U.S. Forecast March 2013 by UCF College of Business

U.S. Forecast March 2013

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

About University of C e n t r a l F lo r i da ( U C F )

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

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

Fo r eca s t fo r t h e Nati o n Forecast 2013 - 2016 March 2013 Report

Published quarterly by the Institute for Economic Competitiveness, College of Business Administration, University of Central Florida Copyright ÂŠ 2013 Institute for Economic Competitiveness. All rights reserved.

Publications of the Institute for Economic Competitiveness are made possible by the following staff: Dr. Sean Snaith, Director Elaine Vogt, Administrative Assistant Melissa Hedtke, Researcher Caleb Leedy, Researcher Ashley Miller, Researcher Casey Moore, Researcher Sangitha Palaniappa, Researcher Nicholas Simons, Researcher This forecast was prepared based upon assumptions reflecting the Institute for Economic 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 1Q 2 0 1 3 U . S . FO R E C A ST In this Issue of the U.S. Forecast: • Manti Te’o and monetary policy. Have we been catfished by the money multiplier? • The Dude and uncertainty abides. The Economic Policy Uncertainty Index remains above the high average level of uncertainty that has prevailed in this recovery. Real GDP growth is sputtering under the weight of this uncertainty.

H I GHL I GHTS

• The fiscal cliff has morphed into a fiscal flight of stairs. The economy is tumbling down with each step along the way creating a mini-crisis of its own. The latest mini-crisis is sequestration. • Real GDP growth in the 4th quarter of 2012 was revised up to 0.1%, a dramatic slowdown from the 3rd quarter of 2012. This lost momentum and sequestration will slow growth in the first six months of 2013. The 1st quarter growth rate is expected to be 1.8%, and in the 2nd quarter the growth rate will slow again to 1.2%. The second half of 2013 should see average growth of 2.7% • Europe is falling deeper into recession. In the long run, either the Euro ceases to exist or member countries form a fiscal union and the Euro survives. The European Central Bank can sooth financial markets, but it cannot fix fiscal imbalances in member countries. • GDP growth in 2013 should average 1.6% before growth accelerates to 2.8% in 2014 and 3.3% in 2015, before easing back to 2.7% in 2016. • Real consumer spending is expected to grow an average of 2.4% during 20132016. Consumer’s balance sheet woes and the slow labor market recovery weigh on spending. • A housing market recovery is in the making. The housing market will steadily improve through 2016. During 2013-2016, housing starts will rise from 953,129 in 2013 to 1,569,646 in 2016. • Payroll employment growth remains sluggish. Economic and policy uncertainty weigh on the private sector and firms are still hesitant to hire new workers. Consequently, payrolls will only expand 1.4% in 2013. Growth rises in 2014 to 1.8% and to 2.0% in 2015. From 2013 to 2016 payrolls will rise by 1.7% on average. • Payroll employment will reach prerecession levels in the 3rd quarter of 2014, nearly seven years after the pre-recession peak. Uncertainty and the sputtering recovery continue to hamper the labor market’s recovery. • Unemployment rates are expected to gradually fall to 5.9% in the 4th quarter of 2016. Underemployment (U-6) remains a serious problem and currently stands at 14.4%.

U . S . F o r eca s t

Manti Te’o and Monetary Policy Or Catfished by the Money Multiplier The news that broke in January surrounding Notre Dame linebacker Manti Te’o may be one of the strangest stories to come out of college football in my lifetime. When Dr. Phil is covering a story about a Notre Dame football player and a finalist for the Heisman trophy you know something has gone terribly awry. Manti had told several media outlets in the Fall of 2012 that both his grandmother and his girlfriend, a Stanford student named Lenna Kekua, had died on September 11th. A double tragedy that would be difficult for anyone to endure, Manti’s story had additional gravitas because of the echoes of the classic novel and 1970 film Love Story. Manti’s girlfriend had died of leukemia, but had earlier urged him to play on no matter what her fate might be. Before the bidding war on the movie rights to this story could get underway, it all came crashing down around Mr. Te’o. Manti’s girlfriend, you see, did not die of leukemia as he had thought. She did not die because she never existed. She was not real. She was a hoax perpetrated on the gullible young man by another young man and possibly some accomplices. It turns out the whole relationship was an elaborate ruse. Manti had carried out the entire relationship with someone he thought was Lenna Kekua strictly online and over the phone. He never actually met the young woman in person. The photos he thought were of her were of another young woman, and the person he thought he was talking to on the phone was not her but the perpetrator(s) of the hoax. Incredible as this story might sound, it is a product of our technological era. Electronic communication enables people to assume personas that are complete fabrications. While this episode went a bit further than placing a fake personal ad on a dating site, it is nonetheless common, and indeed has a name – “catfishing.” According to the Urban Dictionary, a “catfish” is someone who uses social media to create false identities to pretend to be someone they are not, particularly to pursue deceptive online romances. The Federal Reserve Bank has been making news as well in their efforts to combat the recession, financial crisis, housing crisis, and their aftermath. The Fed very quickly cut their key policy rate, the federal funds rate, effectively to zero by the end of 2008. With no room left to stimulate the economy via lowering the federal funds rate, the Fed embarked in December of

2008 on a first round of quantitative easing (QE1). The Fed purchased $600 billion of agency mortgage backed securities and agency debt. They extended the program in 2009, and by March 2010 the Fed had purchased $1.25 trillion of mortgage backed securities and $300 billion in U.S. treasury securities. The economy did not respond to these purchases and the recovery remained weak. In the fall of 2010, the Fed announced a second round of quantitative easing focusing on longer-term treasury bonds. The $600 billion purchase of bonds dubbed QE2 was intended to lower longer-term interest rates and boost the pace of the economic recovery. In September of 2012, the Fed announced the third round of quantitative easing, QE3. This round would involve additional purchases of mortgage backed securities, but there is no limit to the amount of money the Fed spends. Rather QE3 is an open-ended purchase of $40 billion per month until the economy, and more particularly the labor market, improves substantially. In December as “Operation Twist1” was concluding, the Fed announced it would continue to purchase longerterm treasury securities at a pace of $45 billion per month, bringing open ended purchases of bonds to a total of $85 billion per month. The cumulative effect of quantitative easing on the size of the Federal Reserve’s balance sheet has been tremendous. These various rounds of quantitative easing led to ongoing predictions that inflation would be unleashed and accusations that the Fed was “printing money” and monetizing the government’s debt. As a result of all these purchases, the Fed’s balance sheet grew from $800 billion at the start of QE1 to $3.1 trillion today, a near quadrupling in size. These asset purchases helped provide liquidity to banks and kept prices of bonds higher (and thus kept yields lower), but when the Fed grows its asset holdings its liabilities must also grow. The two key liabilities of the Fed are currency in Starting in September 2011, Operation Twist was designed to lower borrowing costs in the private sector. The program entailed buying roughly $45 billion per month in longer-term Treasuries with greater than 6-year durations, while selling the same amount in shorter-term securities with less than 3-year durations. This would effectively “twist” the yield curve by lowering long term rates and raising short term rates. Because equal amounts of bonds were both bought and sold there is no net effect on the size of the Fed’s balance sheet.

Institute for Economic Competitiveness

U . S . F o r eca s t

circulation and bank reserves—the deposits of depository institutions with the Fed. The sum of these two liabilities is known as the monetary base or high powered money. The reason for their designation as high power is that changes in the monetary base can lead to a multiplied change in the money supply. I am reluctant to do this but let me introduce a few equations to elucidate the discussion of quantitative easing, the money supply, and inflation. First is the equation of exchange: M*V=P*Y Where M = The money supply V = The velocity of money (the average number of times a dollar is spent in a year) P = The price level Y = Real GDP.

This is essentially an accounting relationship that shows that the money supply (M) times the average number of times that money is spent (V) is equal to what money is spent on, namely nominal GDP (P*Y). This relationship becomes a rudimentary economic theory when assumptions are imposed on the elements of the equation. If we assume that in the long run the economy produces at its potential, then Y will be constant. Similarly, if the velocity of money were constant (V), then these two assumptions imply that changes in the money supply will cause proportional changes on the price level. This is the essence of the quantity theory of money. Increase the money supply (M) and you get an increase in the price level (P). This vein of thinking is behind the Milton Friedman quote, “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” The second equation relates the money supply to the monetary base: M = mm * MB Where M=

The money supply

mm = The money multiplier MB = The Monetary Base (High powered money).

U.S. Forecast | March 2013

The equation relates the monetary base to the money supply via the money multiplier. Thus the magnitude of the effect of any change in the monetary base upon the money supply will depend upon the size of the money multiplier. You may have heard the multiplier mentioned in the context of economic impact analysis or in the assessment of how fiscal policy will impact the economy. These references are to expenditure multipliers, where an increase in one person’s spending becomes another person’s income and that person spends a portion of that income (saving the rest), which in turn becomes income to a third person and so on. The cumulative effect of all these rounds of spending can be summarized via the expenditures multiplier. When the government increases spending this can trigger an increase in GDP that is a multiple of the initial increase in government spending.

Mathematically, the money multiplier is derived in a similar fashion as the expenditure multiplier, but instead of round by round spending we have round by round lending. The story behind the money multiplier is that essentially when banks get an injection of excess reserves via the Fed or via deposits, they loan out a portion of these reserves that end up redeposited elsewhere in the banking system. This new deposit represents new money (an increase in the money supply) and banks are required by the Fed to hold a portion of the deposit in the bank’s vault or on account with the Fed. The rest of the deposit beyond the required reserves represents excess reserves, which the bank can then lend out. The proceeds of that loan end also up redeposited in the banking system. This deposit is new money as well. The cumulative effect on the money supply of a change in the monetary base is summarized via the money multiplier. The size of the money multiplier will depend on the reserve requirement for banks (the portion of deposits they cannot loan out), banks decisions to hold rather than loan out excess reserves, and the public’s decisions about how much currency to hold relative to depositing it in the banking system. Putting these pieces together we can see the chain of causality that was the genesis of predictions that the Federal Reserves’ massive increase in the size of its balance sheet would yield high levels of inflation: Fed asset purchases ah Monetary base ah Money supply aInflation.

The problem, however, is that after more than four years since the Fed embarked on the first round of QE, and after more than $2 trillion in asset purchases, there is no real sign of inflation taking hold in the economy. It is as if inflation were the economy’s version of Manti Te’o’s girlfriend—a figment of the imagination, something that should exist, but upon looking deeper, just isn’t there.

U . S . F o r eca s t

We know who pulled the wool over Mr. Te’o’s eyes, but who or what is responsible for catfishing us on inflation? The culprits lie in the second half of the chain of causality which links the monetary base to the money supply and the money supply to inflation. Figure 1 displays the monetary base and the money multiplier. As the Fed has embarked on the three rounds of quantitative easing, the impact on the monetary base is dramatic. The $2 trillion in asset purchases caused the size of the monetary base to skyrocket, which would cause an even larger jump in the money supply if nothing else changed. But something else did change, as can also be seen in figure 1. The money multiplier fell significantly during the same time frame as the quantitative easing. The value of the money multiplier fell from about 1.6 to a low of 0.73 and it currently stands at 0.89. As a result of the plunging money multiplier, the impact on the money supply caused by the rounds of quantitative easing were far smaller than they could have been. Figure 2 shows just how much smaller that impact was. The graph displays the actual path that the money supply has followed as well as the path it would have followed if the money multiplier had remained at the level it was when quantitative easing began. The difference is dramatic.

The money supply would be nearly $2 trillion higher if the money multiplier had not plunged. Why did the multiplier fall so dramatically? Recall that the derivation of the money multiplier stems from banks lending out excess reserves and the money getting redeposited in the banking system, triggering additional rounds of lending. The behavior of banks and of depositors thus impacts the size of the money multiplier and money supply as well. This is not something we teach in introductory economics, where we assume the Fed has direct control of the money supply and can set it as one would set a thermostat. This lending component of the money multiplier process is what has driven the fall in the size of the multiplier. Banks have, by and large, held onto the excess reserves that quantitative easing has pushed into the system and have not loaned them out. The $2 trillion dollar question is: “Why not?” The answer is a combination of factors including tougher underwriting standards, lackluster loan demand by businesses still uncertain about the economic recovery, consumers still repairing damage to balance sheets from the housing crisis, and higher levels of bank oversight and regulation. Until more loans are applied for and approved and the

Figure 1: Monetary Base and M1 Money Multiplier St. Louis Adjusted Monetary Base and M1 Money Mutiplier: 2000-Present 3000

2.00

1.80 2500

1.40

1.20 St. Louis Adjusted Monetary Base

1500

1.00

M1 Money Multiplier

0.80 1000 0.60

0.40 500 0.20

2013-01-01

2012-09-01

2012-05-01

2012-01-01

2011-09-01

2011-05-01

2011-01-01

2010-09-01

2010-05-01

2010-01-01

2009-09-01

2009-05-01

2009-01-01

2008-09-01

2008-05-01

2008-01-01

2007-09-01

2007-05-01

2007-01-01

2006-09-01

2006-05-01

2006-01-01

2005-09-01

2005-05-01

2005-01-01

2004-09-01

2004-05-01

2004-01-01

2003-09-01

2003-05-01

2003-01-01

2002-09-01

2002-05-01

2002-01-01

2001-09-01

2001-05-01

2001-01-01

2000-09-01

0.00 2000-05-01

Institute for Economic Competitiveness

M1 Money Multiplier

2000

2000-01-01

St Louis Adjusted Monetary Base, Billions of Dollars

1.60

U . S . F o r eca s t

Figure 2: Effect of Multiplier on Money Supply

recessions, so to see uncertainty continue to rise during the recovery only lowers the prospect of economic growth and job creation gaining momentum. The already high levels of economic policy uncertainty during the Great Recession got even higher after the recession ended. This fact, perhaps as much as anything else, can explain why the economic recovery we are experiencing is as weak as it has been. Figure 3, below, plots the updated monthly Economic Policy Uncertainty Index along with the average level of the index during the phases of recent business cycles. This index has been discussed and tracked in our previous forecasts, and the role of policy uncertainty in constraining the economic recovery has been addressed as well. This updated chart reflects the unfortunate fact that current levels of uncertainty still exceed the average level of policy uncertainty this recovery has struggled under since its beginning in June of 2009. A grand bargain that addresses both the short-run fiscal policy and the medium to long-run issues of tax reform and entitlement reform that puts the country back on a sustainable path and lays out a course that businesses can trust and predict could unleash economic growth. The Dude (Jeff Bridge’s character in the Coen brothers 1998 film, The Big Lebowski) hates The Eagles and markets hate uncertainty. Reducing economic policy uncertainty could bolster the economy; there is not much to be done about The Eagles.

