U.S. Forecast March 2014

U.S. Forecast March 2014

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

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

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

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

FO R E C A S T FO R T H E N ATI O N Forecast 2014 - 2017 March 2014 Report

Published quarterly by the Institute for Economic Competitiveness, College of Business Administration, University of Central Florida Copyright Š 2014 Institute for Economic Competitiveness. All rights reserved.

Publications of the Institute for Economic Competitiveness are made possible by the following staff: Dr. Sean Snaith, Director Angela Ayala, Administrative Assistant Jonathan Fagbohungbe, Researcher Emre Gumulugolu, Researcher Melissa Hedtke, Researcher Ashley Miller, Researcher Sangitha Palaniappa, Researcher Trevi Sellers, Researcher Sean Tull, Researcher This forecast was prepared based upon assumptions reflecting the Institute for Economic Competitiveness’ judgments as of the date it bears. Actual results could vary materially from the forecast. Neither the Institute for Economic Competitiveness nor the University of Central Florida shall be held responsible as a consequence of any such variance. Unless approved by the Institute for Economic Competitiveness, the publication or distribution of this forecast and the preparation, publication or distribution of any excerpts from this forecast are prohibited.

H I G H L I G H T S O F T H E 1Q 2 0 14 U . S . F O R E C A S T In this Issue of the U.S. Forecast: • Stumble in the jumble: The legislative jumble created by the Affordable Care Act and the Dodd-Frank Act precludes robust growth in the U.S. economy.

• Has the link between home equity wealth and consumption spending been broken?

HIGHLIGHTS

• The Fed may need to revisit its 6.5% unemployment rate trigger for interest rate hikes. The falling unemployment rate is a faulty indicator of labor market health in this recovery.

• Real GDP growth in the 1st quarter of 2014 will be just 1.8%, a dramatic slowdown from the inventory-inflated estimate of 4.1% growth for the 3rd quarter of 2013. This lost momentum, policy uncertainty, and sequestration will keep growth slow for 2014 at 1.6%. Growth will gradually rise to 2.9% in 2015 and 3.0% in 2016 and 2017 as Fed tightening keeps growth from accelerating.

• The Affordable Care Act is already impacting the labor market. As the law is being implemented in an ad hoc fashion, this impact will grow especially once the employer mandate is finalized and fully enforced.

• Real consumer spending is expected to grow an average of 2.9% during 2014-2017, while mildly accelerating over this period. Consumers’ balance sheets are healing thanks to a housing market rebound, and this will help support spending growth if housing price gains can persist.

• The housing market recovery continues along its protracted path. The housing market should steadily improve through 2017. During 20142017, housing starts will rise from 1,116,392 in 2014 to 1,537,138 in 2017.

• 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 1.6% in 2014 and then 2.0% in 2015. Growth in 2016 slips to 1.8% before easing to 1.6% in 2017.

• Unemployment rates (U-3) are expected to gradually fall to 5.4% in the 4th quarter of 2017. Underemployment (U-6) remains a serious problem and currently stands at 12.6%.

U . S . F orecast

Stumble in the Jumble (And That’s Not Alright by Me)

In the December 2013 edition of the U.S. Forecast we once again discussed the role of economic policy uncertainty in restraining the recovery in the U.S. economy. The deeply troubled rollouts of both the Patient Protection and Affordable Care Act and the Dodd Frank Wall Street Reform and Consumer Protection Act have served to further muddy the waters surrounding the recovery.

Because of the numerous delays in implementing the Affordable Care Act and the large number of missed rulemaking deadlines laid out in the Dodd Frank Act, the full long-term impact of these laws on the economy remains unclear. But one consequence of these behemoth laws’ poor implementations is clear: a prolonging of the environment of policy uncertainty that has become the defining trait of this historically weak economic recovery.

The most recent delay in the implementation of the Affordable Care Act was a postponement of the employer’s mandate for companies with 50-99 employees until 2016. Various news reports place the total number of delays in the implementation of the Affordable Care Act at somewhere between a dozen to more than two dozen. The mere fact that we cannot pinpoint the number of changes and delays that have already occurred is troubling in and of itself.

The Davis Polk Law firm releases monthly progress reports on the roll-out of the Dodd-Frank law. In the most recent report1 the firm announces that of 280 rulemaking requirement deadlines that have passed, 132 or 47.1% have been missed. Fifty-six of the 132 missed rulemaking deadlines do not even have proposals on the table. Not knowing when or even if all of these rulemaking requirements will be met creates an environment of regulatory uncertainty for the financial sector. This is an improvement over the December 2013 report when 168 or 60% of the deadlines had been missed – meaning that 36 additional required rulemakings were finalized between the December and February progress reports.

I wish that I could take comfort in this progress, but my conversations with bankers from Tennessee to Iowa 1 http://www.davispolk.com/sites/default/files/Feb2014_Dodd.

Frank_.Progress.Report_0.pdf

to South Dakota over the past several months have robbed me of that luxury. It turns out that even when rules are finalized, there is still substantial uncertainty regarding how these rules will be implemented by regulators. Time and time again I have heard exasperation from bankers who have sought guidance and clarification from bank examiners regarding new rules, only to be met with shrugs and advice to go ahead and submit the report and wait for guidance post submission. Needless to say, no banker wants to hear back from a regulator that there is a problem with a submitted report and that their institution has now attracted additional scrutiny from that regulator.

With the financial crisis still fresh on their minds, no financial institution wants to bear the scarlet letter of being singled out for additional scrutiny by regulators.

When the first delay of the employer mandate was announced in July of 2013, I immediately lowered our forecast growth of the U.S. economy for 2014 with the knowledge that the fog of uncertainty regarding healthcare costs had been rolled forward another year by that delay. Upon reading about the most recent delay of the employer mandate, now until 2016 for certain small businesses, I shook my head in disbelief at the ad hoc nature of these changes. I pondered the potential consequences of these delays, especially when coupled with the regulatory confusion permeating the Dodd Frank enactment. As I reflected and tried to digest these latest changes to the Affordable Care Act, a word that I am fairly sure I have never typed before popped into my head: jumble.

The Affordable Care Act and Dodd Frank Act rollouts have collapsed into a jumble – a mass of things mingled together without order, a confused mixture, a disordered mass. Individuals, employers in the public and private sectors, as well as financial institutions are left dumbfounded, wondering what to do next while staring at this tangled mess of legislation.

Unfortunately, there is no easy way out of this situation, no quick fix to the problems with these laws waiting in the wings, nor are there impending answers to the plethora of questions they have spawned. There is just the jumble.

The word left me feeling dejected. It triggered a near-existential crisis wondering if the U.S. economy Institute for Economic Competitiveness

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U . S . F orecast could ever shake off this pall of mediocre economic growth or if the labor market recovery could truly strengthen beyond the shimmering mirage of improvement that is the falling headline unemployment rate.

Dismal science indeed.

But then I remembered those fun word puzzles coupled with a cheeky cartoon printed in the comic strip pages of the local newspaper.

The daily jumble!

So while the economy muddles its way through this policy jumble, please enjoy our jumble below.

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U.S. Forecast | March 2014

Anxious Index The most recent release (1st quarter of 2014) of the Survey of Professional Forecasters by the Federal Reserve Bank of Philadelphia suggests that the 41 forecasters surveyed for the publication are just 9.30% convinced that a decline in real GDP will occur in the 2nd quarter of 2014. This quarter’s release reflects a further easing of forecasters’ anxiety, perhaps as a result of the readings of 3rd and 4th quarter real GDP growth figures that were above expectations. This is the lowest reading for the anxious index since the 2nd quarter of 2011 when the panel of economists was just 8.47% convinced of a decline in real GDP in the 3rd quarter

U . S . F orecast of that year. The index has dropped significantly from 23.04% in the 4th quarter of 2012 when the specter of the fiscal cliff caused the index to surge. Despite the problems with the rollout of the healthcare website and the debacle that has been the ad hoc implementation of the Affordable Care Act, thus far economists’ concern about a near-term drop in real GDP has not been stoked by the Affordable Care Act’s struggles.

In one section of the Survey of Professional Forecasters, panelists are asked to estimate the probability that real GDP will decline in the quarter in which the survey is taken, as well as in each of the following four quarters. The anxious index (a term coined by The New York Times reporter David Leonhardt) is the probability of a decline in real GDP in the quarter after a survey is taken. In the survey taken in the 1st quarter of 2014, the index stands at 9.30, which means that forecasters believe there is a 9.30% chance that real GDP will decline in the 2nd quarter of 2014, down from the 4th quarter’s anxious index of 11.12%.

The forecasters also report an 11.17% chance that we are currently (as of the 1st quarter of 2014) experiencing a contraction in real GDP. According to the panel, the probability that we will fall back into recession is averaging around 10.7% through the end of the 1st quarter of 2015, which implies that the possibility of

a contraction in real GDP in the upcoming year has decreased slightly since last quarter’s survey.

The decline in anxiety over the future of this economic recovery has been steady since the uncertainty surrounding the fiscal cliff passed by the wayside.

The receding fear of a decline in real GDP should not be mistaken as a belief that the economic recovery is gaining strength. We are just a few months from the 5-year anniversary of the start of this economic recovery (and the end of the Great Recession). Confidence in the longevity of the recovery does not translate into confidence that it will strengthen.

The graph below plots the historical values of the anxious index, where the gray bars indicate periods of recession in the U.S. economy. The current level of the anxious index is well below the average level during the economic recovery, and is 1.8 points lower than last quarter.

GDP Outlook The year 2013 ended with a sense, at least to some, that faster economic growth had finally arrived. The seeming appearance of the “Great Pumpkin” of robust growth, in a recovery that was four and a half years old, was indeed a sight for sore eyes. Or was it yet another

Figure 2: The Anxious Index Probability of Decline in Real GDP in the Following Quarter Quarterly, 1968:Q4 to 2014:Q1 100 90 80

60 50 40 30 20 10 0

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

Probability (percent)

70

Survey Date Institute for Economic Competitiveness

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U . S . F orecast illusion in a recovery that has repeatedly bashed the gullible, taken in by this siren song against the rocky shores of reality?

Third quarter 2013 real GDP growth was, at first glance, a healthy 4.1% and the advance estimate of 4th quarter real GDP growth came in at 3.2%. However, in the 3rd quarter nearly 1.7% of the 4.1% growth was due to transitory changes in business inventories. 4th quarter consumption spending growth will likely be revised lower than its advance estimates, as the holiday shopping season was by most accounts the weakest in many years.

The year 2014 is expected to start off on a weak note as far as real GDP growth is concerned. We are forecasting growth to fall to just below 1.8% in the 1st quarter of 2014. Part of this deceleration will be the result of falling inventories that were accumulated in the second half of 2013. Weather will be cited as well when the equivocation begins again in an attempt to explain away the weak growth. But these transitory factors that can impact GDP from one quarter to the next cannot explain away the sluggishness that is the defining characteristic of this recovery.

Over the course of the year we are expecting a modest acceleration in GDP growth rates, which will be approaching 3.0% by the end of 2014. We expect that growth will be stuck in a narrow range around 3.0% for the remainder of our forecast, with a slight risk to the upside the closer we get to the 2017 end of our forecast horizon.

The upside risk will materialize as consumers eventually start to emerge from their spending malaise.

The acceleration of consumer spending growth will be driven by a continued recovery, albeit still weak, in the labor market coupled with gains being made in the housing market that will help alleviate the damage the recession and housing market inflicted upon this critical sector of the U.S. economy. U.S. households have recouped several trillion dollars in home equity wealth, but remain more than $3 trillion below previous peak levels.

However, consumption spending growth is not expected to become the robust driver of GDP growth that it has been historically. Any strengthening in this sector of the economy that represents 70% of overall GDP will go a long way to boosting overall GDP growth.

In 2016 and 2017, assuming the economy has not been shocked back into recession, we are expecting real GDP growth of slightly more than 3.0%. This 8

U.S. Forecast | March 2014

will be the first time since 2005 that the economy will have expanded at a pace of 3.0% or higher. While the economy isn’t exactly smashing through the 3.0% threshold, when it happens it will have been more than a decade since growth has reached this level. I am not sure we could call it a lost decade, but as far as economic growth is concerned it certainly could be viewed as a decade squandered.

CONSUMER SPENDING In our December 2013 U.S. Forecast we predicted a “year without a Santa Claus” for the 2013 holiday shopping season. Reports indicate this was the slowest holiday shopping season since 2009, when the economy was just emerging from the Great Recession.

After a couple years of consumers venting pent-up demand, the 2013 shopping season was left with only the fundamental drivers of consumer spending and these drivers remain weak.

U.S. consumers are still feeling the effects of the underwhelming labor market recovery, as discussed in our U.S. Forecast from September 2013. Consumption continues to be repressed in this recovery relative to those that have preceded it, as U.S. consumers are simply not leading the way in this recovery (or if you prefer, are leading it from behind). This is not the traditional role for U.S. consumers in economic recoveries. In the springs that followed the end of previous recessions U.S. consumers have historically blossomed, spending at a pace that often exceeded the overall growth rate in the economy as a whole – borrowing money to finance this spending when our current incomes could not support it. This borrowing, or lack thereof, may be a key reason why consumers are not contributing as they have historically.

