U.S. Forecast March 2015

U.S. Forecast March 2015

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

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

FO R E C A S T FO R T H E N ATI O N Forecast 2015 - 2018 March 2015 Report

Published quarterly by the Institute for Economic Competitiveness, College of Business Administration, University of Central Florida Copyright Š 2015 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 Ashley Miller, Researcher Trevi Sellers, Researcher Diana Merchant, Researcher Leigh Durden, Researcher Mariah Coughlin, 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 1 5 U . S . F O R E C A S T In this issue of the U.S. Forecast: • Gravy Boat, Genie’s Lamp, a Picture of Dorian Gray—we have described our lackluster recovery in these forecast pages in a variety of ways. The latest: the Grumpy Cat Recovery.

HIGHLIGHTS

• Strengthening of the U.S. dollar will continue to slow export growth and boost import growth, as will relatively stronger economic growth in the U.S. Thus, net exports will increasingly hold down U.S. real GDP growth in the years to come. The 4th quarter of 2014 was just the start of this phenomenon.

• The Fed will commence a cycle of raising interest rates starting in the 4th quarter of 2015 (though we cannot rule out a 2016 start to the tightening process). This action will bring an end to a six-year stretch where gains in the stock market averaged double digits. The S&P 500 will average just 3.5% growth during 2016-2018. Volatility will rise as interest rate hikes draw nearer.

• Real GDP growth in the 1st quarter of 2015 will be just 2.0%, before rising in the 2nd quarter to 2.4%. Growth will gradually rise to 2.8% in 2015, 2.6% in 2016, 2.9% in 2017, and 2.5% in 2018 as the Federal Reserve tightens the reins of economic growth.

• Consumption spending growth should slowly improve over the forecast horizon. Average growth in real consumer spending from 2015 through 2018 will average 2.8%. This is a strengthening over the average growth from 2011 to 2014, which was a measly 2.2%.

• Consumers are feeling a high from inhaling the fumes of cheaper gasoline prices. But as gas prices rise from their lows, this euphoria and its upward impact on consumer confidence will fade. Real consumer spending is expected to grow an average of 2.8% during 2015-2018, while gradually decelerating from peak growth of 3.3% in 2015 to 2.4% growth in 2018.

• The housing market still continues to recover, albeit at a diminishing pace.

Improved availability of mortgage credit will play a critical role in sustaining the recovery. The housing market should slowly but steadily improve through 2016 when rising rates take their toll and housing starts level off. Housing starts will rise from around 1,000,000 in 2014 to 1,449,635 in 2018.

• Payroll employment growth remains sluggish. Policy uncertainty from the ramshackle implementation of the Affordable Care Act will weigh on the private sector. Consequently, payrolls will expand by 2.1% in 2015 and 1.7% 2016. Growth in 2017 slips to 1.4% before easing to just 0.9% in 2018.

Substantive changes to the healthcare law could ameliorate some of its detrimental effects. However, that is not likely to occur before 2017.

• Unemployment rates (U-3) are expected to fall slightly to 5.6% in the 1st quarter of 2015 before drifting up to 5.7% during the 2nd quarter of 2015.

Unemployment should stabilize at 5.3% in 2018. Underemployment (U-6) remains a serious problem and currently stands at 11.2%.

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A Rose by Any Other Name...

Our Current Economic Recovery has Been Consistent: Consistently Thorny The Great Recession officially ended in June 2009. The official announcement of that trough in the U.S. business cycle was made by the National Bureau of Economic Research (NBER) on September 20th of 2010. The recovery that began after the end of that painful recession will be six years old in June, just a few months from now.

Even prior to the official announcement that the recession was over, economic forecasters had begun to make predictions of when the recession would end and how the subsequent recovery would play out. In our May 2009 U.S. Forecast1 publication we did as well2.

In that issue, I predicted the recession would come to an end in the 3rd quarter of 2009 (one month later than it did), and I also, for the first time, characterized what I thought the recovery would look like once it had started.

Many economists at that time were predicting a V-shaped recession and recovery–a sharp recession followed by an equally strong recovery. I suggested the shape of this recession and recovery would instead look like a gravy boat. From that May 2009 forecast:

“The early part of the recession actually saw GDP rising; this represents the “handle” of the gravy boat. As we move past those first few quarters of the recession, GDP begins to plunge toward the bottom of the boat in the 4th quarter of 2008 and the 1st quarter of 2009. As we move from there, we gently taper to the bottom of this cycle in the 3rd quarter of 2009. After touching bottom, we begin to see GDP slowly climb like the graduated, tapered pouring spout of the gravy boat. The spout is longer and less steep than the back end of the gravy boat and, similarly, GDP will take a long time and will only slowly recover from the sharp plunge that it took in the earlier portion of the downturn. …the Gravy Boat characterize[s] the recovery phase of this cycle as a slow and gradual process.

Given the severity of the recession and the particular characteristics of this downturn, most notably the credit crisis, recovery is going to take some time. While we can all hope for a V-shaped

1 http://tinyurl.com/May2009USForecast

2 All of the Institute’s previous forecasts may be found here: http://www.iec.ucf.edu/archive.aspx

recession, we almost certainly will not get one. In the meantime, please pass the mashed potatoes.”

As the lackluster recovery plodded forward I came up with other descriptors of the recovery, all of which continued to reflect a lackluster period of economic growth. In the September 2009 U.S. Forecast3, the Gravy Boat Recession was updated to reflect the struggling labor market in the U.S. economy and was redubbed the Genie’s Lamp Recession, not because the shape of the recovery had changed, but because we were predicting that we would wish for stronger job growth as the recovery continued.

“We believe that the path of this recovery will not be much different from the path of the gravy boat recession described above, but we are redubbing it as the genie’s lamp recession. The genie’s lamp is similar in shape to a gravy boat, and the recovery path we’re forecasting the economy to follow is not much different. So why the name change? In the early part of this recovery, we will all be wishing for stronger job growth. Labor markets will remain the ugly scar that serves as a constant reminder of the economic trauma that we have been through. The quadruple policy bypass may have saved the life of the economy, but the recovery and rehabilitation phase has only just begun. This life-saving treatment will also have side effects that we have not yet begun to feel.”

As the recovery slogged forward, the impacts of massive new legislation and regulatory heavy-handedness further weighed down the recovery. The massive healthcare and financial regulatory reform laws passed in 2010 heaped economic policy uncertainty upon the back of an economy that needed no additional burden to its recovery.

In October 2011, the U.S. Forecast4 featured a “Forecast Gone (Oscar) Wilde.” In that issue we paid homage to Irish writer and poet Oscar Wilde and suggested that the economic data generated during the recovery was painting a “Picture of Dorian Gray” recovery. After recounting the plot of Oscar Wilde’s only novel we asked: 3 http://tinyurl.com/Sept2009USForecast 4 http://tinyurl.com/Oct2011USForecast

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“Is this recovery, nothing more than an economic version of the Picture of Dorian Gray? Is the withered consumer confidence, sluggish economic growth, and repugnant labor market just a reflection of the economic sins committed, copious financial transgressions and policy missteps leading into and following the Great Recession?”

“Like Dorian Gray, the economic recovery in the United States cannot escape its past. The legacy of the financial, economic and policy sins that have been committed continue to haunt it, despite the recession having ending 28 months ago. The economic data as of recent months has revealed a recovery that is “withered, wrinkled, and loathsome of visage. Unlike Dorian Gray, however, the recovery is not dead.

I wonder what Grumpy Cat would say about our current recovery, now named in its honor?

(From Oscar Wilde to Grumpy Cat, how far have I fallen?)

The staff at the Atlanta Federal Reserve Bank assembles 13 labor market indicators into a single chart. Their Labor Market Spider Chart allows for a quick assessment of the health of the broader labor market beyond the heavily reported headline unemployment and payroll job changes. Looking only at these two indicators has given a false impression of how the U.S. labor market is truly faring during this recovery, which is approaching its sixth birthday.

The Spider Chart does incorporate these two headline measures of payroll job growth and unemployment alongside 11 others, providing a holistic look at the health Well, at least not yet.” of the U.S. labor market. The chart, displayed in Figure 1, Call it the gravy boat, the genie’s lamp, or the Picture of is divided into four quadrants, each capturing a different Dorian Gray recovery but no one without bias will call this dimension of the labor market. The upper left quadrant a robust recovery. shows leading indicators of the labor market and includes initial claims for unemployment, firms unable to fill job In the five full years (2010-2014) since the Great openings, and temporary help services. The lower left Recession ended, the average annual growth rate of real quadrant displays measures of labor market utilization GDP has been 2.2%. In the five full years (2002-2006) after the 2001 recession ended, the average annual growth and includes workers who want to work full-time but can only find part-time work, the job finding rate, workers rate of real GDP was 2.9%. In the nine full years (1992marginally attached to the labor force, and unemployment.

2000) after the 1990-1991 recession ended, the average The lower right quadrant displays indicators of confidence annual growth rate of real GDP was 3.8%. In the seven full years (1983-1989) after the 1981-1982 recession ended, in the labor market and includes the number of employee quits, job availability, and hiring plans. The upper right the average growth rate of real GDP was 4.4%. quadrant reflects employer behavior and includes data How should we now refer to this recovery? Forget about measuring payroll employment, hires, and job openings. highbrow literary references; why not wade through the The light gray, dashed inner circle represents the cesspool of internet memes? values of these indicators at the time of the trough in Don’t worry, I will not mention the idiocy that is the employment that took place in December 2009 (the labor latest meme: arguing about the color of #TheDress – market’s bottom actually occurred after Oops, I guess I just did. Sorry. the official end of the recession, which Let’s turn instead to the cute little was June 2009). The dark gray, dashed meme that is…Grumpy Cat. You know, outer circle represents the values of these the little feline internet sensation with the indicators in December 2007, which was perpetual frown on its face. the prerecession peak in the labor market.

The darker solid line show the values of Haven’t seen the cat? Maybe you missed these indicators as of January 2014 and the news report, later proven to be untrue, the lighter solid line is the values for that Grumpy Cat made $100 million for January 2015. its owner. The true number has not been revealed, but it is surely in the seven-figure Movement along each one of the range.

13 threads in the Spider Chart from the inner circle toward the outer circle Yes, we should now refer to this recovery represents improvement along each of as the Grumpy Cat Recovery.

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these dimensions of the labor market’s health. Six of the 13 measures have already exceeded their prerecession peak levels. However, the remaining seven, including all four measures of utilization and all three confidence measures, remain below prerecession levels and, in some cases, well below those levels.

the broadest measure of unemployment, U-6, which still stands at 11.3%.

This slack in the labor market has generally kept wage growth low during this recovery. Despite the recent three months of faster wage growth, this slack is part of the reason why consumer spending growth has remained From January 2014 to January 2015 there were varying muted in the sixth year of this economic recovery. Many degrees of progress in all 13 of the indicators and are pointing to the fact that the U.S. has exceeded regression in three. prerecession levels of payroll employment, the fact that the U.S. labor market has added an average of 260,000 The Federal Reserve Bank has referred to ongoing slack jobs per month for the twelve months of 2014, and the in the labor market. This slack is reflected in the weak recovery of the indicators in the utilization quadrant of the existence of a low unemployment rate as evidence that Atlanta Fed’s Spider Chart. Two of these indicators, work the U.S. labor market, and by proxy the U.S. economy, is healthy and recovering robustly. However, this slack part-time for economic reasons and marginally attached workers, are also reflected in the persistently high levels of still leaves room for the Fed to take their time while deliberating when, and how quickly, to raise interest rates in 2015. We do not The Atlanta Fed’s Labor Market Spider Chart anticipate a rise until late 2015 with a Continues to Show Weakness in Labor Utilization possibility of a federal funds rate raise Figure 1. Labor Marker Spider Chart, January 2014 not happening until early 2016. and January 2015 Levels

Anxious Index Economists Show Little Fear of Recession

The most recent release (1st quarter of 2015) of the Survey of Professional Forecasters by the Federal Reserve Bank of Philadelphia suggests that the 33 forecasters surveyed for the publication are just 9.30% worried that a decline in real GDP will occur in the 2nd quarter of 2015. This quarter’s release reflects a very slight downtick in forecasters’ anxiety, their worries allayed by a rebound of 2014 2nd quarter real GDP growth to 4.6% from a 1st quarter contraction of 2.1%, and a second reading on GDP growth for the 3rd quarter that came in at 5.0%.

Source: Federal Reserve Bank of Atlanta. The interactive spider chart may be found here: http://www.frbatlanta.org/chcs/labormarket/

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 the probabilities of a decline in each of the following four quarters. The anxious index (a term coined by The New York Times reporter David Leonhardt) is the Institute for Economic Competitiveness

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The Anxious Index Probability of Decline in Real GDP in the Following Quarter Quarterly, 1968:Q4 to 2015:Q1 100 90 80

Probability (percent)

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

probability of a decline in real GDP in the quarter after a survey is taken. In the survey taken in the 1st quarter of 2015 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 2015.

The forecasters also report just a 7.90% chance that we are currently (as of the 1st quarter of 2015) experiencing a contraction in real GDP. According to the panel, the probability that we will fall back into recession is averaging around 11.37% through the end of the 1st quarter of 2016.

This implies the forecasters’ assignment of probability for a contraction in real GDP in the upcoming year has decreased slightly since last quarter’s survey.

Figure 2 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 below the average level during the economic recovery (13.60), and is 1.02 points lower than that of the 4th quarter.

GDP Outlook An Illusion of Grandeur After two consecutive quarters of data that led some to declare that we now have a robustly growing economy, 8

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the 4th quarter data on real GDP growth acted as a wet blanket to the notion. The 4.6% and 5.0% growth rates in the 2nd and 3rd quarters of 2014 were nothing but an illusion of grandeur. Fourth quarter growth, initially estimated at 2.6%, was revised lower in data released since the forecasts in this publication were made. With one more final estimate for 4th quarter growth still to come, the most recent estimate put growth at just 2.2%. When you factor that in with the 2.1% contraction in real GDP that took place in the 1st quarter growth for the full year, 2014 averaged just 2.4% growth. And as Grumpy Cat pointed out above, that makes the average growth rate for the past five years of this recovery a paltry 2.2%.

