U.S. Forecast May 2014

U.S. Forecast

May 2014

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

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

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

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

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

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

Publications of the Institute for Economic Competitiveness are made possible by the following staff: Dr. Sean Snaith, Director Angela Ayala, Administrative Assistant Jonathan Fagbohungbe, Researcher Emre Gumulugolu, Researcher Ashley Miller, Researcher Sangitha Palaniappa, Researcher Trevi Sellers, 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 2 Q 2 0 14 U . S . F O R E C A S T In this Issue of the U.S. Forecast: • First, let me take a selfie.

• The rest of the world can be such a drag: Slower export growth serves as a ballast holding down U.S. real GDP growth.

HIGHLIGHTS

• That pesky economic policy uncertainty will not go away, nor is there any reason to expect that it will anytime soon. The persistence of this fog of uncertainty hinders hiring, business investment and economic growth.

• Real GDP growth in the 2nd quarter of 2014 will be 3.3%, a dramatic rebound from the weather-addled 1st quarter of 2014. After the distortion of the first half of the year, growth will remain slow for 2014 at 2.3%. Growth will gradually rise to 2.7% in 2015, 2.9% in 2016, and 2.8% in 2017 as Federal Reserve tightening pulls taut the reins of growth.

• Only 113,000 more payroll jobs to go and we are back… to the same number of payroll jobs the U.S. economy had in January 2008.

• Real consumer spending is expected to grow an average of 3.0% during 2014-2017, while gradually accelerating over this period to 3.3% growth in 2017. Consumers’ balance sheets continue to heal thanks to the housing market rebound. This and the ongoing (albeit slow) labor market recovery will both support consumer spending growth.

• The housing market recovery continues its long-drawn-out recovery.

The housing market should steadily improve through 2016 when rising rates take their toll. During 2014-2017 housing starts will rise from 1,013,560 in 2014 to 1,557,551 in 2017.

• Payroll employment growth remains sluggish. Absent of more robust economic growth, policy uncertainty will weigh on the private sector with firms still hesitant to hire new workers. Consequently, payrolls will only expand 1.7% in 2014 and 2015. Growth in 2016 slips to 1.6% before easing to 1.4% in 2017 as the Affordable Care Act is fully implemented.

• Unemployment rates (U-3) are expected to gradually fall to 6.0% in the 4th quarter of 2017. Underemployment (U-6) remains a serious problem and currently stands at 12.3%.

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pleasing to the eye and that casts the photographer in the most positive fashion possible. Rarely would someone post a selfie in which their eyes were closed or which the angle of the shot is unflattering to the photographer.

In other words, smart phones have become pocketportable pools of Narcissus for an estimated 1.5 billion people worldwide, and that number is growing.

or

Happy 5th Birthday to the Little Recovery that Couldn’t

Selfies.

To the uninformed, selfies are photos that an individual takes of oneself, usually with the intent to post the images to a social media site such as Facebook or Instagram, or likewise share via e-mail or Twitter.

Frequently the subject of the selfie is making a “duck face” or a “kissy face,” a pouty pursing of the lips that ostensibly makes the picture more attractive to the viewer.

The ubiquity of smart phones that have both builtin cameras and the ability to connect to the Internet make the task of taking and sharing selfies a process that is both quick and easy. The objective of taking and posting selfies appears to be largely an exercise in eliciting compliments from those with whom the selfie is shared. Success in the world of selfies may be gauged by counting the number of “likes” or positive comments that a given selfie is able to generate.

As a result, a seflie-taker might actually snap scores of pictures1 before settling on the one image most

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I can’t count the number of times my smart phone has been used by my pre-teen daughters to take hundreds of selfies, sometimes in a single sitting. Their pictures gobble up what should be more than adequate storage on the phone to the point that if I want to take a picture myself I must go through and delete their handiwork just to free up a few megabytes for the new photo. Rest assured this new photo is not a selfie.

The selfie in many ways can be an act of deception, putting your best face (or sometimes more) forward, showing only the most flattering image possible of the taker using camera angles that obscure double chins, hide blemishes, choose lighting that is most becoming, or similarly mask other less attractive qualities of the photographer.

This economic recovery is now five years old, but for many it feels as if it were still in its infancy. Too often it seems that we have been viewing the economic recovery that followed the Great Recession through a series of economic selfies and simply not seeing the complete picture of a recovery that has been the weakest since the Great Depression.