Lost home equity wealth is a part of the problem as this has historically been an easy and low cost way of tapping into wealth that consumers built up over time. U.S. households have gained nearly $4 trillion in home equity since the bottom of the housing crisis, a substantial gain in wealth lost by the plunge in home prices. This still leaves another $3 trillion to be gained in order to get back to pre-crisis highs in home equity wealth.

The pace of the housing recovery has not been anywhere near the pace of recovery in financial asset wealth, but historically, housing wealth is a more powerful stimulant of consumer spending than financial asset wealth. Why isn’t consumer spending being bolstered by the recovery of home equity wealth?

U . S . F orecast The answer may be found by examining commercial banks’ balance sheets. The Federal Reserve Bank data on assets and liabilities of commercial banks in the United States2 reveals that revolving home equity home loans have been contracting since 2010 at an accelerating pace. In 2010 the level of home equity loans declined by 4.2%, and in 2013 the pace of that contraction had increased to 8.1%. Data for January 2014 show that this decline is continuing into the New Year.

There are factors on both the demand and supply side for home equity loans that are jointly causing this shrinkage. Many home equity loans were piggybacked on mortgages during the housing boom, and when the collapse of the housing market took place, consumers defaulted on these loans. As a result, banks began to call these loans in, or if they allowed the line of credit to remain in place, they lowered the credit limits of these loans to reflect depleted levels of home equity. Of course tighter regulatory and higher capital standards also pushed banks to rein in home equity loans, so what was historically a ready and easy source of finance to U.S. consumers suddenly became unavailable.

Consumers’ appetites for these loans have likely also been diminished by their experience in the housing market’s collapse. Are consumers as willing to take out loans on the collateral of the equity they may once again hold in their homes? Prior to this crisis home equity had been a very stable and reliable form of wealth, that many consumers could count on both as a store of steadily growing wealth to finance retirement or pay for their children’s educations. It also was a dependable cushion that could be used when unanticipated expenditures popped up or a cookie jar that could be borrowed against to finance trips, boats, orthodontic braces, or cars.

Consumers could simply give themselves a loan from a home equity line of credit as simply as they could write a check. There was no form to fill out, no loan officer to talk to and interest on these loans could also be taken as a tax deduction. Compare this to the penalties and difficulty in borrowing from a 401k account.

Financial markets went up and down, but housing wealth grew dependably and stably. At least it once did.

Now that housing wealth has proved to be as fleeting as stock market wealth, will consumers turn to this source of funds as they have historically – presuming they even have access to a home equity line of credit? Would you 2 http://www.federalreserve.gov/releases/h8/current/

feel as comfortable borrowing against your home equity today as you would have 10 years ago?

I think the answer for many is probably not.

The disconnect between home equity wealth and consumption spending may persist for many years, and as a result the finance-boosted consumption spending that has been present in previous recoveries may remain absent as this recovery stumbles on.

Real consumer spending growth is expected to fall to a 2.2% rate of growth in the 1st quarter of 2014. A stumble of a start to 2014, the pace of spending should pick up modestly from there as average growth for the next three quarters is expected to be 2.7%.

Quarterly patterns of consumer spending have shown a staccato behavior in this recovery, with a quarter or two of relatively healthy growth followed by several quarters of decelerating growth. This up and down pattern should give way to a more stable profile as the recovery continues. Continued improvement in the labor market and repairs to household balance sheets should provide a stabilizing force to consumer spending, allowing it to follow a smoother trajectory the next several years.

Consumption spending is forecasted to grow 2.6% in 2014, 2.7% in 2015, 3.0% in 2016, and 3.2% in 2017, ten years after the start of the Great Recession.

INVESTMENT Nonresidential fixed investment spending grew at 7.6% in 2011 and 7.4% in 2012. In 2013 the pace of investment growth slowed significantly under a rising wave of policy uncertainty and is expected to be 2.6% for the year. The pace of investment growth is expected to pick up in 2014 and 2015 before decelerating in 2016-2017.

Investment growth is expected to be 5.0% in 2014, 6.3% in 2015, and 7.0% in 2016. Rising interest rates will begin to eat away at investment growth in 2017 as it decelerates to 6.0%.

Interest rates will remain historically low for the next year and a half before the Federal Reserve begins the process of tightening. But the cost of borrowing, either explicitly or the implicit opportunity cost of using retained earnings, has not been an impediment for investment. Uncertainty has had many firms moving forward on investment with great caution. Policy uncertainty, as we have repeatedly discussed in recent U.S. Forecast publications, weighs on these forward looking investment decisions. As the true nature of the Institute for Economic Competitiveness

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U . S . F orecast economic landscape continues to be obscured by policy uncertainty, businesses have remained hesitant to rush forward into that fog.

The fog of uncertainty thickened in 2013.

Consequently, investment growth slowed to just 2.6% in 2013, down from 7.4% the year before. As the fog of uncertainty begins to thin, spending will accelerate in 2014 and beyond until the Fed begins to push interest rates upward, after which investment growth will ease in 2017.

While interest rates will remain low over the near term, they will be rising over the course of our forecast horizon. The Federal Reserve’s commitment to low interest rates has given way to talk of tapering and the eventual onset of their exit strategy. We think the Fed will begin slowly hiking the federal funds rate mid2015, but longer run rates will begin to rise earlier as the tapering of QEIII gets underway in spring of 2014.

We expect the 10-year Treasury yield to average 4.1% in 2016 and 4.6% in 2017.

Business spending on equipment and software will grow at an annual average rate of 7.1% from 2014 through 2017. Investment spending growth in computers and peripherals will resume strong growth after contracting in 2013. Companies still wary from the recession will continue to focus on costs and on making investments that can lower their cost structure.

Consequently many will continue implementing productivity boosting IT plans and will spend at a double-digit average annual growth rate of 12.4% from 2014 to 2017, with growth in the final three years of our forecast averaging 15.7%.

Investment in nonresidential structures experienced a burst of activity in 2012 and expanded at a 13.0% clip.

Investment growth in nonresidential structures plunged to -25.7% in the 1st quarter of 2013 but bounced back in the 2nd and 3rd quarters before stalling again in the 4th quarter. Year-over-year investment in structures, however, will grow just 1.3% in 2013. Investment in nonresidental structures will slowly accelerate in 2014 and 2015 with growth of 3.9% and 3.2% respectively, before growth jumps to 11.2% in 2016 and then pulls back from double-digit growth in 2017, expanding at 6.9% in the final year of the forecast.

Investment in transportation equipment grew robustly in 2012 (25.8%), but growth will decelerate sharply to 1.7% in 2013 before accelerating to a 5.8% growth rate in 2014 only to decelerate again from that point. This type of investment will have an average growth rate of 2.9% during the three-year stretch from 10

U.S. Forecast | March 2014

2015 through 2017, and in that final year growth will be 3.4%. Investment in the component is quite volatile due to aircraft purchases that can result in wild swings from quarter to quarter.

Demand driven by replacement need and lower interest rates bolstered light vehicle sales as the recession ended. Sales will continue to grow from 2012 levels of 14.4 million to a level slightly over 16.0 million in 2017, essentially flat from the previous year. During 2014-2017 light vehicle sales will average 15.8 million as the boost from pent-up demand has played itself out.

Residential fixed investment growth spent several years in negative territory, but there is now a sustained recovery in the sector that contracted all those years.

In 2011, residential fixed investment growth squeaked into positive territory, but then grew by 12.8% in 2012.

It will average 9.2% growth through 2013-2017, with a peak growth rate in 2015 of 14.9%. In the final year of our forecast, 2017, real residential fixed investment will be dampened by higher interest rates and more balance in the housing market that will decelerate the rate of price appreciation. Growth is expected to be flat in the final year of our forecast. In 2017 real residential fixed investment will be just over $668 billion, more than $100 billion lower than the 2005 peak during the housing boom.

Inventories of homes for sale have fallen dramatically and this has fueled double-digit home price appreciation. Yes, housing prices are on the rise again, and the rapid pace of these increases is a function of these temporary inventory constraints and heavy levels of investor purchases. However, housing finance must become more available if the market is to make a smooth transition from investor led purchases to more traditional mortgage financed consumer purchases.

These rising prices and shrinking inventories have sent the signal to builders to get back to building again.

We expect housing starts to continue to accelerate over the next several years reaching more than 1.54 million in 2017. That level represents an increase of 600,000 starts from 2013.

GOVERNMENT SPENDING The sequester was in full effect in 2013, and these cuts have been a drag on the pace of recovery. The two-year agreement that was reached to end the budget standoff and avoid another shutdown included changes that eased some of the blunt force cuts of the sequester, and upcoming elections have likely made politicians lose their appetite for austerity in any form. The 2014-

U . S . F orecast 2015 easing of sequester cuts – $63 billion overall – will reduce the decline in government spending growth from -5.1% in 2013 to -2.0% in 2014 and just -0.1% in 2015.

The combination of higher revenues from economic growth and somewhat smaller expenditures helped to lower the federal budget deficit to $680 billion for 2013.

This is the first time in four years that the deficit did not exceed $1 trillion. We are forecasting that the level of deficits will slowly decline through 2016 when the deficit will be $596 billion. 2016 will be the smallest deficit of the Obama administration yet, but will still be $140 billion higher than the largest deficit of the Bush administration.

Though we are projecting deficits that are smaller for the next several years, the additional debt added to the national debt over the next four years will exceed $2.4 trillion, thus pushing the national debt total to nearly $20 trillion. This is assuming interest rates do not rise faster than we are forecasting, and thereby more rapidly raising the burden of servicing all this debt.

Currently the national debt is over $17.4 trillion and rising. This represents a debt of nearly $150,829 per taxpayer and over $54,810 per citizen. Unfunded liabilities of the U.S. are even more frightening. Social Security, Medicare Part D, and Medicare represent more than $128 trillion in liabilities, and that boils down to more than $1.1 million per taxpayer.

Our political inability to deal with this problem does not make it go away. Playing ostrich will not solve our long-run fiscal problems. It is heartening however to see UCF College of Business students participating in the Up to Us competition, a nationwide campus competition to raise awareness of the consequences of our long term national debt in the generation most likely to bear the burden of the selfish choices made by the generations that preceded them.

NET EXPORTS There have been some developments in emerging markets over the past few months. While they may not give reason to panic, these developments are certainly of some concern. Argentina suffered a run on the peso. Turkey had to take dramatic steps (a giant hike in short-term interest rates) to avert a run on the lira.

Other countries, such as South Africa, have had to raise interest rates to defend their currency as problems with inflation are creeping upward, even though in many of these countries growth remains quite paltry.

While these episodes might not be pandemic to the entirety of emerging markets, when coupled with disappointing data coming out of China, they are rumbles of thunder that may precede a larger global storm. Or perhaps, they might just be rumbles of thunder that will pass with no further incident.

Overall export growth continues through the end of our 2017 forecast period. However, real export growth from 2014-2017 is expected to accelerate somewhat, averaging 5.6%, while real import growth will average 5.0% over the same time frame.

Real net exports will average -$434.3 billion 20142017, with the trade balance improving through 2014 before worsening on the back of a stronger dollar in 2015-2017.

The U.S. dollar will appreciate vis-Ă -vis our major trading partners through 2015 and waver a bit the next two years. The strengthening of the dollar is due to the relative strength of the U.S. recovery and an upward trend in interest rates. The Eurozone may be emerging from recession, but growth will remain paltry in the face of persistent fiscal austerity and continued uncertainty regarding the future of the Eurozone. Once this discrepancy between global growth rates and the pace of the U.S. recovery narrows, the appreciation of the dollar should quickly slow.

The current account deficit will improve through the end of 2014, at which point a multiyear appreciation of the dollar that began in 2012 will begin to manifest itself in a worsening of the current account in 20152017. Current account balances will average -$370 billion during 2014-2017, with a worsening of the deficit in 2015-2017 in the wake of a four-year appreciation of the dollar.

U N E M P LOY M E N T An unemployment rate of 6.5% is a key level as stated by the Fed as far as reversing course on the stance of monetary policy and beginning to raise interest rates.

We are forecasting that an unemployment rate of 6.5% will occur in the third quarter of 2014. However, the relevance of reaching this level of unemployment may no longer be what it was when the Fed first announced this threshold.

How long until unemployment falls to 6.0%?

Our projection has that occurring late in the second quarter of 2015. Looking beyond this point, the unemployment rate will fall gradually below 6.0% reaching 5.4% in the fourth quarter of 2017.

Institute for Economic Competitiveness

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U . S . F orecast

Payroll job creation remains weak, and the recent pace of payroll job growth is simply insufficient given that we are still 866,000 million jobs short of payroll employment returning to its previous peak level. The labor market is still suffering through the worst pace of job recovery following a recession since 1945.

The national unemployment rate ticked down in January to 6.6%. The December jobs report again showed a slight improvement of the labor market with 75,000 new workers on business payrolls, and January was much better with only 113,000 after a revised increase of 274,000 in November and 237,000 in October.

The mixed message in the recent jobs and labor market report, again reinforce the need to look at more than a single metric of how the labor market is performing. Given its complexity, the U.S. labor market simply cannot be sufficiently assessed by a single metric, such as the headline unemployment rate, during this recovery. This is particularly true because as of January 2013 the labor force participation rate is at its lowest point since April 1978.

Estimates by the Economic Policy Institute peg the number of “missing workers” in the U.S. at more than 5.85 million. Missing workers are potential workers who as a result of a weak labor market are not working or even looking for work. If these workers were actively still looking for work, the current headline unemployment rate would be 10%.