QE1

5000

1000

2008-10-01

2008-03-01

2007-08-01

2007-01-01

2006-06-01

2005-11-01

2005-04-01

2004-09-01

2004-02-01

2003-07-01

2002-12-01

2002-05-01

2001-10-01

2001-03-01

2000-08-01

2000-01-01

500

Date

economy moves closer to full-employment, the impact of quantitative easing on the money supply will remain much smaller than would otherwise be the case. And the specter of inflation will remain as intangible as Manti Te’o’s girlfriend.

The Dude Abides

Unfortunately, So Does Economic Uncertainty Economic policy uncertainty has hampered our economic recovery. From the fiscal cliff to the sequester, to healthcare reform and financial regulatory reform, uncertainty does indeed abide. Current levels of the Economic Policy Uncertainty Index continue to remain above the average level of policy uncertainty during the economic recovery that began in June of 2009. Current levels of uncertainty and average levels of uncertainty remain well above what the average level of uncertainty was during the Great Recession itself. In the wake of the Great Recession, uncertainty has actually increased from already elevated levels during the recession and has drifted even higher over recent months. The levels of uncertainty during the Great Recession were already significantly higher than during the prior two 8

U.S. Forecast | March 2013

2012-11-01

1500

2012-04-01

2000

2011-09-01

2500

2011-02-01

M1 Money Supply with Constant Multiplier

3000

2010-07-01

QE3

M1 Money Supply

3500

2009-12-01

M1 Money Supply, Billions $

4000

2009-05-01

4500

QE2

Quantative Easing and the Money Supply

Anxious Index The most recent release (1st quarter of 2013) of the Survey of Professional Forecasters by the Federal Reserve Bank of Philadelphia suggests that the 41 forecasters surveyed for the publication are 17.99% convinced that a decline in real GDP will occur in the 2nd quarter of 2013. This release reflects forecasters’ receding anxiety despite a recovery that has lost momentum. The avoidance of the full impact of the fiscal cliff knocking the economy back into recession may have eased these economists’ worries. The 4th

U . S . F o r eca s t Figure 3: The Economic Policy Uncertainty Index

Economic Policy Uncertainty Index, 1985-Present 300

250

Expansion

Recession

Expansion Expansion Recession Recession

Expansion

Uncertainty Index

200

150

100

50 Uncertainty Index Raw Averages

quarter of 2014, which implies the possibility of a recession in the upcoming year has decreased since last quarterâ&#x20AC;&#x2122;s survey. The decline in anxiety over the future of this economic recovery comes in the wake of another weak report on real GDP growth in the 4th quarter of 2012 (0.1%). This comes after a 3rd quarter growth rate of 3.1%. The graph below plots the historical values of the anxious index and the gray bars indicate periods of recession in the U.S. economy. The current levels of the anxious index are above the average level during this economic recovery and while they are more than five points lower than last quarter, the volatility of the index over the course of the recovery is a testament to uncertainty.

GDP Outlook

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

Probability (percent)

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

The year 2012 ended not with a bang, but with a whimper. Real GDP growth was barely Year perceptible at just 0.1%. Growth at the start of Source: Scott R. Baker, Nicholas Bloom, and Steven J. Davis, Measuring Economic Policy Uncertainty 2013 is likely to remain subdued as consumers adjust to smaller take home pay due to the expiration of payroll tax cuts. This burden on quarter 2012 anxious index was 23.04% and was the highest the consumer is just an addition to the ongoing struggles in value since the 3rd quarter of 2009 as the threat of the fiscal the labor market and the lost wealth that has plagued many cliff was at the time of the survey still a real possibility. consumers as housing prices have plunged in many areas of The survey asks panelists to estimate the probability that the country. real GDP will decline in the quarter in which the survey is taken, as well as the probabilities of a decline in each of the following four quarters. Figure 4: The Anxious Index The anxious index (a term coined by The New York Times The Anxious Index reporter David Leonhardt) is Probability of Decline in Real GDP in the Following Quarter the probability of a decline in Quarterly, 1968:Q4 to 2013:Q1 real GDP in the quarter after 100 a survey is taken. In the survey taken in the 1st quarter of 2013, 90 the index stands at 17.99%, 80 which means that forecasters believe there is a 17.99% chance 70 that real GDP will decline in 60 the 2nd quarter of 2013, down from last quarterâ&#x20AC;&#x2122;s anxious index 50 of 23.04%. 40 The forecasters also report a 15.32% chance that we are 30 currently (as of the 1st quarter of 20 2013) in a recession. According to the panel, the probability that 10 we will fall back into recession 0 is averaging around 15.0% st through the end of the 1 Survey Date

Institute for Economic Competitiveness

U . S . F o r eca s t

In this recovery, the first three full years of real GDP growth in the economy will average just 2.1%. This is a full 0.5% slower than the first three years after the 2001 recession and 1.3% slower than the first three years after the 1990-91 recession. As we have already touched upon in previous forecast publications, policy uncertainty has played a big role in the underwhelming performance of the economic recovery this time around. Looking forward to 2013, the pace of economic recovery is not likely to show an improvement. We are anticipating growth of just 1.6%–coming from a combination of the sequestration cuts, rising payroll taxes, and very weak momentum from the fourth quarter of 2012. The full fiscal cliff may have been avoided, but spending cuts, revenue hikes, healthcare reform, and Dodd-Frank financial regulatory reform will hamper growth. All of these will be albatrosses of uncertainty around the economy’s neck and will keep growth subdued this year. In 2014 as uncertainty abates and damage from the housing crisis continues to heal, real GDP growth will accelerate to 2.8%. Growth will continue to rise in 2015, reaching 3.3% before easing to 2.7% in 2016. A major risk that could derail our recovery would be the ongoing sovereign debt crisis in Europe. I have written about this crisis in previous forecast releases and I described it there and elsewhere as a train wreck in slow motion. The crisis has been out of sight for several months as the fiscal issues and Presidential election dominated our media here in the U.S. Out of sight doesn’t mean the crisis is over; recent political developments in Italy may actually stoke the flames of these crises once again. I still expect that Greece will ultimately leave the common currency, quite possibly in the upcoming year, but if the crisis accelerates and other countries begin to fall out of the Eurozone, the result would be further deepening of an already persistent EU recession. This would create turmoil in financial markets that would impact the U.S. economy. This could also send us back into recession. The bottom line in the Eurozone is that one cannot solve a long run fiscal problem with monetary policy. The purchases of debt by the ECB may quell fears of financial markets temporarily and provide strapped nations with needed liquidity, but they cannot solve the heart of the problem: widely divergent patterns of government spending and taxation in Northern and Southern Europe. This liquidity is like a topical balm that might ease the pain of arthritis in the knee, but the cure would require replacement of the joint. This is not the first course of action in treating joint pain, but in severe cases it is often necessary. Fiscal reform in the Eurozone will be as difficult as joint replacement, but it will ultimately be needed if the Euro is to survive.

U.S. Forecast | March 2013

C o n s u m e r Spe n d i n g Years ago in this publication I suggested the shape of the U.S. economic recovery was not going to be “V”-shaped, but rather we would have a gravy-boat shaped recovery. The spout of a gravy boat is long and gradual and I suggested that this is how the recovery would unfold. As it turns out, the U.S. recovery has been slow and protracted. The reason for my prognostication and for our underwhelming recovery is one and the same: U.S. consumers who account for 70% of GDP were and are simply not in a position to lead a robust recovery. Lost wealth in the housing market and a persistently weak labor market recovery have forced consumers to continue to be cautious with spending as they continue to nurse the wounds on their balance sheets, saving to try and fill the crater where once trillions of dollars of housing wealth did lay. In the 70’s and 80’s, average real consumption growth of 4%-plus characterized the recoveries. In the 90s the growth was on average greater than 3.8%. Consumption growth thus far in the recovery and forecast through the end of 2016 is expected to average just 2.3%, well below the consumer spending growth of previous recoveries. Quarterly patterns of consumer spending show a pattern about this recovery that has persisted over the past several years: consumers spend at a higher pace for a quarter or two only to pull back in subsequent quarters to lick the wounds on their balance sheet. As the recovery progresses, we expect that the pace of spending will stabilize at levels of consumption still much lower than in previous recoveries.

Investment Nonresidential fixed investment spending grew at 8.6% in 2011 and 7.8% in 2012. Businesses have been very profitable for several years and interest rates are historically low, but uncertainty has many firms moving forward on investment with great caution. Policy uncertainty has again risen over the past few months, as we have discussed, and weighs on these investment decisions. Consequently, investment growth will be just 3.6% in 2013. Spending will accelerate in 2014 with investment growing at 7.0%, and expand at 7.8% in 2015 before easing further to 4.5% in 2016. The cost of borrowing will remain subdued for an extended period given the Federal Reserve’s stated commitment to low interest rates through mid-2015. We expect the 10-year Treasury yield to remain below 3.0% until mid-2015. After this, we expect the Fed will slowly begin the process of hiking interest rates and pulling back the reins on monetary stimulus, slightly ahead of their current commitment date. The rise in interest rates will be preceded by the start of undoing the rounds of quantitative easing that has boosted the size of the Fed’s balance sheet.

U . S . F o r eca s t

Business spending on equipment and software will grow at an annual average rate of 5.9% in 2013 through 2016. Investment in computers and peripherals will continue to be strong after slowing a bit in 2012. Companies managing costs and implementing productivity-focused IT plans will continue to spend at an healthy average annual growth rate of 13.2% from 2013 to 2016. Investment in commercial real estate experienced a burst of activity in the first half of 2012. Growth decelerated in the second half of 2012 and will continue to contract into the first half of 2013, before accelerating in the second half of 2013. Year-over-year investment in structures will decline in 2013. Investment in non-residential structures will come back in 2014 and 2015 with growths of 7.6% and 8.8% respectively, before growth eases to 5.4% in 2016. Investment in transportation equipment grew robustly in 2011 (34.4%), and grew again in double digits in 2012 (21.3%), before decelerating to a 3.9% growth rate in 2013 and 2014. This type of investment will have an average growth rate of 3.5% during the four years from 2013 through 2016 and in that final year growth will be -1.2%. Ongoing demand driven by replacement need and persistent low interest rates will bolster light vehicle sales that will grow from 2012 levels of 14.4 million to a level slightly under 16.2 million in 2016. The automotive sector will remain one of the more solid sectors in the U.S. economy over the next 4 years. Residential fixed investment growth spent six years plummeting downward. But there are clearly signs of a recovery in a sector that contracted for years. In 2012, residential fixed investment growth not only turns positive, but also is expected to grow by 11.9%. It will average 13.8% growth through 2013-2016 with a peak growth rate in 2014 of 19.5%. In the final year of our forecast, 2016, real residential fixed investment will still be more than $165 billion lower than its 2005 peak of $775 billion. The housing market is again showing tangible signs of recovery, and while there may be echoes of the housing boom in the current markets, there will not be a replay of the housing bubble. Inventories of new homes have fallen significantly and existing inventories are being absorbed; investors are buying distressed properties, turning them around, and renting them out as opposed to flipping them. The holding periods for this new crop of investors are measured in years, rather than the months or even weeks as we witnessed during the height of the housing bubble. Housing prices are gaining some traction and non-distressed inventory is moving quickly. This is sending a signal to builders to get back to housing production. There are growing indications that the recovery in housing is starting to gain traction. We expect starts to continue to accelerate significantly in 2013, reaching more than 1.56 million in 2016.

