -0.3

0.4 10.7 9.6 3.2 2.4

13.0 0.6 6.2 4.0 3.3

-8.0 -2.4 2.1 10.0 6.4

-4.0 -6.2 3.2 16.9 5.7

6.1

5.9

6.7

5.2

2.0

-2.1

2.5

-10.9

4.3

11.5

9.4

17.3

Personal Social Insurance Tax

U.S. Forecast | July 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)

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

Consumer Expenditures by Type Billions Current Dollars

Consumer spending on… all goods & services

11009.5 11087.5 11158.1 11263.8 11363.1 11450.5 11569.4 11679.3 11807.9 11928.3 12046.2 12165.4 12266.7 12388.0 12512.2 12644.4

durable goods

1232.2 1235.3 1249.7 1262.6 1269.9 1278.1 1292.7 1303.0 1310.9 1319.5 1329.3 1345.0 1351.9 1365.5 1375.9 1394.5

furniture and appliances

266.3

268.5

271.1

274.9

278.3

281.4

284.4

286.6

287.5

287.6

287.2

286.8

287.1

289.7

291.1

292.8

98.3

99.1

100.1

100.9

101.7

102.3

103.2

103.9

104.3

105.1

106.2

107.5

108.3

109.5

110.8

112.0

motor vehicles and parts

419.3

413.0

419.6

423.2

421.2

421.5

428.5

433.6

437.9

443.4

450.0

462.1

465.7

472.7

477.5

489.8

other durable goods

129.1

128.4

129.3

130.7

132.0

132.9

134.2

135.0

135.6

136.2

137.0

137.9

138.6

139.3

140.1

140.9

information processing equipment

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

2556.1 2553.7 2545.7 2567.2 2584.4 2592.7 2621.9 2646.6 2673.2 2698.9 2722.3 2739.6 2756.7 2776.9 2800.4 2824.1 363.1

367.2

368.0

370.8

372.4

374.0

375.7

376.1

376.3

377.4

379.1

380.6

383.7

387.1

22.3

22.0

23.6

23.4

23.5

23.3

23.7

24.1

24.5

24.8

24.9

24.7

24.6

24.5

24.4

390.2 24.4

417.9

394.2

368.4

369.9

368.0

359.9

369.4

375.6

379.8

382.5

383.1

378.3

374.7

371.7

370.7

370.6

886.6

895.1

903.1

910.5

917.2

924.3

931.9

939.2

food

826.5

836.3

843.7

850.6

857.8

864.0

871.1

878.3

other nondurable goods

926.3

933.9

942.1

952.4

962.7

971.6

982.0

992.5 1006.0 1019.1 1032.2 1045.5 1059.5 1072.6 1086.3 1099.8

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

9545.6

9605.5

9666.3

9733.4

9791.8

9847.0

9908.8

9959.9 10016.0 10063.1 10113.1 10171.0 10209.3 10264.9 10323.3 10389.2

1371.4 1379.3 1398.0 1416.0 1428.1 1441.8 1462.7 1477.5 1488.2 1499.1 1511.6 1531.3 1541.1 1558.6 1573.1 1597.3

furniture and appliances

287.7

289.6

292.7

297.3

301.6

305.6

309.3

312.1

313.2

312.6

312.0

311.9

314.5

315.9

317.8

information processing equipment

175.5

182.3

186.7

192.5

198.2

203.6

209.7

215.7

221.5

228.4

236.3

244.6

252.0

260.5

269.3

278.3

motor vehicles and parts

392.0

381.3

386.2

388.4

386.2

386.5

392.9

397.3

400.4

404.4

409.2

419.1

421.2

426.5

429.9

440.0

other durable goods

107.4

109.9

110.6

111.6

112.4

113.0

113.8

114.0

113.9

113.8

114.0

114.3

114.4

114.7

115.0

115.4

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

2089.7 2107.3 2122.5 2137.7 2150.1 2160.9 2172.3 2179.4 2185.0 2189.4 2195.0 2201.6 2206.8 2214.6 2225.2 2236.1 355.2