This slowdown does not come as a surprise. In our December 2014 U.S. Forecast publication, we predicted a significant slowdown from the deceptively strong 5.0% growth in the 3rd quarter and laid out the reasons for which that would happen. Below are some excerpts from that forecast and a discussion of what actually transpired in the 4th quarter.

“After contracting in the first quarter of 2014 by 2.1%, the U.S. economy strung together two consecutive quarters of robust growth, rebounding from the weather burdened first three months of the year. This was the second time during the five and a half years since the Great Recession came to an end

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that the economy was able to manage back-to-back quarters of real GDP growth in excess of 3%. Will the fourth quarter be the third consecutive quarter of 3% or higher economic growth?

I don’t think so.”

GDP growth in the 4th quarter was less than half the growth rate in the 3rd quarter and is well below 3%.

Check.

“Federal government spending, particularly on defense, surged in the third quarter. The fiscal year was coming to a close and with it a need to spend through budgets. New spending related to the actions taken against ISIS in Iraq and Syria combined to cause federal defense spending to grow at a 16% rate in the third quarter. This spending grew just 0.9% in the second quarter. This surge in defense spending added nearly seven tenths of a percentage point to GDP growth in the third quarter.

This will not happen in the fourth quarter…”

Federal defense spending contracted at a 12.4% clip in the 4th quarter and instead of adding 0.7 percentage points to GDP growth as it did in the 4th quarter, it subtracted just under 0.6 percentage points in the 4th quarter. Check.

“Another drag that will be increasingly and persistently weighing down GDP growth over the next several years is the foreign sector.

Exports have grown at a solid pace for much of the recovery, lessening the drag of net exports on GDP growth, while at the same time import growth was occurring at a slower rate. … The recent strengthening of the dollar beginning in 2012 is predicted to continue through 2015. This will make U.S. exports more expensive to foreigners and at the same time make imports less expensive in the U.S. Both of these effects will work to widen the trade gap.

The widening is exacerbated by a slowing in the economies of many of the U.S. trading partners and the relative strength in the U.S. economy. This will further result in slower export growth and faster growth of imports in the U.S.

Net exports added 0.78 percentage points to GDP growth in the third quarter. That boost to GDP growth will turn to a drag in the fourth quarter and continue to weigh down GDP growth, through the end of our forecast horizon.”

Net exports added 0.78 percentage points to 3rd quarter GDP growth but in the 4th quarter that contribution was -1.15 percentage points. This drag will continue as a result of the stronger dollar making U.S. exports more expensive to foreigners and making imports less expensive to U.S. buyers as a result of the relative strength of the U.S. economy compared to the economies of many of our trading partners. The key word here is “relative.” In absolute terms, growth in the U.S. remains historically anemic, but you might say we are economically the healthiest patient in the critical care unit.

The next four quarters of GDP growth will be 2.0% in Q1 2015, followed by 2.4% in Q2, 2.3% in Q3, and 2.3% in Q4 of 2015. Average quarterly growth from there through the end of the forecast horizon (2018 Q4) will be 2.6%.

In 2015 we are expecting real GDP growth of 2.8%, and 2.6% in 2016 before rising to 2.9% in 2017, and as the tightening of monetary policy begins to restrain growth, GDP growth will decelerate to 2.5% in 2018.

The Affordable Care Act and Dodd-Frank financial regulatory reform law continue to be a drag on the economy. Nearly five years have passed since these two massive bills were signed into law, and neither one has been fully implemented, nor will they be anytime soon.

On top of these laws, scores of economically significant regulations have been implemented during this recovery.

These rules of the economic game matter as they change the way the players will play the game. The policy uncertainties that these laws and regulations have created have real economic and human costs associated with them; they do not occur in a vacuum.

The bottom line is that the pace of this economic recovery has and will remain range-bound through 2018 unless legislative action is taken to decisively resolve policy uncertainty and to provide some regulatory relief (which, despite the 2014 midterm elections, does not look likely before the 2016 presidential election). In absence of any regulatory respite, growth will average 2.7% for the 20152018 forecast horizon.

CONSUMER SPENDING

Consumers Are Experiencing Euphoria From Low-priced Gasoline The High Will Not Last and Neither Did the Low Prices The average retail price for a gallon of gasoline fell

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from $3.44 in the first week of September 2014 to around $2.23 by the end of December 2014. The price declines didn’t stop there. Prices continued to fall until the third week of January 2015 when the average price of a gallon of gasoline in the U.S. was in the $2.00 range. In many places around the country gasoline had fallen below that $2.00 threshold.

Inhaling the fumes from this cheap gasoline gave consumers a sense of euphoria. The University of Michigan Consumer Sentiment survey jumped from 84.6 at the end of September 2014 to a much higher 98.1 at the end of January.

consecutive quarters where U.S. consumption spending grew at 3.0% or greater during the entirety of this recovery. The 4th quarter of 2014 finally put an end to that inauspicious streak. Real consumer spending growth in the 4th quarter of 2014 came in at 4.2% after the 3rd quarter growth of 3.2%. Is this the start of a new trend?

Unfortunately, the answer, I believe, is no.

First quarter growth in consumption spending will reflect the new, less favorable trend in gasoline prices as well as another deceleration in real GDP growth to 2.0%.

Real consumption spending will be 2.8% in the 1st quarter of 2015.

The up-and-down sawtooth pattern of consumer spending growth during this recovery should give way to a more stable trajectory as the recovery continues. Continued improvement in the labor market, further repairs to Consumer confidence moved in sync with the lyrics from the 1969 song, “Spinning Wheel” by the band Blood, household balance sheets, and a greater willingness of banks to lend should prove to be stabilizing forces to Sweat and Tears. That band sang, “What goes up must consumer spending. These are far more important supports come down/Spinning wheel, got to go round”. Without for consumer spending than the fleeting decline in fail, in mid-February consumer sentiment dropped from gasoline prices. the January 2015 levels of 98.1, which were the highest Real consumption spending is forecasted to accelerate levels since January 2004, to 93.6. early but then decelerate through the end of our forecast What goes up must come down, indeed. from 2.5% in 2014, 3.3% in 2015, 2.9% in 2016, 2.7% The funny thing was that despite the surge in in 2017, and 2.4% in 2018, 10 years after the start of the confidence, retail sales in December 2014 and January Great Recession.

2015, when adjusted for automotive and gasoline station sales, had an average monthly percent change of just 0.5%. I N V E S T M E N T That euphoria over lower gas prices appeared to wear off Real nonresidential fixed investment spending grew at rather quickly.

7.3% in 2012. In 2013, the pace of investment growth If gasoline prices continue to rise, we can expect that the slowed sharply under a rising swell of economic policy surge in consumer confidence will abate as well. Bigger uncertainty, and grew by just 3.0% for the year. The pace paychecks and more job opportunities will provide a boost of investment growth picked up in 2014 to 6.1%, but is to confidence that is not as transitory as a cheap fill-up. again expected to waver in 2015, slowing to 4.5%. In 2016, as much of the policy uncertainty begins to fade and a Consumer spending averaged a paltry 2.3% growth presidential race promises a different path forward, growth rate from the 1st quarter of 2010 through the 3rd quarter rises to 5.7% in 2016 and 6.4% in 2017 when it eases of 2014. There have been occasional swells in spending th slightly under high interest rates. growth, but they have been short-lived. In the 4 quarter of 2014 real consumption spending surged to 4.2%. As Interest rates will remain historically low for much of 2015 progresses, this pace of consumer spending will not the upcoming year before the Federal Reserve begins be sustained. the process of tightening. The cost of borrowing—either What happened to gas prices in February? In February, gasoline prices began to rise from near that $2.00 threshold up to $2.45 per gallon.

In this economic recovery, U.S. consumers have exhibited temporary glimpses of the spending prowess that they have displayed in previous recoveries, but afterward they have pulled back and returned to the weaker pattern of spending growth that is more indicative of this oftentimes deceptive recovery that began in June of 2009.

Through the 3rd quarter of 2014 there had not been 10

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explicit or the implicit, or opportunity cost of using retained earnings for investment—has never been the reason for lackluster investment spending during this recovery when interest rates have hovered at such low levels. Policy uncertainty, as we have discussed on multiple occasions in previous U.S. Forecast publications, is the real culprit in delayed investment decisions as it obscures

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the horizon over which investments are made. Continued political banter regarding corporate tax rates and multiple fixes/changes being proffered only adds to confusion regarding policy.

While interest rates will remain low over the next year, they will be rising over the remainder of our forecast horizon. With quantitative easing completed, we think the Fed will begin slowly hiking the federal funds rate in the 4th quarter of 2015 (there is a non-trivial chance that interest rates might not be raised until 2016). However, longer-run rates will begin to rise earlier than the federal funds rate as expectations of higher short-term interest rates in the future work their way through the yield curve (expectations of higher short-term rates in the future cause long-term rates to rise in the present). We expect the 10year Treasury yield to average 2.2% in 2015, 3.2% in 2016, 3.6% in 2017, and 4.1% in 2018.

Business spending on equipment and software will grow at an annual average rate of 6.4% in 2015 through 2018. Investment spending growth in computers and peripherals will enjoy double-digit growth in 2015 and 2016, after contracting in 2013 and 2014. Spending on communications equipment should expand at an average annual rate of 10.5% during 2015-2018, while industrial equipment purchases average 6.5% growth over the same time frame.

Investment in nonresidential structures experienced a burst of activity in 2012 and expanded at a 13.5% clip.

Investment growth plunged year over year and contracted by 0.5% in 2013. The roller coaster ride continues in 2014 and 2015 with growth jumping to 8.0% in 2014 and then plunging again to -4.5% in 2015. Investment in nonresidential structures will bounce back in 2016, 2017, and 2018 with growth of 2.8%, 10.1%, and 8.7%, respectively.

Investment growth in transportation equipment decelerated sharply in 2013 to 7.9% from 22.7% in 2012.

This type of investment will have an average growth rate of 1.6% during the four-year stretch from 2015 through 2018, and in that final year, growth will be 3.6%. In the middle of this span, growth will be negative in 2016.

Investment in this sector is highly volatile due to purchases of aircrafts (think Boeing) that cause extreme swings in investment spending growth from quarter to quarter and year to year. This is very clear considering the fact that from 2010 to 2012 growth averaged nearly 47% per year.

Residential fixed investment grew 12.0% in 2013 and then slipped to 1.6% in 2012. Growth will average 7.4%

through 2015-2018 with a peak growth rate of 9.8% in 2016. In the final year of our forecast, 2018, real residential fixed investment will be dampened quite a bit by both higher mortgage rates (expected to average 6.0% on a 30-year fixed mortgage that year) and a balance between supply and demand in the housing market that will diminish the rate of price appreciation. As a consequence, growth is expected to be 1.2% in the final year of our forecast. In 2018, real residential fixed investment will be just over $657 billion. Incidentally, in 2005 residential fixed investment hit $872.6 billion.

Housing prices continue to rise, but the rate of these increases has slowed down into the lower single digits.

Declining levels of investor purchases are taking some wind out the housing market’s sails, particularly with a relatively tight mortgage market. Housing finance must become more accessible to an expanded pool of borrowers if the market is going to make a smooth transition from investor-led purchases to more traditional mortgagefinanced consumer purchases. The needed changes to the Dodd-Frank law are unlikely to escape veto if they were passed by the Congress.

We expect housing starts to continue to gradually accelerate over the next several years, reaching more than 1.44 million in 2018. Average levels of annual housing starts from 2015-2018 will be 1.3 million. In 2018, housing starts are expected to be 1.45 million, a level that represents an increase of nearly 570,000 starts from 2013.

In 2005, as a point of reference, housing starts were in excess of two million. Tight mortgage lending standards could, if not redressed, alter the course of the housing starts in this recovery, as just discussed.

GOVERNMENT SPENDING The uncommon swell in federal government spending in the third quarter of 2014 is a major outlier from the general path that we expect federal government spending to follow. The 9.9% growth in that quarter should give way to much slower growth for some of 2015 as threats like the Islamic terrorist organization, ISIS, will necessitate somewhat higher defense-related spending. Beyond that and through 2018, federal government spending is expected to remain a drag on GDP growth.

The 2014-2015 easing of sequester cuts sharply slowed the rate at which government spending was contracting, from -5.7% in 2013, to -1.9% in 2014, and flat for 2015.

Beyond 2015, federal government spending is expected to continue to contract at an increasingly slower rate. During Institute for Economic Competitiveness

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2015-2018 real federal government spending is expected to contract at an average of 0.4%. Over that same time horizon, state and local governments will oversee spending growing at an average of 1.2%.

The combination of higher revenues from economic growth, new taxes, and an assist from the Federal Reserve are, along with lower government spending, helping to shrink the size of the annual budget deficit. The Fed is holding more than $2.46 trillion in U.S. Treasury debt and more than $1.75 trillion in mortgage-backed securities.

The Fed turns most of the proceeds from holding that debt right back to the U.S. Treasury.

The federal budget deficit fell to $680 billion in 2013, and continued to decline in 2014, when it was $483 billion. We are forecasting deficits to continue to fall through 2016, but after that year, deficits will once again be on the rise. There is no sign whatsoever of a balanced budget in the federal government’s future.

There is no political will in Washington, D.C. to implement fiscal discipline or badly needed reform of entitlements programs and the tax system. Even the relatively small spending constraints of the sequester quickly became disagreeable to Congress. As a result, we expect that the budget deficit will only contract for the next couple of years. In 2015, the budget deficit is expected to be $488 billion, falling to $368 billion in 2016, before rising again to $388 billion in 2017, and jumping to $464 billion in 2018. However, if military action were ramped up in Iraq and Syria – something President Obama still seems reluctant to do despite the continued horrors being committed in the region – these deficit numbers would grow larger sooner.