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 12.7% in January, down just 1.7% from the January 2012 level of 14.4%, but down from its peak of 17.2% in April 2010. U-6 has been in the double-digits for more than five and a half years.

As the Affordable Care Act is eventually enforced over the next couple years, we must pay close attention to this broader measure of unemployment. Companies may alter their approach to managing labor resources and make a shift toward fewer full-time workers and more part-time workers in order to avoid either having 12

U.S. Forecast | March 2014

to provide healthcare insurance, at what will likely be higher premiums, or paying fines for not providing it.

This shift could give false signals of a healthier labor market by pushing up payroll figures and lowering the headline unemployment rate. U-6, however, will reflect the coinciding increase in underemployment not captured in the headline data.

U . S . F orecast C harts

30-Year Mortgage Rates and Housing Starts 9.0

(Mortgage rates - Left axis, %)

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 17 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 17 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 17 Change in Real Business Inventories Institute for Economic Competitiveness

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U . S . F orecast C harts

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 17 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 17 Federal Budget Surplus

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

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U.S. Forecast | March 2014

(%)

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Fed Funds Rate

U . S . F orecast C harts

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 17 Quarterly Growth Rate Real GDP Fed Funds Rate

Industrial Production 115.0

(2002=100)

110.0 105.0 100.0 95.0 90.0 85.0 80.0

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Industrial Production

Private Fixed Nonresidential Investment 2800.0 2600.0 2400.0 2200.0 2000.0 1800.0 1600.0 1400.0 1200.0

(Billions of Dollars)

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Private Fixed Nonresidential Investment Institute for Economic Competitiveness

15

U . S . F orecast C harts

Manufacturing Employment 18.0

(Millions)

17.0 16.0 15.0 14.0 13.0 12.0 11.0

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Manufacturing Employment

Money Supply

3000.0

(Annual Growth Rate %)

2500.0 2000.0 1500.0 1000.0

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Annual Growth Rate of M1

Total Nonfarm Payroll Employment 150.0

(Millions)

145.0 140.0 135.0 130.0 125.0

16

U.S. Forecast | March 2014

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Total Nonfarm Employment

U . S . F orecast C harts

Oil and Consumer Confidence 140.0

Oil ($ Per Barrel) - Left Axis

120

120.0

110

100.0

100

80.0

90

60.0

80

40.0

70

20.0

60

0.0

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Price of Oil WTI Consumer Sentiment

50

Real Disposable Income and Consumption 6.0

(% Change Year Ago)

4.0 2.0 0.0 -2.0 -4.0

-200

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Real Disposable Income Consumption

Trade Balance and Real Exchange Rate

-300 -400 -500 -600

1.50 1.40 1.30 1.20 1.10

-700 -800

1.00 0.90 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Trade Balance (Billions $) Left axis U.S. Dollar Real Exchange Rate (2000 = 1.0) Right axis

0.80

Institute for Economic Competitiveness

17

U . S . F orecast C harts

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 17 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 17 Unemployment Rate

Yield Curve 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0

18

U.S. Forecast | March 2014

(%)

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 1-Year T-Bill Yield 5 Year Treasury Bond Yield 30 year Treasury Bond Yield

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

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

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

Real GDP Nominal GDP

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

2007

2008

2009

2010

2011

2012

2013

2014

1.8 2.0 2.3 4.6 1.7 2.0 5.9 3.2 11.5 13.2 13.1 3.1 -2.8 28.3 -15.6 12.7 10.0 18.1 39.0 -1.6 15.0 -18.9 8.9 2.3 1.7 1.5

-0.3 0.2 -0.4 -5.1 -1.1 0.8 -0.6 -6.9 0.7 6.3 -4.5 -4.7 -22.9 -0.8 -11.0 6.4 -3.6 25.9 11.8 7.3 13.2 -24.0 5.9 -2.7 6.8 0.3

-2.8 -2.0 -1.6 -5.3 -1.8 -0.8 -15.5 -22.5 -8.3 0.7 -12.7 -22.2 -49.0 -40.0 -27.4 -18.9 -30.9 5.2 1.6 -27.7 -18.3 -20.7 -8.9 -13.5 5.7 1.6

2.5 1.0 2.0 6.1 2.2 1.2 2.6 15.9 10.0 11.2 13.6 -0.2 80.2 26.9 17.4 -15.7 -24.1 -27.7 -15.9 21.7 -26.3 -2.4 11.5 12.8 4.4 -2.7

1.8 2.0 2.5 6.6 1.9 2.1 7.5 12.8 2.3 -1.3 2.6 15.7 36.0 14.4 35.9 2.1 -0.2 -1.5 -7.7 24.3 -7.3 0.6 7.1 4.9 -2.6 -3.6

2.8 2.6 2.2 7.7 1.4 1.6 7.4 7.7 2.7 5.6 9.0 5.7 25.8 31.5 16.5 13.0 8.0 16.4 18.9 14.5 8.0 12.8 3.6 2.2 -1.4 -0.7

1.9 1.7 2.0 7.2 2.1 1.2 2.6 2.9 3.1 -0.9 9.1 3.3 1.7 -1.9 -5.5 1.3 3.3 4.3 -8.1 5.1 4.1 12.1 2.8 1.4 -5.1 -0.2

2.6 2.8 2.6 6.3 3.0 1.8 5.0 6.1 5.8 2.5 7.8 7.7 5.8 -3.8 2.7 3.9 10.5 2.7 -2.5 3.3 4.7 11.8 4.8 3.0 -2.0 0.5

14876.8 14833.6 14417.9 14779.4 15052.4 15470.7 15767.1 14480.4 14720.3 14418.0 14958.3 15533.8 16244.6 16802.9

2.7 2.9 2.3 3.9 3.1

1.9 3.8 2.3 6.4 2.9

0.8 -0.3 1.7 -2.5 1.5

1.2 1.6 1.0 4.2 1.9

72.3 1.6 2.5 78.6 36.5 85.6 16.089 1.342 4.418 4.6 1.1 -162 -713

99.6 0.8 -3.4 74.5 -35.0 63.8 13.195 0.900 3.655 5.8 -0.6 -455 -681

61.7 3.2 -11.2 65.7 -146.0 66.3 10.402 0.554 3.868 9.3 -4.4 -1416 -382

79.4 3.3 5.7 71.3 65.9 71.8 11.555 0.586 3.705 9.6 -0.7 -1294 -449

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))

5.02 4.35 4.52 4.43 4.63 4.84 6.34 1477 12.8 1.004 -5.6

1.93 1.37 1.82 2.80 3.67 4.28 6.04 1221 -17.2 0.959 -4.1

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

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

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

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)

11996 5.3 10508 4.7 10822 2.1 3.0 1303 -5.4

12431 3.6 10995 4.6 10989 1.5 5.0 1073 -17.5

12082 -2.8 10937 -0.5 10937 -0.5 6.1 1199 22.2

12435 2.9 11244 2.8 11061 1.1 5.6 1464 23.4

13191 6.1 11787 4.8 11325 2.4 5.7 1473 0.6

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. $)

2.0 3.1 1.7 6.0 2.2

Forecast 2015 2016

2.9 3.0 2.7 4.6 2.3 2.6 6.3 9.1 14.5 18.1 13.1 10.5 3.3 4.4 -2.8 3.2 14.1 3.6 -3.8 -5.1 10.1 16.2 3.8 5.2 -0.1 0.8

3.0 3.1 3.0 5.4 2.5 2.8 7.0 7.3 12.3 15.5 11.5 5.9 1.8 6.1 -3.7 11.2 22.8 7.9 -0.7 8.9 10.3 5.9 5.1 5.0 -1.0 0.8

2017

3.0 3.0 3.2 5.4 2.6 3.1 5.8 6.0 8.4 13.6 7.2 4.1 3.4 5.1 0.0 6.9 14.7 7.0 8.9 -2.3 5.4 0.0 5.5 4.8 -0.6 1.1

16179.9 16651.5 17155.7 17675.1 17502.7 18322.9 19175.2 20052.9

1.7 2.1 2.1 1.9 1.9

1.4 1.5 1.8 1.2 1.9

1.6 1.4 1.7 1.3 2.3

1.7 1.7 2.0 0.7 2.5

1.6 1.7 1.8 1.2 2.7

1.5 1.7 1.8 0.9 2.8

95.1 94.2 0.5 1.5 3.4 3.6 74.0 75.8 39.7 68.7 67.4 76.5 12.735 14.4 0.612 0.8 3.793 4.1 8.9 8.1 1.2 1.7 -1297 -1089.2 -458 -440.4

98.0 0.6 2.6 76.3 62.0 79.2 15.5 0.9 4.5 7.4 1.6 -680.2 -376.1

98.5 1.2 3.1 77.2 50.9 80.6 15.8 1.1 4.7 6.5 1.6 -633.0 -310.4

91.5 0.6 3.5 78.2 49.3 81.4 15.7 1.4 5.0 6.0 2.0 -599.7 -345.7

89.6 1.4 2.9 78.2 40.0 82.5 15.9 1.5 4.9 5.7 1.8 -596.0 -394.0

91.8 1.7 2.4 77.8 42.4 82.3 16.1 1.5 4.7 5.5 1.6 -660.8 -431.7

0.1 0.1 0.2 0.8 1.8 2.9 3.7 1380 8.9 0.9 3.8

0.1 0.1 0.1 1.2 2.4 3.4 4.0 1643 19.0 1.0 3.4

0.1 0.1 0.1 1.6 3.0 3.9 4.6 1828 11.6 1.0 2.5

0.7 0.7 1.0 2.2 3.5 4.4 5.2 1806 -1.2 1.0 0.5

2.6 2.6 3.0 3.5 4.1 4.8 6.0 1757 -2.6 1.0 -0.1

4.0 3.8 4.0 4.4 4.6 4.8 6.6 1862 5.9 1.0 0.4

13744 4.2 12246 3.9 11552 2.0 5.6 1755.3 19.2

14133 2.8 12474 1.9 11638 0.8 4.5 1851.0 5.4

14692 3.9 12947 3.8 11950 2.7 4.6 2032.2 9.9

15415 4.9 13588 5.0 12373 3.5 5.3 1946.7 -4.2

16189 5.0 14311 5.3 12843 3.8 5.9 1901.0 -2.3

17034 5.2 15072 5.3 13328 3.8 6.2 1903.9 0.2

Institute for Economic Competitiveness

19

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

Table 2. Real Gross Domestic Product History 2007

2008

2009

2010

Forecast 2011

2012

2013

2014

2015

2016

2017

Real GDP Billions 2005 $ Gross Domestic Product

14876.8 14833.6 14417.9 14779.4 15052.4 15470.7 15767.1

16179.9 16651.5 17155.7 17675.1

14839.3 14868.9 14565.5 14717.7 15014.4 15403.2 15671.2

16109.8 16591.3 17104.9 17621.5

10035.5

9999.2

9842.9 10035.9 10291.3 10517.6 10728.2

11001.9 11303.9 11646.9 12025.2

Durables

1141.7

1083.2

1023.3

1085.7

1157.1

1246.7

1335.8

1420.1

1484.8

1564.5

1649.1

Nondurables

2239.3

2214.7

2175.1

2223.5

2266.0

2296.8

2344.2

2414.6

2469.9

2531.1

2597.0

Services

6650.4

6700.6

6644.5

6727.2

6871.1

6982.7

7063.6

7189.4

7376.5

7586.3

7822.6

1948.4

1934.5

1633.5

1673.8

1800.4

1931.8

1982.1

2080.6

2211.1

2366.9

2503.8

898.3

836.1

644.3

746.7

841.7

905.9

932.2

989.4

1079.9

1158.6

1227.8

279.9

281.0

256.1

281.4

287.9

295.7

304.6

322.2

368.9

414.2

448.8

Computers & Peripherals

72.8

77.1

76.8

84.7

83.4

87.9

86.9

89.0

105.1

121.3

137.8

Communications Equipment

96.2

91.5

79.4

90.2

92.3

100.6

109.4

117.7

133.0

148.3

159.0

Industrial Equipment

205.3

195.5

152.1

151.3

175.0

184.6

190.6

205.4

226.9

240.3

250.2

Transportation Equipment

188.8

146.2

70.6

127.5

171.8

214.4

217.9

230.4

238.0

242.3

250.7

30.2

30.0

17.7

22.1

24.5

32.0

31.2

29.6

31.0

32.8

34.5

48.1

42.6

30.8

36.2

49.2

56.6

53.2

54.6

53.1

51.1

51.1

509.0

540.2

438.2

366.3

374.1

421.6

427.0

443.6

457.8

509.0

544.1

189.9

182.8

126.7

95.2

94.8

102.3

105.7

116.7

133.4

163.6

187.4

Manufacturing

43.1

53.8

56.3

40.8

39.1

45.0

47.0

48.2

49.9

53.8

57.5

Power & Communication

85.9

94.5

95.8

80.4

74.1

88.0

80.2

78.1

75.1

74.6

81.3

Mining & Petroleum

97.9

105.0

75.0

87.8

109.0

124.1

130.5

134.5

127.6

138.9

135.6

Other

91.8

103.4

84.5

62.0

57.3

61.9

64.4

67.4

74.2

81.9

86.2

654.8

497.7

392.3

382.4

384.3

433.8

486.0

543.7

631.2

668.2

668.1

Exports

1647.3

1741.8

1583.8

1765.6

1890.6

1957.5

2012.4

2109.0

2190.3

2301.2

2426.9

Imports

2350.9

2288.7

1976.0

2228.1

2336.4

2388.2

2421.5

2494.5

2624.6

2756.5

2888.9

Federal Government

1078.7

1152.3

1217.7

1270.7

1237.9

1220.3

1157.5

1134.5

1133.8

1122.8

1116.6

State & Local Government

1836.2

1842.5

1871.4

1820.8

1754.5

1742.8

1739.7

1747.7

1761.0

1774.6

1793.7

Final Sales of Domestic Product Total Consumption

Nonresidential Fixed Investment Equipment & Software Information Processing Equipment

Aircraft Other Equipment Structures Commercial & Health

Residential Fixed Investment

20

U.S. Forecast | March 2014

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

Table 3. Quarterly Summary of the Forecast of the U.S. 2013Q3

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.