Take the April 2014 monthly jobs report from the Bureau of Labor Statistics as an example of the selfie approach to viewing the recovery. The two figures that receive the most attention in this monthly report are the number of payroll jobs that are added to businesses’ payrolls in that month and the headline unemployment rate. The report showed that 288,000 new employees were added to business payrolls in April. This was the largest increase in payrolls since January 2012; in fact it was the fourth largest monthly increase in payrolls since the recovery began. The headline unemployment rate stood at 6.3% in April, a drop of 0.4% from the March 2014 unemployment rate.

These kind of economic selfies were sure to generate a lot of “likes” or “looking good” comments and in fact they did. Headlines include: “Jump in Payrolls Is Seen as a Sign of New Optimism,” from the New York Times, “The most important charts from the fantastic April jobs report” from Quartz, which is a website billed as a “digitally native news outlet for business people in the new global economy,” and “Spring stunner: Jobs report blows past forecasts” from USA Today.

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U . S . F orecast Wow, imagine the satisfaction of having posted a selfie on Facebook that was referred to as a “spring stunner.” Mission accomplished, ego stroked.

Unfortunately that same labor market report when viewed from a less flattering angle was more hideous than stunning. The U.S. labor force in April declined by 806,000, the 2nd largest one-month contraction since October 2013 when it contracted by 848,000. Before that you must go back to June of 1981 to find a labor force contraction larger than the one this April. Keep in mind that June 1981 was one month before the second worst recession since the Great Depression.

The only stunning thing about this economic recovery is that we still ogle the selfies in each data release and try to fool ourselves that we are looking at its true visage. After five years of disappointment, you might think we would stop clicking the “like” button for each and every economic selfie that comes out, and face the fact this recovery has been more Marty Feldman than Marilyn Monroe.

In fact, three of the five largest single-month declines in the U.S. labor force since 1948 have taken place during this economic recovery.

The drop in the U.S. unemployment rate from 6.7% to a svelte 6.3% in April is not a sign of a labor market that is more fit, but rather one that continues to atrophy as the labor force withers away.

Just looking at selfies will never give you a complete picture of the person featured in those photos, nor will looking at economic selfies give you the complete picture of our economic recovery that is “celebrating” its 5th birthday.

Figure 1: The Anxious Index Probability of Decline in Real GDP in the Following Quarter Quarterly, 1968:Q4 to 2014:Q2 100

Probability (percent)

90 80 70 60 50 40 30 20

0

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

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Survey Date 6

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Anxious Index Economists still Sanguine when it comes to a Shrinking Economy The most recent release (2nd quarter of 2014) of the Survey of Professional Forecasters by the Federal Reserve Bank of Philadelphia suggests that the 36 forecasters surveyed for the publication are 10.06% convinced that a decline in real GDP will occur in the 3rd quarter of 2014. This quarter’s release reflects a very slight increase of forecasters’ anxiety, despite a first reading of 1st quarter real GDP growth figures that were near zero. This is the second lowest reading for the anxious index since the 2nd quarter of 2011 when the panel of economists was just 8.47% convinced of a decline in real GDP in the 3rd quarter, and last quarter’s survey result that pegged the anxious index a 9.30%.

The index has dropped significantly from 23.04% in the 4th quarter of 2012 when the feared potential consequences of the fiscal cliff (which despite the political hyperbole never transpired) caused the index to surge. Economists remain sanguine about any further contraction in the economy. Perhaps most attributed the poor showing in the 1st quarter of 2014 to a brutal winter in the northern United States.

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 probability of a decline in real GDP in the quarter after a survey is taken. In the survey taken in the 2nd quarter of 2014, the index stands at 10.06%, which means that forecasters believe there is a 10.06% chance that real GDP will decline in the 3rd quarter of 2014.

The forecasters also report just an 8.32% chance that we are currently (as of the 2nd quarter of 2014) experiencing a contraction in real GDP. According to the panel, the probability that we will fall back into recession is averaging around 11.48% through the end of the 2nd quarter of 2015, which implies the possibility of a contraction in real GDP in the upcoming year has increased slightly since last quarter’s survey.

The decline in anxiety over the future of this economic recovery has been steady since the uncertainty

surrounding the fiscal cliff passed by the wayside. In my mind, the receding fear of a decline in real GDP should not be mistaken as a belief that the economic recovery is gaining strength, particularly given the 1st quarter sputtering to at the onset of this year. We are “celebrating” the 5-year anniversary of the start of this economic recovery (and the end of the Great Recession).

Confidence in the longevity of the recovery does not translate into confidence that it will strengthen.

The graph below plots the historical values of the anxious index, where the gray bars indicate periods of recession in the U.S. economy. The current level of the anxious index is well below the average level during the economic recovery (14.17%), and is 0.76 points higher than in the 1st quarter.