G o v e r n m e n t Spe n d i n g The fiscal cliff has been avoided. The simultaneous expiration of the Bush tax cuts and across the board budget cuts known as sequestration were temporarily avoided. We haven’t fallen off the cliff, but now appear to be tumbling down a flight of fiscal stairs bouncing from one crisis to the next in an interminable and seemingly perpetual fiscal crisis. The Bush tax cut expiration was avoided for all but the highest income earners. No one, however, escaped rising taxes as the 2% payroll tax cut was allowed to expire and all wage earners took a 2% hit on their take home pay in January of 2013. The sequester, however, is going to happen, and while these trillion dollar plus cuts are spread over a decade, they will be a drag on the pace of recovery. That is the nature of the beast, though, isn’t it? It is easy to run deficits. Everyone enjoys lower taxes and more spending, especially politicians. These things win friends and votes. But correcting fiscal imbalances and addressing entitlements so the country can return to a path for fiscal policy that is sustainable and that does not lead to insolvency, well that’s not going to be easy. Higher taxes, less spending? That’s no fun at all. The long run solution will require significant changes to entitlement programs (Social Security and Medicare), increased revenue, and decreased spending. The President’s bipartisan deficit reduction commission authored a report laying out one potential way forward. The SimpsonBowles report lays out a set of policies that are going to be politically painful and difficult to implement, but are by and large just the type of changes that must take place. Despite the apocalyptic predictions of what the sequester would entail for the economy, the fiscal impact of these cuts is not significant in the larger battle over reducing deficits and working down the national debt. This battle over such a relatively small act of fiscal austerity reinforces the political challenges this country faces in actually doing the difficult changes that entail a true solution to our deficit and debt problems. Even though we have run federal budget deficits from 2009-2012 that are nearly $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 eschew any possibility of further fiscal stimulus (aside from the actions averting the fiscal cliff). The national debt that stands in excess of $16.6 trillion nearly ($1 trillion larger than GDP) also looms large and is a growing threat to the U.S. economy. The national debt, as previously mentioned, is over $16.6 trillion and rising. This represents a debt of nearly $147,000 per taxpayer and over $52,800 per citizen. Trillion-dollar federal budget deficits are a hallmark of the first term of Institute for Economic Competitiveness

U . S . F o r eca s t

the Obama administration that have run average deficits of $1.274 trillion during 2009-2012. In 2013, we are forecasting the federal budget deficit to shrink to $858 billion, which should continue to shrink to $683 billion in 2014, $597 billion in 2015, and $647 billion in 2016. Though we are projecting deficits to get smaller, the additional debt added to the national debt over these four years will exceed $2.7 trillion, thus pushing the national debt total to over $19.4 trillion. This is assuming interest rates do not rise faster than anticipated, and thus debt service do not surge, thereby raising the burden of servicing all this debt.

Ne t E x p o r t s The international sector continues to be a growing source of concern with the European Union in a deepening recession that could cause the sovereign debt crisis to roil. This crisis does not only threaten the EU but also the global economy as well. This remains the biggest risk to the U.S. economic recovery (after ongoing fiscal drama and political rancor), and the Euro crisis is not going to end any time in the near future. The European Central Bank announced that it will buy sovereign debt of countries that are in trouble. This was an important step taken by the ECB to ease the financial consequences of the debt crisis. Even though the debt purchases come with austerity strings attached, in the end as I have often repeated, you cannot solve a fiscal policy problem with monetary policy regardless of these austerity strings attached to the debt purchases. The situation in Spain and Italy continue to worsen on both the political and economic fronts. Overall trade growth continues through the end of our 2016 forecast period. However, real export and import growth both decelerated in 2012 as the U.S. and global recovery lost momentum. Real export growth is expected to be 5.6% through 2012-2016, even with the slowdown in 2012 as the debt crisis that brought recession to Europe has depressed both the value of the Euro in the first half of the year—making U.S. exports more expensive—and European’s incomes as well. Real imports will expand over the same period with an average growth of 3.6%. The near term deceleration of import growth is a function of the continuing wealth effects of lost home equity faced by consumers, the still weak labor market, the expiration of the payroll tax cut, and the deceleration in the pace of the U.S. economic recovery that has occurred as 2012 came to an end.. The U.S. dollar will appreciate vis-à-vis our major trading partners through 2014. The strengthening is due to the deepening recession, the uncertainty stemming from the sovereign debt crisis in the E.U. that has once again began to depress the value of the Euro, and the continued flight to the quality of U.S. treasuries in the face of 12

U.S. Forecast | March 2013

escalating uncertainty over the slowing economic recovery. Once this wave of global uncertainty abates, we expect the dollar will depreciate again in 2015 -2016 at an average annual rate of 2.3% in the wake of still large and persistent imbalances in the U.S. economy. The current account deficit will improve through the end of 2014 as the dollar appreciates. Current account balances will average -$440 billion during 2012-2014, with a worsening of the deficit in 2014-2016 when the dollar depreciates again. We expect net exports to average -$472 billion during 2015-2016.

U n e m p loy m e n t The labor market in the United States has shown continued improvement to date. The pace of the recovery has been underwhelming.

Job creation remains weak and the pace of payroll job growth is insufficient given that we are still 3.1 million jobs short of payroll employment returning to prerecession levels. The labor market is still suffering through the worst pace of job recovery following a recession since 1945. The national unemployment rate ticked up in January to 7.9%. The jobs report again showed conflicting pictures of the labor market with 157,000 new workers on business payroll, but an increase of only 17,000 people in the household survey who were reporting that they are employed. The mixed messages in recent jobs and labor market report reinforces the need to look at more than a single metric of how the labor market is performing. Because it is sufficiently complex and difficult to measure, the U.S. labor market cannot be adequately gauged by a single metric such as the headline unemployment rate during this recovery. This is particularly true because in 2012 the labor force participation rate is at its lowest point in 30 years. The headline unemployment rate falls as workers leave the labor force giving a downward bias to the unemployment rate in this recovery. The Bureau of Labor Statistics (BLS) does have alternative measures of labor market weakness. The broadest measure of unemployment (U-6) takes into account discouraged workers as well as those who are underemployed—working part-time but not by choice— and workers who are marginally attached to the labor force and have looked for work in the past 12 months but are not currently looking, yet indicate a willingness to work. U-6 remains painfully high at 14.4% in January, unchanged since November and down from its peak of 17.1%. It will take several years before we see the unemployment rate fall back into a range consistent with full employment. By the end of 2016, the unemployment rate will dip below 6.0%—nine years from the official start of the recession.

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

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

9.0

2.5

8.0

2.0

7.0

1.5

6.0

1.0

5.0

0.5

4.0 3.0

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

0.0

Automobile and Light Truck Sales 11.0

(Millions Vehicles)

10.0 9.0 8.0 7.0 6.0 5.0 4.0

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

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

(Billions of 2000 Dollars)

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

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

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

Federal Budget Surplus 500.0

(Billions of Dollars)

0.0 -500.0 -1000.0 -1500.0

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

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

U.S. Forecast | March 2013

(%)

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

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

Industrial Production 110.0

(2002=100)

105.0 100.0 95.0 90.0 85.0 80.0

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

Private Fixed Nonresidential Investment 2200.0

(Billions of Dollars)

2000.0 1800.0 1600.0 1400.0 1200.0 1000.0

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

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

Manufacturing Employment (Millions)

18.0 17.0 16.0 15.0 14.0 13.0 12.0 11.0

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

Money Supply 2600.0

(Billions $)

2400.0 2200.0 2000.0 1800.0 1600.0 1400.0 1200.0 1000.0

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

Total Nonfarm Payroll Employment 145.0

(Millions)

140.0 135.0 130.0 125.0

U.S. Forecast | March 2013

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

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

Oil and Consumer Confidence 140.0

Oil ($ Per Barrel) - Left Axis

120

120.0

110

100.0

100

80.0

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 6.0

(% Change Year Ago)

4.0 2.0 0.0 -2.0 -4.0 -6.0

-200 -300 -400 -500

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

Trade Balance and Real Exchange Rate

1.40 1.30 1.20 1.10

-600

1.00

-700 -800

0.90 0.80 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Trade Balance (Billions $) Left axis U.S. Dollar Real Exchange Rate (2000 = 1.0) Right axis

0.70

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

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

Civilian Unemployment Rate 10.0

(%)

9.0 8.0 7.0 6.0 5.0 4.0 3.0

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

Yield Curve 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0

U.S. Forecast | March 2013

(%)

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

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

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

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

Real GDP Nominal GDP

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

Oil - WTI ($ per barrel) Productivity (% change) Industrial Production (% change) Factory Operating Rate Nonfarm Inven. Chg. (Bil. of 2005 $) Consumer Sentiment Index Light Vehicle Sales (Million units) Housing Starts (Million units) Existing House Sales (Million units) Unemployment Rate (%) Payroll Employment (% change) Federal Surplus (Unified, FY, bil. $) Current Account Balance (Bil. $)

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

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

2005

2006

2007

History 2008 2009

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

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

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

Composition of Real GDP, Percent Change -0.3 -3.0 2.4 1.8 2.2 0.2 -2.3 0.9 2.0 2.0 -0.5 -1.9 1.8 2.5 1.9 -4.9 -5.1 6.2 7.2 7.8 -1.2 -1.8 2.3 2.3 0.9 0.5 -1.4 1.0 1.9 1.3 -0.7 -18.0 0.9 8.6 7.8 -4.2 -16.2 8.9 11.0 7.0 2.2 -3.9 4.6 5.0 3.8 8.4 -5.3 3.1 12.3 4.9 -4.7 -9.4 12.7 -5.7 4.4 -3.8 -21.2 -0.9 13.3 7.2 -23.0 -45.6 61.9 34.4 20.8 -3.3 -25.0 6.9 -0.8 33.1 -12.7 -23.3 -1.0 41.7 16.3 6.7 -21.1 -14.7 2.7 10.0 -3.6 -30.9 -24.2 -2.1 7.0 25.8 5.2 -27.8 3.3 17.7 11.6 1.0 -15.9 -8.9 17.8 8.4 -33.9 23.6 23.4 6.2 13.2 -18.3 -26.4 -6.3 7.7 -23.9 -22.0 -3.6 -1.2 11.9 6.3 -9.0 11.2 6.7 3.2 -2.7 -13.4 12.5 4.9 2.5 7.2 6.1 4.5 -2.8 -2.2 0.0 2.2 -1.8 -3.4 -1.3

2010

2011

2012

Billions of Dollars 12623.0 12958.5 13206.4 13161.9 12758.0 13063.0 13299.1 13588.8 12623.0 13377.2 14028.7 14291.6 13973.7 14498.9 15075.7 15676.0

2013

1.6 1.7 1.7 5.1 1.4 1.3 3.6 5.1 6.6 10.5 10.6 5.8 3.9 6.2 0.6 -0.4 2.4 2.2 -9.9 1.4 2.7 13.2 2.4 1.0 -4.1 -0.5

3.2 3.2 2.5 3.0 2.9

2.9 2.9 2.3 3.9 3.1

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

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

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

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

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

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

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

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

10486 5.5 9277 4.4 9277 1.4 1.6 1228 33.1

11268 7.5 9916 6.9 9653 4.0 2.6 1349 10.1

11912 5.7 10424 5.1 9880 2.4 2.4 1293 -4.2

12460 4.6 11025 5.8 10119 2.4 5.4 1051 -18.6

2.8 2.7 2.5 4.7 2.1 2.3 7.0 6.8 8.5 17.7 8.5 8.9 3.9 2.2 6.2 7.6 18.6 10.0 -2.9 4.0 9.4 19.4 5.2 5.1 -2.4 -0.1

3.3 3.3 2.7 5.0 1.9 2.6 7.8 7.5 7.4 13.2 8.6 8.5 7.3 5.2 5.8 8.8 25.4 2.1 5.5 -1.3 9.5 19.5 5.8 4.8 -2.3 0.5

2016

2.7 2.8 2.6 4.4 2.1 2.4 4.5 4.1 5.8 11.5 8.9 3.2 -1.2 5.3 -2.9 5.4 17.8 10.0 -2.8 -6.9 7.2 3.2 6.5 3.0 -1.4 0.6

13808.7 14200.9 14670.3 15065.4 16142.9 16890.3 17718.0 18467.0

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

3.3 3.4 2.1 4.9 3.1

Forecast 2014 2015

1.3 1.5 1.8 1.3 1.9

1.7 1.7 2.0 0.5 2.3

1.5 1.6 1.9 0.6 2.5

1.5 1.7 1.8 0.8 2.7

94.2 1.1 3.7 77.2 61.8 76.5 14.4 0.8 4.1 8.1 1.7 -1089 -478

93.8 0.5 2.1 77.4 36.1 78.5 15.0 1.0 4.4 7.8 1.4 -858 -427

88.4 0.6 3.2 78.7 47.0 81.8 15.5 1.2 5.0 7.2 1.8 -683 -416

83.6 1.1 3.5 79.5 51.6 84.8 16.0 1.5 5.3 6.4 2.0 -597 -460

86.4 1.3 2.6 79.0 33.1 84.1 16.2 1.6 5.0 6.0 1.7 -647 -483

Financial Markets, NSA 0.16 0.18 0.10 0.1 0.15 0.14 0.05 0.1 0.47 0.32 0.18 0.2 2.19 1.93 1.52 0.8 3.26 3.21 2.79 1.8 4.07 4.25 3.91 2.9 5.04 4.69 4.46 3.7 947 1139 1269 1380 -18.9 21.6 11.5 8.9 0.926 0.898 0.845 0.9 4.8 -2.8 -5.8 3.7

0.2 0.1 0.1 1.0 2.1 3.2 3.5 1454 5.5 0.9 1.3

0.2 0.1 0.2 1.3 2.6 3.7 3.9 1452 -0.1 0.9 2.5

0.7 0.6 0.9 1.9 3.3 4.2 4.9 1512 4.2 0.9 -2.6

2.7 2.6 3.1 3.6 4.4 4.9 6.2 1448 -4.2 0.9 -2.0

Incomes 12322 12947 3.8 5.1 11127 11549 3.8 3.8 10017 10150 1.8 1.3 5.1 4.3 1443 1475 24.6 2.2

13719 2.4 12120 1.6 10364 0.6 2.8 1601 -5.7

14429 5.2 12731 5.0 10736 3.6 3.7 1754 9.5

15160 5.1 13383 5.1 11119 3.6 4.4 1679 -4.2

15893 4.8 14055 5.0 11494 3.4 5.1 1574 -6.3

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

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

Other Measures 79.4 95.1 3.1 0.7 5.4 4.1 71.2 75.0 58.0 36.5 71.8 67.4 11.555 12.733 0.586 0.612 3.704 3.797 9.6 8.9 -0.7 1.2 -1294 -1297 -442 -466