Although we are projecting deficits through 2018 that are relatively smaller than the $1 trillion-plus deficits that were the norm in 2009-2012, the additional debt added to the national debt over the next four years will be more than $1.7 trillion, thus pushing the national debt total near $20 trillion.

Should interest rates rise faster than what we are currently predicting, we could face a serious risk of a rapidly rising burden of servicing national debt, historically associated with persistent deficits and increasingly large levels of debt. The persistently low interest rates on U.S. Treasury bonds have ameliorated the pain of the record borrowing needed to finance federal budget deficits in recent years.

Net interest on the national debt was $237 billion in 2014, and the Congressional Budget Office projects it to 12

U.S. Forecast | March 2015

be $823 billion in 2023 for a cumulative total of $5.22 trillion from 2014-2023. If the interest rate on our national credit card goes up, the pain of this deficit financing could become more acute, and severe consequences of our lack of fiscal discipline will begin to manifest.

Currently, the national debt is over $18.1 trillion and rising. This represents a debt of nearly $154,120 per taxpayer and over $56,600 per citizen. Unfunded liabilities of the U.S. are even more frightening: Social Security, Medicare part D, and Medicare represent nearly $95.5 trillion in liabilities, and that boils down to more than $811,196 per taxpayer.

NET EXPORTS Net exports became a drag on real GDP growth in the U.S. in the 4th quarter of 2014 after being a positive contributor in the 3rd quarter of that year. In the 3rd quarter, net exports was a positive contributor to real GDP growth, adding 0.78 percentage points to overall growth as real import growth swung from 11.3% in the 2nd quarter to -0.9%.

The net exports boost to GDP growth in the 3rd quarter should give way to a persistent drag on GDP growth through the end of 2017. In 2018 the drag will begin to lift. The U.S. dollar has begun a streak of appreciation against our trading partners that we are forecasting to last for the next year.

Over time, a stronger dollar will boost imports and work to decrease exports, leading to a worsening of the trade deficit. This will be intensified by relatively stronger growth in U.S. GDP while many of our trading partners are experiencing slower, sometimes much slower, GDP growth. U.S. buyers will thus have income to purchase more foreign goods and services while foreign buyers will have relatively less income to spend on our goods and services.

Overall, export growth continues through the end of our 2018 forecast period. However, growth will remain fairly constant through 2016 with an average growth rate during 2012-2016 of 3.2% before accelerating in 2017 and 2018.

Real export growth from 2015-2018 will average 4.1%, while real import growth will average 5.1% over the same time frame.

Real net exports will average -$605.5 billion during 2015-2018, with the trade balance worsening in each successive year on the back of that robust appreciation of the dollar and a weaker global demand for U.S. goods and services.

U . S . F orecast

The four-year strengthening period of the dollar (20122015) is due to the relative strength of the U.S. recovery and the eventual upward movement in U.S. interest rates if the Federal Reserve begins to tighten interest rates in late 2015. The Eurozone continues to battle recession or near recession in many countries. Any growth in the current year will remain paltry in the face of persistent fiscal austerity, and the seemingly constant threat of a return to a deflationary environment continues to fuel uncertainty regarding the future of the Eurozone. Meanwhile, the European Central Bank has been forced to become more aggressive in its stance on policy and has announced the implementation of quantitative easing policies as the Fed did in the U.S. over the past several years. Other countries (China for example) are also using policies to stimulate growth that over time should help support growth of U.S. exports.

The current account deficit will improve slightly until the 2nd quarter of 2015, at which point the appreciation of the dollar that began in 2012 will begin to manifest itself in a worsening of the current account continuing through 2016-2017 before stabilizing in 2018. Current account balances will average -$392.9 billion during 20152018. There will be continued worsening of the deficit in 2016-2018 and in 2018 the current account deficit will be -$477.4 billion.

U N E M P LOY M E N T The U.S. headline unemployment rate (U-3 in the jargon of the Bureau of Labor Statistics) for most of the economic recovery has been a defective measure of how the labor market and economy have been performing, so much so that the Fed Reserve has shifted itself away from its previous focus on this statistic.

The national headline unemployment rate in January rose slightly from 5.7% to 5.8%. Part of the increase was a result of a larger number of unemployed workers, but the growth in the labor force (which includes people who are working as well as people not working, but actively looking for work) grew by 703,000. Despite a rise in the unemployment rate, the large number of people deciding to reenter the labor market is a positive sign in that monthly report.

The January jobs report again showed weaker payroll job growth compared to November and December’s numbers, 423,000 and 329,000 respectively, while 257,000 new workers appeared on business payrolls in January, the third largest monthly gain in this recovery. Average payroll

gains for the 12 months of 2014 were 260,000. Over the same period last year, average gains were 199,000.

The mixed messages in recent months’ jobs and labor market reports again reinforces the need to look at more than a single metric of how the labor market is performing and why the Federal Reserve Bank of Atlanta’s Labor Market Spider Chart is one such approach of accomplishing this.

Given the frustrating nature of this recovery and the complexity of trying to sift through often contradictory data, particularly when it comes to jobs data, the U.S. labor market simply cannot be sufficiently assessed by a single metric such as the headline unemployment rate (U3) during this recovery. This is particularly true because as of January 2015, the labor force participation rate of 62.9% remains at its lowest point since March 1978.

Recent estimates by the Economic Policy Institute of the number of “missing workers”5—potential workers who, as a result of a weak labor market are neither working nor looking for work—is just under 5.76 million in the U.S. If these workers were actively still looking for work, the current headline unemployment rate (U-3) would be 9.0%.

The Bureau of Labor Statistics (BLS) does produce alternative measures of labor market weakness. The broadest measure of unemployment, U-6, takes into account discouraged workers (currently 682,000 workers) as well as those who are underemployed (currently 6.81 million workers) —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 (2.2 million workers).

U-6 remains distressingly high at 11.2% in January 2015, down 2.4 points from the January 2014 level of 13.6%, and down 6.0 points from its peak of 17.2% in April 2010. U-6 has been in double digits for 80 straight months, nearly seven years.

The number of people not in the labor force who are between the ages of 16 to 64 currently stands at 59,066,000. These are men and women who could be working and producing goods and services in our economy but are not participating in the labor force. Many of these folks would not be participating regardless of the health of the overall economy; millions of them would if they only could.

5 http://www.epi.org/publication/missing-workers/

Institute for Economic Competitiveness

13

U . S . F orecast C harts

30-Year Mortgage Rates and Housing Starts 8.0

(Mortgage rates - Left axis, %)

2.5

7.0

2.0

6.0

1.5

5.0

1.0

4.0

0.5

3.0

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

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

14

U.S. Forecast | March 2015

(Billions of 2000 Dollars)

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

U . S . F orecast C harts

Consumer Prices (% Change Year Ago)

6.0 4.0 2.0 0.0 -2.0

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

Federal Budget Surplus 500.0

(Billions of Dollars)

0.0 -500.0 -1000.0 -1500.0

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

Federal Funds Rate 6.0

(%)

5.0 4.0 3.0 2.0 1.0 0.0 -1.0

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

15

U . S . F orecast C harts

Real GDP Growth and Federal Funds Rate (%)

10.0 5.0 0.0 -5.0 -10.0

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

Industrial Production 120.0

(2002=100)

110.0 100.0 90.0 80.0

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

Private Fixed Nonresidential Investment 3000.0

(Billions of Dollars)

2500.0 2000.0 1500.0 1000.0

16

U.S. Forecast | March 2015

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

U . S . F orecast C harts

Manufacturing Employment 18.0

(Millions)

17.0 16.0 15.0 14.0 13.0 12.0 11.0

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

Money Supply

3000.0

(Annual Growth Rate %)

2500.0 2000.0 1500.0 1000.0

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

Total Nonfarm Payroll Employment 150.0

(Millions)

145.0 140.0 135.0 130.0 125.0

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

17

U . S . F orecast C harts

Oil and Consumer Confidence 140.0

Oil ($ Per Barrel) - Left Axis

120.0

100 90

100.0 80.0

80

60.0

70

40.0

60

20.0 0.0

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

-400

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

Trade Balance and Real Exchange Rate

1.50 1.40

-500

1.30

-600

1.20

-700

1.10

-800

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

18

U.S. Forecast | March 2015

0.80

U . S . F orecast C harts

Twin Deficits 500.0

(Billions of Dollars)

0.0 -500.0 -1000.0 -1500.0

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

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

Yield Curve 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0

(%)

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

19

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. 2008

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.

2014

2015

Forecast 2016 2017

Composition of Real GDP, Percent Change -2.8 2.5 1.6 2.3 2.2 -2.0 1.1 1.7 2.2 2.2 -1.6 1.9 2.3 1.8 2.4 -5.3 6.1 6.1 7.3 6.8 -1.8 2.2 1.8 0.7 1.9 -0.9 1.2 1.8 1.3 1.9 -15.5 2.6 7.6 7.3 3.0 -22.5 15.9 13.6 6.9 4.6 -8.3 10.0 1.6 3.2 3.1 0.7 11.2 -1.8 5.0 -0.1 -12.7 13.6 2.0 11.4 8.3 -22.2 -0.2 21.0 4.2 3.9 -49.0 80.2 37.6 22.7 7.9 -40.0 26.9 28.4 14.2 -0.8 -27.4 17.4 33.0 14.6 -5.0 -18.9 -15.7 2.3 13.5 -0.5 -30.9 -24.1 -0.3 8.6 3.4 5.2 -27.7 -1.6 15.7 -1.2 1.6 -15.9 -7.6 21.4 -7.5 -27.7 21.7 26.4 13.2 0.6 -18.3 -26.3 -9.1 9.5 3.1 -20.7 -2.4 0.7 13.5 12.0 -8.7 11.9 6.9 3.3 3.0 -13.6 12.8 5.6 2.3 1.1 5.7 4.4 -2.7 -1.8 -5.7 1.6 -2.7 -3.3 -1.2 0.5

2.4 2.3 2.5 7.0 1.8 2.0 6.1 6.3 2.6 -2.5 -0.1 13.1 12.6 18.0 15.0 8.0 7.1 11.9 13.1 8.3 0.4 1.6 3.1 3.9 -1.9 0.9

2.8 2.8 3.3 5.9 3.3 2.9 4.5 8.0 13.2 14.1 14.8 9.5 3.5 2.4 -0.6 -4.5 9.7 10.3 -8.7 -21.8 5.1 9.4 3.3 5.8 0.0 1.6

2.6 2.7 2.9 5.9 2.8 2.4 5.7 7.1 12.6 13.2 12.8 6.4 -1.5 -3.8 -6.9 2.8 12.5 -16.8 -2.4 2.3 11.4 9.8 3.5 5.4 -0.4 1.1

2010

2011

2012

Billions of Dollars 14830.4 14418.8 14783.8 15020.6 15369.2 15710.3 16089.8 14718.6 14418.7 14964.4 15517.9 16163.2 16768.1 17420.7 Prices & Wages, Percent Change, Annual Rate 1.9 0.8 1.2 2.1 1.8 1.5 3.8 -0.3 1.6 3.1 2.1 1.5 2.3 1.7 1.0 1.7 2.1 1.8 6.4 -2.6 4.2 6.0 2.0 1.2 2.0 1.9 2.9 1.4 1.9 2.1

2.9 2.9 2.7 6.2 2.5 2.3 6.4 6.0 8.1 9.1 8.8 6.4 0.9 5.3 -0.5 10.1 13.9 2.8 4.0 13.7 10.9 9.0 4.5 5.1 -0.7 1.0

2018

2.5 2.5 2.4 4.3 2.2 2.2 5.2 4.7 6.0 7.5 5.3 3.7 3.6 3.7 5.3 8.7 9.0 7.5 6.2 11.8 7.1 1.2 5.2 4.1 -0.6 1.1

16535.3 16961.8 17451.7 17889.4 18218.1 19063.1 19971.6 20880.4

1.5 1.6 1.7 1.9 2.1

1.7 -0.2 1.7 -3.6 2.6

2.0 2.6 2.2 2.7 3.0

1.8 2.5 2.2 2.8 3.2

2.0 2.6 2.2 2.8 3.4

99.6 0.8 -3.4 74.6 -35.0 63.8 13.195 0.900 3.655 5.8 -0.6 -455 -687

61.7 3.2 -11.2 65.6 -146.0 66.3 10.402 0.554 3.868 9.3 -4.3 -1416 -381

Other Measures 79.4 95.1 94.2 3.3 0.1 1.0 5.7 3.3 3.8 71.1 73.9 75.5 65.9 36.6 65.9 71.8 67.4 76.5 11.555 12.735 14.425 0.586 0.612 0.784 3.705 3.792 4.128 9.6 8.9 8.1 -0.7 1.2 1.7 -1294 -1297 -1089 -444 -459 -461

98.0 0.9 2.9 76.1 55.2 79.2 15.522 0.930 4.471 7.4 1.7 -680 -400

93.0 0.8 4.2 77.2 73.5 84.1 16.404 1.004 4.328 6.2 1.9 -483 -411

55.6 0.9 2.6 78.0 67.9 92.2 16.5 1.1 4.8 5.6 2.1 -488 -295

74.3 1.6 3.4 78.2 44.7 90.6 16.8 1.3 5.0 5.5 1.7 -368 -328

85.7 2.0 4.1 78.4 46.8 88.0 17.2 1.4 4.9 5.3 1.4 -387 -472

97.6 2.1 3.0 78.0 43.1 87.6 16.9 1.4 4.7 5.3 0.9 -464 -477

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

1.93 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

Financial Markets, NSA 0.18 0.10 0.14 0.14 0.05 0.09 0.32 0.18 0.18 1.93 1.52 0.76 3.21 2.79 1.80 4.25 3.91 2.92 4.69 4.46 3.66 1139 1269 1380 21.6 11.5 8.9 0.970 0.912 0.946 -2.8 -5.8 3.8