GDP Outlook Can’t Blame Old Man Winter for Everything 2014 started with a shiver when it came to real GDP growth and the sub-zero temperatures affecting a large swath of the country. That kind of bitter cold can keep economic activity in a deep freeze, and without a doubt the weather played a role in the poor performance of the economy in the 1st quarter. But the cold winter also forced consumers to spend more (something that has been lacking in this recovery) on utilities to stay warm in the face of such cold weather. While the economy in first three months of 2014 was affected by record cold, you can’t blame the weather for the struggles in the first four and a half years of the recovery that preceded it.

Some spending, that under normal weather circumstances would have taken place in the 1st quarter, was delayed until the 2nd quarter which will cause a burst of GDP growth in the 2nd quarter. We expect that growth to be 3.3%, but many economists are expecting even higher numbers for the 2nd quarter. Suffice it to say there will be some rebound in growth, but however big it turns out to be, it will tell us very little about the underlying strength of the recovery or lack thereof. The second half of the year will provide a clearer picture of the recovery that continues to underwhelm. We expect real GDP growth to average 2.5% in the 3rd and 4th quarters of 2014. In other words, more of the same as the economic recovery enters its 6th year.

Full-year real GDP growth for 2014 is now expected to come in at 2.3%. Weather-related shocks to the Institute for Economic Competitiveness

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U . S . F orecast recovery come and go, but the underlying weakness in this recovery isn’t bad weather, but bad policy.

The Affordable Care Act and Dodd Frank financial regulatory reform law continue to envelop the economy in a fog of policy-related uncertainty. The winter snow melts away very quickly in the spring but policy-related uncertainty continues to linger. Four 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. Old man winter isn’t nearly as detrimental to economic growth as government overreach.

In 2015 we are expecting real GDP growth of 2.7%, and 2.9% in 2016 before easing slightly to 2.8% in 2017 as the tightening of monetary policy begins to restrain growth. The bottom line is that the pace of the economic recovery will remain range-bound through 2017 unless action is taken to resolve policy uncertainty or the economy is knocked back into recession by some unforeseen shock.

CONSUMER SPENDING Forced Healthcare Spending and a Desire to Avoid Hypothermia Doesn’t Mean U.S. Consumers are Back

Consumer spending has averaged a paltry 2.2% growth rate from the start of the recovery in mid-2009 through the end of 2013. There have been occasional surges in spending growth but they have always been short-lived; there have been quarters where growth has been in excess of 3.0%, but they have always been followed by rapid deceleration in spending growth during the quarters that followed. U.S. consumers show a flash of the spending prowess that they have demonstrated in previous recoveries, but then pull back and return to the weak pattern of spending growth that led up to these transitory bursts in spending.

Through the end of 2013 there have not been consecutive quarters where U.S. consumption spending grew at 3.0% or more during the entirety of the recovery. This streak may have been broken in the 1st quarter of 2014. While overall GDP growth in the 1st quarter revealed an economy in reverse, consumer spending grew for the second quarter in a row at a rate greater than 3%.

In the 4th quarter of 2013 consumption spending growth surged to 3.3% from just 2.0% in the previous 8

U.S. Forecast | May 2014

quarter. In the 1st quarter of 2014 it appears that total consumption spending grew at a rate that hit the 3.0% threshold, thereby breaking the streak of no back-toback quarters with consumer spending of at least 3.0% during the recovery. On the surface it may appear that U.S. consumers have at long last broken out of the spending funk that has plagued this sector of the economy since the recession ended, but a closer look at the composition of that consumer spending gives reason to be skeptical that consumers have finally come out of hibernation.

Eighty-five percent of the contribution toward consumption spending growth in the 1st quarter of 2014 was attributable to two categories of consumer spending for services: housing & utilities and healthcare. Less than 8% of the contribution came from spending on goods. Consumers were effectively coerced into spending at a faster rate by two factors: the weather and the Affordable Care Act. The polar vortex that brought frigid weather to much of the country necessitated that consumers spend more money on heating their homes. Similarly, the individual mandate in the Affordable Care Act forced consumers to purchase health insurance that was in most instances more expensive than coverage they had prior to the law’s enactment.

Consumer spending is still not being boosted by the recovery of a significant amount of lost home equity wealth, although home equity wealth is still $3 trillion below peak levels prior to the housing crisis.

As we discussed in our last U.S. Forecast publication, part of the answer may be found by examining commercial banks’ balance sheets. Looking at Federal Reserve Bank data on assets and liabilities of commercial banks in the United States2 reveals that revolving home equity home loans have been contracting since 2010 at an accelerating pace. In 2010 the level of home equity loans declined by 4.2%, and in 2013 the pace of that contraction had increased to 8.1%. Data through April 2014 shows that this decline is continuing into the 2nd quarter of 2014.