13402 3.5 11931 3.3 10306 1.5 3.9 1698 15.3

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 2005

2006

2007

2008

Forecast 2009

2010

2011

2012

2013

2014

2015

2016

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

12623.0 12958.5 13206.4 13161.9 12758.0 13063.0 13299.1 13588.8

13808.7 14200.9 14670.3 15065.4

12573.0 12899.3 13177.6 13200.6 12899.7 13010.3 13265.3 13532.8

13762.9 14140.1 14604.3 15017.3

8803.5

9054.5

9262.9

9211.7

9032.6

9196.2

9428.8

9605.3

9773.1 10020.3 10289.5 10555.3

Durables

1123.4

1174.2

1232.4

1171.8

1109.1

1178.3

1262.6

1361.1

1430.6

1497.8

1572.0

1641.8

Nondurables

1953.4

2005.0

2042.9

2019.1

1982.8

2029.3

2075.2

2094.8

2124.8

2170.1

2212.3

2259.4

Services

5726.8

5875.6

5990.1

6017.0

5930.6

5987.6

6101.5

6178.0

6258.7

6403.3

6567.6

6727.4

1347.3

1455.5

1549.9

1537.7

1259.9

1268.5

1378.2

1483.8

1536.6

1644.4

1773.1

1852.8

995.6

1071.1

1106.8

1059.4

885.2

963.9

1070.0

1144.2

1203.0

1284.6

1380.7

1437.7

475.3

516.3

558.2

569.7

546.4

571.7

600.2

623.0

664.4

720.8

774.3

818.8

Computers & Peripherals

78.9

97.1

110.7

119.5

112.6

116.0

130.3

135.9

149.5

175.8

199.0

222.0

Communications Equipment

83.2

93.8

104.4

99.1

89.3

100.5

94.7

98.8

109.2

118.4

128.5

140.0

Industrial Equipment

159.6

172.9

179.9

172.9

136.2

134.6

152.6

163.2

172.6

188.0

204.0

210.4

Transportation Equipment

181.7

198.2

190.2

146.9

75.9

123.2

164.7

197.8

205.5

213.6

229.1

226.1

22.0

20.6

26.8

26.0

19.1

20.4

19.8

26.4

27.3

27.9

29.4

30.9

48.2

51.6

42.1

36.5

27.9

27.7

39.3

45.2

45.4

48.2

50.9

49.4

351.8

384.0

438.2

466.4

368.1

310.6

319.2

349.8

348.4

374.9

407.5

429.5

135.9

144.2

158.6

152.7

105.8

79.4

77.6

83.0

85.1

100.9

126.4

148.6

Manufacturing

29.9

33.0

39.0

48.6

50.9

36.8

36.9

42.8

43.7

48.1

49.0

53.9

Power & Communication

45.2

48.7

67.8

74.0

74.5

62.5

56.8

66.7

60.1

58.1

61.2

59.5

Mining & Petroleum

77.1

88.3

93.6

101.5

66.1

77.3

94.8

100.2

101.6

105.5

104.1

96.9

Other

63.7

69.6

80.3

90.4

73.9

54.2

50.6

54.4

55.9

61.2

67.0

71.8

775.0

718.2

584.2

444.4

344.8

332.2

327.6

366.7

415.0

495.8

591.7

610.0

Exports

1305.1

1422.1

1554.4

1649.3

1498.7

1665.6

1776.9

1833.9

1877.1

1974.1

2088.8

2225.2

Imports

2027.8

2151.5

2203.3

2144.0

1853.9

2085.2

2184.9

2239.5

2262.3

2376.8

2489.7

2564.3

876.3

894.9

906.1

971.1

1030.6

1076.8

1047.0

1024.0

981.8

958.0

936.4

923.2

1493.6

1507.2

1528.1

1561.8

1534.1

1482.0

1462.5

1454.9

1453.6

1461.3

1470.2

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 | March 2013

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

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

Real GDP Nominal GDP

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

0.1 1.7 2.1 13.8 0.1 0.9 9.7 11.3 15.4 90.2 -6.0 8.1 23.2 467.4 -18.4 -1.1 -5.2 -0.1 -6.2 2.5 3.8 15.3 -3.9 -4.5 -14.8 -0.7

2013Q1

1.8 1.5 1.6 3.7 1.3 1.3 0.7 1.2 1.6 -12.8 8.0 1.8 -1.3 -45.2 17.9 -0.6 2.7 5.7 8.6 -10.6 0.9 11.4 4.4 1.4 -2.0 -1.2

2013Q2

1.2 1.3 1.5 -0.3 2.2 1.5 3.8 6.5 11.0 21.6 13.4 5.2 5.0 -17.3 0.9 -3.0 3.3 0.2 -31.0 9.9 1.9 15.8 4.6 2.8 -8.3 0.1

2013Q3

2.8 2.5 2.1 3.9 2.3 1.8 6.3 7.4 10.5 21.5 14.2 9.6 3.1 3.5 22.8 3.4 2.7 4.6 -9.1 11.1 3.4 11.5 4.7 2.9 -0.6 -0.5

2013Q4

2.6 2.2 1.9 2.7 2.2 1.7 5.8 7.5 9.9 22.2 10.6 13.7 -1.9 3.3 -20.0 1.3 3.0 -1.4 -8.7 6.1 3.2 13.6 6.0 4.9 -1.3 -0.5

13656.6 13707.8 13748.7 13845.1 13933 15851 15917.6 16041.6 16221.1 16391.4

2014Q1

2014Q3

2014Q4

2015Q1

2015Q2

Composition of Real GDP, Percent Change, Annual Rate 2.9 3.1 3.3 3.3 3.5 3.4 3.0 3.1 3.2 3.3 3.4 3.4 3.1 2.8 2.7 2.9 2.5 2.8 6.2 6.3 4.9 6.2 3.5 5.7 2.2 1.9 2.1 1.9 1.9 1.9 2.9 2.6 2.5 2.7 2.6 2.6 6.6 8.7 8.6 8.5 8.8 6.9 5.4 7.0 7.3 7.5 8.9 7.1 7.2 8.0 7.0 7.8 8.1 7.1 12.9 19.6 14.3 14.6 13.5 12.0 5.4 7.6 5.2 8.0 10.3 8.0 5.9 8.1 9.8 10.5 10.9 6.1 3.8 7.5 8.3 3.8 10.8 7.2 3.7 3.1 5.3 2.9 5.9 5.8 15.4 13.3 6.3 13.5 4.4 2.8 10.0 13.3 12.0 11.1 8.4 6.5 28.6 26.2 31.4 30.9 23.6 22.7 22.8 21.5 2.2 2.1 0.8 -2.8 -10.2 13.0 15.6 8.8 6.4 1.4 2.6 1.2 -0.4 0.6 -0.5 -2.4 14.5 13.3 12.9 10.2 7.8 8.1 21.2 25.0 25.4 21.0 20.8 19.2 4.9 5.6 4.6 4.8 6.2 6.3 5.7 6.5 4.9 5.3 4.7 4.8 -1.7 -3.3 -3.0 -2.4 -2.1 -1.9 -0.7 0.6 0.7 0.6 0.3 0.6

2015Q3

3.2 3.3 2.6 4.2 2.1 2.5 6.6 6.7 6.8 9.7 9.7 5.3 7.5 6.7 1.1 6.3 20.5 2.7 -2.6 -2.0 7.9 14.7 6.8 4.0 -1.9 0.6

2015Q4

2.6 2.9 2.5 5.2 1.9 2.3 4.9 5.1 6.1 10.6 10.5 4.7 1.9 6.6 -0.7 4.2 21.7 2.2 -6.4 -10.1 10.5 4.9 6.6 3.2 -1.5 0.6

2016Q1

2.4 2.6 2.5 3.8 2.1 2.5 3.4 3.1 5.3 12.1 9.5 1.9 -4.6 3.4 -6.2 4.1 19.3 11.8 -5.5 -12.5 7.2 -0.3 6.4 2.8 -1.3 0.6

2016Q2

2.4 2.6 2.6 4.5 2.2 2.4 3.5 2.6 5.2 12.2 8.2 1.9 -6.8 6.0 -4.6 5.7 16.4 18.1 0.7 -10.1 5.2 -2.0 6.5 2.3 -1.3 0.7

2016Q3

2.7 2.8 2.6 4.0 2.4 2.5 4.3 3.3 5.2 12.2 7.9 1.8 -2.8 4.7 -3.6 6.7 10.9 19.4 -1.2 0.4 4.9 -0.1 6.5 2.6 -1.1 0.5

Billions of Dollars 14618 14735.2 14831.7 14920.4 15010.6 15110.4 14032 14141 14257.1 14373.6 14496.2 16586 16788.5 16992.6 17194.3 17412.2 17623.1 17826.6 18010.1 18186.5 18368 18555.5 Prices & Wages, Percent Change, Annual Rate 1.9 1.8 1.6 1.5 1.7 1.9 1.8 1.6 1.5 1.6 2.2 2.1 1.9 1.7 1.9 1.2 0.8 0.5 0.7 0.7 2.7 2.3 2.3 2.2 2.6

0.9 2.1 1.6 2.3 2.1

0.5 1.2 1.7 2.9 1.8

1.9 1.0 1.9 -1.6 1.8

1.7 1.2 2.0 -0.7 1.8

1.7 1.8 1.9 0.9 2.0

88.2 -2.2 1.0 76.8 43.8 79.4 15.013 0.898 4.323 7.8 1.6 -1062 -475

96.3 1.5 2.6 77.2 32.9 74.0 15.015 0.900 4.302 7.9 1.2 -827 -481

96.0 0.1 2.3 77.0 28.4 79.1 14.921 0.916 4.399 7.9 1.0 -784 -430

91.8 0.6 3.5 77.4 36.3 80.2 14.978 0.962 4.507 7.7 1.6 -757 -405

91.3 0.3 3.6 77.9 46.6 80.7 15.019 1.035 4.535 7.7 1.8 -742 -394

90.7 0.1 2.8 78.3 43.9 81.0 15.294 1.110 4.731 7.4 2.2 -676 -410

0.16 0.09 0.17 0.69 1.71 2.86 3.36 1418 4.6 0.872 -4.6

0.15 0.04 0.07 0.78 1.89 3.09 3.44 1487 20.9 0.885 6.0

0.16 0.05 0.12 0.87 1.97 3.16 3.47 1460 -7.0 0.883 -0.9

0.16 0.08 0.16 1.04 2.12 3.23 3.50 1444 -4.5 0.887 1.9

0.16 0.07 0.15 1.18 2.28 3.39 3.54 1426 -4.9 0.895 3.7

0.16 0.11 0.24 1.27 2.50 3.60 3.57 1419 -1.7 0.900 2.3

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)

13656 7.9 12160 8.1 10455 6.8 4.7 1715 -6.1

13478 -5.1 11927 -7.4 10237 -8.1 2.3 1623 -19.8

13645 5.0 12055 4.4 10324 3.4 2.7 1577 -10.8

13799 4.6 12179 4.2 10405 3.2 2.9 1594 4.5

13953 4.5 12320 4.7 10489 3.3 3.2 1613 4.8

14188 6.9 12508 6.2 10606 4.5 3.5 1726 31.2

2014Q2

1.5 1.6 1.8 0.5 2.5

1.4 1.6 1.9 -0.3 2.5

1.5 2.0 1.8 1.1 2.6

1.5 1.3 1.8 -0.1 2.8

1.6 2.0 1.8 2.0 2.7

1.4 1.9 1.8 1.3 2.7

Other Key Measures 89.1 87.4 86.4 84.0 0.9 1.4 1.3 0.7 3.1 3.5 3.6 3.9 78.5 78.8 79.1 79.4 45.2 48.8 50.1 53.6 81.4 82.0 82.8 83.7 15.494 15.629 15.752 15.890 1.211 1.296 1.367 1.448 4.962 5.074 5.151 5.218 7.2 7.1 7.0 6.6 1.9 1.7 1.8 2.3 -625 -639 -669 -646 -413 -414 -427 -436

82.5 1.0 3.4 79.5 53.9 84.8 16.029 1.530 5.278 6.5 2.2 -635 -447

82.4 1.3 3.1 79.6 53.1 85.5 16.097 1.588 5.318 6.3 1.9 -634 -468

85.4 0.9 2.7 79.4 45.6 85.4 16.144 1.581 5.218 6.2 1.8 -638 -491

83.0 1.2 2.5 79.2 40.4 85.7 16.212 1.571 5.108 6.1 1.6 -701 -486

85.3 1.3 2.2 79.0 33.5 84.2 16.182 1.572 4.922 6.1 1.5 -722 -480

87.5 1.6 2.2 78.9 29.1 83.5 16.204 1.569 4.999 6.0 1.5 -746 -483

Financial Markets, NSA 0.16 0.16 0.16 0.16 0.09 0.08 0.08 0.11 0.20 0.18 0.17 0.24 1.32 1.34 1.37 1.46 2.59 2.66 2.69 2.78 3.71 3.79 3.81 3.89 3.73 4.02 4.18 4.29 1428 1461 1500 1524 2.6 9.5 10.9 6.7 0.918 0.914 0.907 0.898 7.9 -1.9 -3.0 -3.7