356.2

357.5

360.4

362.1

363.7

365.2

365.1

364.2

364.1

365.0

365.8

365.5

368.1

371.0

12.5

12.8

14.9

14.8

14.9

15.0

14.9

14.8

373.8 14.8

252.0

256.2

258.3

260.3

261.2

261.8

262.0

261.2

258.5

255.3

253.3

252.1

250.7

249.5

249.8

food

685.1

691.1

695.9

700.5

705.1

709.6

714.3

718.3

722.2

726.1

729.4

732.5

734.9

737.9

741.6

745.1

other nondurable goods

797.8

802.8

806.9

812.7

818.0

822.2

827.3

831.6

837.2

841.7

846.0

850.4

855.2

859.4

864.0

868.7

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

2.7

2.5

2.8

2.4

2.3

2.5

2.1

2.3

1.9

2.0

2.3

1.5

2.2

2.3

2.6

13.5

2.3

5.4

5.2

3.4

3.8

5.8

4.0

2.9

3.3

5.2

2.6

4.6

3.7

6.2

furniture and appliances

9.2

2.7

4.3

6.2

5.7

5.3

4.9

3.6

1.4

0.0

-0.8

0.0

3.3

1.8

2.4

information processing equipment

1.5

15.5

9.6

12.4

11.8

11.1

11.9

11.4

10.7

12.6

13.8

14.1

12.1

13.5

13.4

13.4 9.5

motor vehicles and parts

20.6

-10.9

5.1

2.4

-2.3

0.3

6.6

4.5

3.1

4.0

4.8

9.7

2.1

5.0

3.1

other durable goods

7.5

9.3

2.6

3.4

3.0

2.0

2.8

0.8

-0.4

-0.2

0.6

1.0

0.5

0.8

1.1

1.4

nondurables

2.3

3.4

2.9

2.3

2.0

2.1

1.3

1.0

0.8

1.0

1.2

0.9

1.4

1.9

2.0

clothing & shoes

5.5

1.2

1.4

3.3

1.8

1.7

-0.2

-1.0

-0.1

0.9

-0.4

2.8

3.2

3.0

-53.8

10.1

66.1

-1.1

0.8

1.4

0.8

0.6

1.0

-0.3

-1.3

-1.1

-0.9

-2.0

-0.6

-0.3

gasoline & motor oil

1.1

6.6

3.2

3.1

1.4

0.9

0.3

-1.3

-4.1

-5.0

-3.2

-1.9

-2.2

-1.9

-0.1

0.5

food

2.0

3.6

2.8

2.7

2.6

2.5

2.7

2.2

1.9

1.7

1.3

1.7

2.0

1.9

other nondurable goods

3.5

2.5

2.0

2.9

2.6

2.1

2.5

2.1

2.7

2.2

2.0

2.1

2.3

2.0

2.2

fuel oil & coal

Institute for Economic Competitiveness

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 2004

2005

2006

2007

Forecast 2008

2009

2010

2011

2012

2013

2014

2015

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

8270.6

8803.5

9301.0

9772.3 10035.5

9866.1 10245.5 10725.9

durable goods

1072.9

1123.4

1155.0

1188.4

1108.9

1029.6

1085.5

1162.9

1245.0

1285.9

1326.2

1371.9

247.0

261.3

271.5

271.3

257.9

235.3

243.8

253.4

270.2

282.7

287.3

290.2

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

11129.7 11515.6 11987.0 12452.8

59.4

67.0

75.3

86.1

84.9

83.0

91.3

96.5

99.6

102.8

105.8

110.1

403.9

408.2

394.8

399.9

339.3

316.5

340.1

378.6

418.8

426.2

448.3

476.4

92.9

99.5

109.9

118.8

117.9

111.0

116.9

126.4

129.4

133.5

136.7

139.7

1819.3

1953.4

2069.8

2175.5

2272.8

2167.8

2301.5

2483.7

2555.7

2611.4

2708.5

2789.5

298.7

314.0

327.3

335.4

330.9

318.2

334.3

350.3

367.3

374.5

378.3

385.4

17.9

20.0

20.6

21.8

25.9

20.3

22.7

25.5

22.8

23.6

24.7

24.5

gasoline & motor oil

231.6

283.8

314.7

343.0

384.5

279.1

331.4

402.7

387.6

368.2

380.9

371.9

food

613.0