We discussed in the last forecast both the supply and demand side reasons that home equity lending continues to contract. The disconnect between rising home equity wealth and consumption spending may http://www.federalreserve.gov/releases/h8/current/

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U . S . F orecast persist for many years, and as a result the financeboosted consumption spending that has been present in previous recoveries may remain absent as this recovery stumbles on.

Further examination of the commercial bank data does show that lending has improved for a variety of commercial and consumer borrowing. Consumer loans for automobiles, student loans and other personal expenditures have been growing since 2012, and in the past couple of months have grown at a double-digit pace. But the appetite for home equity lending has not returned as of now.

Many borrowers simply walked away from home equity loans or conducted short sales of homes that included very little for the home equity portion of the sale. Bankers may just feel more comfortable making automobile loans rather than home equity loans because when a borrower walks away from an auto loan they literally have to walk away, and there are not very many substitutes for a vehicle. After a foreclosure or short sale, former homeowners always have the option to rent a home or apartment.

Real consumer spending growth is expected to fall to a 2.3% rate of growth in the 2nd quarter of 2014. The pace of spending should pick up modestly from there as average growth for the second half of 2014 is expected to be 2.5%.

The serried pattern should give way to a more stable profile as the recovery continues. Continued improvement in the labor market and repairs to household balance sheets should prove to be a stabilizing force to consumer spending, allowing it to follow a smoother trajectory over the next several years.

Real consumption spending is forecasted to grow 2.6% in 2014, 2.8% in 2015, 3.3% in 2016 and 3.2% in 2017, ten years after the start of the Great Recession.

INVESTMENT Real nonresidential fixed investment spending grew at 7.5% in 2011 and 7.4% in 2012. In 2013 the pace of investment growth slowed significantly under a rising wave of policy uncertainty, and grew by just 2.7% for the year. The pace of investment growth is expected to pick up in 2014 and 2015 before decelerating in 20162017.

Investment growth is expected to be 4.1% in 2014, 6.6% in 2015, and 6.2% in 2016. Rising interest rates begin to eat away at investment growth in 2017 as it decelerates to 5.9%.

Interest rates will remain historically low for the next year and a half before the Federal Reserve begins the process of tightening. The cost of borrowing, either explicitly or the implicit opportunity cost of using retained earnings, has not been an impediment for investment this recovery, when interest rates have hovered at very low levels. Uncertainty has had many firms moving forward on investment with great caution.

Policy uncertainty, as we have discussed on several occasions in previous U.S. Forecast publications, weighs on these investment decisions that by their very nature are forward looking.

The fog of policy uncertainty thickened in 2013 as delays in implementing healthcare and financial regulatory reform grew longer. Consequently, investment growth slowed to just 2.6% in 2013, down from 7.4% the year before. As the fog of policy uncertainty begins to slowly lift, spending will accelerate in 2014 and 2015 until the Fed begins to push interest rates upward, after which investment growth will stabilize in 2016-2017 around 6.0%.

While interest rates will remain low over the next year, they will be rising over the remainder of our forecast horizon. The Federal Reserve’s commitment to low interest rates has given way to talk of tapering and the eventual onset of their exit strategy. We think the Fed will begin slowly hiking the federal funds rate mid-2015, but longer-run rates will begin to rise earlier, as the tapering of QEIII is wrapped up by the end of 2014. We expect the 10-year Treasury yield to average 4.1% in 2016 and 4.5% in 2017.

Business spending on equipment and software will grow at an annual average rate of 6.6% in 2014 through 2017. Investment spending growth in computers and peripherals will resume strong growth after contracting 0.5% in 2013. Companies continue to be cost conscientious and focus on making investments that can lower their cost structure. Consequently, many will continue implementing productivity boosting IT plans and will spend at a near double-digit average annual growth rate of 9.6% from 2014 to 2017, with growth in the final three years of our forecast averaging 12.0%.

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U . S . F orecast Investment in nonresidential structures experienced a burst of activity in 2012 and expanded at a 12.7% clip. Investment growth in nonresidential structures plunged year-over-year and grew at just 1.3% in 2013.

Investment in non-residential structures will slowly accelerate in 2014 and 2015 with growth of 4.0% and 4.3% respectively, before growth jumps to 8.6% in 2016 and then accelerates slightly in 2017 to 8.9% in the final year of our forecast.

Investment growth in transportation equipment decelerated sharply in 2013 to 2.1%. This type of investment will have an average growth rate of 1.7% during the four-year stretch from 2014 through 2017, and in that final year growth will be just 1.0%.