4.1 2.5 2.0 7.9 2.9 0.7 4.8 0.2 2.0 1.9 -4.3 15.5 6.1 12.5 2.0 13.4 18.2 55.5 2.9 10.6 2.6 10.3 3.9 2.4 -1.5 1.7

2013Q4

3.2 2.8 3.3 5.9 4.4 2.5 3.8 6.9 -6.2 22.3 -23.3 -3.9 19.6 188.9 6.9 -1.2 19.2 -5.6 -19.0 -2.6 0.9 -9.8 11.4 1.0 -12.7 0.5

2014Q1

1.8 2.7 2.2 5.9 3.3 1.2 4.4 4.8 2.8 -21.3 15.4 13.7 -3.6 -63.4 4.1 3.4 8.6 -10.2 -3.6 10.0 2.0 18.9 2.8 1.7 0.5 -0.7

2014Q2

2.2 3.3 2.7 8.5 2.0 2.1 6.4 10.3 13.9 12.0 22.2 7.4 12.6 0.1 -0.7 0.9 7.6 3.1 0.7 -5.6 2.4 18.1 2.7 3.6 2.5 1.3

2014Q3

2.5 2.7 2.7 3.6 2.8 2.4 5.7 8.1 16.6 16.9 19.5 10.9 -0.3 5.3 -3.0 2.2 8.5 9.4 -1.0 -4.7 5.5 20.4 2.7 6.0 1.4 0.0

2014Q4

2015Q2

2015Q3

2015Q4

2016Q1

Composition of Real GDP, Percent Change, Annual Rate 2.9 3.2 2.9 3.1 3.0 2.9 3.2 2.9 2.8 3.1 3.1 3.1 2.8 2.9 2.5 2.8 2.8 3.3 5.0 4.4 3.5 4.1 5.8 6.4 2.4 2.3 1.9 2.4 2.2 2.8 2.6 2.8 2.6 2.7 2.5 2.9 5.6 6.3 6.2 7.3 7.3 6.8 7.6 10.1 10.4 8.7 8.1 5.4 15.0 14.6 14.0 13.0 13.6 12.4 22.4 18.7 19.0 14.0 16.9 13.8 10.3 11.5 11.7 12.3 12.0 12.3 10.0 12.8 11.1 8.3 7.5 4.8 -2.5 4.3 7.1 4.0 3.0 -5.2 1.4 5.9 4.4 5.4 8.0 4.7 -6.4 -5.1 -0.7 3.7 -2.9 -19.6 3.4 1.4 0.4 9.2 11.2 14.4 8.3 7.0 21.3 31.3 25.3 22.7 8.1 1.7 0.3 1.6 1.6 10.4 -1.6 -6.0 -8.3 -1.2 -2.7 -2.7 -0.3 -6.1 -14.7 -1.7 8.0 19.2 5.7 17.2 9.3 10.9 14.7 12.4 21.4 13.4 16.3 13.6 7.2 4.3 5.1 4.8 3.1 3.8 4.5 5.2 4.4 5.5 5.6 5.4 5.2 4.6 0.9 -0.4 -1.5 -1.4 -0.1 -1.5 1.0 0.8 1.0 0.7 0.7 0.6

2016Q2

3.0 3.1 3.0 5.2 2.4 2.9 7.7 7.7 12.4 16.1 11.7 3.9 5.6 7.2 9.4 13.8 19.7 12.5 3.3 18.8 6.6 2.4 5.1 5.0 -0.9 0.9

2016Q3

3.2 3.1 3.2 4.9 2.7 3.1 6.7 7.0 10.0 14.5 10.1 4.3 4.3 6.3 5.1 10.4 18.9 15.1 2.1 6.2 6.6 2.5 5.3 5.1 -0.8 0.9

2016Q4

3.4 3.2 3.5 5.7 2.6 3.4 6.3 6.6 9.3 17.7 6.9 5.6 2.1 5.1 -7.3 7.8 18.5 9.4 5.2 -2.8 7.4 1.4 5.6 5.1 -0.6 1.0

2017Q1

2.8 2.9 3.1 5.5 2.5 2.9 4.9 5.3 6.6 9.2 6.0 5.9 0.6 3.9 -13.5 3.7 13.8 1.1 14.0 -11.9 3.4 0.9 5.5 4.4 -0.4 1.0

2017Q2

2.9 2.9 3.3 5.6 2.6 3.2 5.7 6.0 8.5 16.3 6.3 3.0 5.9 4.1 12.8 6.7 14.6 11.0 13.7 -8.0 5.6 -2.8 5.5 5.2 -0.6 1.2

Billions of Dollars 15839.3 15965.6 16036.6 16122.2 16221.3 16339.4 16468.1 16587.2 16713.7 16836.9 16956.9 17084.2 17219.5 17362.2 17481.8 17609.0 16912.9 17102.5 17226 17389.8 17597.7 17797.2 18018.5 18217.2 18426.8 18629.2 18851.3 19061.8 19278.9 19508.9 19725.3 19941.8 Prices & Wages, Percent Change, Annual Rate 1.6 1.8 1.5 1.5 1.4 1.7 1.7 1.5 1.7 1.6 2.2 2.1 1.7 1.7 1.7 -0.3 0.6 0.8 1.5 1.6 2.3 2.5 2.5 2.7 2.7

2.0 2.6 1.8 3.7 1.7

1.3 0.9 1.6 0.3 2.0

1.5 1.3 1.4 3.0 2.7

1.7 0.8 1.9 0.5 2.3

2.3 2.7 2.2 0.7 2.3

105.8 3.6 2.4 76.0 89.2 81.6 15.658 0.882 4.730 7.2 1.4 -850 -379

97.5 3.2 6.8 76.9 103.8 76.9 15.587 1.002 4.337 7.0 1.7 -649 -319

99.1 0.3 2.5 77.1 78.9 80.3 15.580 0.999 4.405 6.8 1.3 -733 -312

100.0 0.2 1.1 76.9 45.4 80.7 16.043 1.079 4.564 6.6 1.5 -694 -303

98.6 -0.4 3.0 77.2 42.8 80.4 15.855 1.155 4.719 6.4 1.8 -620 -308

96.4 0.5 4.1 77.5 36.5 80.8 15.784 1.232 4.943 6.2 2.2 -621 -318

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

0.08 0.03 0.12 1.51 2.71 3.72 4.44 1675 17.3 0.987 0.3

0.09 0.06 0.12 1.44 2.75 3.79 4.30 1770 24.7 0.978 -3.6

0.08 0.04 0.11 1.59 2.80 3.72 4.39 1815 10.4 0.989 4.6

0.09 0.06 0.13 1.64 2.92 3.87 4.50 1824 2.1 1.001 4.9

0.09 0.06 0.14 1.67 3.05 4.03 4.69 1832 1.8 1.008 3.1

0.09 0.06 0.14 1.69 3.11 4.08 4.77 1840 1.6 1.014 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)

14226 4.0 12568 5.0 11704 3.0 4.9 1869 10.8

14296 2.0 12614 1.5 11726 0.8 4.3 1929 13.6

14439 4.1 12730 3.7 11804 2.7 4.4 2071 32.8

14597 4.5 12866 4.3 11909 3.6 4.6 2043 -5.2

14779 5.1 13015 4.7 11988 2.7 4.6 2008 -6.7

14953 4.8 13175 5.0 12097 3.7 4.8 2006 -0.4

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

2015Q1

1.9 2.0 1.8 2.4 2.9

1.5 1.5 1.7 0.5 2.7

1.4 1.5 1.8 0.0 2.8

1.5 1.6 1.7 0.4 2.8

1.7 1.7 1.9 0.9 2.9

1.5 1.8 1.7 1.3 2.7

Other Key Measures 92.5 92.1 91.4 89.9 0.8 0.8 1.1 1.2 4.7 3.3 3.2 2.6 78.0 78.2 78.4 78.3 47.1 52.0 50.4 47.5 81.0 81.1 81.5 82.0 15.781 15.705 15.647 15.783 1.295 1.374 1.422 1.451 4.970 5.009 5.067 5.008 6.1 6.0 5.9 5.9 2.2 1.9 1.9 1.9 -615 -609 -596 -586 -330 -336 -352 -366

89.5 1.3 2.8 78.1 37.6 82.9 15.838 1.474 5.012 5.8 1.7 -628 -378

89.6 1.6 2.8 78.0 36.3 82.2 15.895 1.501 4.872 5.8 1.8 -642 -386

89.7 1.7 3.0 78.2 40.7 82.1 15.912 1.530 4.828 5.7 1.8 -652 -402

89.7 1.9 2.8 78.3 45.3 82.6 15.989 1.549 4.811 5.7 1.9 -669 -410

90.4 1.4 2.3 78.1 41.0 82.7 16.043 1.544 4.798 5.6 1.4 -673 -423

91.4 1.7 2.1 77.9 42.4 82.2 16.109 1.537 4.674 5.5 1.4 -700 -429

Financial Markets, NSA 0.14 0.29 1.00 1.50 0.11 0.25 1.04 1.49 0.18 0.39 1.45 1.86 1.74 1.89 2.44 2.59 3.21 3.33 3.77 3.83 4.16 4.28 4.65 4.67 4.86 5.00 5.34 5.63 1841 1834 1796 1754 0.4 -1.6 -8.0 -9.1 1.015 1.010 1.005 1.003 0.4 -1.9 -2.0 -0.9

2.00 1.98 2.39 2.99 4.02 4.77 5.81 1737 -3.8 1.004 0.5

2.50 2.47 2.88 3.37 4.12 4.85 5.99 1746 2.1 1.006 0.9

3.00 2.94 3.35 3.75 4.23 4.90 6.16 1754 1.8 1.009 1.0

3.00 2.96 3.27 3.70 4.03 4.64 6.14 1793 9.2 1.011 0.8

4.00 3.83 4.20 4.46 4.60 4.99 6.48 1827 7.8 1.011 0.0

4.00 3.79 4.01 4.36 4.50 4.79 6.64 1846 4.2 1.012 0.5

Incomes 15328 15496 4.4 4.5 13505 13667 4.6 4.9 12321 12424 3.3 3.4 5.2 5.4 1950 1952 3.1 0.3

15905 6.1 14040 6.3 12666 4.6 5.8 1883 -13.0

16090 4.8 14211 5.0 12777 3.5 5.9 1894 2.2

16280 4.8 14401 5.5 12904 4.0 6.0 1897 0.7

16482 5.1 14592 5.4 13027 3.9 6.1 1930 7.1

16720 5.9 14775 5.1 13140 3.5 6.1 1881 -9.7

16938 5.3 14979 5.6 13272 4.1 6.3 1896 3.3

15165 5.8 13354 5.5 12221 4.1 5.1 1935 -13.4

15671 4.6 13827 4.7 12525 3.3 5.5 1950 -0.3

Institute for Economic Competitiveness

21

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

Table 4. Quarterly Gross Domestic Product

2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2

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

15839.3 15965.6 16036.6 16122.2 16221.3 16339.4 16468.1 16587.2 16713.7 16836.9 16956.9 17084.2 17219.5 17362.2 17481.8 17609.0 15711.1 15821.1 15925.5 16057.0 16163.8 16292.8 16410.4 16524.2 16652.3 16778.5 16908.6 17037.3 17167.9 17305.7 17429.8 17555.4 10744.2 10832.8 10891.4 10965.2 11037.2 11113.8 11193.0 11263.0 11340.1 11419.3 11511.4 11597.6 11689.2 11789.6 11878.7 11976.9

Durables

1348.6 1368.1 1387.9 1416.5 1429.1 1446.8 1462.4 1475.2 1490.2 1511.3 1535.0 1554.6 1573.2 1595.0 1616.4 1638.6

Nondurables

2348.6 2374.2 2393.8 2405.7 2422.5 2436.6 2450.7 2462.1 2476.5 2490.2 2507.4 2522.2 2539.1 2555.7 2571.5 2588.2

Services

7063.6 7108.2 7129.0 7165.3 7208.5 7254.8 7305.5 7352.1 7400.9 7447.5 7501.2 7554.9 7612.6 7676.6 7730.9 7792.4

Nonresidential Fixed Investment

1994.7 2013.5 2035.1 2066.8 2095.8 2124.6 2157.5 2190.0 2228.7 2268.2 2305.9 2349.3 2387.9 2424.4 2453.8 2488.1