644.5

674.2

711.2

746.4

746.0

766.4

808.6

839.3

867.8

898.8

928.2

other nondurable goods

658.2

691.1

733.0

764.1

785.1

804.1

846.7

896.6

938.7

977.2

1025.7

1079.5

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

8515.8

8803.5

9054.5

9262.9

9211.7

9037.5

9220.9

9421.3

9637.7

9876.9 10090.8 10296.7

durable goods

1060.9

1123.4

1174.2

1232.4

1171.8

1108.3

1188.3

1285.4

1391.2

1452.5

1507.5

1567.5

247.2

261.3

272.5

274.4

262.8

240.6

260.1

274.3

291.8

307.1

312.7

315.0

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

52.5

67.0

85.0

105.9

113.6

120.4

142.4

164.8

184.3

206.8

232.7

265.0

410.4

408.2

394.4

401.4

346.8

322.5

330.1

356.7

387.0

390.7

408.2

429.4

90.3

99.5

108.2

111.9

106.4

98.9

103.2

107.2

109.9

113.3

114.0

114.9

1892.8

1953.4

2005.0

2042.9

2019.1

1983.4

2041.3

2075.8

2114.3

2165.7

2192.7

2220.7

296.0

314.0

328.7

340.1

338.1

322.4

341.0

351.3

357.3

364.0

364.8

369.6

24.0

20.0

18.0

17.6

15.4

17.8

17.0

14.9

13.7

14.9

15.0

14.8

gasoline & motor oil

282.1

283.8

278.9

276.8

265.3

263.1

264.2

254.1

256.7

261.6

254.8

249.9

food

623.9

644.5

663.0

673.2

666.0

657.3

673.1

683.0

693.2

711.8

727.5

739.9

other nondurable goods

668.2

691.1

717.3

737.5

739.7

725.8

750.7

782.4

805.1

824.8

843.8

861.8

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

3.3

2.8

3.2

1.7

-2.5

-0.2

3.0

1.6

2.7

2.3

2.1

durable goods

5.9

3.1

7.1

4.6

-12.6

3.5

10.9

7.1

6.8

4.3

3.6

4.3

furniture and appliances information processing equipment

6.5

6.2

1.4

1.2

-9.2

-1.4

9.3

5.3

5.7

5.0

0.0

1.9

25.9

26.8

28.7

21.3

0.8

12.1

18.2

16.3

10.2

12.1

13.4

13.8

motor vehicles and parts

1.6

-6.8

5.8

0.6

-23.5

8.0

12.9

7.7

4.8

2.3

5.5

5.0

other durable goods

6.8

10.8

5.8

4.1

-12.5

0.3

6.4

1.0

5.8

2.2

0.3

0.9

nondurables

2.7

3.1

2.9

0.8

-3.1

0.6

3.5

0.5

2.9

2.0

1.0

1.6

clothing & shoes

5.2

7.2

3.4

2.3

-3.8

-0.5

7.8

0.2

2.9

1.3

0.2

2.2

-18.3

-18.2

3.5

-7.9

9.1

8.5

-3.0

-14.1

12.5

0.9

-0.4

-0.9

gasoline & motor oil

0.7

-0.6

-0.4

-1.8

-4.0

-0.7

0.1

-3.8

3.6

0.4

-3.5

-0.9

food

2.5

3.6

2.9

0.8

-4.0

2.6

2.1

0.1

2.8

2.5

2.0

1.7

other nondurable goods

3.3

4.2

1.7

-1.2

-0.3

4.8

3.5

2.8

2.3

2.2

fuel oil & coal

U.S. Forecast | July 2012

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

Table 14. Business Fixed Investment History

2004

2005

2006

2007

Forecast

2008

2009

2010

2011

2012

2013

2014

2015

Billions Current Dollars Business Fixed Investment

1223.0 1347.3 1505.3 1637.5 1656.3 1353.0 1390.1 1532.5

1641.7 1728.7 1862.9 2032.4

Producers Dur. Equipment

916.4

995.6 1071.7 1112.6 1070.0

903.0 1015.7 1123.0

Nonresidential Structures

306.7

351.8

433.7

524.9

586.3

449.9

374.4

409.5