Investment in this component is quite volatile due to big-ticket purchases of aircraft that can cause extreme swings in investment growth from quarter to quarter.

Residential fixed investment grew by 12.8% in 2012 and 12.3% in 2013. Growth will average 8.6% through 2014-2017 with a peak growth rate in 2015 of 18.5%. In the final year of our forecast, 2017, real residential fixed investment will be dampened by both higher mortgage rates expected to average 6.6% on a 30-year fixed mortgage that year, and balance between supply and demand in the housing market that will significantly dampen the rate of price appreciation.

Growth is expected to be 1.3% in the final year of our forecast. In 2017 real residential fixed investment will be just over $670 billion.

Housing prices continue to rise and the pace of these increases is a function of temporary inventory constraints and heavy levels of investor purchases.

Housing finance must become available to an expanded pool of borrowers if the market is to make a smooth transition from investor-led purchases to more traditional mortgage-financed consumer purchases.

Rising home prices and shrinking inventories have sent the signal to builders to get back to work. We expect housing starts to continue to accelerate over the next several years reaching more than 1.55 million in 2017. That level represents an increase of 600,000 starts from 2013. Tight mortgage lending standards could, if not redressed, take most of the wind out of the housing market’s sails.

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GOVERNMENT SPENDING The sequester was in full effect for only one year, 2013, before the two-year agreement reached to end the budget standoff and avoid another federal government shutdown declawed the spending cuts of the original sequester, paring back spending cuts by $63 billion over 2014-15. Midterm elections played a role in this agreement as politicians did not want the liability of another government shutdown or the fiscal pain of implementing the full force of the sequester’s austerity measures.

The 2014-2015 easing of sequester cuts will sharply slow the rate at which government spending was contracting from -5.1% in 2013 to -2.4% in 2014 and just -0.5% in 2015. Beyond 2015 government spending is expected to continue to contract as military spending declines as the war in Afghanistan is winding down.

During 2014-2017 real government spending is expected to contract at an average of 1.1%.

The combination of higher revenues from economic growth, new taxes, and some help from the Federal Reserve Bank are, along with lower government spending, working to shrink the size of the annual budget deficit. The Fed, which is holding nearly $2.4 trillion in U.S. Treasury debt and growing as the Fed continues to taper the latest of three rounds of quantitative easing, 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. This was the first time in four years that the annual deficit did not exceed $1 trillion. We are forecasting that the deficit declines once again in 2014, when the deficit is expected to be $596 billion.

Looking forward, the possibility of striking a “grand bargain” in Washington D.C. is as likely as finding a unicorn wandering the halls of the Capitol Building.

Even the relatively small spending cuts in the sequester quickly became unpalatable to Congress. As a result, we expect that the budget deficit will once again begin to grow in 2015 and continue to grow larger through 2017. Next year the budget deficit is expected to be $548 billion rising to $581 billion in 2016 and $687 billion in 2017.

Though we are projecting deficits 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 exceed

U . S . F orecast $2.3 trillion, thus pushing the national debt total to nearly $20 trillion. This is assuming interest rates do not rise faster than we are currently forecasting, and thereby more rapidly raising the burden of servicing all this debt. The persistent low interest rates on U.S. Treasury bonds has taken some of the sting out of borrowing these large sums each and every year, but that anesthesia will be wearing off eventually.

Currently the national debt is over $17.5 trillion and rising. This represents a debt of nearly $151,080 per taxpayer and over $55,800 per citizen. Unfunded liabilities of the U.S. are even more frightening. Social Security, Medicare part D, and Medicare represent more than $129 trillion in liabilities, and that boils down to more than $1.1 million per taxpayer.

NET EXPORTS Net exports will become an increasing drag on real GDP growth in the U.S. through the end of the forecast horizon.

There have been some adverse developments in emerging markets over the past year. Argentina suffered a run on the peso. Turkey and South Africa were forced to take aggressive steps to defend their currencies as problems with inflation are creeping upward even though growth in these countries remains quite paltry.

China’s economic growth continues to slow as concerns about its banking sector and real estate markets grow. Between strict capital controls and massive foreign exchange reserves there is little nearterm threat to the Yuan, but economic fundamentals always win out in the end. As Actor/Economist (is that redundant?) Ben Stein’s father Herb said, “If something cannot go on forever, it will stop.”

Overall export growth continues through the end of our 2017 forecast period. However, real export growth from 2014-2017 is expected to be weaker than previously anticipated, averaging just 3.0%, while real import growth will average 4.4% over the same time frame.