0.29 0.20 0.32 1.56 2.96 3.99 4.48 1537 3.4 0.889 -4.0

0.89 0.77 1.04 2.12 3.57 4.41 5.02 1517 -5.0 0.881 -3.6

1.36 1.37 1.82 2.64 3.98 4.63 5.61 1469 -12.1 0.877 -1.6

1.88 1.83 2.24 2.92 4.10 4.67 5.90 1439 -7.9 0.874 -1.5

2.42 2.37 2.84 3.38 4.30 4.84 6.07 1439 0.0 0.870 -1.9

2.96 2.90 3.38 3.86 4.50 5.04 6.32 1450 3.0 0.866 -1.6

Incomes 14510 14673 4.6 4.6 12805 12950 4.7 4.6 10778 10864 3.2 3.2 3.7 3.8 1764 1775 3.6 2.6

15076 4.9 13302 5.0 11076 3.5 4.3 1697 0.7

15249 4.7 13466 5.0 11170 3.4 4.5 1674 -5.5

15418 4.5 13623 4.7 11250 2.9 4.6 1652 -5.2

15640 5.9 13816 5.8 11372 4.4 5.0 1562 -20.1

15807 4.3 13969 4.5 11448 2.7 5.0 1579 4.6

15974 4.3 14135 4.8 11534 3.1 5.1 1572 -1.7

14347 4.5 12660 5.0 10694 3.4 3.6 1749 5.3

14896 6.2 13140 6.0 10982 4.4 4.2 1694 -17.0

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

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

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

13647.6 13707.8 13748.7 13845.1 13933.0 14032.0 14141.0 14257.1 14373.6 14496.2 14618.0 14735.2 14831.7 14920.4 15010.6 15110.4 13615.7 13667.2 13712.9 13798.6 13873.0 13974.5 14082.1 14194.4 14309.5 14428.5 14549.8 14667.7 14771.5 14865.2 14962.1 15066.1

9671.9 9709.2 9744.3 9796.1 9842.8 9917.6 9986.8 10052.7 10124.2 10187.6 10258.5 10323.7 10388.1 10452.9 10519.3 10588.3 1409.1 1422.1 1421.1 1434.7 1444.4 1466.2 1488.8 1506.6 1529.5 1542.8 1564.3 1580.3 1600.6 1615.7 1633.7 1649.9

Nondurables

2100.3 2107.3 2118.7 2130.7 2142.4 2154.2 2164.5 2175.6 2186.0 2196.1 2206.7 2217.9 2228.5 2240.0 2252.3 2265.7

Services

6201.3 6220.8 6243.9 6272.0 6298.2 6342.8 6383.1 6422.6 6464.8 6506.3 6548.8 6589.0 6626.2 6666.5 6705.5 6747.1

Nonresidential Fixed Investment Equipment & Software

1506.2 1508.8 1522.9 1546.3 1568.3 1593.7 1627.2 1661.2 1695.5 1731.6 1760.8 1789.2 1810.6 1825.7 1841.4 1860.9 1169.2 1172.7 1191.3 1212.8 1235.0 1251.4 1272.7 1295.3 1319.0 1347.6 1370.9 1393.4 1410.9 1421.7 1430.7 1442.3

Information Processing Equipment

636.9

639.4

656.3

672.9

689.0

701.0

714.6

726.9

740.6

755.2

768.3

780.9

792.7

803.1

813.4

823.8

Computers & Peripherals

143.5

138.7

145.6

152.9

160.7

165.7

173.2

179.1

185.3

191.3

196.8

201.4

206.5

212.5

218.7

225.1

Communications Equipment

102.2

104.2

107.5

111.1

114.0

115.5

117.6

119.1

121.4

124.4

126.8

129.8

133.1

136.1

138.8

141.5

Industrial Equipment

166.9

167.6

169.8

173.7

179.3

181.9

185.5

189.9

194.7

199.8

202.8

205.4

207.8

208.8

209.8

210.8

Transportation Equipment

203.7

203.1

205.6

207.2

206.2

208.1

211.9

216.2

218.2

223.8

227.7

231.9

233.0

230.2

226.2

224.6

32.7

28.1

26.8

27.1

27.3

27.5

27.7

28.1

28.3

28.7

29.1

29.6

30.1

30.3

30.8

31.1

43.0

44.8

44.9

47.2

44.7

46.3

47.8

48.5

50.1

50.6

51.0

51.1

51.0

50.2

49.6

49.2

349.2

348.6

346.0

348.9

350.1

358.5

369.9

380.5

390.6

398.5

404.9

411.2

415.4

419.6

425.5

432.4

Commercial & Health

83.5

84.1

84.8

85.3

86.0

91.6

97.0

103.9

111.1

117.2

123.3

129.2

135.7

141.8

147.3

151.2

Manufacturing

42.9

43.5

44.0

43.8

46.1

48.4

48.7

49.0

49.1

48.7

49.0

49.3

50.7

52.9

55.2

Power & Communication

64.2

65.5

59.7

58.3

57.0

55.5

57.2

59.3

60.6

61.5

61.7

61.3

60.3

59.5

59.6

59.4

100.9

98.1

100.4

103.1

104.6

105.3

105.6

105.5

105.7

105.5

104.9

104.4

101.6

98.3

95.7

95.8

55.3

55.4

55.6

56.1

56.6

58.5

60.4

62.2

63.7

65.0

66.2

67.5

69.2

70.4

71.3

72.2

384.3

394.8

409.6

420.9

434.5

455.9

482.1

510.1

535.0

560.8

585.9

606.3

613.7

613.2

610.0

609.9

Aircraft Other Equipment Structures

Mining & Petroleum Other Residential Fixed Investment Exports

1824.0 1843.6 1864.6 1886.2 1913.9 1937.1 1963.7 1986.0 2009.5 2039.8 2071.0 2105.3 2139.3 2172.9 2207.2 2242.0

Imports

2228.0 2235.7 2251.0 2267.4 2294.9 2327.2 2364.2 2392.4 2423.3 2451.2 2479.8 2504.1 2523.7 2541.0 2555.5 2572.0

Federal Government

1004.4

State & Local Government

1460.2 1456.0 1456.4 1454.6 1452.7 1450.3 1452.3 1454.8 1456.9 1458.1 1460.2 1462.3 1464.4 1466.8 1469.4 1471.3

U.S. Forecast | March 2013

999.3

977.9

976.5

973.4

969.2

961.0

953.8

948.0

942.9

938.3

933.9

930.3

927.4

924.4

921.8

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

Table 5. Annual Employment 2005

2006

2007

History 2008 2009

2010

2011

2012

2013

Forecast 2014 2015

2016

Millions Total Nonfarm Employment

133.738 136.130 137.642 136.849 130.859 129.911 131.500

133.74

135.544 138.035

140.83 143.184

Private Nonfarm

111.934 114.155 115.423 114.346 108.306 107.420 109.408

111.82

113.695 116.165

118.89 121.090

Mining

0.562

0.620

0.663

0.709

0.644

0.655

0.739

0.80

0.822

0.832

0.83

0.836

Construction

7.333

7.690

7.627

7.162

6.016

5.518

5.533

5.64

5.755

6.109

6.84

7.454

Manufacturing

14.226

14.156

13.878

13.404

11.846

11.528

11.727

11.92

11.975

12.203

12.52

12.725

Trade, Transportation and Utilities

25.960

26.277

26.627

26.294

24.904

24.638

25.067

25.51

25.910

26.211

26.51

26.833

Transportation & Warehousing

4.363

4.469

4.542

4.508

4.237

4.189

4.300

4.41

4.531

4.677

4.83

4.995

Financial Activities

8.197

8.366

8.347

8.204

7.838

7.696

7.697

7.79

7.863

7.928

7.92

7.806

Education & Health

17.370

17.825

18.321

18.837

19.191

19.529

19.885

20.32

20.695

21.023

21.29

21.790

Professional & Business Services

16.952

17.572

17.947

17.741

16.577

16.724

17.327

17.93

18.360

19.318

20.31

20.968

3.061

3.038

3.032

2.983

2.803

2.707

2.674

2.68

2.735

2.733

2.75

2.803

Leisure & Hospitality

12.813

13.109

13.428

13.441

13.072

13.045

13.351

13.75

14.017

14.208

14.33

14.303

Government

21.804

21.975

22.219

22.503

22.553

22.491

22.092

21.91

21.848

21.871

21.95

22.095

2.732

2.733

2.735

2.761

2.831

2.977

2.860

2.82

2.745

2.690

2.63

2.593

19.073

19.242

19.484

19.742

19.722

19.514

19.232

19.10

19.103

19.180

19.31

19.501

Information

Federal State & Local

Growth Rates Total Nonfarm Employment

1.71

1.79

1.11

-0.57

-4.38

-0.71

1.22

1.70

1.35

1.84

2.03

1.67

Private Nonfarm

1.87

1.99

1.11

-0.93

-5.28

-0.80

1.85

2.21

1.68

2.17

2.34

1.85

Mining

9.36

10.03

5.74

6.77

-14.53

11.65

13.45

3.22

3.83

0.23

0.18

0.66

Construction

5.81

2.36

-1.95

-9.21

-16.57

-3.46

1.84

1.57

2.50

9.19

12.35

6.58

-0.83

-1.03

-2.05

-5.36

-11.40

0.60

1.77

1.36

0.36

2.78

2.45

1.30

Trade, Transportation and Utilities

1.65

1.14

1.17

-3.31

-4.74

0.70

1.98

1.85

1.32

0.91

1.35

1.27

Transportation & Warehousing

2.48

2.60

0.89

-2.70

-5.70

1.56

2.44

2.92

2.78

3.03

3.51

3.24

Financial Activities

1.89

1.37

-1.16

-2.31

-4.30

-0.89

0.50

1.34

0.91

0.56

-0.73

-1.17

Education & Health

2.51

2.62

2.88

2.57

1.72

1.77

2.00

2.09

1.57

1.49

1.59

2.57

Professional & Business Services

3.74

3.08

1.64

-3.60

-5.16

2.92

3.54

3.23

3.14

5.38

4.88

2.74

-1.07

-0.93

-0.04

-3.14

-6.04

-2.27

-0.38

0.03

3.16

-1.07

1.24

1.81

Leisure & Hospitality

2.15

2.85

2.15

-1.66

-2.44

1.27

2.77

2.67

1.79

0.95

0.62

-0.36

Government

0.81

1.03

1.16

0.98

-0.19

-0.93

-1.40

-0.41

-0.09

0.15

0.49

0.65

Federal

0.34

-0.21

0.54

1.11

2.41

4.82

-0.84

-1.49

-2.36

-2.42

-1.84

-1.44

State & Local

0.88

1.20

1.25

0.97

-0.54

-1.31

-1.48

-0.25

0.25

0.52

0.82

0.93

Manufacturing

Information

Institute for Economic Competitiveness

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

Employment (Millions) Total Nonfarm Employment

134.5 134.9 135.2 135.7 136.3 137.1 137.7 138.3 139.0 139.8 140.5 141.2 141.8 142.4 142.9 143.4

Private Nonfarm

112.6 113.0 113.4 113.9 114.5 115.2 115.9 116.5 117.1 117.9 118.6 119.2 119.8 120.4 120.8 121.3

Mining

0.8

Construction

5.7

5.8

5.9

6.0

6.2

6.3

6.5

6.7

7.0

7.1

7.3

7.4

7.5

Manufacturing

11.9

12.0

12.1

12.2

12.3

12.4

12.5

12.6

12.7

Trade, Transportation and Utilities

25.7

25.8

25.9

26.0

26.1

26.2

26.3

26.4

26.5

26.6

26.7

26.8

26.9

Transportation & Warehousing

4.5

4.6

4.7

4.8

4.9

5.0

Financial Activities

7.8

7.9

7.8

Education & Health

20.5

20.6

20.7

20.8

20.9

21.0

21.1

21.2

21.3

21.4

21.6

21.7

21.9

Professional & Business Services

18.1

18.2

18.4

18.7

18.9

19.2

19.4

19.7

19.9

20.2

20.4

20.6

20.8

20.9

21.0

2.7

2.8

2.7

2.8

Leisure & Hospitality

13.9

14.0

14.1

14.2

14.3

Government

21.9

21.8

21.9

22.0

22.1

2.8

2.7

2.8

2.7

2.6

19.1

19.2

19.3

19.4

19.5

Information

Federal State & Local

Growth Rates Total Nonfarm Employment

1.60

1.24

1.02

1.57

1.76

2.21

1.90

1.71

1.82

2.32

2.17

1.89

1.83

1.57

1.46

1.47

Private Nonfarm

2.06

1.61

1.25

1.79

2.09

2.64

2.24

1.98

2.10

2.73

2.49

2.13

2.03

1.70

1.62

1.64

Mining

0.80

8.13

1.39

1.71

3.78

0.83

-0.86

0.50

0.44

0.11

0.68

0.02

-0.09

0.10

0.27

0.87

Construction

3.20

1.56

2.53

2.71

3.10

5.10

8.51 10.75 11.13 11.74 12.69 12.36 10.45

8.37

7.09

5.79

Manufacturing

-0.11

0.32

0.95

0.58

-0.43

3.59

2.60

2.48

2.34

3.31

2.46

1.64

2.31

1.60

1.31

1.28

Trade, Transportation and Utilities

2.97

1.39

0.87

1.38

1.59

1.49

0.74

0.51

0.89

1.54

1.24

1.32

1.27

0.93

1.19

1.46

Transportation & Warehousing

4.35

2.35

0.95

3.21

4.62

3.21

2.99

2.64

3.28

3.41

3.45

3.60

3.58

3.47

3.05

3.28

Financial Activities

1.39

1.30

-0.26

1.07

1.52

0.34

1.53

0.50

-0.15

-0.06

-0.21

-0.83

-1.82

-1.93

-1.96

-0.55

Education & Health

2.04

2.35

1.06

2.04

0.83

2.48

1.76

0.82

0.91

0.97

1.81

1.57

2.01

2.74

2.78

2.33

Professional & Business Services

2.47

1.05

1.87

3.67

5.98

6.13

5.67

5.13

4.59

5.81

5.32

4.73

3.69

2.49

2.64

2.65

Information

0.10

3.01

4.22

3.20

2.22

-0.96

-4.27

-1.81

2.78

2.20

0.49

-0.15

2.45

2.48

1.96

2.01

Leisure & Hospitality

2.40

2.08

1.57

1.08

2.42

1.73

0.79

0.23

1.03

2.18

0.67

-0.35

-0.01

-0.12

-0.56

Government

-0.73

-0.66

-0.20

0.44

0.05

-0.08

0.09

0.26

0.32

0.14

0.44

0.64

0.75

0.84

0.59

Federal

-1.13

-4.70

-5.23

3.03

-2.53

-2.52

-2.41

-2.24

-1.75

-1.62

-1.50

-1.37

State & Local

-0.67

-0.06

0.55

0.08

0.43

0.28

0.46

0.64

0.68

0.47

0.74

0.97

1.08

1.16

0.88

0.86

U.S. Forecast | March 2013

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

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

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

GDP

116.0 116.1 116.7 117.2 117.6 118.2 118.7 119.2 119.6 120.1 120.6 121.0 121.4 121.9 122.4 122.8