Equipment & Software

930.4

946.1

957.2

981.0 1000.4 1018.9 1043.7 1069.8 1092.3 1113.7

308.3

303.4

305.5

315.6

328.0

339.6

351.4

363.1

374.4

386.6

398.1

409.9

419.8

429.2

436.1

445.1

85.1

89.5

84.3

86.7

90.2

94.8

99.0

103.4

106.8

111.1

114.7

119.1

123.2

128.3

131.1

136.2

113.5

106.2

110.1

115.8

121.0

124.0

127.4

131.0

134.9

138.8

142.9

146.9

150.4

153.0

155.2

157.6

Industrial Equipment

194.4

192.5

198.8

202.3

207.7

212.7

219.2

225.0

229.6

233.8

236.5

238.8

241.3

244.6

248.2

250.0

Transportation Equipment

217.8

227.8

225.7

232.5

232.4

230.9

233.4

237.4

239.7

241.5

238.3

241.5

244.1

245.3

245.7

249.2

29.0

37.8

29.4

29.4

29.8

29.9

30.4

30.7

31.1

31.7

32.1

32.6

33.1

33.5

33.9

34.2

53.6

54.5

55.1

55.0

54.6

53.7

53.0

52.9

53.4

53.0

50.2

51.3

52.0

51.0

49.2

50.7

438.4

437.0

440.7

441.7

444.1

447.8

449.3

449.8

459.8

472.1

488.2

504.3

516.9

526.7

531.5

540.1

106.3

111.1

113.4

115.5

117.9

120.2

122.3

128.4

137.4

145.4

153.0

160.0

167.1

174.4

180.1

186.3

49.1

48.4

47.1

47.5

48.6

49.5

49.7

49.8

50.0

50.2

51.4

53.0

54.9

56.1

56.2

57.7

Information Processing Equipment Computers & Peripherals Communications Equipment

Aircraft Other Equipment Structures Commercial & Health Manufacturing Power & Communication Mining & Petroleum Other Residential Fixed Investment

1128.3 1149.4 1168.9 1187.7 1203.1 1220.9

83.2

78.9

78.2

78.3

78.1

77.8

76.6

75.0

74.7

74.2

73.7

74.3

74.7

75.7

78.2

80.7

134.5

133.6

136.8

134.9

133.3

133.2

131.1

126.0

125.5

127.9

133.7

139.5

141.7

140.7

136.3

133.5

66.0

66.1

66.4

66.8

67.7

68.7

71.4

73.0

74.9

77.6

79.9

81.1

82.5

83.9

84.7

85.8

499.2

486.5

508.0

529.6

554.8

582.3

600.9

624.1

644.3

655.6

662.6

666.5

670.6

673.0

674.5

669.7

Exports

2017.6 2073.0 2087.3 2101.2 2115.5 2131.9 2151.6 2175.5 2203.2 2230.8 2257.2 2285.5 2315.1 2346.9 2378.4 2410.4

Imports

2437.3 2443.1 2453.3 2474.8 2511.4 2538.4 2572.5 2607.9 2642.2 2675.7 2706.0 2739.1 2773.0 2807.9 2838.2 2874.4

Federal Government

1163.9 1125.2 1126.6 1133.6 1137.6 1140.2 1139.0 1134.8 1130.7 1130.5 1126.2 1123.7 1121.5 1119.8

State & Local Government

1743.2 1745.4 1742.5 1748.1 1748.0 1752.2 1755.5 1759.8 1762.9 1766.0 1768.7 1772.5 1776.4 1780.9 1785.5 1790.7

22

U.S. Forecast | March 2014

1118.8

1117.3

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

Table 5. Annual Employment History 2007

2008

2009

2010

Forecast 2011

2012

2013

2014

2015

2016

2017

Millions Total Nonfarm Employment

137.64

136.85

130.86

129.91

131.50

133.74

135.93

138.11

140.85

143.38

145.61

Private Nonfarm

115.42

114.35

108.31

107.42

109.41

111.82

114.07

116.28

118.94

121.36

123.44

Mining

0.66

0.71

0.64

0.65

0.74

0.80

0.82

0.85

0.87

0.89

0.90

Construction

7.63

7.16

6.02

5.52

5.53

5.64

5.80

6.02

6.55

7.10

7.48

Manufacturing

13.88

13.40

11.85

11.53

11.73

11.92

11.98

12.26

12.45

12.55

12.58

Trade, Transportation and Utilities

26.63

26.29

24.90

24.64

25.07

25.51

25.98

26.39

26.69

27.08

27.45

Transportation & Warehousing

4.54

4.51

4.24

4.19

4.30

4.41

4.48

4.56

4.72

4.90

5.08

Financial Activities

8.35

8.20

7.84

7.70

7.70

7.79

7.89

7.94

7.99

7.93

7.89

Education & Health

18.32

18.84

19.19

19.53

19.89

20.32

20.68

20.97

21.28

21.80

22.32

Professional & Business Services

17.95

17.74

16.58

16.72

17.33

17.93

18.54

19.16

20.15

20.75

21.30

3.03

2.98

2.80

2.71

2.67

2.68

2.69

2.70

2.70

2.76

2.80

Leisure & Hospitality

13.43

13.44

13.07

13.04

13.35

13.75

14.15

14.45

14.74

14.97

15.15

Government

22.22

22.50

22.55

22.49

22.09

21.91

21.85

21.83

21.91

22.02

22.17

2.74

2.76

2.83

2.98

2.86

2.82

2.75

2.69

2.66

2.62

2.59

19.48

19.74

19.72

19.51

19.23

19.10

19.11

19.14

19.26

19.41

19.58

Information

Federal State & Local

Growth Rates Total Nonfarm Employment

1.11

-0.57

-4.38

-0.71

1.22

1.70

1.64

1.60

1.99

1.80

1.55

Private Nonfarm

1.11

-0.93

-5.28

-0.80

1.85

2.21

2.01

1.93

2.29

2.04

1.71

Mining

5.74

6.77

-14.53

11.65

13.45

3.27

4.36

2.70

1.42

2.92

0.84

Construction

-1.95

-9.21

-16.57

-3.46

1.84

1.62

2.84

6.10

9.52

7.39

3.99

Manufacturing

-2.05

-5.36

-11.40

0.60

1.77

1.38

0.60

2.92

1.23

0.38

0.12

Trade, Transportation and Utilities

1.17

-3.31

-4.74

0.70

1.98

1.83

2.00

1.16

1.06

1.68

1.06

Transportation & Warehousing

0.89

-2.70

-5.70

1.56

2.44

2.86

1.38

1.90

3.87

3.80

3.30

Financial Activities

-1.16

-2.31

-4.30

-0.89

0.50

1.34

1.13

0.77

-0.13

-0.45

-0.77

Education & Health

2.88

2.57

1.72

1.77

2.00

2.06

1.67

1.20

1.74

2.74

2.33

Professional & Business Services

1.64

-3.60

-5.16

2.92

3.54

3.29

3.60

4.06

4.52

2.95

2.22

-0.04

-3.14

-6.04

-2.27

-0.38

-0.05

0.10

0.85

2.59

0.29

1.68

Leisure & Hospitality

2.15

-1.66

-2.44

1.27

2.77

2.69

2.97

1.96

1.89

1.44

1.16

Government

1.16

0.98

-0.19

-0.93

-1.40

-0.41

-0.13

-0.03

0.53

0.52

0.77

Federal

0.54

1.11

2.41

4.82

-0.84

-1.45

-2.91

-1.54

-1.08

-1.67

-1.12

State & Local

1.25

0.97

-0.54

-1.31

-1.48

-0.25

0.28

0.19

0.75

0.82

1.02

Information

Institute for Economic Competitiveness

23

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

Table 6. Quarterly Employment

2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2

Employment (Millions) Total Nonfarm Employment

136.2 136.7 137.2 137.7 138.4 139.1 139.9 140.5 141.2 141.8 142.4 143.1 143.7 144.4 144.9 145.4

Private Nonfarm

114.3 114.9 115.4 115.9 116.5 117.3 118.0 118.6 119.3 119.9 120.4 121.0 121.7 122.3 122.8 123.3

Mining

0.8

0.8

0.8

0.9

0.9

0.9

0.9

0.9

0.9

0.9

0.9

0.9

0.9

0.9

0.9

0.9

Construction

5.8

5.8

5.9

6.0

6.1

6.2

6.3

6.5

6.6

6.8

6.9

7.0

7.2

7.3

7.4

7.5

Manufacturing

12.0

12.0

12.1

12.2

12.4

12.4

12.4

12.4

12.5

12.5

12.5

12.5

12.6

12.6

12.6

12.6

Trade, Transportation and Utilities

26.0

26.2

26.3

26.3

26.4

26.5

26.6

26.6

26.7

26.8

26.9

27.0

27.2

27.3

27.3

27.4

Transportation & Warehousing

4.5

4.5

4.5

4.5

4.6

4.6

4.7

4.7

4.7

4.8

4.8

4.9

4.9

5.0

5.0

5.1

Financial Activities

7.9

7.9

7.9

7.9

7.9

8.0

8.0

8.0

8.0

8.0

7.9

7.9

7.9

7.9

7.9

7.9

Education & Health

20.7

20.8

20.9

20.9

21.0

21.1

21.1

21.2

21.3

21.4

21.6

21.7

21.9

22.0

22.1

22.3

Professional & Business Services

18.6

18.8

18.9

19.0

19.2

19.5

19.8

20.1

20.3

20.4

20.5

20.7

20.8

21.0

21.1

21.2

2.7

2.7

2.7

2.7

2.7

2.7

2.7

2.6

2.7

2.8

2.8

2.8

2.8

2.8

2.8

2.8

Leisure & Hospitality

14.2

14.3

14.3

14.4

14.5

14.6

14.7

14.7

14.8

14.8

14.9

14.9

15.0

15.0

15.1

15.1

Government

21.8

21.9

21.8

21.8

21.8

21.8

21.9

21.9

21.9

22.0

22.0

22.0

22.0

22.1

22.1

22.1

2.7

2.7

2.7

2.7

2.7

2.7

2.7

2.7

2.7

2.6

2.6

2.6

2.6

2.6

2.6

2.6

19.1

19.1

19.1

19.1

19.1

19.2

19.2

19.2

19.3

19.3

19.3

19.4

19.4

19.5

19.5

19.5

Information

Federal State & Local

Growth Rates Total Nonfarm Employment

1.41

1.71

1.34

1.54

1.83

2.20

2.15

1.86

1.86

1.87

1.65

1.77

1.80

1.86

1.42

1.41

Private Nonfarm

1.71

2.02

1.68

1.86

2.16

2.55

2.45

2.12

2.13

2.08

1.90

1.98

2.04

2.07

1.58

1.56

Mining

4.51

4.49

3.74

5.31

0.32

1.26

1.43

1.90

0.43

1.90

3.13

3.57

3.11

1.75

1.25

0.21

Construction

1.08

1.86

2.92

4.92

7.59

8.36

7.94

9.36 10.38

9.09

8.05

7.42

7.02

6.27

5.24

4.43

-0.36

1.71

2.19

5.22

3.87

0.20

1.30

0.95

1.24

1.40

0.92

0.13

0.34

0.14

0.58

0.28

Trade, Transportation and Utilities

2.34

2.86

1.51

-0.15

1.40

1.87

1.06

0.82

1.08

1.28

1.47

1.84

1.85

1.53

1.29

1.26

Transportation & Warehousing

0.59

4.78

-0.34

1.81

2.46

3.68

3.99

3.77

3.68

4.02

3.65

3.99

3.82

3.75

3.95

3.41

Financial Activities

1.12

0.44

0.92

-0.86

0.88

2.15

1.54

-0.28

-0.84

-0.95

-1.05

-0.42

-0.48

0.13

-0.25

-0.91

Education & Health

1.57

1.59

1.67

0.61

1.01

1.51

1.72

1.69

1.57

1.99

2.78

3.29

2.22

2.69

1.87

2.72

Professional & Business Services

3.17

2.84

2.22

3.46

4.46

6.11

6.55

5.27

3.37

2.89

2.17

2.73

3.39

3.50

2.53

1.90

-0.74

-1.04

0.05

3.75

-0.06

-0.34

-7.49

-0.08 11.51

6.39

-1.50

-0.22

1.61

1.25

1.44

2.02

2.06

2.19

1.50

2.94

0.87

2.50

2.89

1.54

1.36

1.77

1.99

0.67

1.40

1.70

0.76

1.24

Government

-0.12

0.07

-0.44

-0.13

0.11

0.34

0.52

0.48

0.39

0.71

0.28

0.58

0.53

0.68

0.53

0.63

Federal

-4.32

-1.60

-2.75

-2.21

-0.73

-0.46

-0.51

-1.72

-1.75

-0.34

-2.95

-1.48

-1.37

-0.90

-0.76

-1.27

0.50

0.31

-0.11

0.17

0.23

0.46

0.66

0.79

0.69

0.86

0.73

0.86

0.79

0.89

0.71

0.89

Manufacturing

Information Leisure & Hospitality

State & Local

24

U.S. Forecast | March 2014

U . S . F orecast T ables Table 7. Quarterly Implicit Price Deflators (2000=100)

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

2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2

GDP

106.7 107.0 107.4 107.9 108.5 108.9 109.4 109.8 110.2 110.6 111.2 111.6 112.0 112.4 112.8 113.2