Real net exports will average -$519.1 billion in 2014-2017, with the trade balance improving through 2014 before worsening on the back of a stronger dollar in 2015-2017 and weaker global demand for U.S. goods and services.

The four-year period of strengthening of the dollar (2012-2015) is due to the relative strength of the U.S. recovery and the eventual upward movement in U.S. interest rates. The Eurozone may be emerging from recession, but growth will remain paltry in the face of persistent fiscal austerity, and the threat of a return to a deflationary environment continues to fuel uncertainty regarding the future of Eurozone. Meanwhile the European Central Bank has done little in the past two years other than serve as a safety net while the continent teeters on the high-wire making uneasy, diminutive economic progress in at least some of the countries of the Eurozone.

The current account deficit will improve through the end of 2014, at which point a multi-year appreciation of the dollar that began in 2012 will begin to manifest itself in a worsening of the current account in 20152017. Current account balances will average -$459.5 billion during 2014-2017, with a worsening of the deficit in 2015-2017 erasing the improvements of the previous four years.

U N E M P LOY M E N T The U.S. unemployment rate is a prime example of one of the economic selfies discussed earlier. In this economic recovery the unemployment rate has been a faulty barometer of how the labor market and economy are performing, so much so that the Fed has distanced itself from overreliance on this statistic. Fed Chair Janet Yellen in her May testimony before Congress stated, “Now the unemployment rate is a good indicator of the state of the labor market, and if I could only have one, I think that’s the metric I’d probably choose. But there are different things happening in the labor market we need to take account of.”

The national unemployment rate took a steep drop in April to 6.3%, but this was driven by a staggering decline in the labor force of 806,000 in the same month.

Payroll job creation has revved up a bit in the first four months of the year, but this is a pattern we have seen before in this recovery: early in the year strong job growth followed by a summertime fizzle. Will 2014 be different? Will Charlie Brown get to kick the football next time Lucy is holding it?

The April jobs report again showed stronger job

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growth with 288,000 new workers on business payrolls.

This followed gains of 144,000, 222,000, and 203,000 in January, February and March, respectively.

The mixed message in recent jobs and labor market reports again reinforces the need to look at more than a single metric of how the labor market is performing.

Given its complexity, and the vexing nature of this recovery, the U.S. labor market simply cannot be sufficiently assessed by a single metric such as the headline unemployment rate (U-3) during this recovery.

This is particularly true because as of April 2013 the labor force participation rate is at its lowest point since January 1978.

Recent estimates by the Economic Policy Institute of the number of “missing workers3,” potential workers who as a result of a weak labor market are not working nor are they looking for work, is at more than 6.2 million in the U.S. If these workers were actively still looking for work, the current headline unemployment rate would be 9.9%.

The Bureau of Labor Statistics (BLS) does have alternative measures of labor market weakness. The broadest measure of unemployment (U-6) takes into account discouraged workers as well as those who are underemployed—working part-time but not by choice—and workers who are marginally attached to the labor force and have looked for work in the past http://www.epi.org/publication/missing-workers/

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12 months but are not currently looking, yet indicate a willingness to work.

U-6 remains painfully high at 12.3% in April, down just 1.6 points from the April 2013 level of 13.9%, and down nearly 5.0 points from its peak of 17.2% in April 2010. U-6 has been in double digits for 71 straight months.

As the Affordable Care Act mandates are enforced over the next couple years, we must pay closer attention to this broader measure of unemployment. If companies alter their approach to managing labor resources by shifting towards fewer full-time workers and more part-time workers, this shift could give false signals of a healthier labor market by pushing up payrolls. One full-time payroll job split into two part-time jobs would add an additional worker to the company’s payroll figures – there is no distinction made between full and part-time jobs in the monthly payroll jobs report. This would also work to lower the headline unemployment rate. U-6, however, will reflect the coinciding increase in underemployment not captured in the headline data.

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30-Year Mortgage Rates and Housing Starts 9.0

(Mortgage rates - Left axis, %)

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99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 30-Year Fixed Mortgage Rate Housing Starts - Millions

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Automobile and Light Truck Sales 11.0

(Millions Vehicles)

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99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Auto Sales Light Truck Sales

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

(Billions of 2000 Dollars)

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Change in Real Business Inventories Institute for Economic Competitiveness

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Consumer Prices (% Change Year Ago)

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99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Consumer Price Index Core Consumer Price Index

Federal Budget Surplus 500.0

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99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Federal Budget Surplus

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

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U.S. Forecast | May 2014

(%)

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

U . S . F orecast C harts

Real GDP Growth and Federal Funds Rate (%)

10.0 5.0 0.0 -5.0 -10.0

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

Industrial Production 115.0

(2002=100)