Consumption

116.3 116.5 116.8 117.1 117.5 117.9 118.4 118.8 119.2 119.7 120.1 120.6 121.1 121.5 122.0 122.5

Durables Motor Vehicles Furniture

88.8

88.3

88.1

87.8

87.6

87.4

87.1

86.9

86.7

86.5

86.3

86.2

86.0

85.8

85.6

85.3

108.8 109.1 109.1 109.3 109.5 109.7 109.8 109.9 110.1 110.3 110.5 110.7 110.9 111.1 111.3 111.5 91.7

91.3

91.1

90.8

90.6

90.5

90.4

90.3

90.2

90.1

90.0

89.9

89.8

Other Durables

115.0 114.9 115.3 115.6 115.9 116.3 116.7 117.1 117.4 117.9 118.3 118.7 119.1 119.5 119.8 120.2

Nondurables

123.1 122.9 122.4 122.1 122.2 122.4 122.5 122.7 122.9 123.2 123.5 124.0 124.8 125.0 125.7 126.4

Food

121.5 122.6 123.5 124.0 124.1 124.1 124.2 124.3 124.5 125.0 125.4 125.9 126.3 126.8 127.2 127.5

Clothing & Shoes 104.0 103.8 104.3 104.5 104.7 104.9 105.1 105.2 105.2 105.4 105.4 105.5 105.5 105.4 105.4 105.4 Gasoline & Oil

165.4 161.0 152.5 146.9 146.1 145.3 144.0 142.5 141.3 139.9 138.5 138.6 141.6 139.5 141.8 144.0

Fuel

176.5 176.6 170.6 169.0 169.3 169.0 168.3 167.5 166.7 165.8 165.0 165.2 167.6 166.5 168.6 170.7

Services

119.5 120.0 120.7 121.3 121.9 122.6 123.4 124.0 124.6 125.3 125.9 126.5 127.1 127.7 128.4 129.0

Housing

117.3 117.9 118.6 119.5 120.3 121.0 121.8 122.5 123.1 123.7 124.3 124.9 125.5 126.1 126.6 127.1

Electricity

130.9 131.9 133.3 134.6 136.0 137.2 138.3 139.3 140.1 140.7 141.4 141.7 141.9 142.4 142.9 143.3

Natural Gas

79.6

81.1

84.5

86.6

90.3

94.2

97.2

99.3 101.0 102.0 101.9

98.1

94.4

92.1

93.0

92.7

Water & Sewer

149.3 151.1 152.6 154.0 155.4 156.7 158.0 159.3 160.5 161.8 163.1 164.3 165.5 166.7 168.0 169.2

Telephone

103.5 103.6 103.5 103.4 103.2 102.7 102.4 102.1 101.8 101.6 101.3 101.1 100.8 100.6 100.3 100.1

Transportation

124.3 124.9 125.4 125.7 126.1 126.7 127.2 127.6 128.1 128.6 129.1 129.7 130.2 130.8 131.3 131.9

Other Services

126.4 127.4 128.0 128.6 129.1 129.6 130.2 131.0 131.7 132.4 133.0 133.8 134.6 135.4 136.2 137.0

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

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

GDP

0.6

0.5

1.9

1.7

1.9

1.8

1.6

1.5

1.7

1.5

1.4

1.5

1.6

1.4

Consumption

1.2

0.7

0.9

1.0

1.4

1.6

1.4

1.3

1.5

1.8

1.3

1.8

1.7

Durables

-2.5

-2.1

-1.1

-1.2

-1.1

-0.9

-1.1

-1.0

-0.7

-0.8

-0.9

-1.0

Motor Vehicles

-1.1

1.0

0.2

0.6

0.7

0.6

0.4

0.6

0.8

0.7

0.6

Furniture

-1.9

-1.5

-1.0

-1.1

-1.0

-0.6

-0.5

-0.4

-0.3

-0.2

-0.3

-0.4

Other Durables

1.0

-0.4

1.3

1.0

1.4

1.3

1.6

1.5

1.3

1.1

1.2

1.1

Nondurables

1.5

-0.7

-1.7

-1.1

0.5

0.6

0.5

0.4

0.6

1.0

1.1

1.6

2.7

0.6

2.3

2.2

Food

2.1

3.4

3.3

1.5

0.3

0.1

0.2

0.3

0.8

1.5

1.4

1.2

Clothing & Shoes

1.0

-0.9

1.8

0.9

0.8

0.7

0.9

0.2

0.1

0.5

0.2

0.0

-0.1

0.0

-0.1

Gasoline & Oil

4.2 -10.2 -19.5 -13.9

-2.0

-2.1

-3.7

-3.9

-3.5

-3.9

-3.8

0.3

8.9

-5.7

6.6

6.4

Fuel

20.6

0.1 -12.9

-3.8

0.8

-0.7

-1.7

-2.0

-1.9

-2.0

0.5

5.9

-2.5

5.1

Services

1.8

1.7

2.2

2.1

2.4

2.2

2.0

2.1

2.0

1.9

2.0

Housing

2.7

2.0

2.5

2.8

2.7

2.6

2.5

2.4

2.0

1.9

1.8

1.7

Electricity

5.2

3.1

4.6

3.9

4.1

3.5

3.3

2.8

2.4

1.9

1.0

0.5

1.3

1.5

1.2

15.2

8.0

17.4

10.4

18.1

18.7

13.3

9.1

7.1

3.7

-0.4 -14.1 -14.0

-9.3

3.6

-1.2

Water & Sewer

4.5

4.8

4.1

3.9

3.5

3.4

3.3

3.2

3.0

Telephone

0.9

0.5

-0.4

-0.5

-0.8

-1.7

-1.5

-0.9

-1.2

-1.0

-1.1

-0.8

-1.1

-1.0

-0.9

-0.8

Transportation

1.6

2.0

1.4

1.0

1.3

1.9

1.6

1.5

1.4

1.7

1.6

1.8

1.7

1.8

Other Services

2.4

3.1

1.9

1.7

1.6

1.8

2.4

2.2

2.1

2.4

2.3

2.4

2.6

Natural Gas

U.S. Forecast | March 2013

U . S . F o r eca s t Tab l e s Table 9. Annual Implicit Price Deflators (2000=100) Table 9. Annual Implicit Price Deflators (2005=100) History

Forecast

2005 2006 2007 2008 2009 2010 2011 2012

2013 2014 2015 2016

GDP

100.0 103.2 106.2 108.6 109.5 111.0 113.4 115.4

116.9 118.9 120.8 122.6

Consumption Durables

100.0 102.7 105.5 108.9 109.0 111.1 113.8 115.8 100.0 98.4 96.4 94.6 92.8 91.6 90.8 89.6

116.9 118.6 120.4 122.3 87.9 87.0 86.2 85.4

Motor Vehicles Furniture Other Durables

100.0 100.1 99.6 97.8 97.9 104.0 107.5 108.9 100.0 99.6 98.9 98.1 97.8 93.7 92.4 92.2 100.0 101.8 105.5 109.1 110.4 110.9 114.3 115.0

109.3 109.8 110.6 111.4 91.0 90.3 90.1 89.8 115.4 116.9 118.5 120.0

Nondurables Food

100.0 103.2 106.5 112.6 109.2 112.6 119.4 122.3 100.0 101.7 105.6 112.1 113.4 113.7 118.2 120.9

122.4 122.6 123.8 126.0 123.6 124.3 125.7 127.3

Clothing & Shoes 100.0 99.6 98.6 97.9 98.8 98.1 Gasoline & Oil 100.0 112.8 123.9 144.9 105.5 124.8 Fuel 100.0 114.2 123.5 168.4 114.3 134.1 Services 100.0 103.4 107.0 110.6 112.2 114.4 Housing 100.0 103.6 107.3 110.2 112.2 112.2

99.8 156.9 171.6 116.4 113.8

103.4 162.5 174.3 118.8 116.3

104.3 151.6 171.4 121.0 119.1

105.1 143.3 167.9 123.7 122.1

105.4 139.7 165.9 126.2 124.6

105.4 142.9 169.7 128.7 126.9

Electricity Natural Gas

100.0 112.1 116.7 124.2 128.1 128.3 130.7 130.7 100.3 102.7 102.5 116.1 90.3 88.5 86.0 77.7

134.0 138.7 141.5 143.1 85.6 98.0 99.1 92.6

Water & Sewer Telephone

100.0 104.9 110.3 116.7 123.9 131.8 138.6 146.4 100.0 100.6 102.4 104.0 105.5 104.9 103.3 103.6

153.2 158.6 163.7 168.6 103.4 102.3 101.2 100.2

Transportation Other Services

100.0 104.2 106.6 112.5 115.7 118.1 121.4 123.9 100.0 104.1 107.4 112.5 115.4 119.1 122.3 125.6

125.5 127.4 129.4 131.6 128.3 130.6 133.5 136.6

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

Forecast

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

3.5

2.9

2.6

2.1

0.5

1.8

2.0

1.7

1.4

1.7

1.5

GDP Consumption

3.3

1.9

3.5

1.8

1.4

1.5

2.5

1.5

1.0

1.5

1.6

Durables

-1.3

-1.8

-1.9

-2.1

-1.1

-2.0

-0.5

-1.7

-1.4

-1.0

-0.8

-1.0

Motor Vehicles Furniture

1.0 -0.3

-0.7 -0.1

0.5 -1.5

-4.0 0.3

5.5 -2.0

3.6 -4.3

3.4 -0.1

0.5 -0.4

0.6 -1.2

0.5 -0.5

0.8 -0.2

Other Durables Nondurables Food

-0.2 4.5

3.2 0.5

2.5 6.4

3.4 1.0

1.3 2.8

0.6 2.3

3.2 5.9

-0.3 1.9

0.7 -0.7

1.3 0.5

1.4 1.6

0.7 -0.4 1.1

Clothing & Shoes

1.5 -1.3

1.7 0.2

4.7 -1.2

7.0 -0.9

-1.7 1.4

1.3 -1.4

5.1 4.4

1.2 2.4

2.1 0.7

0.3 0.5

1.5 0.2

1.2 -0.1

Gasoline & Oil

31.8

-0.8

30.4

5.1

26.7

13.3

19.7

5.4

-11.4

-3.3

0.4

3.4

Fuel Services Housing

33.1 3.8 2.5

-0.3 3.1 4.4

28.5 3.5 3.0

23.2 3.0 2.6

-0.3 1.4 0.9

16.0 1.8 0.3

27.2 1.9 1.9

3.7 1.9 2.3

-3.9 2.0 2.5

-1.6 2.2 2.4

0.6 2.0 1.9

3.2 2.0 1.7

Electricity Natural Gas

10.2 44.9

8.6 -18.3

5.3 3.5

8.4 19.1

-0.3 -17.9

0.5 -0.9

2.5 -2.0

-0.7 -4.1

3.9 13.5

3.0 12.0

1.3 -6.2

1.3 -1.7

Water & Sewer Telephone

5.0 0.2

4.9 1.2

5.2 1.5

6.7 2.0

6.0 0.7

5.8 -1.0

4.9 -1.3

6.0 0.2

4.0 -0.3

3.3 -1.3

3.1 -1.0

3.0 -0.9

Transportation Other Services

4.9 4.7

2.5 4.0

3.4 3.3

6.0 5.0

2.0 2.2

1.5 2.9

3.3 3.0

1.4 2.3

1.4 2.1

1.6 2.0

1.7 2.2

1.7 2.5

1.8

Table 11. Personal Income and its Components

Table 11. Personal Income and its Components 2005

2006

2007

History 2008 2009

2010

2011

2012

2013

Forecast 2014 2015

2016

Personal Income Billions Current Dollars Personal Income Wages & Salaries Other Labor Income Nonfarm Income

10485.9 11268.1 11912.3 12460.2 11867.0 12321.9 12947.3 13402.4 7065.1 7477.0 7855.9 8068.3 7799.4 7970.0 8295.2 8559.8