0.11 0.06 0.13 1.17 2.35 3.45 3.98 1643 19.0 0.977 3.3

0.09 0.03 0.12 1.64 2.54 3.34 4.17 1931 17.7 1.010 3.3

0.2 0.1 0.3 1.5 2.2 2.9 3.9 2122 10.0 1.2 18.1

0.9 1.0 1.4 2.5 3.2 3.8 5.1 2257 6.4 1.2 -1.7

2.5 2.4 2.7 3.3 3.6 4.0 5.4 2369 5.0 1.1 -5.4

3.7 3.5 3.7 4.0 4.1 4.5 6.0 2352 -0.7 1.1 -4.5

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)

12430 3.6 10994 4.6 10987 1.5 5.0 1073 -17.5

12087 -2.8 10943 -0.5 10943 -0.4 6.2 1203 22.4

14167 2.0 12505 1.0 11651 -0.2 4.9 1761 4.7

14717 3.9 12981 3.8 11936 2.4 4.8 1822 3.5

15303 4.0 13445 3.6 12333 3.3 4.8 1902 4.4

16037 4.8 14028 4.3 12615 2.3 4.4 1943 2.3

16919 5.5 14795 5.5 13039 3.4 5.0 1842 -5.2

17794 5.2 15588 5.4 13451 3.2 5.6 1840 -0.1

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. $)

20

-0.3 0.2 -0.3 -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 -2.6 6.8 0.3

2013

2009

U.S. Forecast | March 2015

Incomes 12429 13202 2.8 6.2 11238 11801 2.7 5.0 11055 11331 1.0 2.5 5.6 6.0 1470 1428 23.4 -2.9

13888 5.2 12384 4.9 11676 3.0 7.2 1681 17.9

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

Table 2. Real Gross Domestic Product History 2008

2009

2010

2011

Forecast 2012

2013

2014

2015

2016

2017

2018

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

14830.4 14418.8 14783.8 15020.6 15369.2 15710.3 16089.8

16535.3 16961.8 17451.7 17889.4

14865.8 14566.3 14722.2 14979.0 15304.3 15636.7 15991.7

16443.7 16895.5 17382.7 17823.5

10007.2

11327.6 11653.0 11971.6 12264.5

9847.0 10036.3 10263.5 10449.7 10699.7 10967.8

Durables

1083.2

1023.3

1085.7

1151.5

1235.7

1319.0

1411.1

1494.3

1583.0

1680.6

1753.2

Nondurables

2214.7

2175.1

2223.5

2263.2

2280.1

2322.6

2365.2

2442.7

2512.1

2574.9

2631.6

Services

6708.6

6648.5

6727.6

6851.4

6942.4

7073.1

7216.1

7422.5

7600.4

7772.5

7945.5

1934.5

1633.5

1673.8

1802.3

1931.8

1990.6

2112.7

2207.8

2333.5

2482.7

2611.4

836.1

644.3

746.7

847.9

905.6

947.2

1006.6

1087.1

1164.6

1234.2

1291.8

281.0

256.1

281.4

285.9

295.0

304.0

311.8

353.1

397.3

429.2

455.0

Computers & Peripherals

77.1

76.8

84.7

83.0

86.8

86.7

84.4

96.4

109.0

118.9

127.7

Communications Equipment

91.5

79.4

90.2

91.8

102.3

110.4

110.1

126.2

142.4

154.9

163.1

Industrial Equipment

195.5

152.1

151.3

183.3

190.3

197.7

223.8

244.8

260.5

277.3

287.4

Transportation Equipment

146.2

70.6

127.5

173.9

211.4

228.2

256.6

265.1

261.1

263.3

272.7

30.0

17.7

22.1

27.9

31.0

30.7

35.5

35.4

33.9

35.8

37.1

42.6

30.8

36.2

48.1

54.5

51.6

59.4

58.6

54.5

54.2

57.1

540.2

438.2

366.3

374.7

423.8

421.7

455.3

434.6

446.4

491.5

533.9

182.8

126.7

95.2

94.7

102.8

106.3

113.8

124.8

140.5

159.8

174.1

Manufacturing

53.8

56.3

40.8

39.1

44.9

44.3

49.6

54.5

45.3

46.2

49.6

Power & Communication

94.5

95.8

80.4

74.1

89.6

82.8

92.7

84.5

82.4

85.7

91.0

Mining & Petroleum

105.0

75.0

87.8

110.9

124.5

125.2

135.5

105.4

106.5

121.0

135.3

Other

103.4

84.5

62.0

56.2

61.5

63.4

63.6

66.9

74.5

82.6

88.4

497.7

392.3

382.4

384.5

436.5

488.4

496.3

543.1

596.2

649.6

657.4

Exports

1740.8

1587.7

1776.6

1898.3

1960.1

2019.8

2082.5

2150.6

2225.0

2325.0

2446.6

Imports

2298.6

1983.2

2235.4

2357.7

2412.6

2440.3

2535.1

2681.3

2826.9

2971.2

3091.4

Federal Government

1152.3

1217.7

1270.7

1236.4

1214.4

1145.3

1123.4

1123.5

1119.3

1111.1

1104.5

State & Local Government

1842.5

1871.4

1820.8

1761.0

1739.5

1748.5

1764.9

1792.4

1812.3

1829.9

1849.8

Nonresidential Fixed Investment Equipment & Software Information Processing Equipment

Aircraft Other Equipment Structures Commercial & Health

Residential Fixed Investment

Institute for Economic Competitiveness

21

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. 2015Q1

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

2.0 2.4 2.8 1.7 3.1 3.0 4.2 13.4 16.1 20.1 17.0 17.1 8.4 -11.4 5.4 -13.3 10.8 7.2 -3.6 -44.6 3.4 15.2 2.5 7.0 1.0 1.3

2015Q2

2.4 3.0 3.4 5.5 3.4 3.1 2.2 7.7 14.8 19.0 12.8 8.8 -5.3 -18.0 -19.7 -12.5 12.4 1.1 -8.8 -43.9 2.8 12.6 2.0 3.1 0.4 1.9

2015Q3

2.3 2.6 3.1 5.8 3.1 2.7 5.2 9.0 16.4 22.0 14.1 9.1 -3.6 -17.4 -15.9 -3.4 11.0 5.4 -5.6 -23.3 3.8 7.1 2.5 6.2 0.3 1.7

2015Q4

2.3 2.6 2.9 5.8 3.1 2.4 5.6 7.5 15.0 14.0 15.0 6.9 -3.5 -17.7 -4.6 0.5 8.5 4.0 -3.7 -9.7 5.5 11.8 3.4 7.3 -0.1 1.4

2016Q1

2.4 2.7 2.9 6.8 2.7 2.3 5.6 5.6 12.3 11.8 13.7 5.4 -4.5 3.8 -11.9 4.5 9.2 -29.4 0.3 13.8 21.9 9.1 3.1 5.0 -0.6 0.8

2016Q2

2017Q1

2017Q2

2017Q3

Composition of Real GDP, Percent Change, Annual Rate 2.9 2.9 3.4 2.8 2.7 2.6 2.8 2.8 3.1 2.9 2.9 2.7 2.6 2.7 2.8 2.6 2.8 2.8 5.4 5.6 5.6 5.9 7.4 7.3 2.4 2.9 2.7 2.3 2.4 2.3 2.2 2.2 2.4 2.2 2.2 2.2 7.1 5.5 7.1 6.9 6.3 5.7 8.1 6.2 6.8 6.5 5.2 4.6 11.1 8.9 8.5 8.8 7.5 5.7 10.0 10.0 9.8 9.1 9.3 7.3 12.3 9.5 8.9 11.2 7.9 4.8 4.4 6.1 8.4 7.2 5.8 5.2 7.4 -1.9 -0.6 1.4 0.5 1.8 7.3 4.6 6.5 4.6 3.8 8.5 1.7 1.5 -1.8 -8.2 5.8 4.6 7.7 5.2 12.3 10.8 10.8 10.4 14.4 17.8 25.0 10.0 10.6 9.9 -33.6 -24.9 -3.2 16.8 17.0 13.0 -1.8 -0.7 -2.1 8.3 7.5 6.0 32.3 6.3 17.2 11.7 11.6 12.9 11.9 11.8 11.2 10.8 10.3 11.3 10.3 7.0 13.3 12.5 6.4 4.6 3.9 4.8 4.7 4.5 4.5 4.1 6.1 4.6 4.5 5.3 4.3 5.4 -0.6 -0.9 -0.9 -0.7 -0.7 -0.7 0.9 0.9 0.9 1.1 0.9 1.0

Prices & Wages, Percent Change, Annual Rate 2.2 1.6 1.5 1.8 2.0 2.6 2.4 2.3 2.2 2.8 2.2 2.2 2.1 2.2 2.2 3.2 2.5 2.2 2.5 3.6 3.1 3.2 3.2 3.2 3.2

2.1 -4.0 1.2 -11.7 2.3

3.1 1.9 2.2 -0.1 2.6

1.5 1.4 2.3 0.4 3.0

1.9 3.0 2.2 3.5 3.0

2.3 3.1 2.2 3.7 2.9

52.3 0.0 1.0 78.1 91.8 92.6 16.556 1.104 4.546 5.6 2.3 -646 -345

54.4 1.5 1.3 78.0 71.5 92.7 16.503 1.115 4.757 5.7 1.8 -586 -257

54.2 1.6 0.8 77.9 59.7 91.7 16.489 1.156 4.881 5.6 1.6 -554 -274

61.4 1.2 2.3 77.8 48.3 91.9 16.519 1.177 4.987 5.6 1.8 -503 -303

69.2 1.4 3.9 77.7 36.4 91.4 16.674 1.197 5.063 5.5 1.7 -509 -312

73.8 1.9 4.7 78.0 40.7 90.5 16.804 1.248 5.075 5.5 1.8 -483 -297

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

0.14 0.04 0.19 1.33 1.85 2.44 3.73 2054 8.6 1.160 41.7

0.14 0.11 0.21 1.47 2.10 2.78 3.84 2107 10.8 1.200 14.4

0.14 0.15 0.24 1.54 2.23 3.01 3.93 2140 6.4 1.203 1.0

0.28 0.29 0.45 1.77 2.47 3.26 4.20 2187 9.1 1.201 -0.4

0.54 0.56 0.85 2.08 2.86 3.56 4.61 2221 6.3 1.192 -3.1

0.79 0.89 1.25 2.42 3.24 3.88 5.08 2241 3.7 1.178 -4.6

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

15096 4.6 13289 4.1 12258 6.3 5.3 1780 -7.8

15228 3.5 13385 2.9 12303 1.5 4.9 1928 37.6

15365 3.6 13495 3.3 12367 2.1 4.7 1938 2.0

15524 4.2 13611 3.5 12404 1.2 4.3 1961 4.9

15740 5.7 13779 5.0 12485 2.6 4.3 1917 -8.7

15928 4.9 13925 4.3 12553 2.2 4.2 1964 10.2

22

2016Q4

2017Q4

2.6 2.5 2.6 4.6 2.4 2.4 5.5 4.3 5.5 6.5 5.2 4.8 1.5 2.6 0.6 10.0 7.2 9.4 7.0 17.4 8.9 2.1 4.6 4.6 -0.7 1.0

2018Q1

2.3 2.3 2.1 2.6 2.0 2.0 5.5 4.8 5.7 6.1 5.6 3.4 5.2 1.0 6.4 9.6 10.2 -1.5 8.9 14.3 9.6 -0.8 5.5 3.8 -0.6 1.0

2018Q2

2.4 2.4 2.4 3.3 2.2 2.3 4.4 4.8 6.7 9.9 5.2 2.4 4.7 4.2 8.5 5.9 8.2 3.6 2.2 9.1 2.7 -1.0 5.8 3.9 -0.5 1.4

2018Q3

2.6 2.7 2.5 4.4 2.2 2.3 4.5 4.6 5.9 6.9 4.8 2.7 4.0 5.0 6.5 6.9 8.4 15.4 6.1 5.3 2.8 1.2 5.8 3.4 -0.6 1.1

2018Q4

2.7 2.7 2.5 4.5 2.1 2.3 4.7 4.8 5.9 8.0 4.1 2.1 5.5 4.6 4.6 7.1 9.2 16.3 4.8 5.2 3.2 1.8 6.1 3.5 -0.4 1.0

Billions of Dollars 16391.2 16490.3 16582.9 16676.8 16774.7 16894.8 17017.6 17159.9 17279.4 17396.7 17509.6 17621.0 17721.5 17829.0 17943.9 18063.2 17901.3 18147.7 18316.5 18507.1 18719.9 18957.6 19170.9 19403.8 19624.0 19855.6 20087.9 20318.9 20539.0 20760.2 20991.8 21230.8

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

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

2016Q3

U.S. Forecast | March 2015

2.1 2.8 2.2 3.7 3.2

2.1 2.7 2.2 2.8 3.3

2.1 2.6 2.2 2.9 3.5

1.9 2.5 2.2 2.4 3.4

1.9 2.4 2.2 2.7 3.4

1.9 2.3 2.2 2.1 3.4

Other Key Measures 76.3 78.0 79.6 84.1 1.9 2.3 1.9 1.9 4.8 5.6 3.8 3.5 78.3 78.7 78.7 78.5 45.4 56.4 54.5 46.8 90.2 90.5 88.4 87.8 16.832 16.853 17.004 17.180 1.282 1.366 1.411 1.412 4.944 4.971 4.989 4.863 5.5 5.4 5.4 5.3 1.7 1.7 1.3 1.2 -481 -490 -499 -517 -325 -377 -439 -475