1214.4 1301.8 1397.4 1505.0 427.3

426.9

465.5

527.4

Non-Farm Buildings

196.7

212.9

247.6

297.3

322.0

253.9

174.8

165.4

182.0

201.4

241.2

296.2

Commercial

104.3

112.9

128.4

150.8

149.1

95.5

64.5

63.7

68.0

77.3

96.6

124.8

Industrial

23.7

29.9

35.1

43.7

57.4

61.2

40.8

38.4

44.7

47.3

53.3

63.1

Other Buildings

68.7

70.2

84.1

102.8

115.6

97.1

69.5

63.3

69.2

76.8

91.3

108.4

Utilities

48.6

51.4

61.1

85.6

99.5

98.6

89.4

100.4

107.5

102.9

102.3

105.6

Mines & Wells

51.9

77.1

114.2

130.9

151.7

87.9

100.9

133.5

127.5

112.0

109.7

112.9

Billions 2005 Dollars Business Fixed Investment

1263.0 1347.3 1455.5 1549.9 1537.7 1263.2 1319.2 1435.5

1524.1 1610.1 1724.5 1860.7

Producers Dur. Equipment

917.3

995.6 1071.1 1106.8 1059.4

889.7 1019.4 1125.7

Nonresidential Structures

346.7

351.8

384.0

438.2

466.4

367.3

309.1

323.2

1213.4 1307.8 1400.9 1501.8 329.1

327.7

350.8

385.8

Non-Farm Buildings

213.9

212.9

229.2

260.5

272.0

214.1

151.8

141.0

150.8

160.3

183.4

215.6

Commercial

114.4

112.9

118.4

131.2

124.5

78.4

54.4

52.6

54.4

59.2

70.8

87.5

Industrial

25.5

29.9

33.0

39.0

48.6

50.8

34.6

32.0

36.2

36.6

39.3

44.5

Other Buildings

74.1

70.2

77.9

90.3

99.3

85.7

63.5

56.9

60.9

65.1

73.9

84.0

Utilities

52.1

51.4

56.2

75.6

82.5

82.4

71.9

76.7

79.2

75.1

74.1

74.9

Mines & Wells

69.9

77.1

88.3

93.6

101.5

65.8

76.7

93.6

88.1

82.6

83.2

85.4

10.3

5.1

5.5

9.0

8.4

Annual Growth Rate Business Fixed Investment Producers Dur. Equipment

9.5

8.4

11.7

9.0

-5.8

-16.7

11.1

8.5

6.3

6.9

3.5

-11.2

-5.9

15.3

10.3

7.2

6.6

8.2

6.6

Nonresidential Structures

12.6

14.9

25.2

22.0

5.1

-34.4

2.1

11.0

-0.6

2.5

11.4

13.7

Non-Farm Buildings

10.8

7.3

18.7

22.6

-0.1

-33.7

-21.8

8.6

7.5

15.1

20.5

23.7

9.3

10.0

15.3

17.3

-11.8

-44.7

-17.3

5.4

8.1

20.7

25.5

29.9

Commercial

30.4

13.8

16.1

46.6

23.0

-12.0

-32.4

29.3

5.7

7.8

13.0

22.8

Other Buildings

Industrial

9.2

1.7

26.0

22.6

6.7

-29.7

-18.7

1.5

8.6

14.6

20.0

17.5

Utilities

5.5

3.8

23.9

54.9

0.8

-4.1

15.4

10.5

-1.7

-6.0

3.9

0.3

38.0

51.3

50.0

4.8

24.1

-45.1

62.1

17.7

-10.0

-9.2

-0.3

5.5

Mines & Wells

Institute for Economic Competitiveness

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

Forecast

2004

2005

2006

2007

2008

2014.0

2290.1

2524.5

2654.7

2502.3

2009

2010

2011

2012

2013

2014

2015

Federal Government Receipts and Expenditures Receipts

2232.5

2429.6

2564.8

2747.0

3036.1

3216.5

3429.3

Personal Tax and Nontax Receipts

799.2

931.9

1049.9

1165.6

1101.3

856.6

896.4

1072.0

1158.0

1320.2

1402.4

1485.8

Corp. Profits Tax Accruals

250.3

341.0

395.0

362.8

233.6

201.7

329.6

338.2

396.0

453.9

466.4

474.2

94.3

98.8

99.4

94.5

94.0

97.3

101.5

110.8