13718.8 14429.4 15160.0 15892.8 8845.3 9262.2 9719.5 10157.8

931.6 1025.9

960.2 1103.6

980.5 1052.6

1052.4 1046.1

1067.2 939.5

1097.3 1059.1

1139.0 1102.8

1172.2 1145.8

1214.2 1192.9

1273.2 1281.4

1340.4 1371.3

1412.1 1434.8

43.9 178.2 555.0

29.4 146.5 702.2

37.8 143.7 791.9

51.8 231.6 783.4

39.9 289.7 533.3

44.3 349.2 581.7

54.6 409.7 676.3

57.2 463.5 756.8

59.4 509.0 788.7

56.4 531.8 833.1

57.7 526.4 857.2

56.9 510.6 862.1

987.0 1508.6 445.2

1127.5 1605.0 475.1

1265.1 1718.5 499.6

1382.0 1879.2 517.2

1093.3 2140.1 506.3

1016.6 2284.3 515.2

1008.8 2319.3 424.4

991.8 2375.2 435.1

1002.3 2443.9 589.1

1049.9 2599.5 623.1

1155.3 2731.4 665.3

1320.5 2880.7 705.6

Personal Income Wages & Salaries

5.5 5.6

7.5 5.8

5.7 5.1

4.6 2.7

Percent Change, Annual Rate -4.8 3.8 5.1 3.5 -3.3 2.2 4.1 3.2

2.4 3.3

5.2 4.7

5.1 4.9

4.8 4.5

Other Labor Income Nonfarm Income

6.5 4.3

3.1 7.6

2.1 -4.6

7.3 -0.6

1.4 -10.1

2.8 12.7

3.8 4.2

2.9 3.9

3.6 4.1

4.9 7.4

5.3 7.0

5.3 4.6

Farm Income Rental Income

-11.1 -10.9

-32.7 -23.8

28.3 32.7

39.9 66.4

-20.7 12.6

12.0 16.3

23.5 22.4

4.9 12.8

4.8 8.1

-4.9 1.7

2.3 -2.3

-1.3 -2.8

Dividends Interest Income

-0.6 19.4

26.8 10.9

7.6 13.7

-9.1 2.6

-29.2 -21.9

28.2 -2.1

11.7 -1.8

27.3 0.9

-1.6 1.7

3.0 7.4

2.9 11.3

-0.7 15.3

6.3 5.9

6.7 6.7

7.6 5.2

10.1 2.0

15.3 -2.0

6.0 2.7

0.2 -12.9

3.4 2.9

3.1 54.7

6.5 6.1

5.0 6.8

5.8 5.9

Farm Income Rental Income Dividends Interest Income Transfer Payments Personal Social Insurance Tax

Transfer Payments Personal Social Insurance Tax

U.S. Forecast | March 2013

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

Table 12. Personal Consumption Expenditures (Current Dollars)

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

Consumer Expenditures by Type Billions Current Dollars

Consumer spending on… all goods & services

11249.1 11312.0 11378.4 11466.8 11560.9 11696.0 11823.1 11942.9 12068.0 12189.9 12320.4 12446.0 12578.9 12699.7 12836.1 12975.7

durable goods

1251.4 1256.2 1251.7 1259.7 1264.7 1280.8 1297.0 1309.1 1325.6 1334.7 1350.7 1361.7 1376.2 1385.8 1397.8 1408.0

furniture and appliances

268.1

269.7

270.8

274.7

276.6

279.6

282.2

284.3

286.2

287.9

291.2

292.8

294.6

295.3

295.8

295.2

information processing equipment

102.0

103.3

104.1

104.9

106.1

107.1

108.6

109.8

111.1

112.4

114.3

115.7

117.1

118.2

119.1

120.1

motor vehicles and parts

427.9

431.4

420.9

421.7

422.0

430.0

438.4

443.7

453.2

455.0

461.3

464.6

471.6

475.5

482.9

489.0

other durable goods

135.8

135.1

136.4

137.4

138.2

139.0

139.9

140.7

141.7

142.7

143.8

144.9

145.8

146.6

147.1

147.8

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

2585.9 2590.0 2593.0 2600.5 2618.0 2636.5 2652.2 2668.6 2685.6 2704.6 2724.7 2749.2 2780.5 2799.2 2830.3 2862.8 369.4

369.2

372.4

374.5

376.6

378.6

379.4

381.4

382.9

385.6

388.1

391.4

393.8

395.2

397.5

21.9

21.0

23.5

23.2

23.3

23.2

23.1

23.0

22.9

23.0

23.3

23.2

23.5

400.7 23.8

422.6

412.7

393.2

381.6

381.2

378.2

373.1

368.7

365.1

361.1

357.7

364.8

359.5

365.6

371.9

888.3

895.4

903.1

910.7

919.0

927.3

935.3

943.6

951.7

food

832.4

839.6

848.6

856.7

864.5

873.0

880.9

other nondurable goods

939.5

947.5

955.4

964.4

972.4

983.4

995.5 1007.0 1019.2 1031.9 1045.3 1058.2 1071.2 1086.0 1100.1 1114.7

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

9671.9 9709.2 9744.3 9796.1 9842.8 9917.6 9986.8 10052.7 10124.2 10187.6 10258.5 10323.7 10388.1 10452.9 10519.3 10588.3

durable goods

1409.1 1422.1 1421.1 1434.7 1444.4 1466.2 1488.8 1506.6 1529.5 1542.8 1564.3 1580.3 1600.6 1615.7 1633.7 1649.9

furniture and appliances

292.5

295.4

297.4

302.4

305.2

309.1

312.3

314.9

317.4

319.5

323.2

325.2

327.4

328.4

329.2

328.9

information processing equipment

194.6

200.7

205.8

211.2

217.5

223.5

231.2

238.4

246.0

253.8

262.9

271.2

279.2

287.1

294.6

302.8

motor vehicles and parts

393.1

395.4

385.6

385.8

385.4

392.1

399.3

403.7

411.8

412.7

417.5

419.6

425.1

427.9

433.8

438.6

other durable goods

114.7

114.4

115.2

115.8

116.2

116.6

117.1

117.5

118.0

118.5

119.0

119.6

120.1

120.5

120.7

121.1

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

2100.3 2107.3 2118.7 2130.7 2142.4 2154.2 2164.5 2175.6 2186.0 2196.1 2206.7 2217.9 2228.5 2240.0 2252.3 2265.7 355.0

355.7

357.1

358.3

359.6

360.9

362.6

363.9

366.0

368.2

371.1

373.4

374.9

377.1

12.4

11.9

13.7

13.8

13.9

380.1 13.9

255.4

256.4

257.8

259.8

260.9

260.2

259.2

258.7

258.4

258.2

258.0

257.6

257.9

258.2

food

685.0

685.1

686.8

690.8

696.6

703.3

709.5

714.8

719.2

722.7

726.0

730.0

734.0

737.8

742.1

746.2

other nondurable goods

805.0

811.2

815.2

819.9

823.5

828.4

833.7

838.6

843.8

848.9

854.2

859.2

864.2

870.6

876.5

882.8

2.6

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

2.2

1.5

1.4

2.1

1.9

3.0

2.8

2.6

2.8

2.5

2.8

2.5

13.2

3.7

-0.3

3.8

2.7

6.0

6.2

4.8

6.1

3.5

5.6

4.1

5.1

3.8

4.5

4.0

4.1

4.0

2.7

6.8

3.7

5.0

4.2

3.4

3.1

2.6

4.7

2.5

2.6

1.3

0.9

-0.4

information processing equipment

18.1

12.6

10.0

10.5

12.0

11.0

13.7

12.6

12.7

14.3

12.6

11.9

11.3

10.4

11.2

motor vehicles and parts

24.3

2.4

-9.9

0.2

-0.5

7.0

7.4

4.4

8.0

0.8

4.7

2.0

5.3

2.6

5.6

4.4

6.9

-1.1

2.8

2.3

1.4

1.3

1.5

1.4

1.8

1.5

1.8

2.0

1.8

1.3

0.7

1.2 2.4

durable goods furniture and appliances

other durable goods nondurables

0.4

1.3

2.2

2.3

2.2

1.9

2.0

1.9

2.0

1.9

2.1

2.2

-0.4

0.7

1.7

1.3

1.5

1.4

0.0

1.9

1.4

2.3

2.4

3.2

2.5

1.6

2.4

3.3

-25.8

-17.5

63.5

0.0

0.2

0.9

0.5

0.1

1.0

1.1

0.6

0.4

0.3

-0.1

-0.4

gasoline & motor oil

-2.4

1.6

2.3

3.1

1.6

-1.1

-1.6

-0.8

-0.4

0.0

-0.3

-0.6

0.0

0.3

0.6

food

-0.5

0.0

1.0

2.4

3.4

3.9

3.5

3.1

2.5

2.0

1.9

2.2

2.1

2.3

2.2

3.4

3.1

2.0

2.3

1.8

2.4

2.6

2.3

2.5

2.4

2.5

2.3

3.0

2.7

2.9

clothing & shoes fuel oil & coal

other nondurable goods

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 2005

2006

2007

2008

Forecast 2009

2010

2011

2012

2013

2014

2015

2016

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

8803.5

9301.0

9772.3 10035.5

9845.9 10215.7 10729.0 11119.5

durable goods

1123.4

1155.0

1188.4

1108.9

1029.6

1079.4

1146.4

1218.8

1258.1

1303.1

1355.8

1402.8

261.3

271.5

271.3

257.9

235.4

241.3

251.7

265.8

273.0

283.1

291.6

295.4

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

11429.5 11882.5 12383.8 12908.1

67.0

75.3

86.1

84.9

82.4

91.7

94.7

99.4

104.6

109.1

114.9

119.7

408.2

394.8

399.9

339.3

316.0

342.7

373.6

407.6

424.0

441.3

463.1

485.7

99.5

109.9

118.8

117.9

111.1

116.0

125.8

132.3

136.8

140.3

144.3

147.5

1953.4

2069.8

2175.5

2272.8

2164.8

2285.5

2478.4

2563.0

2600.4

2660.7

2739.8

2847.0

314.0

327.3

335.4

330.9

317.0

331.6

349.2

366.1

373.2

380.6

389.7

399.3

20.0

20.6

21.8

25.9

20.6

22.3

24.5

21.9

22.7

23.2

23.1

23.6

gasoline & motor oil

283.8

314.7

343.0

384.5

278.7

330.1

403.8

417.3

392.2

371.3

360.3

368.9

food

644.5

674.2

711.2

746.4

742.3

760.6

810.2

829.0

852.3

884.4

915.0

947.5

other nondurable goods

691.1

733.0

764.1

785.1

806.1

840.8

890.7

928.7

959.9

1001.3

1051.6

1107.8

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

8803.5

9054.5

9262.9

9211.7

9032.6

9196.2

9428.8

9605.3

9773.1 10020.3 10289.5 10555.3

durable goods

1123.4

1174.2

1232.4

1171.8

1109.1

1178.3

1262.6

1361.1

1430.6

1497.8

1572.0

1641.8

261.3

272.5

274.4

262.8

240.7

257.5

272.5

288.4

300.1

313.4

323.8

329.0 298.9

furniture and appliances information processing equipment

67.0

85.0

105.9

113.6

119.6

143.3

161.6

183.3

208.8

234.8

266.8

408.2

394.4

401.4

346.8

322.6

329.5

347.4

374.1

388.1

401.7

418.7

436.0

99.5

108.2

111.9

106.4

99.0

102.5

106.7

111.7

115.4

117.3

119.3

121.0

1953.4

2005.0

2042.9

2019.1

1982.8

2029.3

2075.2

2094.8

2124.8

2170.1

2212.3

2259.4

314.0

328.7

340.1

338.1

321.0

338.1

350.0

354.1

357.7

362.1

369.7

378.8

20.0

18.0

17.6

15.4

18.0

16.6

14.3

12.5

13.3

13.8

13.9

gasoline & motor oil

283.8

278.9

276.8

265.3

264.1

264.6

257.3

256.7

258.7

259.1

258.0

258.1

food

644.5

663.0

673.2

666.0

654.8

668.8

685.3

685.7

689.8

711.7

728.2

744.0

other nondurable goods

691.1

717.3

737.5

739.7

727.7

745.6

777.4

797.4

817.4

836.1

856.6

879.9

motor vehicles and parts other durable goods nondurables clothing & shoes fuel oil & coal