87.7 1.9 3.0 78.3 42.5 87.8 17.309 1.427 4.832 5.3 1.1 -527 -489

91.4 2.0 2.8 78.2 43.5 88.0 17.226 1.426 4.776 5.3 1.0 -557 -485

94.3 1.9 2.8 78.1 43.9 87.6 17.025 1.430 4.736 5.3 0.8 -552 -478

96.6 2.2 3.0 78.0 45.0 87.9 16.859 1.436 4.721 5.3 0.8 -587 -471

98.4 2.3 3.3 77.9 42.4 87.7 16.820 1.457 4.738 5.3 0.8 -604 -474

101.2 2.4 3.2 77.9 41.1 87.3 16.801 1.474 4.761 5.3 0.8 -616 -487

Financial Markets, NSA 1.03 1.28 1.71 2.21 1.17 1.42 1.81 2.27 1.55 1.77 2.16 2.61 2.67 2.82 3.04 3.18 3.37 3.37 3.42 3.46 3.94 3.88 3.92 3.95 5.30 5.31 5.32 5.36 2267 2302 2339 2361 4.7 6.3 6.7 3.8 1.164 1.145 1.131 1.115 -4.7 -6.2 -5.1 -5.4

2.71 2.62 2.85 3.29 3.54 4.00 5.43 2384 3.9 1.100 -5.4

3.20 3.02 3.28 3.64 3.84 4.25 5.65 2393 1.4 1.083 -5.8

3.67 3.43 3.72 3.98 4.13 4.49 5.94 2369 -3.9 1.071 -4.6

3.75 3.51 3.77 4.00 4.13 4.49 6.04 2339 -5.0 1.061 -3.7

3.75 3.51 3.75 3.95 4.08 4.44 6.00 2339 0.0 1.052 -3.1

3.75 3.51 3.73 3.92 4.04 4.41 5.96 2360 3.6 1.046 -2.2

Incomes 16349 16597 5.5 6.2 14298 14496 5.4 5.7 12765 12882 3.4 3.7 4.5 4.8 1941 1853 -2.0 -16.8

17025 5.1 14891 5.5 13089 3.3 5.0 1831 -1.4

17241 5.2 15101 5.8 13202 3.5 5.2 1845 3.1

17482 5.7 15289 5.1 13295 2.8 5.4 1812 -7.0

17694 4.9 15495 5.5 13405 3.3 5.6 1834 4.9

17898 4.7 15689 5.1 13503 3.0 5.7 1852 4.0

18104 4.7 15880 4.9 13600 2.9 5.7 1862 2.1

16131 5.2 14110 5.4 12658 3.4 4.4 1951 -2.6

16813 5.3 14692 5.5 12984 3.2 4.9 1838 -3.3

U . S . F orecast T ables Table 4. Quarterly Gross Domestic Product 2015Q1

Table 4. Quarterly Gross Domestic Product 2015Q2

2015Q3

2015Q4

2016Q1

2016Q2

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

2017Q4

2018Q1

2018Q2

2018Q3

2018Q4

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

16391.2 16490.3 16582.9 16676.8 16774.7 16894.8 17017.6 17159.9 17279.4 17396.7 17509.6 17621.0 17721.5 17829.0 17943.9 18063.2 16272.5 16394.5 16501.1 16606.7 16717.0 16832.7 16950.6 17081.8 17202.9 17327.8 17444.9 17555.1 17655.1 17761.3 17878.7 17999.1 11193.2 11287.3 11374.2 11455.9 11537.6 11612.1 11690.6 11771.8 11848.3 11931.6 12014.0 12092.5 12154.9 12226.0 12301.0 12376.1

Durables

1463.6 1483.3 1504.4 1525.9 1551.4 1571.9 1593.3 1615.3 1638.6 1668.3 1698.0 1717.4 1728.3 1742.5 1761.4 1780.9

Nondurables

2413.2 2433.8 2452.5 2471.3 2487.8 2502.5 2520.4 2537.5 2552.2 2567.7 2582.3 2597.4 2610.4 2624.5 2638.8 2652.7

Services

7345.3 7400.8 7450.0 7493.9 7536.8 7578.6 7620.6 7665.4 7707.3 7750.1 7793.0 7839.5 7878.9 7923.2 7967.6 8012.1

Nonresidential Fixed Investment Equipment & Software Information Processing Equipment

2177.3 2189.2 2217.3 2247.4 2278.2 2317.7 2348.7 2389.2 2429.1 2466.5 2500.7 2534.4 2568.3 2596.3 2625.3 2655.6 1055.5 1075.4 1098.8 1118.9

1134.2 1156.6 1174.2 1193.6 1212.4 1227.8 1241.7 1254.8 1269.6 1284.5 1299.0 1314.1

334.4

346.2

359.5

372.3

383.3

393.5

402.0

410.3

419.0

426.6

432.6

438.5

444.6

451.9

458.4

465.0

90.1

94.1

98.9

102.2

105.1

107.7

110.3

112.9

115.4

118.0

120.1

122.0

123.8

126.8

128.9

131.4

120.2

123.9

128.1

132.6

136.9

141.0

144.2

147.3

151.3

154.2

156.0

158.0

160.2

162.2

164.1

165.8

Industrial Equipment

237.3

242.4

247.7

251.9

255.2

258.0

261.8

267.2

271.9

275.7

279.2

282.5

284.8

286.5

288.4

289.9

Transportation Equipment

269.6

266.0

263.6

261.3

258.3

262.9

261.7

261.3

262.2

262.6

263.7

264.7

268.1

271.2

273.9

277.6

38.0

36.2

34.5

32.9

33.2

33.8

34.1

34.7

35.1

35.4

36.1

36.4

36.5

36.8

37.3

37.7

62.6

59.2

56.7

56.1

54.3

54.5

54.7

54.5

53.3

54.1

54.7

54.8

55.6

56.8

57.7

58.3

447.3

432.6

428.9

429.4

434.2

442.3

448.0

461.2

473.2

485.5

497.6

509.6

521.5

529.0

537.9

547.2

119.9

123.5

126.7

129.3

132.2

136.7

142.5

150.6

154.3

158.2

162.0

164.8

168.9

172.2

175.7

179.6

Manufacturing

53.9

54.0

54.7

55.3

50.7

45.7

42.6

42.2

43.9

45.7

47.1

48.1

48.0

48.4

50.1

52.1

Power & Communication

86.8

84.8

83.6

82.8

82.9

82.5

82.4

81.9

83.6

85.1

86.4

87.8

89.7

90.2

91.6

92.6

121.7

105.3

98.5

96.1

99.2

106.4

108.0

112.4

115.6

118.8

122.4

127.4

131.8

134.7

136.4

138.2

66.0

66.5

67.1

68.0

71.4

73.5

75.5

77.6

79.6

81.5

83.8

85.5

87.5

88.1

88.7

89.4

522.8

538.5

547.8

563.3

575.7

590.0

600.1

619.1

637.6

647.6

654.9

658.2

657.0

655.3

657.1

660.0

Computers & Peripherals Communications Equipment

Aircraft Other Equipment Structures Commercial & Health

Mining & Petroleum Other Residential Fixed Investment Exports

2131.7 2142.2 2155.4 2173.4 2189.8 2210.7 2236.9 2262.6 2287.8 2313.0 2336.6 2362.8 2394.5 2428.8 2463.2 2500.0

Imports

2633.9 2654.3 2694.5 2742.4 2775.7 2811.9 2841.3 2878.7 2921.6 2954.7 2987.2 3021.1 3049.7 3079.2 3104.9 3131.8

Federal Government

1122.4 1123.4 1124.2 1124.1 1122.3 1120.7 1118.3

State & Local Government

1780.8 1789.3 1796.7 1803.0 1806.4 1810.3 1814.2 1818.4 1823.3 1827.6 1832.1 1836.7 1841.3 1847.7 1852.9 1857.3

1115.9

1114.0

1112.1

1110.1

1108.2 1106.6 1105.1 1103.6 1102.5

Institute for Economic Competitiveness

23

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

Table 5. Annual Employment 2008

2009

History 2010 2011

2012

2013

2014

2015

Forecast 2016 2017

2018

Millions Total Nonfarm Employment

137.17

131.22

130.27

131.84

134.10

136.39

139.02

141.94

144.41

146.42

147.73

Private Nonfarm

114.67

108.67

107.78

109.75

112.18

114.55

117.17

120.04

122.44

124.23

125.27

Mining

0.71

0.64

0.65

0.74

0.80

0.81

0.84

0.81

0.80

0.84

0.88

Construction

7.16

6.02

5.52

5.53

5.65

5.86

6.14

6.46

6.81

7.27

7.64

Manufacturing

13.40

11.85

11.53

11.73

11.93

12.02

12.19

12.41

12.62

12.72

12.75

Trade, Transportation and Utilities

26.29

24.90

24.64

25.07

25.47

25.86

26.38

26.90

27.27

27.53

27.63

Transportation & Warehousing

4.51

4.24

4.19

4.30

4.41

4.50

4.63

4.78

4.94

5.11

5.22

Financial Activities

8.20

7.84

7.70

7.70

7.78

7.89

7.98

8.11

8.12

8.04

7.91

Education & Health

19.16

19.55

19.89

20.23

20.70

21.10

21.47

21.96

22.43

22.71

22.89

Professional & Business Services

17.74

16.57

16.72

17.33

17.93

18.52

19.10

19.81

20.69

21.27

21.48

2.98

2.80

2.71

2.67

2.68

2.71

2.74

2.78

2.80

2.81

2.82

Leisure & Hospitality

13.44

13.07

13.04

13.35

13.77

14.26

14.71

15.12

15.25

15.44

15.68

Government

22.50

22.55

22.49

22.09

21.92

21.85

21.86

21.91

21.97

22.19

22.46

2.76

2.83

2.98

2.86

2.82

2.77

2.73

2.72

2.68

2.65

2.61

19.74

19.72

19.51

19.23

19.10

19.08

19.13

19.19

19.28

19.55

19.85

Information

Federal State & Local

Growth Rates Total Nonfarm Employment

-0.55

-4.34

-0.71

1.21

1.71

1.71

1.93

2.10

1.74

1.40

0.89

Private Nonfarm

-0.91

-5.23

-0.80

1.83

2.22

2.11

2.29

2.45

2.01

1.46

0.83

6.77

-14.61

11.68

13.57

2.32

3.07

5.19

-8.65

4.70

4.42

3.57

Construction

-9.21

-16.57

-3.35

1.88

1.75

4.30

5.05

5.69

5.65

6.81

4.16

Manufacturing

-5.37

-11.38

0.65

1.75

1.45

0.95

1.74

1.80

1.07

0.88

0.07

Trade, Transportation and Utilities

-3.31

-4.83

0.76

1.95

1.48

1.85

2.02

1.78

1.24

0.70

0.15

Transportation & Warehousing

-2.70

-6.16

2.14

2.38

2.66

1.93

3.51

2.94

3.62

2.78

1.75

Financial Activities

-2.28

-4.32

-0.90

0.50

1.25

1.22

1.57

1.33

-0.60

-1.35

-1.29

Education & Health

2.72

1.83

1.70

1.85

2.35

1.68

2.11

1.91

2.46

0.74

0.82

Professional & Business Services

-3.60

-5.15

2.96

3.56

3.32

3.23

3.46

3.92

4.61

1.52

0.79

Information

-3.14

-6.02

-2.35

-0.37

-0.19

1.95

1.32

0.47

0.94

0.37

0.62

Leisure & Hospitality

-1.66

-2.46

1.26

2.79

3.14

3.65

3.18

2.19

0.42

1.73

1.39

Government

0.98

-0.18

-0.94

-1.39

-0.39

-0.25

0.27

0.06

0.59

1.13

1.24

Federal

1.11

2.46

4.80

-0.84

-1.03

-2.52

-0.58

-0.72

-1.45

-1.41

-1.45

State & Local

0.97

-0.53

-1.31

-1.47

-0.29

0.09

0.39

0.18

0.88

1.48

1.60

Mining

24

U.S. Forecast | March 2015

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

Table 6. Quarterly Employment

2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4

Employment (Millions) Total Nonfarm Employment

141.0 141.7 142.2 142.9 143.5 144.1 144.7 145.3 145.8 146.2 146.6 147.0 147.3 147.6 147.9 148.2

Private Nonfarm

119.1 119.8 120.3 120.9 121.6 122.2 122.7 123.3 123.7 124.1 124.4 124.7 124.9 125.2 125.4 125.6