110.0 105.0 100.0 95.0 90.0 85.0 80.0

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

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

(Billions of Dollars)

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

15

U . S . F orecast C harts

Manufacturing Employment 18.0

(Millions)

17.0 16.0 15.0 14.0 13.0 12.0 11.0

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

Money Supply

3000.0

(Annual Growth Rate %)

2500.0 2000.0 1500.0 1000.0

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

Total Nonfarm Payroll Employment 150.0

(Millions)

145.0 140.0 135.0 130.0 125.0

16

U.S. Forecast | May 2014

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

U . S . F orecast C harts

Oil and Consumer Confidence 140.0

Oil ($ Per Barrel) - Left Axis

120

120.0

110

100.0

100

80.0

90

60.0

80

40.0

70

20.0

60

0.0

50

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

Real Disposable Income and Consumption 6.0

(% Change Year Ago)

4.0 2.0 0.0 -2.0 -4.0

-200 -300 -400 -500 -600 -700 -800

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

Trade Balance and Real Exchange Rate

1.50 1.40 1.30 1.20 1.10 1.00 0.90

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

0.80

Institute for Economic Competitiveness

17

U . S . F orecast C harts

Twin Deficits 500.0

(Billions of Dollars)

0.0 -500.0 -1000.0 -1500.0

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 U.S. Federal Budget Surplus Current Account

Civilian Unemployment Rate 10.0

(%)

9.0 8.0 7.0 6.0 5.0 4.0 3.0

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

Yield Curve 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0

18

U.S. Forecast | May 2014

(%)

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

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

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

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

Real GDP Nominal GDP

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

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

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

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

2007

2008

2009

2010

2011

2012

2013

2014

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

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

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

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

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

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

1.9 1.7 2.0 7.0 2.0 1.2 2.7 3.1 3.4 -0.5 9.2 3.3 2.1 0.6 -5.6 1.3 3.5 2.5 -7.8 5.1 4.3 12.3 2.7 1.4 -5.1 -0.2

2.3 2.3 2.6 4.5 1.9 2.5 4.1 4.7 2.6 2.3 -1.2 7.7 5.3 1.3 0.9 4.0 5.9 5.2 -1.3 6.5 2.4 3.6 2.5 1.9 -2.4 0.3

14876.8 14833.6 14417.9 14779.4 15052.4 15470.7 15761.3 14480.4 14720.3 14418.0 14958.3 15533.8 16244.6 16799.7

Forecast 2015 2016

2.7 2.9 2.8 5.8 2.7 2.4 6.6 9.2 14.7 14.7 16.8 10.4 1.5 -1.4 -3.7 4.3 14.3 4.6 -7.4 1.1 9.6 18.5 3.4 5.9 -0.5 0.8

2.9 3.0 3.3 6.3 3.1 2.9 6.2 6.7 12.6 10.8 14.8 5.6 -1.0 5.8 -2.8 8.6 27.2 5.7 0.1 -3.7 13.1 10.9 2.7 5.4 -0.9 0.9

2017

2.8 2.9 3.3 5.7 2.7 3.1 5.9 5.6 8.3 10.4 8.6 5.4 0.9 5.2 0.1 8.9 11.8 6.0 8.9 9.5 4.6 1.3 3.6 4.6 -0.6 1.1