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

2.8

3.2

1.7

-2.5

-0.3

2.9

1.9

1.8

2.9

2.6

durable goods

3.1

7.1

4.6

-12.6

3.5

9.6

6.1

8.5

2.5

5.9

4.7

4.2

furniture and appliances

6.2

1.4

1.2

-9.2

-1.6

8.2

6.1

4.4

4.0

3.2

0.6

information processing equipment

26.8

28.7

21.3

0.8

11.9

18.1

13.9

14.6

11.8

13.1

13.5

11.5

motor vehicles and parts

-6.8

5.8

0.6

-23.5

8.2

11.3

4.2

10.0

-1.9

6.9

3.2

4.4

other durable goods

10.8

5.8

4.1

-12.5

1.4

5.5

1.1

8.2

1.3

1.5

1.8

1.2

3.1

2.9

0.8

-3.1

0.4

3.0

1.4

0.9

2.0

1.9

2.3

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

7.2

3.4

2.3

-3.8

-0.9

7.6

0.7

1.5

1.3

1.2

2.6

-18.2

3.5

-7.9

9.1

9.6

-8.0

-14.2

-4.6

16.0

0.6

0.7

-0.2

-0.6

-0.4

-1.8

-4.0

-1.1

0.2

-1.5

0.4

2.2

-0.9

-0.3

0.4

food

3.6

2.9

0.8

-4.0

2.1

1.4

-0.2

1.7

3.2

2.1

2.2

other nondurable goods

3.3

4.2

1.7

-1.2

-0.1

3.7

2.4

2.3

2.5

2.4

3.0

U.S. Forecast | March 2013

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

Table 14. Business Fixed Investment History

2005

2006

2007

2008

Forecast

2009

2010

2011

2012

2013

2014

2015

2016

Billions Current Dollars Business Fixed Investment

1347.3 1505.3 1637.5 1656.3 1349.3 1338.4 1479.6 1616.6

1691.4 1823.0 1989.2 2105.6

Producers Dur. Equipment

995.6 1071.7 1112.6 1070.0

898.2

962.1 1074.7 1158.1

Nonresidential Structures

351.8

433.7

524.9

586.3

451.1

376.3

404.8

458.5

1226.1 1309.8 1412.6 1477.8 465.3

513.3

576.6

627.8

Non-Farm Buildings

212.9

247.6

297.3

322.0

253.9

177.0

173.8

196.4

208.9

252.4

309.3

370.1

Commercial

112.9

128.4

150.8

149.1

95.5

64.7

65.3

73.6

80.3

102.3

137.8

173.4

Industrial

29.9

35.1

43.7

57.4

61.2

43.3

44.2

52.3

55.9

65.3

69.9

80.4

Other Buildings

70.2

84.1

102.8

115.6

97.1

69.0

64.2

70.5

72.7

84.8

101.6

116.2

Utilities

51.4

61.1

85.6

99.5

98.6

88.4

85.8

102.2

95.0

93.0

98.7

98.2

Mines & Wells

77.1

114.2

130.9

151.7

88.6

101.9

135.6

150.0

151.7

155.8

155.6

146.9

Billions 2005 Dollars Business Fixed Investment

1347.3 1455.5 1549.9 1537.7 1259.9 1268.5 1378.2 1483.8

1536.6 1644.4 1773.1 1852.8

Producers Dur. Equipment

995.6 1071.1 1106.8 1059.4

885.2

963.9 1070.0 1144.2

Nonresidential Structures

351.8

384.0

438.2

466.4

368.1

310.6

319.2

349.8

1203.0 1284.6 1380.7 1437.7 348.4

374.9

407.5

429.5

Non-Farm Buildings

212.9

229.2

260.5

272.0

214.1

153.9

148.3

163.2

167.3

191.6

223.7

256.3

Commercial

112.9

118.4

131.2

124.5

78.3

54.6

53.9

59.0

62.3

75.4

96.7

116.6

Industrial

29.9

33.0

39.0

48.6

50.9

36.8

36.9

42.8

43.7

48.1

49.0

53.9

Other Buildings

70.2

77.9

90.3

99.3

85.6

63.1

57.8

61.8

61.5

68.2

77.8

85.3

Utilities

51.4

56.2

75.6

82.5

82.4

71.1

65.0

74.8

68.6

66.3

69.1

67.2

Mines & Wells

77.1

88.3

93.6

101.5

66.1

77.3

94.8

100.2

101.6

105.5

104.1

96.9

5.6

5.1

8.9

8.4

5.2

Annual Growth Rate Business Fixed Investment Producers Dur. Equipment Nonresidential Structures Non-Farm Buildings

8.4

11.7

9.0

-5.8

-18.2

8.2

12.6

6.3

6.9

3.5

-11.2

-8.3

11.1

12.3

5.9

6.2

6.7

7.7

3.5

14.9

25.2

22.0

5.1

-34.5

2.1

15.8

5.2

2.3

14.9

10.1

9.4

7.3

18.7

22.6

-0.1

-33.7

-21.3

15.7

7.1

8.2

27.8

20.6

17.9

Commercial

10.0

15.3

17.3

-11.8

-44.7

-16.8

9.6

12.3

9.3

39.4

31.5

21.0

Industrial

13.8

16.1

46.6

23.0

-12.0

-28.8

49.0

3.5

9.2

18.5

5.6

20.4

Other Buildings

1.7

26.0

22.6

6.7

-29.7

-19.5

4.3

5.3

6.2

22.4

17.9

12.0

Utilities

3.8

23.9

54.9

0.8

-4.1

16.0

1.1

14.6

-8.1

6.8

1.5

1.1

51.3

50.0

4.8

24.1

-46.9

66.0

29.9

1.0

2.2

0.9

-2.1

-2.3

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 2005

2006

2007

2008

2290.1

2524.5

2654.7

2502.3

Personal Tax and Nontax Receipts

931.9

1049.9

1165.6

1101.3

Corp. Profits Tax Accruals

341.0

395.0

362.8

233.6

98.8

99.4

94.5

94.0

852.6

904.6

945.3

973.1

Forecast 2009

2010

2011

2012

2013

2014

2015

2016

Federal Government Receipts and Expenditures Receipts

Indirect Business Tax and Nontax Accruals Contributions for Social Insurance Expenditures

2226.5

2395.4

2519.6

2674.7

2979.4

3244.5

3394.7

3513.4

857.0

894.2

1075.2

1137.8

1251.0

1342.5

1402.2

1448.2

200.4

305.1

304.2

373.9

385.0

481.0

488.0

479.5

91.4

95.5

107.4

116.1

117.6

130.6

137.7

144.9

949.1

969.8

905.5

934.8

1111.0

1172.8

1246.2

1317.4

2573.1

2728.3

2900.0

3115.7

3455.9

3703.4

3757.0

3756.1

3757.2

3898.6

4031.4

4246.6

Purchases Goods & Services

876.3

931.7

976.4

1080.1

1143.6

1223.1

1222.1

1214.2

1181.6

1170.3

1160.6

1162.8

National Defense

589.1

624.9

662.3

737.8

776.0

817.7

820.8

809.1

781.3

774.3

767.2

767.9

Other

287.3

306.9

314.1

342.3

367.6

405.3

401.3

405.1

400.3

396.0

393.5

394.9

Transfer Payments

1491.3

1587.1

1690.5

1841.9

2157.5

2310.8

2309.4

2317.5

2368.9

2509.0

2630.3

2777.4

To Persons

1078.0

1180.7

1254.2

1385.7

1605.4

1708.6

1735.8

1773.2

1810.5

1896.1

1978.6

2077.7

40.9

35.0

42.2

45.3

53.5

54.7

58.7

58.5

60.7

62.0

63.0

64.0

Grants in Aid to State & Local Gov't

361.2

359.0

380.8

395.5

482.6

531.1

497.8

468.0

479.3

532.2

569.6

616.2

Net Interest

239.0

261.0

291.0

272.1

228.6

251.7

294.7

292.8

276.2

289.1

308.1

372.3

64.1

53.9

50.2

53.6

62.8

62.4

73.8

78.2

74.0

70.1

66.6

62.9

Surplus (+) or Deficit (-)

-283.0

-203.8

-245.2

-613.5 -1229.4 -1308.1 -1237.4 -1081.3

-777.8

-654.2

-636.7

-733.1

Receipts

1730.5

1829.7

1923.1

1944.8

1961.4

2042.5

2064.4

2068.1

2133.1

2249.3

2360.0

2477.2

Personal Tax/Nontax Receipts

1163.1

1249.1

1313.6

1326.4

1264.9

1304.6

1360.8

1396.6

1442.2

1491.8

1550.3

1605.7 389.2

To Foreigners

Subsidies less Surplus of Gov't Entities

State and Local Government Receipts and Expenditures

Corporate Profits

276.7

302.5

323.1

334.4

287.6

300.6

322.8

334.0

347.6

356.1

375.1

Indirect Business Tax and Nontax Accruals

55.0

59.1

57.8

47.4

45.5

44.5

47.6

48.2

50.9

56.9

55.9

52.9

Contributions for Social Insurance

24.8

21.8

18.9

19.0

18.4

18.3

17.5

17.1

17.8

18.7

19.5

361.2

359.0

380.8

395.5

482.6

531.1

497.8

468.0

479.3

532.2

569.6

616.2

Federal Grants-In-Aid Expenditures

1704.50 1778.63 1910.83 2017.05 2074.63 2132.10 2166.35 2200.30

2251.87 2348.89 2432.98 2526.79

Purchases Goods & Services

1493.6

1586.7

1697.9

1798.0

1823.6

1834.4

1837.7

1849.4

1870.9

1905.7

1954.8

Government Social Benefits

404.8

402.9

433.7

456.7

495.1

528.3

538.5

556.1

586.4

653.3

698.4

745.1

404.8

402.9

433.7

456.7

495.1

528.3

538.5

556.1

586.4

653.3

698.4

745.1

10.9

2.1

0.4

16.2

23.0

30.3

36.2

40.8

41.0

39.2

37.4

39.1 14.7

Transfer Payments Interest Received

2010.7

Net Subsidies

0.3

1.7

16.2

15.3

12.5

14.1

14.4

16.7

17.1

16.3

15.5

Dividends Received

2.1

2.3

2.4

2.9

2.1

2.2

2.3

2.2

2.3

2.4

Net Wage Accruals

0.0

26.0

51.0

12.2

-72.3

-113.2

-89.7

-102.0

-132.2

-118.8

-99.6

-73.0

-49.6

Surplus (+) or Deficit (-)

U.S. Forecast | March 2013

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

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

Forecast

2005

2006

2007

2008

2009

-722.7

-769.3

-713.1

-709.8

-388.7

2010

2011

2012

2013

2014

2015

2016

-566.7

-517.3

-493.3

-500.4

-465.6

Billions of Dollars Net Exports Goods & Services

-511.6

-568.1

Current Account

-745.8

-800.6

-710.3

-677.1

-381.9

-442.0

-465.9

-477.9

-427.4

-415.9

-460.3

-483.4

Exports -Goods & Services

1305.1

1471.1

1661.7

1846.8

1587.5

1844.5

2094.2

2179.7

2236.3

2364.3

2522.2

2706.3

Merchandise Balance

-780.7

-835.7

-818.9

-830.1

-505.8

-645.1

-738.4

-740.5

-707.8

-686.1

-703.3

-691.5

Food, Feed & Beverage

58.95

65.98

84.28

108.33

93.93

107.70

126.23

135.45

132.92

134.15

141.13

148.62

Industrial Supplies Excl Petroleum

227.5

267.3

316.2

386.9

293.5

388.5

484.4

480.5

473.2

494.7

525.4

563.3

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

98.4

107.3

121.3

121.5

81.7

112.0

133.1

145.8

155.1

167.6

181.6

358.4

404.1

433.0

457.7

391.5

447.8

493.2

527.4

549.4

589.5

631.4

680.0

45.5

47.6

45.6

43.9

37.7

43.8

48.4

49.6

50.7

52.8

58.6

66.9

Other

257.0

291.9

314.5

339.8

279.0

332.0

364.7

384.7

401.1

432.7

462.8

493.7

Consumer Goods, Excl. MVP

115.3

129.1

146.0

161.3

149.4

165.2

175.0

181.7

193.6

209.0

219.9

229.6

47.5

50.8

61.3

61.8

54.6

57.4

62.5

68.8

77.8

82.3

87.3

92.5

399.0

446.6

499.7

549.3

522.7

565.9

619.7

640.1

663.5

699.5

749.3

810.6

Other Consumer Services

Billions of Dollars Imports -Goods & Services

2027.8

2240.4

2374.8

2556.5

1976.2

2356.1

2662.3

2746.4

2753.6

2857.6

3022.5

3171.9

Merchandise

1708.0

1884.9

2000.7

2146.3

1587.5

1947.0

2229.2

2294.2

2286.3

2356.2

2481.5

2592.1

68.1

75.0

81.7

90.4

82.9

92.5

108.3

111.0

112.7

113.8

119.0

123.8

Petroleum & Products

Food, Feed & Beverage

251.9

302.5

346.7

476.1

267.7

353.8

462.3

440.8

379.6

334.5

305.6

301.2

Industrial Supplies Excl Petroleum

266.0

291.4

295.7

318.9

196.8

249.6

293.1

289.5

298.2

315.0

337.5

346.7

Motor Vehicles & Parts

239.5

256.6

233.2

159.2

225.7

255.2

298.9

307.7

316.6

341.4

359.7

Capital Goods, Excl. MVP

380.8

420.0

446.0

458.7

374.1

450.3

513.4

550.3

556.2

598.3

654.8

703.0

93.3

101.4

105.2

101.2

94.2

117.3

119.7

122.3

124.7

132.9

141.2

149.9

Computer Equipment Other

261.7

290.2

306.5

322.0

249.2

301.8

358.1

388.4

390.5

421.5

467.3

503.5

Consumer Goods, Excl. MVP

411.5

446.1

478.2

486.7

431.4

486.5

517.4

545.4

582.7

617.7

646.5

Other Consumer

90.3

93.5

95.9

82.3

75.5

88.7

79.6

86.4

86.5

95.2

105.5

111.2

319.8

355.4

374.0

410.1

388.7

409.1

433.0

452.1

467.3

501.4

541.1

579.8

Net Exports Goods & Services

-722.7

-729.4

-648.8

-494.8

-355.2

-419.7

-408.0

-405.5

-385.2

-402.7

-400.9

-339.1

Exports G & S

1305.1

1422.1

1554.4

1649.3

1498.7

1665.6

1776.9

1833.9

1877.1

1974.1

2088.8

2225.2

Imports G & S

2027.8

2151.5

2203.3

2144.0

1853.9

2085.2

2184.9

2239.5

2262.3

2376.8

2489.7

2564.3

Services

Billions 2005 Dollars

Exports & Imports % Change Exports G & S

10.3

14.0

14.6

0.5

3.5

14.4

9.0

2.6

5.0

5.7

7.4

7.2

Imports G & S

12.1

5.4

9.0

-1.7

0.9

14.4

11.0

0.7

1.3

5.3

6.1

4.5

Real Exports G & S

6.8

10.5

10.1

-1.7

2.4

8.8

4.3

1.5

4.9

5.0

6.5

Real Imports G & S

5.3

4.2

0.9

-5.7

-3.3

11.1

3.5

0.5

3.0

5.6

4.1

2.6

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