Mining

0.8

0.8

0.8

0.8

0.8

0.8

0.8

0.8

0.8

0.8

0.8

0.9

0.9

0.9

0.9

0.9

Construction

6.3

6.4

6.5

6.6

6.7

6.8

6.9

7.0

7.1

7.2

7.3

7.4

7.5

7.6

7.7

7.7

Manufacturing

12.4

12.4

12.4

12.5

12.6

12.6

12.6

12.6

12.7

12.7

12.7

12.7

12.7

12.7

12.7

12.7

Trade, Transportation and Utilities

26.7

26.8

26.9

27.1

27.1

27.2

27.3

27.4

27.4

27.5

27.6

27.6

27.6

27.6

27.6

27.6

Transportation & Warehousing

4.7

4.8

4.8

4.8

4.9

4.9

5.0

5.0

5.1

5.1

5.1

5.2

5.2

5.2

5.2

5.2

Financial Activities

8.1

8.1

8.1

8.1

8.1

8.1

8.1

8.1

8.1

8.1

8.0

8.0

8.0

7.9

7.9

7.9

Education & Health

21.8

21.9

22.0

22.1

22.2

22.4

22.5

22.6

22.6

22.7

22.7

22.8

22.8

22.9

22.9

23.0

Professional & Business Services

19.5

19.7

19.9

20.1

20.3

20.6

20.8

21.0

21.2

21.2

21.3

21.4

21.4

21.5

21.5

21.5

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

Leisure & Hospitality

15.0

15.1

15.2

15.2

15.2

15.2

15.2

15.3

15.3

15.4

15.5

15.5

15.6

15.6

15.7

15.8

Government

21.9

21.9

21.9

21.9

21.9

21.9

22.0

22.0

22.1

22.2

22.2

22.3

22.4

22.4

22.5

22.6

2.7

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

19.2

19.2

19.2

19.2

19.2

19.2

19.3

19.4

19.4

19.5

19.6

19.7

19.7

19.8

19.9

20.0

Information

Federal State & Local

Growth Rates Total Nonfarm Employment

2.30

1.77

1.57

1.78

1.71

1.83

1.65

1.71

1.31

1.20

1.06

0.99

0.80

0.78

0.80

0.77

Private Nonfarm

2.70

2.08

1.81

2.16

2.00

2.09

1.80

1.84

1.32

1.24

1.05

0.96

0.73

0.67

0.71

0.71

-8.44 -13.62

-8.12

-5.73

-1.27

3.87

7.56

8.10

5.27

3.55

4.39

4.18

4.57

3.77

3.28

2.48

Mining Construction

6.73

5.21

4.87

5.49

4.78

5.46

5.47

6.42

7.08

7.05

6.51

5.92

5.14

4.20

3.68

3.38

Manufacturing

2.45

1.72

0.07

2.92

2.67

1.52

0.54

-0.50

1.40

1.33

0.85

-0.06

-0.05

0.25

0.03

0.03

Trade, Transportation and Utilities

2.09

1.45

1.68

1.86

1.02

1.16

1.34

1.44

0.57

0.92

0.88

0.44

0.24

-0.01

0.18

0.18

Transportation & Warehousing

2.52

1.70

3.65

3.88

3.01

3.51

3.76

4.20

3.33

2.76

2.63

2.42

2.72

2.12

1.08

1.09

Financial Activities

2.15

0.47

1.71

1.00

0.15

-0.84

-1.28

-0.43

-0.38

-1.30

-1.80

-1.93

-1.46

-1.82

-1.00

-0.87

Education & Health

2.51

2.42

1.65

1.07

2.49

3.48

1.76

2.12

0.21

0.94

0.58

1.24

0.24

1.20

0.97

0.88

Professional & Business Services

3.43

3.84

3.93

4.48

4.43

4.70

4.54

4.75

2.72

1.00

1.12

1.24

1.22

0.43

0.50

1.01

Information

2.95

1.17

-3.07

0.84

-0.05

4.79

2.88

-3.85

1.58

1.62

-0.92

-0.78

1.38

0.96

0.64

-0.50

Leisure & Hospitality

3.25

2.16

1.95

1.40

0.57

-0.62

0.65

1.07

1.40

1.84

1.87

1.80

1.20

1.41

1.57

1.38

Government

0.18

0.10

0.25

-0.27

0.13

0.43

0.86

0.95

1.22

1.00

1.13

1.16

1.19

1.39

1.29

1.09

Federal

0.23

-0.78

-0.98

-1.36

-1.21

-1.72

-1.39

-1.47

-1.10

-1.22

-1.63

-1.71

-1.53

-1.49

-1.36

-1.43

State & Local

0.17

0.22

0.42

-0.12

0.32

0.74

1.18

1.28

1.55

1.31

1.51

1.55

1.56

1.78

1.65

1.43

Institute for Economic Competitiveness

25

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

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

2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4

GDP

109.2 110.1 110.5 111.0 111.6 112.2 112.7 113.1 113.6 114.1 114.7 115.3 115.9 116.4 117.0 117.5

Consumption

108.4 108.8 109.1 109.7 110.4 110.9 111.5 112.0 112.5 113.2 113.8 114.4 115.0 115.6 116.2 116.8

Durables Motor Vehicles Furniture

90.7

90.5

90.2

89.9

89.6

89.3

89.0

88.7

88.4

88.2

88.0

87.8

87.6

87.4

87.2

86.9

110.2 110.7 111.0 111.3 111.4 111.4 111.5 111.7 111.9 112.1 112.3 112.6 113.0 113.3 113.7 114.0 87.3

87.3

87.2

87.0

86.9

86.7

86.5

86.3

86.1

86.0

85.9

85.7

85.6

85.5

85.3

85.2

Other Durables

100.9 101.1 101.3 101.5 101.8 102.1 102.3 102.6 102.8 103.1 103.3 103.6 103.9 104.1 104.4 104.6

Nondurables

108.1 108.6 108.6 109.8 111.1 112.0 112.5 113.2 113.8 114.7 115.5 116.4 117.2 117.9 118.6 119.2

Food

111.6 111.9 112.3 112.6 113.1 113.5 113.9 114.3 114.7 115.2 115.7 116.3 116.8 117.4 117.9 118.4

Clothing & Shoes

104.9 105.0 105.0 105.1 105.1 105.3 105.3 105.3 105.3 105.3 105.3 105.3 105.3 105.3 105.3 105.3

Gasoline & Oil

96.4

98.7

96.6 104.2 112.2 116.0 117.8 120.2 121.6 126.3 129.8 133.6 136.5 138.9 140.8 142.7

Fuel

98.4

97.4

97.8 103.7 109.5 112.8 114.9 117.6 119.5 122.9 125.5 128.3 130.7 132.9 134.8 136.7

Services

111.6 112.1 112.6 113.2 113.8 114.5 115.2 115.8 116.5 117.2 117.9 118.6 119.4 120.1 120.8 121.6

Housing

110.9 111.6 112.4 113.1 113.9 114.6 115.3 115.9 116.6 117.2 117.9 118.6 119.2 119.9 120.6 121.2

Electricity

109.1 108.1 107.4 107.0 106.7 106.9 107.6 108.3 108.9 109.7 111.1 112.4 113.2 113.9 114.8 115.9

Natural Gas Water & Sewer Telephone

92.4

87.7

85.6

85.7

84.6

86.3

88.8

88.1

88.4

89.2

91.8

92.0

93.2

93.6

95.1

95.1

132.6 133.8 134.9 136.0 137.1 138.3 139.4 140.5 141.5 142.6 143.7 144.9 146.1 147.4 148.6 149.9 94.4

94.4

94.3

94.1

94.0

93.9

93.8

93.8

93.7

93.6

93.4

93.3

93.2

93.1

93.0

92.9

Transportation

110.5 110.8 111.2 111.7 112.3 112.8 113.4 114.0 114.6 115.2 115.8 116.4 117.1 117.7 118.4 119.0

Other Services

115.4 116.0 116.7 117.4 118.2 119.0 119.8 120.6 121.5 122.4 123.3 124.1 125.0 126.0 127.0 127.9

26

U.S. Forecast | March 2015

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

Table 8. Percent Change in Implicit Price Deflators

2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4

GDP

2.1

3.1

1.5

1.9

2.3

2.2

1.6

1.5

1.8

2.0

2.1

2.1

2.1

1.9

1.9

1.9

Consumption

-2.1

1.4

1.2

2.3

2.3

2.1

1.9

1.9

1.9

2.2

2.2

2.2

2.1

2.1

2.1

2.0

Durables

-2.9

-1.1

-1.2

-1.1

-1.4

-1.4

-1.4

-1.2

-1.2

-1.1

-1.1

-1.0

-0.9

-0.9

-0.9

-1.0

Motor Vehicles

-0.2

1.6

1.3

1.0

0.2

0.2

0.4

0.6

0.7

0.8

0.9

1.0

1.2

1.2

1.2

1.1

Furniture

-2.5

-0.1

-0.4

-0.6

-0.8

-0.9

-0.9

-0.8

-0.7

-0.7

-0.6

-0.6

-0.6

-0.6

-0.6

-0.7

Other Durables

-1.9

0.9

0.9

0.9

1.0

1.1

1.0

1.0

1.0

1.1

0.9

1.0

1.0

1.1

1.0

1.0

-12.7

1.9

0.2

4.5

4.8

3.1

2.1

2.3

2.1

3.4

2.9

3.0

2.8

2.5

2.2

2.2

2.5

1.3

1.2

1.3

1.7

1.6

1.3

1.3

1.5

1.8

1.8

2.0

1.9

1.9

1.7

1.6

-1.4

0.5

0.0

0.4

0.1

0.5

0.1

0.1

0.0

0.1

0.0

0.0

0.0

0.1

-0.1

-0.1

Gasoline & Oil

-71.3

10.0

-8.4

35.8

34.4

14.3

6.4

8.2

4.8

16.3

11.4

12.3

9.0

7.2

5.6

5.7

Fuel

-70.0

-3.7

1.6

26.0

24.7

12.5

7.6

9.5

6.6

12.0

8.8

9.1

7.8

6.8

5.8

5.7

Services

1.8

1.7

1.9

2.1

2.2

2.3

2.4

2.3

2.3

2.4

2.5

2.5

2.4

2.4

2.5

2.4

Housing

2.5

2.8

2.8

2.7

2.6

2.5

2.4

2.3

2.3

2.3

2.3

2.3

2.3

2.3

2.3

2.3

Electricity

3.4

-3.4

-2.5

-1.7

-1.0

0.9

2.7

2.6

2.0

3.2

5.1

4.6

2.9

2.5

3.4

3.6

-2.3

-18.6

-9.4

0.3

-5.1

8.5

11.8

-2.8

1.3

3.3

12.4

0.9

5.5

1.6

6.5

-0.1

6.9

3.6

3.5

3.4

3.3

3.3

3.3

3.2

3.0

3.0

3.2

3.3

3.4

3.4

3.4

3.4

-2.9

-0.3

-0.3

-0.9

-0.3

-0.3

-0.5

-0.1

-0.6

-0.5

-0.5

-0.4

-0.5

-0.5

-0.4

-0.4

Transportation

2.3

0.9

1.5

1.9

2.1

2.0

2.1

2.1

2.1

2.1

2.1

2.3

2.3

2.2

2.1

2.0

Other Services

1.7

2.3

2.2

2.4

2.8

2.8

2.7

2.9

2.9

2.9

2.9

2.9

2.9

3.0

3.2

3.1

Nondurables Food Clothing & Shoes

Natural Gas Water & Sewer Telephone

Institute for Economic Competitiveness

27

U . S . F orecast T ables

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

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

2008 GDP

2009

History 2010 2011 2012

2013

2014

2015

Forecast 2016 2017

2018

99.2 100.0 101.2 103.3 105.2 106.7 108.3

110.2 112.4 114.4 116.7

Consumption

100.1 100.0 101.7 104.1 106.1 107.3 108.8

109.0 111.2 113.5 115.9

Durables

101.8 100.0

Motor Vehicles Furniture Other Durables

98.6

97.7

96.5

94.7

92.4

99.7 100.0 105.7 108.9 110.4 111.1 110.6 100.4 100.0

95.8

94.2

94.0

92.1

88.8

90.3

89.1

88.1

87.3

110.8 111.5 112.2 113.5 87.2

86.6

85.9

85.4

98.9 100.0 100.4 103.6 104.1 103.9 102.2

101.2 102.2 103.2 104.3

102.7 100.0 103.1 109.2 111.8 112.0 112.7

108.8 112.2 115.1 118.2

Food

98.9 100.0 100.3 104.3 106.6 107.8 109.8

112.1 113.7 115.5 117.6

Clothing & Shoes

99.1 100.0

99.3 101.1 104.7 105.7 106.1

105.0 105.2 105.3 105.3

Gasoline & Oil

136.6 100.0 118.2 149.3 154.6 150.4 144.7

99.0 116.6 127.8 139.7

Fuel

146.0 100.0 117.0 148.8 150.7 149.0 148.3

99.3 113.7 124.0 133.7

Services

98.9 100.0 101.7 103.5 105.7 107.9 110.3

112.4 114.8 117.6 120.5

Housing

98.3 100.0 100.1 101.4 103.7 106.1 109.0

112.0 114.9 117.6 120.2

Electricity

97.1 100.0 100.2 101.8 101.8 103.9 107.7

107.9 107.4 110.5 114.4

Nondurables

Natural Gas

128.2 100.1

98.1

95.1

85.9

89.9

96.4

87.9

86.9

90.3

94.2

Water & Sewer

94.2 100.0 106.3 111.8 117.9 123.3 127.8

Telephone

98.7 100.0

Transportation

97.0 100.0 102.0 104.8 106.8 108.1 109.4

111.0 113.1 115.5 118.0

Other Services

97.3 100.0 103.0 105.6 108.3 111.3 113.9

116.4 119.4 122.8 126.5

28

U.S. Forecast | March 2015

99.3

97.5

97.7

97.2

96.5

134.3 138.8 143.2 148.0 94.3

93.9

93.5

93.1

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

Table 10. Percent Change in Implicit Price Deflators History Forecast 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

2018

GDP

1.9

0.4

1.8

1.9

1.8

1.4

1.2

2.2

1.9

2.0

1.9

Consumption

1.6

1.2

1.3

2.7

1.6

1.0

1.1

0.7

2.1

2.1

2.1

Durables

-2.1

-0.9

-2.1

-0.5

-1.6

-2.0

-2.6

-1.6

-1.4

-1.1

-0.9

Motor Vehicles

-4.1

5.6

2.9

3.3

0.8

0.5

-0.7

0.9

0.4

0.8

1.2

Furniture

0.3

-2.0

-4.4

-0.2

-0.5

-3.0

-3.1

-0.9

-0.9

-0.7

-0.6

Other Durables

3.2

1.3

0.6

3.2

-0.6

-0.6

-1.9

0.2

1.0

1.0

1.0

Nondurables

1.2

2.8

2.2

5.9

1.9

-0.4

-0.2

-1.5

3.1

2.9

2.4

Food

6.9

-1.8

1.3

5.1

1.2

0.8

2.8

1.6

1.5

1.8

1.8

-0.9

1.5

-1.4

4.4

2.5

0.2

-0.4

-0.1

0.2

0.0

0.0

4.8

26.8

13.4

20.4

4.6

-5.0

-9.7

-8.5

15.8

11.2

6.8

22.4

-0.8

15.7

26.2

3.1

-1.2

-7.9

-11.5

13.6

9.1

6.5

Services

2.5

1.1

1.5

2.1

2.1

2.1

2.2

1.9

2.3

2.4

2.5

Housing

2.5

0.9

0.3

1.9

2.3

2.5

2.8

2.7

2.5

2.3

2.3

Electricity

8.2

-0.4

0.5

2.4

-0.8

3.1

3.1

-1.0

1.3

3.7

3.1

19.1

-18.3

-1.2

-1.6

-4.3

2.5

6.1

-7.5

3.1

4.5

3.4

Water & Sewer

6.8

6.0

5.7

4.9

6.0

3.8

4.4

4.3

3.3

3.1

3.4

Telephone

2.0

0.6

-1.1

-1.5

0.1

-0.4

-2.0

-1.1

-0.3

-0.5

-0.5

Transportation

5.9 2.2 1.5 3.1 1.3 and 1.6its Components 1.0 1.6 2.1 2.1 Table 11. Personal Income History 2.2 4.7 2.4 2.7 2.8 2.9 2.4 2.2 2.8 Forecast 2.9