113.6

115.4

133.0

140.3

807.6

852.6

904.6

945.3

973.1

948.9

970.9

907.3

943.1

1013.3

1079.6

1189.4

Indirect Business Tax and Nontax Accruals Contributions for Social Insurance

2393.4

2573.1

2728.3

2900.0

3115.7

3450.4

3703.3

3752.6

3727.7

3753.0

3887.1

4070.8

Purchases Goods & Services

Expenditures

824.7

876.3

931.7

976.4

1080.1

1142.7

1222.9

1232.9

1217.8

1196.2

1181.7

1177.0

National Defense

550.8

589.1

624.9

662.3

737.8

774.9

819.2

824.9

809.8

794.3

783.4

780.0

Other

273.9

287.3

306.9

314.1

342.3

367.8

403.7

407.9

408.0

401.9

398.3

397.1

Transfer Payments

1405.1

1491.3

1587.1

1690.5

1841.9

2153.6

2313.7

2305.8

2301.7

2353.3

2483.1

2618.6

To Persons

1014.3

1078.0

1180.7

1254.2

1385.7

1601.8

1708.3

1738.8

1771.8

1817.8

1888.8

1982.9

30.9

40.9

35.0

42.2

45.3

53.3

57.3

57.8

59.7

61.0

62.0

63.0

Grants in Aid to State & Local Gov't

349.2

361.2

359.0

380.8

395.5

482.4

531.5

492.5

452.5

456.4

513.9

553.8

Net Interest

204.6

239.0

261.0

291.0

272.1

227.5

250.0

282.1

268.8

267.2

284.4

335.4

45.7

64.1

53.9

50.2

53.6

62.7

60.6

64.1

60.6

52.2

49.5

47.9

Surplus (+) or Deficit (-)

-379.5

-283.0

-203.8

-245.2

-613.5 -1217.9 -1273.7 -1187.8

-980.7

-716.8

-670.6

-641.5

Receipts

1601.0

1730.5

1829.7

1923.1

1944.8

1953.6

2064.7

2084.2

2080.8

2143.0

2265.8

2377.0

Personal Tax/Nontax Receipts

1059.4

1163.1

1249.1

1313.6

1326.4

1252.8

1307.9

1364.3

1394.1

1438.6

1489.6

1545.9 380.0

To Foreigners

Subsidies less Surplus of Gov't Entities

State and Local Government Receipts and Expenditures

Corporate Profits

248.6

276.7

302.5

323.1

334.4

284.8

297.5

325.7

337.8

347.7

362.0

Indirect Business Tax and Nontax Accruals

41.7

55.0

59.1

57.8

47.4

57.9

51.5

51.1

59.4

60.2

59.1

Contributions for Social Insurance

24.1

24.8

21.8

18.9

19.0

20.2

20.8

21.6

22.0

22.8

23.8

24.9

349.2

361.2

359.0

380.8

395.5

482.4

531.5

492.5

452.5

456.4

513.9

553.8

Federal Grants-In-Aid Expenditures

1609.33 1704.50 1778.63 1910.83 2017.05 2031.70 2090.00 2149.70

2156.30 2196.64 2302.53 2396.25

Purchases Goods & Services

1408.2

1493.6

1586.7

1697.9

1798.0

1774.8

1780.0

1797.7

1798.0

1815.1

1855.4

Government Social Benefits

384.3

404.8

402.9

433.7

456.7

498.1

534.6

558.0

553.9

580.3

657.4

709.1

384.3

404.8

402.9

433.7

456.7

498.1

534.6

558.0

553.9

580.3

657.4

709.1

Interest Received

19.0

10.9

2.1

0.5

16.2

28.0

35.4

43.7

49.1

46.1

41.3

41.2

Net Subs idies

12.0

Transfer Payments

1907.9

-0.6

0.3

1.7

16.2

15.3

11.9

12.4

14.0

15.4

13.9

12.8

Dividends Received

2.0

2.1

2.3

2.4

2.9

2.5

2.6

3.1

3.2

3.3

3.4

Net Wage Accruals

0.0

-8.4

26.0

51.0

12.2

-72.3

-78.1

-25.3

-65.5

-75.5

-53.7

-36.7

-19.3

Surplus (+) or Deficit (-)