Consumption

107.4 107.6 107.8 108.0 108.6 108.9 109.3 109.6 110.0 110.4 110.9 111.2 111.6 112.0 112.4 112.9

Durables Motor Vehicles Furniture

94.5

93.9

93.3

92.7

92.4

92.1

91.8

91.6

91.3

91.1

90.8

90.5

90.2

89.9

89.6

89.4

111.1 111.2 111.4 111.6 111.7 111.7 111.8 111.9 112.1 112.3 112.5 112.6 112.7 112.8 112.9 113.1 91.4

90.6

89.6

88.7

88.6

88.5

88.5

88.4

88.4

88.3

88.2

88.1

88.0

87.8

87.7

87.5

Other Durables

104.5 103.4 103.1 102.7 103.0 103.2 103.5 103.8 104.0 104.3 104.6 104.8 105.0 105.3 105.5 105.7

Nondurables

112.4 112.0 111.9 111.2 111.8 112.0 112.2 112.4 112.7 112.9 113.4 113.5 113.8 114.2 114.6 115.0

Food

108.0 108.0 108.3 108.3 108.5 108.7 109.0 109.3 109.6 109.9 110.3 110.6 110.9 111.3 111.6 112.0

Clothing & Shoes

106.2 105.5 106.1 106.2 106.3 106.3 106.3 106.3 106.3 106.3 106.3 106.2 106.2 106.1 106.0 105.9

Gasoline & Oil

151.8 148.4 146.6 139.5 143.4 142.5 141.3 140.1 139.7 138.3 139.4 137.9 137.0 137.8 137.6 138.4

Fuel

146.5 149.1 154.6 152.7 151.6 151.0 150.4 149.8 149.7 149.1 150.1 149.7 149.5 150.4 150.6 151.5

Services

107.9 108.5 109.0 109.7 110.3 110.9 111.4 111.9 112.5 113.0 113.6 114.2 114.8 115.3 115.9 116.5

Housing

106.5 107.2 108.0 108.8 109.6 110.4 111.0 111.5 112.0 112.5 113.0 113.5 114.0 114.5 115.0 115.5

Electricity

104.2 105.0 105.8 106.8 107.2 107.3 107.2 107.4 107.9 108.4 108.8 109.6 110.2 110.4 110.6 111.2

Natural Gas Water & Sewer Telephone

90.7

88.8

90.0

92.3

93.5

91.6

91.0

91.6

93.6

97.5 101.3 102.9 101.3

98.6

98.1

98.1

123.6 124.9 126.0 127.1 128.3 129.4 130.5 131.6 132.6 133.7 134.7 135.7 136.7 137.6 138.6 139.6 97.1

97.2

97.2

97.1

96.9

96.9

96.6

96.2

96.0

95.7

95.4

95.2

95.0

94.8

94.5

94.3

Transportation

108.2 108.8 108.7 109.0 109.3 109.6 110.0 110.4 110.9 111.3 111.8 112.2 112.7 113.1 113.6 114.0

Other Services

111.3 112.2 112.6 113.0 113.7 114.3 114.9 115.5 116.2 116.8 117.5 118.3 119.0 119.8 120.5 121.3

Institute for Economic Competitiveness

25

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

Table 8. Percent Change in Implicit Price Deflators

2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2

GDP

2.0

1.3

1.5

1.7

2.3

1.6

1.8

1.5

1.5

1.4

1.9

1.5

1.4

1.5

1.7

1.5

Consumption

1.9

0.7

1.0

0.7

2.0

1.3

1.3

1.2

1.4

1.4

1.7

1.4

1.4

1.5

1.5

1.5

-2.3

-2.5

-2.5

-2.3

-1.3

-1.4

-1.2

-1.2

-1.1

-1.1

-1.1

-1.3

-1.3

-1.3

-1.3

-1.3

0.3

0.4

0.5

0.8

0.4

0.0

0.3

0.5

0.6

0.7

0.6

0.4

0.4

0.4

0.5

0.5

-5.8

-3.3

-4.5

-4.0

-0.6

-0.3

0.0

-0.2

-0.3

-0.4

-0.4

-0.5

-0.6

-0.6

-0.7

-0.7

Other Durables

1.8

-4.0

-1.1

-1.8

1.2

1.0

1.0

1.0

1.0

1.1

1.0

0.9

0.9

0.9

0.9

0.8

Nondurables

4.5

-1.4

-0.1

-2.7

2.4

0.6

0.6

0.7

1.1

0.7

1.7

0.6

0.9

1.6

1.2

1.5

Food

1.2

0.1

1.0

0.3

0.7

0.8

1.1

1.0

1.2

1.2

1.3

1.1

1.2

1.3

1.2

1.1

Clothing & Shoes

4.7

-2.6

2.1

0.4

0.3

0.2

0.1

-0.1

0.0

0.0

-0.1

-0.2

-0.2

-0.2

-0.4

-0.4

22.1

-8.6

-4.8

-18.1

11.7

-2.3

-3.6

-3.3

-1.1

-3.9

3.1

-4.0

-2.7

2.3

-0.7

2.4

Fuel

4.3

7.3

15.7

-4.8

-3.0

-1.5

-1.7

-1.7

-0.2

-1.5

2.8

-1.2

-0.4

2.3

0.6

2.3

Services

1.8

2.0

2.0

2.4

2.4

2.0

2.0

1.8

2.0

2.0

2.1

2.0

2.0

1.9

2.1

2.0

Housing

2.5

2.8

3.0

3.0

3.1

2.7

2.3

1.9

1.8

1.7

1.8

1.8

1.8

1.8

1.8

1.7

Electricity

0.6

2.9

3.2

3.8

1.5

0.1

-0.2

0.8

1.8

1.6

1.8

2.6

2.2

0.9

0.6

2.3

-12.4

-8.0

5.5

10.7

5.2

-7.9

-2.5

2.6

9.2

17.5

16.7

6.3

-6.0

-10.1

-2.2

0.3

Water & Sewer

2.6

4.3

3.5

3.6

3.6

3.5

3.5

3.4

3.2

3.2

3.1

3.0

2.9

2.8

2.8

2.8

Telephone

0.1

0.7

-0.1

-0.3

-0.9

-0.3

-1.2

-1.3

-1.1

-1.3

-0.9

-0.9

-0.8

-1.1

-1.0

-0.9

Transportation

3.4

2.1

-0.2

1.0

1.3

1.2

1.5

1.3

1.6

1.6

1.8

1.5

1.6

1.6

1.7

1.5

Other Services

0.6

3.3

1.5

1.6

2.4

2.2

2.1

2.1

2.3

2.3

2.4

2.5

2.7

2.5

2.6

2.6

Durables Motor Vehicles Furniture

Gasoline & Oil

Natural Gas

26

U.S. Forecast | March 2014

U . S . F orecast T ables

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

Table 9. Annual Implicit Price Deflators (2005=100)

2007

2008

History 2009 2010 2011

2012

2013

2014

Forecast 2015 2016

2017

GDP

97.3

99.2 100.0 101.2 103.2 105.0 106.5

108.2 110.0 111.8 113.4

Consumption

97.1 100.1 100.0 101.7 104.1 106.0 107.2

108.3 109.8 111.4 113.1

Durables

103.8 101.8 100.0

Motor Vehicles

102.0

Furniture

101.1 100.4 100.0

98.6

97.6

96.5

94.7

99.7 100.0 105.7 108.6 110.4 111.0 95.8

94.2

94.0

92.1

92.7

91.5

90.4

89.2

111.6 112.0 112.6 113.1 88.8

88.4

88.0

87.4

Other Durables

95.7

98.9 100.0 100.4 103.6 104.2 104.0

103.0 103.9 104.9 105.8

Nondurables

97.2 102.7 100.0 103.1 109.1 111.8 111.9

111.7 112.5 113.7 115.2

Food

93.2

98.9 100.0 100.3 104.3 106.7 107.8

108.5 109.5 110.8 112.1

Clothing & Shoes

99.9

99.1 100.0

99.3 101.0 104.7 105.6

106.2 106.3 106.2 105.9

Gasoline & Oil

117.1 136.6 100.0 118.2 148.6 153.9 149.7

143.0 139.8 138.0 138.9

Fuel

107.7 146.0 100.0 117.0 148.7 150.6 148.6

152.5 149.7 149.9 152.0

Services

96.0

98.9 100.0 101.7 103.5 105.7 107.7

110.0 112.2 114.5 116.8

Housing

95.7

98.3 100.0 100.1 101.4 103.7 106.2

109.2 111.7 113.7 115.7

Electricity

91.2

97.1 100.0 100.2 102.1 102.0 104.1

106.8 107.7 109.7 111.9

Natural Gas

112.7 128.2 100.1

98.1

95.4

86.1

90.2

91.8

93.4 101.0

99.2

Water & Sewer

89.0

94.2 100.0 106.3 111.8 118.0 123.3

Telephone

97.2

98.7 100.0

Transportation

92.1

97.0 100.0 102.0 104.7 106.8 108.0

109.2 110.7 112.4 114.2

Other Services

93.0

97.3 100.0 103.1 105.7 108.3 111.2

113.4 115.8 118.6 121.7

99.3

97.5

97.7

97.3

127.7 132.1 136.2 140.1 97.0

96.1

95.1

Institute for Economic Competitiveness

94.2

27

U . S . F orecast T ables Table 10. Percent Change in Implicit Price Deflators

Table 10. Percent Change in Implicit Price Deflators History Forecast 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

2017

GDP

2.5

1.9

0.4

1.8

1.8

1.8

1.3

1.8

1.6

1.6

1.5

Consumption

3.3

1.6

1.2

1.3

2.6

1.7

0.9

1.2

1.4

1.5

1.5

-2.0

-2.1

-0.9

-2.1

-0.6

-1.5

-2.0

-1.9

-1.1

-1.2

-1.3

0.1

-4.1

5.6

2.9

3.1

0.9

0.7

0.4

0.5

0.4

0.5

-1.6

0.3

-2.0

-4.4

-0.2

-0.5

-3.0

-2.4

-0.2

-0.5

-0.8

Other Durables

2.2

3.2

1.3

0.6

3.2

-0.5

-0.5

-0.2

1.0

0.9

0.8

Nondurables

6.3

1.2

2.8

2.2

5.8

1.9

-0.5

0.1

0.8

1.2

1.4

Food

4.9

6.9

-1.8

1.3

5.1

1.2

0.8

0.7

1.1

1.2

1.1

Clothing & Shoes

-1.2

-0.9

1.5

-1.4

4.3

2.5

0.2

0.7

0.0

-0.2

-0.4

Gasoline & Oil

30.9

4.8

26.8

13.4

19.5

4.9

-4.3

-3.4

-3.0

-0.3

2.0

Fuel

27.7

22.4

-0.8

15.7

26.2

2.9

-1.2

1.6

-1.3

0.9

2.1

Services

3.3

2.5

1.1

1.5

2.0

2.1

1.9

2.2

2.0

2.0

2.0

Housing

3.1

2.5

0.9

0.3

1.9

2.3

2.5

3.0

1.9

1.8

1.7

Electricity

5.0

8.2

-0.4

0.5

2.5

-0.8

3.1

2.2

1.0

1.9

2.7

Natural Gas

3.4

19.1

-18.3

-1.2

-2.0

-4.8

3.0

3.4

6.7

1.7

2.7

Water & Sewer

5.2

6.8

6.0

5.7

4.9

6.0

3.8

3.5

3.3

3.0

2.8

Telephone

1.3

2.0

0.6

-1.1

-1.5

0.1

-0.3

-0.4

-1.2

-0.9

-1.0

Transportation

3.3 5.9 2.2 1.5 3.1 and 1.3its Components 1.6 0.8 1.5 Table 11. Personal Income

1.6

1.5

Other Services

3.2

2.2 Forecast 2.5

2.6

Durables Motor Vehicles Furniture

Table 11. Personal Income and its Components

2007

4.8

2008

2.4

2009

History 2.8 2.7 2010

2011

2.1

2012

2.9

2013

1.9

2014

2015

2016

2017

Personal Income Billions Current Dollars Personal Income

11995.8 12430.6 12082.1 12435.2 13191.3 13743.8 14133.5

14691.7 15414.9 16189.5 17034.1

Wages & Salaries

7899.1

8079.2

7787.8

7967.3

8278.5

8611.6

8859.5

9207.7

9674.3 10156.9 10642.4

Other Labor Income

1041.4

1075.1

1077.5

1120.4

1145.4

1170.6

1190.4

1218.1

1270.1

1344.7

1423.1

941.1

979.5

937.6

986.7

1082.6

1149.6

1220.4

1284.6

1356.1

1418.9

1475.6

Nonfarm Income Farm Income

38.1

47.0

35.5

46.0

72.6

75.4

126.8

102.5

99.9

96.4

96.0

Rental Income

189.4

262.1

333.7

402.8

484.4

541.2

590.4

613.6

611.9

599.0

593.7

Dividends

816.6

805.5

547.9

544.6

680.5

746.9

769.3

830.7

873.1

899.3

926.4

Interest Income

1350.1

1361.6

1263.9

1195.0

1204.1

1211.6

1228.3

1271.5

1384.7

1546.9

1781.9

Transfer Payments

1722.8

1884.0

2140.2

2276.9

2306.9

2358.3

2444.9

2547.6

2658.2

2792.5

2907.6

499.7

516.9

506.3

514.7

423.8

436.4

574.8

608.1

651.3

694.1

730.5

Personal Income

5.3

3.6

-2.8

2.9

6.1

4.2

2.8

3.9

4.9

5.0

5.2

Wages & Salaries

5.3

2.3

-3.6

2.3

3.9

4.0

2.9

3.9

5.1

5.0

4.8

Other Labor Income

4.4

3.2

0.2

4.0

2.2

2.2

1.7

2.3

4.3

5.9

5.8

Personal Social Insurance Tax

Percent Change, Annual Rate

Nonfarm Income

-7.5

4.1

-4.2

5.3

9.7

6.2

6.2

5.3

5.6

4.6

4.0

Farm Income

5.9

24.9

-21.8

30.4

59.2

4.2

68.2

-18.7

-2.4

-3.4

-0.5

Rental Income

5.3

52.4

18.4

20.1

21.1

8.2

8.5

2.6

-1.9

-1.7

-0.8

10.0

-11.0

-32.5

22.8

19.4

24.0

-1.0

7.9

3.3

3.1

2.9

9.9

-2.2

-8.9

-2.7

0.6

1.7

1.6

6.1

9.3

13.3

15.0

Transfer Payments

8.1

10.3

14.8

5.5

0.2

3.4

3.2

4.3

4.4

5.2

4.5

Personal Social Insurance Tax

4.9

2.6

-1.8

2.4

-13.3

4.6

44.4

6.5

7.0

6.5

5.1

Dividends Interest Income 28

U.S. Forecast | March 2014

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

Table 12. Personal Consumption Expenditures (Current Dollars)