2.2

Clothing & Shoes Gasoline & Oil Fuel

Natural Gas

Table 11. Personal Income and its Components

Other Services

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

3.1

2018

Personal Income Billions Current Dollars Personal Income

12429.6 12087.5 12429.4 13202.0 13887.7 14166.9 14716.6 8078.2

7787.0

7961.5

Other Labor Income

1075.1

1077.5

1114.6

1142.0

1160.5

1193.9

1226.4

1261.9

1310.0

1368.7

1429.4

979.5

937.6

986.7

1068.1

1187.9

1253.5

1316.6

1396.7

1467.2

1523.9

1568.7

Nonfarm Income Farm Income

8269.0

8606.5

8844.8

9207.0

15303.1 16036.9 16919.2 17794.5

Wages & Salaries

9595.7 10077.1 10605.7 11136.4

47.0

35.5

46.0

75.6

72.3

83.2

63.7

60.6

64.1

66.1

66.6

Rental Income

262.1

333.7

402.8

485.3

533.0

595.8

640.6

655.5

648.7

656.9

664.7

Dividends

805.5

553.8

544.6

682.3

832.7

824.6

860.7

920.0

986.5

996.9

988.6

Interest Income

1361.6

1264.3

1195.1

1231.6

1255.9

1255.2

1264.0

1266.9

1341.5

1562.6

1797.3

Transfer Payments

1884.0

2140.2

2276.9

2307.9

2350.7

2414.6

2523.5

2622.6

2739.1

2877.2

3025.5

516.9

506.3

514.7

423.9

437.3

578.4

611.3

642.7

683.2

727.2

771.4

3.6

-2.8

2.8

6.2

4.0

4.8

5.5

5.2

Wages & Salaries

2.3

-3.6

2.2

3.9

4.1

2.8

4.1

4.2

5.0

5.2

5.0

Other Labor Income

3.2

0.2

3.4

2.5

1.6

2.9

2.7

2.9

3.8

4.5

4.4

Personal Social Insurance Tax

Percent Change, Annual Rate Personal Income

Nonfarm Income

5.2

2.0

3.9

4.1

-4.2

5.3

8.2

11.2

5.5

5.0

6.1

5.1

3.9

2.9

Farm Income

24.9

-21.8

30.4

66.2

-4.2

15.1

-22.6

-4.1

6.0

3.1

0.8

Rental Income

52.4

18.4

20.1

20.8

7.9

11.2

7.2

-1.5

0.7

1.5

0.6

-11.0

-33.4

23.8

23.5

48.6

-9.9

6.8

7.1

5.7

-1.5

0.5

Interest Income

Dividends

-2.2

-9.2

-1.8

3.3

1.7

0.5

-0.5

1.0

11.2

17.6

12.4

Transfer Payments

10.3

14.8

5.5

0.2

2.7

2.6

5.5

3.0

4.9

5.4

5.2

2.6

-1.8

2.4

-13.5

5.0

45.0

5.8

5.6

6.4

6.3

6.1

Personal Social Insurance Tax

Institute for Economic Competitiveness

29

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

Table 12. Personal Consumption Expenditures (Current Dollars)

2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4

Consumer Expenditures by Type Billions Current Dollars

Consumer spending on… all goods & services

12134.1 12280.1 12411.8 12570.7 12733.7 12882.1 13031.7 13185.1 13333.4 13501.1 13668.2 13832.4 13977.9 14132.7 14292.5 14451.1

durable goods

1327.9 1341.8 1356.7 1372.3 1390.2 1403.6 1417.8 1432.9 1449.3 1471.6 1493.8 1507.1 1513.3 1522.4 1535.3 1548.4

furniture and appliances

293.9

297.8

300.1

303.7

307.4

310.6

312.2

314.6

317.5

320.4

323.4

325.7

327.5

329.6

331.8

334.1

information processing equipment

106.2

107.3

108.4

109.4

110.2

111.1

112.2

113.4

114.3

115.4

116.6

117.8

118.6

119.7

120.7

121.6

motor vehicles and parts

457.5

459.6

466.6

473.3

483.4

488.4

495.8

502.1

510.2

522.3

533.9

537.2

535.2

534.9

538.7

542.8

other durable goods

139.2

141.4

142.5

143.6

144.1

145.2

145.8

146.8

147.4

148.5

149.7

150.8

151.8

152.9

153.9

154.8

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

2607.6 2642.2 2663.6 2713.8 2764.4 2801.8 2836.4 2872.1 2903.7 2945.7 2983.8 3023.8 3059.6 3095.3 3129.4 3162.9 377.9

383.8

389.2

392.0

394.6

395.9

400.3

403.5

404.9

407.9

410.8

413.7

417.2

420.2

422.8

18.0

18.4

18.7

20.1

21.5

22.4

23.0

23.6

23.9

24.3

24.6

25.0

25.3

25.6

25.8

425.0 26.0

256.4

263.4

259.4

280.8

301.8

311.2

315.4

321.1

324.6

337.0

346.1

356.5

364.8

372.4

379.0

385.9

898.7

908.2

915.3

926.7

938.3

949.0

960.6

971.2

981.6

1056.7 1068.5 1081.0 1094.1 1108.1

1123.4

1137.1

1152.7

1168.7

992.6 1003.0 1013.2 1022.8 1032.3 1041.5 1050.2 1183.8

1199.3

1215.4 1229.5 1244.8 1260.3 1275.8

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

11193.2 11287.3 11374.2 11455.9 11537.6 11612.1 11690.6 11771.8 11848.3 11931.6 12014.0 12092.5 12154.9 12226.0 12301.0 12376.1

durable goods

1463.6 1483.3 1504.4 1525.9 1551.4 1571.9 1593.3 1615.3 1638.6 1668.3 1698.0 1717.4 1728.3 1742.5 1761.4 1780.9

furniture and appliances

336.7

341.2

344.3

348.9

353.9

358.4

361.0

364.6

368.7

372.6

376.6

380.0

382.6

385.6

388.8

392.3

information processing equipment

162.3

167.5

172.6

176.3

180.8

185.4

190.7

196.3

201.5

207.3

213.4

219.8

225.4

231.8

238.0

244.4

motor vehicles and parts

415.1

415.3

420.3

425.3

434.2

438.4

444.6

449.6

456.1

465.9

475.2

476.9

473.8

472.0

474.0

476.3

other durable goods

139.2

141.0

141.7

142.3

142.5

143.1

143.5

144.2

144.6

145.4

146.4

147.3

148.1

148.9

149.8

150.6

nondurables clothing & shoes

2413.2 2433.8 2452.5 2471.3 2487.8 2502.5 2520.4 2537.5 2552.2 2567.7 2582.3 2597.4 2610.4 2624.5 2638.8 2652.7 360.3

365.5

370.7

373.0

375.4

376.1

380.2

383.1

384.5

387.3

390.1

392.8

396.1

398.9

401.4

18.3

18.9

19.1

19.4

19.7

19.8

20.0

20.1

20.0

19.8

19.6

19.5

19.4

19.2

19.1

19.0

gasoline & motor oil

266.0

266.9

268.6

269.4

269.0

268.2

267.6

267.2

266.9

266.8

266.7

266.9

267.3

268.2

269.3

270.4

food

805.4

811.4

815.3

822.9

829.5

835.7

843.3

849.8

855.8

861.6

866.6

871.2

875.4

879.3

883.4

887.3

other nondurable goods

974.4

982.5

990.3

998.0 1005.8 1014.2 1021.0 1029.4 1037.2 1044.7 1052.1 1060.3 1065.7 1072.6 1079.6 1086.6