U.S. Forecast | July 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

2004

2005

2006

2007

2008

-618.7

-722.7

-769.3

-713.1

-709.8

2009

2010

2011

2012

2013

2014

2015

-578.8

-571.9

-535.3

-559.1

-533.0

Billions of Dollars Net Exports Goods & Services

-391.5

-516.9

Current Account

-628.5

-745.8

-800.6

-710.3

-677.1

-376.6

-470.9

-473.4

-496.2

-456.6

-511.7

-543.4

Exports -Goods & Services

1180.2

1305.1

1471.1

1661.7

1846.8

1583.1

1839.8

2085.5

2202.3

2312.3

2474.7

2680.4

Merchandise Balance

-663.5

-780.7

-835.7

-818.9

-830.1

-505.9

-645.9

-738.3

-732.6

-694.1

-727.6

-724.2

Food, Feed & Beverage

56.55

58.95

65.98

84.28

108.33

93.93

107.73

125.38

125.98

128.15

131.43

139.05

Industrial Supplies Excl Petroleum

199.5

227.5

267.3

316.2

386.9

293.8

388.7

485.6

491.0

503.8

539.8

579.8

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

89.2

98.4

107.3

121.3

121.5

81.7

112.0

132.7

148.3

156.6

168.0

185.6

327.6

358.4

404.1

433.0

457.7

390.5

446.6

491.6

537.6

579.9

631.7

693.3

42.8

45.5

47.6

45.6

43.9

37.7

43.9

48.5

50.0

53.2

59.2

67.7

Other

238.7

257.0

291.9

314.5

339.8

278.0

330.8

363.0

391.1

420.2

458.2

500.5

Consumer Goods, Excl. MVP

103.3

115.3

129.1

146.0

161.3

150.0

165.9

176.2

181.2

194.6

210.1

223.8

41.0

47.5

50.8

61.3

61.8

54.8

56.9

62.0

65.2

68.9

73.7

79.0

363.3

399.0

446.7

499.7

549.3

518.4

562.0

612.1

653.0

680.4

720.0

779.8

Imports -Goods & Services

1798.9

2027.8

2240.4

2374.8

2556.5

1974.6

2356.7

2664.2

2774.2

2847.5

3033.8

3213.4

Merchandise

1501.7

1708.0

1884.9

2000.8

2146.4

1587.3

1947.3

2237.9

2311.2

2354.6

2511.2

2653.4

Other Consumer Services

Billions of Dollars

62.1

68.1

75.0

81.7

90.4

82.9

92.5

108.6

112.2

112.8

119.2

124.3

Petroleum & Products

Food, Feed & Beverage

180.5

251.9

302.5

346.7

476.1

267.7

353.7

461.5

413.3

351.6

373.2

370.1

Industrial Supplies Excl Petroleum

226.4

266.0

291.4

295.7

318.9

197.1

250.4

296.2

290.7

303.8

331.7

361.5

Motor Vehicles & Parts

228.2

239.5

256.6

233.2

159.2

225.6

255.8

298.1

304.0

320.5

344.1

Capital Goods, Excl. MVP

344.5

380.8

420.0

446.0

458.7

372.7

450.0

514.0

565.9

594.3

641.8

701.1

88.6

93.3

101.4

105.2

101.2

94.2

117.3

119.7

127.3

133.1

141.0

150.2

Computer Equipment Other

231.6

261.7

290.2

306.5

322.0

247.8

301.5

358.8

399.9

418.6

455.7

502.1

Consumer Goods, Excl. MVP

377.2

411.5

446.1

478.2

486.7

432.5

486.6

518.6

540.1

591.9

623.8

646.2

82.9

90.3

93.5

95.9

82.3

75.4

88.6

83.2

90.8

96.1

100.9

106.0

297.3

319.8

355.4

374.0

410.2

387.3

409.4

426.3

463.0

492.9

522.6

560.0

Net Exports Goods & Services

-687.9

-722.7

-729.4

-648.8

-494.8

-358.8

-421.8

-413.6

-426.5

-444.2

-411.7

-358.5

Exports G & S

1222.6

1305.1

1422.1

1554.4

1649.3

1494.0

1663.2

1774.2

1851.5

1934.5

2047.0

2195.9

Imports G & S

1910.4

2027.8

2151.5

2203.3

2144.0

1852.9

2085.0

2187.7

2277.9

2378.6

2458.7

2554.4

Exports G & S

11.7

10.3

14.0

14.6

0.5

3.0

13.9

9.5

5.8

5.6

8.3

7.7

Imports G & S

19.1

12.1

5.4

9.0

-1.7

0.4

14.2

11.3

2.7

5.3

6.7

5.6

Other Consumer Services

Billions 2005 Dollars

Exports & Imports % Change

Real Exports G & S

7.2

6.8

10.5

10.1

-1.7

2.0

8.8

4.7

4.4

4.9

7.0

6.8

Real Imports G & S

11.0

5.3

4.2

0.9

-5.7

-3.9

11.0

3.6

4.7

4.6

3.0

4.1

Institute for Economic Competitiveness

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