2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2

Consumer Expenditures by Type Billions Current Dollars

Consumer spending on… all goods & services

11537.7 11653.1 11746.0 11846.5 11982.0 12104.7 12231.5 12346.1 12475.0 12605.8 12760.5 12899.4 13045.4 13205.9 13356.5 13517.7

durable goods

1274.0 1284.4 1294.7 1313.7 1321.2 1332.9 1343.2 1351.0 1360.9 1376.4 1393.9 1407.2 1419.5 1434.6 1449.1 1464.2

furniture and appliances

289.4

291.2

291.6

291.3

291.7

294.1

296.9

301.0

303.6

305.5

308.5

311.2

312.6

314.8

317.0

319.2

information processing equipment

100.6

101.8

102.2

103.7

104.9

106.5

107.8

109.1

110.3

111.6

112.8

113.9

115.1

116.5

117.6

118.8

motor vehicles and parts

427.1

428.3

433.2

447.5

448.3

450.7

451.3

448.8

449.2

456.2

463.5

468.4

472.6

477.9

482.6

487.8

other durable goods

140.8

143.3

145.2

145.5

146.3

147.3

148.2

149.1

150.1

151.1

152.2

152.9

153.8

154.9

155.9

156.8

nondurables clothing & shoes

2638.8 2658.0 2679.6 2674.7 2709.1 2729.1 2749.3 2766.7 2790.3 2810.7 2842.2 2863.5 2888.9 2919.0 2946.1 2976.0 363.1

368.2

371.9

376.5

380.1

383.6

387.8

390.5

394.5

397.6

401.0

403.6

408.7

412.0

415.9

23.3

27.3

27.4

26.1

25.9

25.8

25.8

25.6

25.6

25.5

25.7

25.7

25.7

25.9

25.9

26.1

gasoline & motor oil

390.7

379.9

373.9

355.9

366.9

365.4

363.0

361.1

361.3

359.0

363.5

361.0

359.5

362.3

361.9

364.4

food

886.2

894.3

904.0

907.8

914.1

920.2

925.5

930.9

937.6

944.5

951.9

958.9

966.2

973.5

981.2

988.9

other nondurable goods

975.6

988.3 1002.4 1008.3 1022.1 1034.1 1047.2 1058.5 1071.3 1084.1 1100.0

1114.3

1128.8

1145.3

1161.2

1176.5

fuel oil & coal

420.0

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

10744.2 10832.8 10891.4 10965.2 11037.2 11113.8 11193.0 11263.0 11340.1 11419.3 11511.4 11597.6 11689.2 11789.6 11878.7 11976.9

durable goods

1348.6 1368.1 1387.9 1416.5 1429.1 1446.8 1462.4 1475.2 1490.2 1511.3

1535.0 1554.6 1573.2 1595.0 1616.4 1638.6

furniture and appliances

316.6

321.2

325.4

328.5

329.3

332.4

335.6

340.3

343.6

346.1

349.9

353.3

355.4

358.4

361.6

364.7

information processing equipment

139.5

142.8

146.3

151.2

156.1

161.6

166.8

172.0

177.2

182.6

188.1

193.5

199.5

205.6

211.6

218.0

motor vehicles and parts

384.3

385.1

389.0

401.0

401.3

403.4

403.7

401.0

400.8

406.2

412.1

416.1

419.4

423.7

427.4

431.4

other durable goods

132.8

137.1

139.1

140.6

141.0

141.5

142.1

142.6

143.2

144.0

144.7

145.1

145.8

146.6

147.4

148.1

nondurables clothing & shoes

2348.6 2374.2 2393.8 2405.7 2422.5 2436.6 2450.7 2462.1 2476.5 2490.2 2507.4 2522.2 2539.1 2555.7 2571.5 2588.2 341.7

348.9

350.6

354.5

357.7

360.8

364.7

367.3

371.1

374.0

377.3

379.9

384.9

388.2

392.2

15.9

18.3

17.7

17.1

17.1

17.1

17.1

17.1

17.1

17.1

17.1

17.2

17.2

17.2

17.2

17.2

gasoline & motor oil

257.3

255.9

255.0

255.2

255.9

256.4

257.0

257.8

258.6

259.6

260.8

261.7

262.4

262.9

263.1

263.3

food

820.8

828.1

835.0

837.9

842.3

846.3

849.0

851.8

855.4

859.0

863.0

867.0

870.9

874.7

878.9

883.3

other nondurable goods

923.0

934.2

948.3

954.6

963.5

970.7

978.0

983.5

990.0

996.5 1005.4 1013.1 1020.9 1030.3 1038.4 1046.6

fuel oil & coal

396.6

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

2.0

3.3

2.2

2.7

2.6

2.8

2.9

2.5

2.7

2.8

3.2

3.0

3.2

3.4

3.0

3.3

durable goods

7.7

5.8

5.8

8.2

3.6

5.0

4.3

3.5

4.1

5.7

6.3

5.1

4.8

5.5

5.4

5.5

furniture and appliances

12.6

5.9

5.2

3.7

1.1

3.7

3.8

5.7

3.8

2.9

4.4

3.9

2.4

3.4

3.5

3.5

information processing equipment

13.6

9.5

9.8

13.5

13.0

14.0

13.0

12.3

12.3

12.2

11.9

11.6

12.2

12.4

11.6

12.1 3.8

motor vehicles and parts other durable goods nondurables clothing & shoes

4.9

0.7

4.1

12.4

0.3

2.1

0.3

-2.7

-0.2

5.4

5.8

3.8

3.2

4.0

3.5

-1.7

12.8

5.9

4.3

1.1

1.6

1.5

1.4

1.9

2.0

2.1

1.2

1.7

2.3

2.1

2.0

2.9

4.4

3.3

2.0

2.8

2.3

2.3

1.9

2.3

2.2

2.8

2.4

2.7

2.6

2.5

2.6

-4.3

8.3

2.0

4.5

3.6

3.4

4.3

2.9

4.1

3.1

3.5

2.8

5.3

3.5

4.1

4.4

-18.6

61.9

-13.3

-13.7

-0.1

-0.1

0.6

-0.6

-0.1

0.2

0.7

0.3

0.5

0.5

0.3

-0.2

gasoline & motor oil

4.5

-2.2

-1.4

0.4

1.1

0.6

1.0

1.2

1.3

1.4

1.9

1.3

1.1

0.7

0.2

0.4

food

2.7

3.6

3.4

1.4

2.1

1.9

1.3

1.3

1.7

1.7

1.9

1.9

1.8

1.7

1.9

2.0

other nondurable goods

5.8

4.9

6.2

2.7

3.8

3.0

3.0

2.3

2.7

2.6

3.6

3.1

3.1

3.8

3.2

3.2

fuel oil & coal

Institute for Economic Competitiveness

29

U . S . F orecast T ables Table 13. Personal Consumption Expenditures (2000 Dollars)

Table 13. Personal Consumption Expenditures (2005 Dollars) History 2007

2008

2009

2010

Forecast 2011

2012

2013

2014

2015

2016

2017

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

9744.4 10005.5

9842.9 10201.9 10711.8 11149.6 11499.3

durable goods

1184.6

1102.3

1023.3

1070.7

1129.9

1202.7

1265.2

1315.6

1357.9

1413.8

1470.8

283.5

268.7

244.3

250.4

260.1

275.1

286.5

292.2

301.8

311.8

320.0

furniture and appliances information processing equipment motor vehicles and parts other durable goods

11919.8 12414.6 12977.8 13598.8

84.8

83.4

81.2

90.3

92.0

96.1

100.0

104.3

109.7

114.6

119.4

400.6

339.6

317.1

342.0

368.7

401.7

424.6

444.9

451.4

470.6

489.5

113.2

112.1

105.5

110.0

121.2

129.3

140.6

146.1

149.6

153.4

157.2

2176.9

2273.4

2175.1

2292.1

2472.8

2567.0

2623.7

2698.1

2779.3

2878.4

2991.6

323.7

319.5

306.5

320.6

338.3

354.6

363.5

378.0

392.6

406.3

422.2

25.6

30.8

24.3

26.2

29.4

26.7

25.6

26.3

25.6

25.7

26.1

gasoline & motor oil

319.9

358.3

260.2

307.3

379.5

390.4

382.2

365.5

361.1

361.6

365.7

food

737.3

772.9

770.0

788.9

833.0

863.3

884.3

911.5

934.7

962.6

992.6

other nondurable goods

770.4

791.9

814.2

849.2

892.6

932.1

968.1

1016.7

1065.3

1122.1

1184.9

nondurables clothing & shoes fuel oil & coal

Consumer Expenditures by Type Billions 2005 Dollars Consumer spending on… all goods & services durable goods furniture and appliances information processing equipment motor vehicles and parts other durable goods