fuel oil & coal

403.7

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

2.8

3.4

3.1

2.9

2.9

2.6

2.7

2.8

2.6

2.8

2.8

2.6

2.1

2.3

2.5

2.4

durable goods

1.7

5.4

5.7

5.7

6.7

5.3

5.4

5.5

5.8

7.2

7.1

4.6

2.5

3.3

4.3

4.4

furniture and appliances

6.1

5.4

3.6

5.3

5.7

5.1

2.9

3.9

4.4

4.3

4.3

3.5

2.8

3.2

3.3

3.6

information processing equipment

9.7

12.7

12.2

8.7

10.0

10.3

11.3

11.7

10.6

11.6

11.8

11.9

10.3

11.3

10.8

10.7

motor vehicles and parts

-4.9

0.2

4.8

4.8

8.3

3.9

5.7

4.5

5.8

8.6

8.0

1.4

-2.6

-1.5

1.7

1.9

other durable goods

2.7

5.1

2.0

1.8

0.5

1.8

1.0

2.1

1.0

2.4

2.6

2.6

2.0

2.4

2.2

2.1

nondurables

3.1

3.4

3.1

3.1

2.7

2.4

2.9

2.7

2.3

2.4

2.3

2.3

2.0

2.2

2.2

2.1

clothing & shoes

6.1

5.8

5.7

2.5

2.5

0.8

4.4

3.0

1.4

2.9

2.9

2.8

3.4

2.8

2.5

2.3

fuel oil & coal

6.4

12.4

6.1

5.4

5.4

3.6

3.3

2.3

-2.6

-3.6

-3.6

-3.1

-2.4

-2.6

-2.1

-2.1

gasoline & motor oil food

5.0

1.2

2.6

1.2

-0.7

-1.2

-0.8

-0.7

-0.4

-0.1

-0.2

0.2

0.6

1.4

1.6

1.6

-0.3

3.0

1.9

3.8

3.3

3.0

3.7

3.1

2.9

2.7

2.3

2.1

1.9

1.8

1.8

1.8

4.3

3.4

3.2

3.2

3.2

3.4

2.7

3.3

3.1

2.9

2.9

3.1

2.1

2.6

2.7

2.6

other nondurable goods

30

U.S. Forecast | March 2015

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

Table 13. Personal Consumption Expenditures (2005 Dollars) History 2008

2009

2010

2011

Forecast 2012

2013

2014

2015

2016

2017

2018

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

10013.6

9847.0 10202.2 10689.3 11083.1 11484.3 11928.3

12349.2 12958.2 13583.8 14213.5

1102.3

1023.3

1070.7

1125.3

1192.1

1249.3

1303.2

1349.7

1411.1

1480.5

1529.9

268.7

244.3

250.4

260.7

271.1

280.9

287.4

298.9

311.2

321.8

330.7

83.4

81.2

90.3

91.9

96.0

100.2

104.0

107.8

111.7

116.0

120.1

339.6

317.1

342.0

363.5

395.1

417.7

448.5

464.3

492.4

525.9

537.9

112.1

105.5

110.0

121.4

129.4

138.8

139.8

141.7

145.5

149.1

153.3

2273.4

2175.1

2292.1

2471.1

2549.8

2601.9

2665.8

2656.8

2818.7

2964.3

3111.8

319.5

306.5

320.6

338.9

353.7

360.7

365.9

385.7

398.6

409.3

421.3

30.8

24.3

26.2

29.2

26.8

26.6

27.3

18.8

22.6

24.5

25.7

gasoline & motor oil

358.3

260.2

307.3

380.4

388.6

381.8

371.1

265.0

312.4

341.0

375.5

food

772.9

770.0

788.9

829.1

854.9

872.2

888.0

912.2

954.7

997.6

1036.7

other nondurable goods

791.9

814.2

849.2

893.5

925.7

960.7

1013.6

1075.0

1130.3

1191.8

1252.6

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

10007.2

9847.0 10036.3 10263.5 10449.7 10699.7 10967.8

11327.6 11653.0 11971.6 12264.5

1083.2

1023.3

1085.7

1151.5

1235.7

1319.0

1411.1

1494.3

1583.0

1680.6

1753.2

267.7

244.3

261.5

276.6

288.4

305.1

323.4

342.8

359.5

374.5

387.3

76.9

81.2

97.2

108.0

121.7

137.3

151.4

169.7

188.3

210.5

234.9

340.8

317.1

323.4

333.8

357.9

376.0

405.6

419.0

441.7

468.5

474.0

113.4

105.5

108.9

115.1

122.4

132.0

136.7

141.0

143.3

145.9

149.3

2214.7

2175.1

2223.5

2263.2

2280.1

2322.6

2365.2

2442.7

2512.1

2574.9

2631.6

322.3

306.5

322.7

335.3

337.7

341.2

345.0

367.4

378.7

388.7

400.0

21.1

24.3

22.4

19.6

17.8

17.8

18.3

18.9

19.9

19.7

19.2

gasoline & motor oil

262.4

260.2

259.9

254.7

251.3

253.8

256.7

267.7

268.0

266.8

268.8

food

781.9

770.0

786.5

795.1

801.6

809.4

809.0

813.7

839.6

863.8

881.3

other nondurable goods

828.3

814.2

833.0

863.2

879.7

909.9

947.1

986.3

1017.6

1048.6

1076.1

nondurables clothing & shoes fuel oil & coal

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

-1.9

-0.2

3.1

1.5

2.0

2.8

2.8

3.1

2.8

2.7

2.3

-12.4

3.0

9.3

4.9

7.5

5.9

8.5

4.7

5.9

6.3

3.7

-9.1

-2.0

8.3

5.8

3.0

7.1

6.4

5.2

4.5

4.2

3.2

0.4

12.9

16.8

13.9

12.9

10.2

11.8

11.3

11.3

12.0

11.2

motor vehicles and parts

-23.0

7.9

11.0

1.5

7.7

3.1

10.6

1.3

5.7

6.1

-0.1

other durable goods

-12.3

0.6

5.5

3.2

10.8

5.4

3.0

2.9

1.4

2.1

2.2

nondurables

-2.6

0.2

3.3

0.4

1.0

2.5

2.3

3.2

2.7

2.4

2.1

clothing & shoes

-3.2

-1.0

7.6

1.1

0.6

1.4

4.1

5.1

2.7

2.5

2.8

7.9

7.5

-7.6

-12.6

3.1

11.9

-2.0

7.8

3.7

-3.2

-2.3

gasoline & motor oil

-3.9

-1.1

2.2

-3.1

-1.4

2.0

3.7

2.6

-0.8

-0.1

1.3

food

-3.7

2.1

2.1

-0.4

1.6

1.2

-1.0

2.1

3.3

2.5

1.8

other nondurable goods

-0.6

-0.6

3.6

2.8

1.9

4.2

4.4

3.5

3.1

3.0

2.5

fuel oil & coal

Institute for Economic Competitiveness

31

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

Table 14. Business Fixed Investment History

2008

2009

2010

2011

Forecast 2012

2013

2014

2015

2016

2017

2018

Billions Current Dollars Business Fixed Investment

1941.0 1633.4 1658.2 1812.1 1972.0 2054.0 2206.5

2310.4 2462.6 2662.4 2854.6

Producers Dur. Equipment

825.1

644.3

731.8

838.2

904.1

949.7 1015.6

Nonresidential Structures

552.4

438.2

362.0

381.6

446.9

457.2

506.1

492.4

517.2

582.7

654.6

Non-Farm Buildings

317.5

249.1

173.7

170.2

191.6

201.7

222.9

247.0

268.4

307.8

347.7

Commercial

148.9

95.4

64.7

66.8

75.6

83.4

96.2

108.2

123.2

143.3

160.7

52.8

56.3

39.8

39.0

45.8

46.3

53.4

60.9

53.5

57.5

64.8

Other Buildings

115.8

97.4

69.2

64.5

70.2

72.0

73.3

78.0

91.8

107.0

122.2

Utilities

104.6

104.3

93.3

90.7

112.2

105.6

119.2

112.7

113.6

122.1

133.5

Mines & Wells

117.0

75.0

86.2

112.3

133.1

139.7

154.1

121.2

122.5

138.0

158.8

Industrial

1089.6 1169.5 1255.4 1332.9

Billions 2005 Dollars Business Fixed Investment

1934.5 1633.5 1673.8 1802.3 1931.8 1990.6 2112.7

2207.8 2333.5 2482.7 2611.4

Producers Dur. Equipment

836.1

644.3

746.7

847.9

905.6

947.2 1006.6

Nonresidential Structures

540.2

438.2

366.3

374.7

423.8

421.7

455.3

434.6

446.4

491.5

533.9

Non-Farm Buildings

317.9

249.1

179.3

172.3

188.8

194.0

207.4

225.6

238.5

265.3

289.5

Commercial

151.7

95.4

66.6

67.3

73.9

79.8

89.6

99.6

111.4

126.4

137.4

53.8

56.3

40.8

39.1

44.9

44.3

49.6

54.5

45.3

46.2

49.6

Other Buildings

112.8

97.4

71.9

65.9

70.0

69.8

68.1

71.3

82.3

93.5

103.3

Utilities

103.6

104.3

89.8

82.8

99.1

92.2

102.5

94.7

92.8

96.4

102.0

Mines & Wells

105.0

75.0

87.8

110.9

124.5

125.2

135.5

105.4

106.5

121.0

135.3

Industrial

1087.1 1164.6 1234.2 1291.8

Annual Growth Rate Business Fixed Investment

-5.6

-14.2

8.6

10.9

5.1

6.1

6.5

4.4

7.7

8.0

6.9

Producers Dur. Equipment

-15.9

-11.4

20.2

14.4

4.5

6.3

5.9

8.0

7.6

6.7

6.2

4.7

-32.2

-0.6

15.3

8.1

8.6

7.8

-5.1

9.5

13.6

11.3

-0.4

-34.0

-21.1

14.7

7.3

9.1

10.2

10.0

10.4

14.2

13.1

-11.8

-44.7

-16.8

14.7

9.9

17.4

11.0

12.7

17.9

12.1

12.6

22.5

-11.9

-28.8

37.4

8.1

1.2

20.8

9.9

-18.4

19.9

13.6

Other Buildings

6.7

-29.7

-19.5

3.6

4.5

5.7

2.6

6.5

23.0

14.0

13.7

Utilities

2.5

-4.1

19.0

2.4

18.4

15.3

-2.9

-2.2

2.3

10.5

8.6

24.4

-42.8

53.6

36.6

2.7

8.2

14.6

-29.0

15.1

14.3

12.6

Nonresidential Structures Non-Farm Buildings Commercial Industrial

Mines & Wells

32

U.S. Forecast | March 2015

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

Table 15. Government Receipts and Expenditures History 2008

2009

2010

2011

Forecast 2012

2013

2014

2015

2016

2017

2018

Federal Government Receipts and Expenditures Receipts

2503.7

2227.8

2391.8

2519.5

2684.1

3113.0

3288.8

3431.9

3641.4

3781.2

3939.7

Personal Tax and Nontax Receipts

1101.7

857.2

893.8

1076.6

1149.0

1286.8

1367.5

1472.0

1597.5

1688.0

1749.6

233.6

200.4

298.7

299.4

369.5

384.9

493.9

511.6

510.2

455.1

431.0

94.0

91.4

96.8

108.6

115.0

120.9

134.1

131.4

149.2

166.7

197.3

974.4

950.8

970.9

904.0

938.1

1092.3

1147.5

1202.7

1274.4

1356.4

1439.0

Expenditures

3137.7

3476.6

3720.5

3763.7

3763.2

3762.1

3884.5

4004.4

4132.0

4306.0

4529.6

Purchases Goods & Services

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

1155.6

1217.7

1303.9

1303.5

1291.4

1231.5

1219.0

1225.2

1237.2

1249.0

1264.1

National Defense

754.1

788.3

832.8

837.0

818.0

769.9

761.4

765.2

774.2

780.6

790.4

Other

401.5

429.4

471.1

466.5

473.4

461.6

457.7

460.1

462.9

468.4

473.7

Transfer Payments

1820.3

2132.4

2281.7

2272.4

2278.3

2322.0

2421.3

2536.1

2649.6

2780.2

2915.7

To Persons

1391.9

1608.9

1710.1

1727.3

1767.0

1806.8

1863.5

1927.1

2005.7

2108.2

2215.1

41.9

49.4

49.7

55.6

48.8

46.4

35.6

50.5

51.3

52.5

53.5

Grants in Aid to State & Local Gov't

To Foreigners

371.0

458.1

505.3

472.5

444.4

450.0

502.9

538.4

572.1

598.4

625.2

Net Interest

368.4

330.8

351.0

398.0

401.5

393.0

413.5

414.2

412.8

441.4

512.1

48.7

56.2

57.4

66.7

66.7

75.0

77.3

79.9

78.4

76.3

74.3

Surplus (+) or Deficit (-)

Subsidies less Surplus of Gov't Entities

-634.0 -1248.8

-1328.7

-1244.2

-1079.1

-649.1

-595.6

-572.5

-490.6

-524.8

-589.9

Receipts

1909.1

1919.2

1998.5

2030.5

2061.3

2125.6

2206.4

2295.5

2426.8

2552.5

2675.2

Personal Tax/Nontax Receipts

1328.9

1268.1

1305.7

1368.3

1424.8

1471.8

1493.8

1537.8

1620.6

1704.5

1784.5

333.5

287.8

297.6

324.1

354.7

375.0

368.2

386.1

411.1

436.1

456.5

State and Local Government Receipts and Expenditures

Corporate Profits Indirect Business Tax and Nontax Accruals

47.4

45.6

47.7

50.2

53.2

55.3

56.4

59.5

60.5

57.5

55.3

Contributions for Social Insurance

18.7

18.6

18.2

18.2

17.7

17.7

17.6

18.1

19.1

20.1

21.2

371.0

458.1

505.3

472.5

444.4

450.0

502.9

538.4

572.1

598.4

625.2

Federal Grants-In-Aid Expenditures Purchases Goods & Services

2074.15 2191.15 2235.85 2246.40 2293.78 2350.75 2431.50

2496.29 2587.11 2684.62 2803.45

1847.6

1871.4

1870.2

1865.3

1877.8

1912.4

1955.5

2008.7

2080.4

2160.8

2252.2

477.8

566.1

612.0

582.2

556.3

570.8

628.7

671.4

715.7

752.9

790.8

Interest Received

36.0

114.3

123.0

125.9

143.7

137.0

131.2

125.0

119.5

116.8

121.2

Net Subsidies

25.0

22.8

21.4

17.9

16.6

14.8

15.0

15.0

14.2

13.4

12.6

2.6

2.2

2.3

2.7

3.4

3.7

3.9

3.8

3.9

3.9

4.0

-165.1

-271.9

-237.3

-215.9

-232.6

-225.2

-225.1

-200.8

-160.3

-132.1

-128.3

Transfer Payments

Dividends Received Surplus (+) or Deficit (-)

Institute for Economic Competitiveness

33

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 2008

2009

2010

2011

Forecast 2012

2013

2014

2015

2016

2017

2018

Billions of Dollars Net Exports Goods & Services

-723.1

-395.5

-512.7

-580.0

-568.3

-508.2

-538.1

-381.9

-429.2

-525.5

-579.1

Current Account

-686.6

-380.8

-443.9

-459.3

-460.8

-400.3

-411.4

-294.7

-327.8

-471.8

-477.4

Exports -Goods & Services

1841.9

1587.7

1852.3

2106.4

2194.2

2262.2

2334.2

2362.2

2493.3

2656.5

2842.9

Merchandise Balance

-832.5

-509.7

-648.7

-740.6

-742.1

-701.7

-744.2

-602.2

-649.1

-751.1

-822.4

Food, Feed & Beverage

108.35

93.91

107.72

126.25

132.90

136.18

140.21

137.44

141.24

146.44

154.02

Industrial Supplies Excl Petroleum

386.9

293.5

388.6

485.3

482.4

492.1

502.4

478.9

538.9

598.5

649.8

Motor Vehicles & Parts

121.5

81.7

112.0

133.0

146.1

152.6

159.3

163.1

174.2

189.7

207.6

Capital Goods, Excl. MVP

457.7

391.5

447.8

494.2

527.5

534.6

548.9

555.5

565.5

583.9

618.7

43.9

37.7

43.8

48.5

49.3

48.1

48.8

47.0

52.1

60.8

70.5

Other

Computer Equipment

339.8

279.0

332.1

365.4

383.9

381.5

387.7

391.0

397.0

409.3

431.8

Consumer Goods, Excl. MVP

161.2

149.3

164.9

174.7

181.0

188.4

198.5

200.0

209.6

213.1

215.0

63.3

55.2

58.6

53.4

57.2

59.1

64.7

68.3

63.2

61.8

67.0

543.1

522.6

572.7

639.5

667.0

699.4

720.2

758.9

800.7

863.0

930.8

Other Consumer Services

Billions of Dollars Imports -Goods & Services

2565.0

1983.2

2365.0

2686.4

2762.5

2770.4

2872.3

2744.1

2922.4

3182.0

3422.0

Merchandise

2149.4

1590.3

1949.8

2244.7

2306.0

2302.3

2383.8

2230.9

2366.1

2568.0

2757.2

90.4

82.9

92.5

108.3

111.1

116.0

126.8

121.3

119.6

126.2

133.8

Petroleum & Products

476.1

267.7

353.6

462.1

434.3

387.6

349.7

146.2

191.8

234.1

262.4

Industrial Supplies Excl Petroleum

318.7

196.6

249.4

292.7

288.9

291.2

314.5

308.0

328.8

358.1

381.2

Motor Vehicles & Parts

233.2

159.2

225.6

255.2

298.5

309.6

328.7

334.4

331.9

355.3

374.6

Capital Goods, Excl. MVP

458.7

374.1

450.4

513.4

551.8

557.8

595.5

612.1

653.9

710.8

762.9

Computer Equipment

101.2

94.2

117.3

119.7

122.3

121.2

121.7

129.8

134.9

142.3

150.7

Other

322.0

249.2

301.9

358.2

389.4

389.7

420.5

431.9

470.9

520.6

563.0

Consumer Goods, Excl. MVP

485.7

429.9

485.1

515.9

518.8

533.9

558.6

595.0

607.9

636.1

683.7

Food, Feed & Beverage

Other Consumer Services

86.5

80.0

93.1

97.1

102.6

106.1

110.0

113.8

132.2

147.4

158.6

415.6

392.9

415.2

441.6

456.4

468.1

488.4

513.2

556.3

614.0

664.8

-530.6

-601.9

-646.1

-644.8

Billions 2005 Dollars Net Exports Goods & Services

-557.8

-395.4

-458.8

-459.4

-452.5

-420.5

-452.6

Exports G & S

1740.8

1587.7

1776.6

1898.3

1960.1

2019.8

2082.5

2150.6

2225.0

2325.0

2446.6

Imports G & S

2298.6

1983.2

2235.4

2357.7

2412.6

2440.3

2535.1

2681.3

2826.9

2971.2

3091.4

1.0

2.6

6.4

6.4

7.4

Exports & Imports % Change Exports G & S

0.0

4.1

15.3

8.7

3.6

4.9

Imports G & S

-1.8

0.9

15.0

10.9

0.3

1.5

3.8

-2.7

8.0

8.4

7.2

Real Exports G & S

-2.0

3.0

10.1

4.2

2.4

5.1

2.3

2.6

4.1

4.4

5.8

Real Imports G & S

-5.7

-3.6

12.2

3.5

0.4

2.5

5.4

5.9

5.0

4.9

3.7

34

U.S. Forecast | March 2015

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