10035.5

9999.2

9842.9 10035.9 10291.3 10517.6 10728.2

1141.7

1083.2

1023.3

1085.7

1157.1

1246.7

1335.8

11001.9 11303.9 11646.9 12025.2 1420.1

1484.8

1564.5

1649.1

280.4

267.7

244.3

261.5

276.0

292.8

311.3

328.9

341.4

354.2

366.1

71.9

76.9

81.2

97.2

108.2

122.0

137.2

153.8

174.7

196.7

221.3

392.8

340.8

317.1

323.4

339.4

364.0

382.4

398.7

402.9

417.8

432.7

119.5

113.4

105.5

108.9

114.9

122.2

133.5

140.6

143.0

145.5

148.5

2239.3

2214.7

2175.1

2223.5

2266.0

2296.8

2344.2

2414.6

2469.9

2531.1

2597.0

323.9

322.3

306.5

322.7

334.9

338.9

344.1

355.9

369.3

382.6

398.9

23.8

21.1

24.3

22.4

19.8

17.7

17.2

17.3

17.1

17.2

17.2

gasoline & motor oil

273.2

262.4

260.2

259.9

255.4

253.7

255.3

255.6

258.2

262.0

263.3

food

791.3

781.9

770.0

786.5

798.8

809.4

820.5

840.4

853.8

868.9

885.4

other nondurable goods

825.2

828.3

814.2

833.0

861.6

885.1

917.3

959.3

987.0

1017.4

1051.3

nondurables clothing & shoes fuel oil & coal

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

1.5

-1.9

durable goods

4.1

furniture and appliances

0.9

information processing equipment

-0.1

3.1

2.0

2.0

2.3

2.6

2.7

3.2

3.2

-12.4

3.0

9.3

5.8

7.9

6.5

5.8

4.5

5.5

5.4

-9.1

-2.0

8.3

6.0

4.7

8.1

3.5

4.1

3.6

3.4

20.4

0.4

12.9

16.8

14.5

12.6

10.7

13.1

13.0

12.6

12.4

motor vehicles and parts

0.9

-23.0

7.9

11.0

3.8

7.3

2.5

4.9

0.7

4.3

3.3

other durable goods

3.3

-12.3

0.6

5.5

2.8

11.3

7.6

3.2

1.7

1.8

2.2

nondurables

0.1

-2.6

0.2

3.3

0.7

1.6

2.9

2.6

2.2

2.6

2.6

clothing & shoes

1.0

-3.2

-1.0

7.6

1.2

1.1

3.0

3.4

3.7

3.8

4.3

fuel oil & coal

-5.3

7.9

7.5

-7.6

-11.0

-4.9

11.5

-6.4

0.0

0.5

0.0

gasoline & motor oil

-3.3

-3.9

-1.1

2.2

-2.6

-0.9

1.9

0.2

1.3

1.3

0.2

food

0.2

-3.7

2.1

2.1

0.3

1.9

1.8

2.2

1.5

1.8

2.0

other nondurable goods

1.2

-0.6

-0.6

3.6

2.9

2.9

4.4

3.9

2.7

3.4

3.4

30

U.S. Forecast | March 2014

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

Table 14. Business Fixed Investment History

2007

2008

2009

2010

Forecast 2011

2012

2013

2014

2015

2016

2017

Billions Current Dollars Business Fixed Investment

1920.6 1941.0 1633.4 1658.2 1809.9 1970.0 2045.0

2175.4 2337.6 2526.7 2697.8

Producers Dur. Equipment

885.8

825.1

644.3

731.8

832.7

907.6

937.3

996.2 1087.4 1166.5 1235.4

Nonresidential Structures

496.9

552.4

438.2

362.0

380.6

437.3

456.6

492.9

525.5

600.1

659.6

Non-Farm Buildings

293.9

317.5

249.1

173.7

170.2

190.9

203.8

227.2

262.9

321.1

371.2

Commercial

150.7

148.9

95.4

64.7

66.8

75.6

82.0

93.9

112.7

148.6

180.4

Industrial Other Buildings Utilities Mines & Wells

40.2

52.8

56.3

39.8

38.9

45.8

48.9

52.7

56.8

63.9

71.0

103.0

115.8

97.4

69.2

64.5

69.5

72.9

80.6

93.4

108.7

119.8

89.6

104.6

104.3

93.3

90.8

110.9

104.3

104.7

102.7

103.5

113.8

102.2

117.0

75.0

86.2

110.2

125.5

138.0

149.9

148.0

162.3

160.1

Billions 2005 Dollars Business Fixed Investment

1948.4 1934.5 1633.5 1673.8 1800.4 1931.8 1982.1

2080.6 2211.1 2366.9 2503.8

Producers Dur. Equipment

898.3

836.1

644.3

746.7

841.7

905.9

932.2

989.4 1079.9 1158.6 1227.8

Nonresidential Structures

509.0

540.2

438.2

366.3

374.1

421.6

427.0

443.6

457.8

509.0

544.1

Non-Farm Buildings

305.2

317.9

249.1

179.3

172.4

188.4

195.5

210.1

235.5

277.3

308.7

Commercial

159.9

151.7

95.4

66.6

67.4

74.0

78.4

87.3

101.7

129.4

151.4

43.1

53.8

56.3

40.8

39.1

45.0

47.0

48.2

49.9

53.8

57.5

102.6

112.8

97.4

71.9

65.9

69.3

70.1

74.6

83.9

94.2

100.1

Utilities

94.3

103.6

104.3

89.8

82.8

97.9

90.8

89.3

85.8

84.5

90.9

Mines & Wells

97.9

105.0

75.0

87.8

109.0

124.1

130.5

134.5

127.6

138.9

135.6

Industrial Other Buildings

Annual Growth Rate Business Fixed Investment

8.3

-5.6

-14.2

8.6

10.4

6.5

3.5

6.9

7.9

7.8

6.3

Producers Dur. Equipment

3.1

-15.9

-11.4

20.2

12.9

6.1

2.8

7.9

9.4

6.5

5.3

Nonresidential Structures

21.8

4.7

-32.2

-0.6

15.4

10.7

5.2

6.3

8.7

14.4

8.8

Non-Farm Buildings

22.5

-0.4

-34.0

-21.1

15.2

7.4

10.6

9.5

20.5

20.6

12.4

Commercial

17.3

-11.8

-44.7

-16.8

14.6

11.2

12.5

11.1

30.3

28.0

16.5

Industrial

48.0

22.5

-11.9

-28.8

41.2

7.6

10.5

7.1

5.5

16.6

8.1

Other Buildings

22.6

6.7

-29.7

-19.5

3.6

3.8

10.7

9.5

19.3

13.7

9.1

Utilities

51.4

2.5

-4.1

19.0

7.6

32.0

-8.3

1.1

-2.9

3.3

12.1

1.8

24.4

-42.8

53.6

31.2

1.6

16.6

5.6

-1.1

10.4

0.1

Mines & Wells

Institute for Economic Competitiveness

31

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

Table 15. Government Receipts and Expenditures History 2007

2008

2009

2010

Forecast 2011

2012

2013

2014

2015

2016

2017

Federal Government Receipts and Expenditures Receipts

2660.8

2505.7

2230.1

2391.8

2516.7

2663.0

3042.2

3248.7

3456.3

3604.9

3727.0

Personal Tax and Nontax Receipts

1164.4

1101.7

857.2

893.8

1077.0

1149.2

1282.7

1368.3

1438.4

1480.9

1547.9

362.8

233.6

200.4

298.7

294.3

351.1

329.6

460.7

519.5

538.8

508.8

94.6

94.0

91.4

96.8

108.6

118.0

120.4

138.5

145.1

152.6

164.6

947.3

974.4

950.8

970.9

904.4

937.8

1093.9

1154.1

1230.1

1306.7

1375.1

Expenditures

2927.5

3140.9

3479.9

3721.3

3764.9

3772.7

3793.5

3915.5

4057.8

4252.7

4428.5

Purchases Goods & Services

Corp. Profits Tax Accruals Indirect Business Tax and Nontax Accruals Contributions for Social Insurance

1049.8

1155.6

1217.7

1303.9

1304.1

1295.7

1246.2

1239.6

1253.5

1256.3

1263.4

National Defense

678.7

754.1

788.3

832.8

835.9

817.2

771.0

763.1

769.4

770.9

774.2

Other

371.1

401.5

429.4

471.1

468.2

478.6

475.1

476.5

484.1

485.4

489.2

Transfer Payments

1673.5

1823.5

2135.6

2282.5

2274.3

2283.6

2349.4

2446.4

2552.4

2687.2

2793.0

To Persons

1258.9

1391.9

1608.9

1710.1

1728.2

1772.5

1838.0

1896.4

1964.8

2056.3

2138.0

42.3

45.1

52.7

50.6

56.5

49.9

49.0

52.9

55.4

56.2

57.4

Grants in Aid to State & Local Gov't

To Foreigners

359.0

371.0

458.1

505.3

472.5

443.2

444.0

478.1

513.0

555.0

577.6

Net Interest

386.1

368.4

330.8

351.0

394.1

398.3

390.9

425.5

450.3

504.4

562.5

48.7

56.2

57.4

66.7

70.3

82.7

77.4

72.8

69.1

67.5

Surplus (+) or Deficit (-)

Subsidies less Surplus of Gov't Entities

-266.7

45.4

-635.1 -1249.8

-1329.5

-1248.3

-1109.7

-751.3

-666.8

-601.5

-647.8

-701.5

Receipts

1900.6

1909.1

1919.2

1998.5

2029.9

2039.5

2100.4

2186.0

2289.0

2403.6

2508.1

Personal Tax/Nontax Receipts

1321.3

1328.9

1268.1

1305.7

1366.3

1405.2

1459.4

1497.9

1551.7

1609.4

1676.0

323.5

333.5

287.8

297.6

327.0

348.8

376.6

376.8

388.1

397.5

414.3 65.1

State and Local Government Receipts and Expenditures

Corporate Profits Indirect Business Tax and Nontax Accruals

57.9

47.4

45.6

47.7

50.8

51.4

55.6

65.5

65.6

64.9

Contributions for Social Insurance

18.9

18.7

18.6

18.2

18.3

17.5

17.6

18.0

19.0

19.9

20.8

359.0

371.0

458.1

505.3

472.5

443.2

444.0

478.1

513.0

555.0

577.6

Federal Grants-In-Aid Expenditures Purchases Goods & Services

1973.33 2074.15 2191.15 2235.85 2242.98 2292.10 2320.08

2390.81 2472.85 2565.15 2656.75

1752.2

1847.6

1871.4

1870.2

1854.7

1871.3

1879.4

1921.7

1978.8

2040.9

2112.6

460.9

477.8

566.1

612.0

581.8

552.5

557.5

601.1

646.1

698.8

732.3

Interest Received

17.3

36.0

114.3

123.0

126.7

146.8

143.3

139.3

139.4

142.7

144.4

Net Subsidies

25.6

25.0

22.8

21.4

17.0

14.7

15.9

15.5

14.7

13.9

13.1

2.2

2.6

2.2

2.3

2.3

2.4

2.3

2.4

2.4

2.5

2.5

-72.7

-165.1

-271.9

-237.3

-213.1

-252.7

-219.7

-204.8

-183.9

-161.5

-148.7

Transfer Payments

Dividends Received Surplus (+) or Deficit (-)

32

U.S. Forecast | March 2014

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

Table 16. U.S. Exports and Imports of Goods and Services History 2007

2008

2009

2010

Forecast 2011

2012

2013

2014

2015

2016

2017

Billions of Dollars Net Exports Goods & Services

-709.8

-713.2

-392.2

-518.5

-568.8

-547.2

-493.8

-426.0

-437.6

-453.4 -469.28

Current Account

-713.4

-681.3

-381.6

-449.5

-457.7

-440.4

-376.1

-310.4

-345.7

-394.0 -431.67

Exports -Goods & Services

1665.7

1843.2

1583.8

1843.5

2101.2

2195.9

2262.2

2389.6

2510.3

2662.7 2828.75

Merchandise Balance

-822.7

-834.0

-510.6

-650.2

-744.1

-741.5

-698.8

-642.3

-657.1

-688.1 -720.23

Food, Feed & Beverage

84.28

108.33

93.93

107.70

126.20

132.83

131.98

130.26

131.90

137.78

143.40

Industrial Supplies Excl Petroleum

316.3

386.9

293.5

388.6

484.7

482.3

492.9

535.3

554.2

583.8

614.17

Motor Vehicles & Parts

121.3

121.5

81.7

112.0

132.9

146.2

152.2

158.8

169.4

186.1

201.65

Capital Goods, Excl. MVP

433.0

457.7

391.5

447.9

493.3

527.7

535.8

564.4

598.7

627.3

667.68

Computer Equipment

45.6

43.9

37.7

43.8

48.4

49.3

48.1

47.9

51.2

57.8

64.27

Other

314.5

339.8

279.0

332.1

364.7

384.0

381.7

402.4

424.8

443.6

473.71

Consumer Goods, Excl. MVP

146.0

161.3

149.4

165.3

174.9

181.8

189.6

204.5

217.0

225.8

236.06

64.5

62.0

54.6

57.1

61.7

65.3

67.6

73.7

71.0

73.8

77.37

500.4

545.5

519.1

565.1

627.6

659.9

692.2

722.6

768.0

828.1

888.42

Other Consumer Services

Billions of Dollars Imports -Goods & Services

2375.6

2556.4

1976.0

2362.0

2669.9

2743.1

2755.9

2815.6

2947.9

3116.1

3298.0

Merchandise

2000.3

2146.4

1587.3

1951.2

2234.6

2295.4

2295.0

2333.3

2423.5

2547.1

2685.2

83.0

90.4

82.9

92.5

108.3

111.1

116.2

119.0

124.3

129.1

133.6

Petroleum & Products

346.7

476.1

267.7

353.7

462.2

433.9

386.8

354.4

327.7

321.1

316.6

Industrial Supplies Excl Petroleum

297.9

318.7

196.6

249.4

293.0

290.0

292.0

294.3

314.0

335.3

348.6

Motor Vehicles & Parts

258.5

233.2

159.2

225.7

255.3

298.6

309.3

315.9

319.0

325.9

347.1

Capital Goods, Excl. MVP

449.1

458.7

374.1

450.4

513.5

551.7

557.2

586.3

637.5

693.6

741.5

Computer Equipment

105.5

101.2

94.2

117.3

119.7

122.2

121.4

121.1

124.5

130.2

135.4

Other

309.2

322.0

249.2

301.9

358.2

389.3

390.0

416.3

461.6

510.1

551.2

Consumer Goods, Excl. MVP

480.0

486.7

431.4

486.5

517.5

519.7

535.1

555.7

574.0

601.3

644.8

Food, Feed & Beverage

Other Consumer

85.1

82.5

75.5

93.1

85.1

90.6

98.6

107.8

127.1

140.8

153.1

375.3

410.0

388.7

410.8

435.3

447.7

460.9

482.2

524.4

569.0

612.9

Net Exports Goods & Services

-703.6

-546.9

-392.2

-462.6

-445.9

-430.8

-409.2

-385.5

-434.3

-455.3

-462.0

Exports G & S

1647.3

1741.8

1583.8

1765.6

1890.6

1957.5

2012.4

2109.0

2190.3

2301.2

2426.9

Imports G & S

2350.9

2288.7

1976.0

2228.1

2336.4

2388.2

2421.5

2494.5

2624.6

2756.5

2888.9

Exports G & S

14.5

0.0

3.5

15.2

9.2

4.1

5.8

6.0

6.3

Services

Billions 2005 Dollars

Exports & Imports % Change 3.7

5.3

Imports G & S

9.0

-1.6

0.9

15.0

10.9

0.0

1.6

3.0

5.6

5.6

5.9

Real Exports G & S

9.9

-2.0

2.5

9.8

4.6

2.4

5.5

2.8

4.6

5.2

5.5

Real Imports G & S

0.8

-5.6

-3.6

11.9

3.6

0.1

2.7

3.9

5.4

4.9

4.6

Institute for Economic Competitiveness

33

In Appeciation

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

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

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

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

Responsiveness. You work directly with a decision

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

Consistency. We are a unified firm employing team-

members who are committed to the success of our clients.

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

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

Experience. The staff at Real Property Specialists is

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

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

SEAN M. SNAITH, PH.D.

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

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