16118.0 16557.1 17045.2 17524.9 17460.7 18254.5 19069.2 19885.5

2.7 2.9 2.3 3.9 3.1

1.9 3.8 2.3 6.4 2.9

0.8 -0.3 1.7 -2.6 1.4

1.2 1.6 1.0 4.2 1.9

2.0 3.1 1.7 6.0 2.1

1.7 2.1 2.1 2.0 2.0

1.4 1.5 1.8 1.2 1.9

1.7 1.9 1.8 2.9 1.8

1.8 1.4 1.9 0.5 2.4

1.5 1.3 1.6 0.5 2.6

1.4 1.5 1.6 0.8 2.6

72.3 1.6 2.5 78.7 36.5 85.6 16.089 1.342 4.418 4.6 1.1 -162 -713

99.6 0.8 -3.4 74.6 -35.0 63.8 13.195 0.900 3.655 5.8 -0.6 -455 -681

61.7 3.2 -11.2 65.6 -146.0 66.3 10.402 0.554 3.868 9.3 -4.3 -1416 -382

79.4 3.3 5.7 71.1 65.9 71.8 11.555 0.586 3.705 9.6 -0.7 -1294 -449

95.1 0.5 3.3 73.9 39.7 67.4 12.735 0.612 3.792 8.9 1.2 -1297 -458

94.2 1.5 3.8 75.5 68.7 76.5 14.4 0.8 4.1 8.1 1.7 -1089 -440.4

98.0 0.5 2.9 76.1 58.3 79.2 15.5 0.9 4.5 7.4 1.7 -680 -379.3

98.8 0.8 3.5 76.8 61.2 83.4 15.9 1.0 4.4 6.5 1.7 -522 -358.0

86.3 0.9 2.8 77.2 42.8 89.0 16.1 1.4 4.9 6.2 1.7 -548 -400.9

94.9 1.6 2.6 76.9 41.5 89.1 16.2 1.5 4.9 6.1 1.6 -581 -506.4

97.8 1.7 2.0 75.9 35.3 87.7 16.3 1.6 4.7 6.1 1.4 -687 -572.9

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

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

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

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

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

0.1 0.1 0.2 0.8 1.8 2.9 3.7 1380 8.9 0.9 3.8

0.1 0.1 0.1 1.2 2.4 3.4 4.0 1643 19.0 1.0 3.4

0.1 0.0 0.1 1.7 2.9 3.8 4.5 1872 14.3 1.0 2.2

0.7 0.7 0.9 2.1 3.5 4.4 5.1 1824 -2.5 1.0 0.8

2.7 2.6 3.0 3.5 4.1 4.8 6.0 1696 -7.0 1.0 -0.6

4.0 3.7 3.9 4.3 4.5 4.8 6.6 1701 0.3 1.0 0.1

11996 5.3 10508 4.7 10822 2.1 3.0 1303 -5.4

12431 3.6 10995 4.6 10989 1.5 5.0 1073 -17.5

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

12435 2.9 11244 2.8 11061 1.1 5.6 1464 23.4

13191 6.1 11787 4.8 11325 2.4 5.7 1473 0.6

13744 4.2 12246 3.9 11552 2.0 5.6 1755 19.2

14135 2.9 12477 1.9 11637 0.7 4.5 1845 5.1

14644 3.6 12908 3.5 11866 2.0 3.9 2055 11.4

15369 5.0 13549 5.0 12301 3.7 4.6 2022 -1.6

16137 5.0 14274 5.3 12803 4.1 5.3 1988 -1.7

16948 5.0 15033 5.3 13316 4.0 5.8 1961 -1.4

Institute for Economic Competitiveness

19

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

Table 2. Real Gross Domestic Product History 2007

2008

2009

2010

Forecast 2011

2012

2013

2014

2015

2016

2017

Real GDP Billions 2005 $ Gross Domestic Product

14876.8 14833.6 14417.9 14779.4 15052.4 15470.7 15761.3

16118.0 16557.1 17045.2 17524.9

14839.3 14868.9 14565.5 14717.7 15014.4 15403.2 15669.7

16031.1 16501.8 16991.0 17476.6

10035.5

9999.2

9842.9 10035.9 10291.3 10517.6 10727.9

11009.1 11322.5 11693.1 12074.4

Durables

1141.7

1083.2

1023.3

1085.7

1157.1

1246.7

1333.3

1393.8

1474.9

1567.6

1656.5

Nondurables

2239.3

2214.7

2175.1

2223.5

2266.0

2296.8

2342.0

2387.6

2452.4

2527.3

2596.0

Services

6650.4

6700.6

6644.5

6727.2

6871.1

6982.7

7067.7

7247.3

7422.5

7635.1

7868.4

1948.4

1934.5

1633.5

1673.8

1800.4

1931.8

1984.4

2066.2

2202.4

2337.9

2475.0

898.3

836.1

644.3

746.7

841.7

905.9

934.4

978.9

1069.0

1141.0

1205.2

279.9

281.0

256.1

281.4

287.9

295.7

305.7

313.8

359.6

404.7

438.1

Computers & Peripherals

72.8

77.1

76.8

84.7

83.4

87.9

87.3

89.2

102.2

113.2

125.0

Communications Equipment

96.2

91.5

79.4

90.2

92.3

100.6

109.5

108.1

126.2

144.8

157.2

Industrial Equipment

205.3

195.5

152.1

151.3

175.0

184.6

190.6

205.2

226.4

239.0

252.0

Transportation Equipment

188.8

146.2

70.6

127.5

171.8

214.4

218.9

230.4

233.9

231.5

233.6

30.2

30.0

17.7

22.1

24.5

32.0

32.1

31.7

31.0

32.8

34.5

48.1

42.6

30.8

36.2

49.2

56.6

53.1

53.6

51.6

50.1

50.2

509.0

540.2

438.2

366.3

374.1

421.6

426.9

443.6

462.6

502.4

547.1

189.9

182.8

126.7

95.2

94.8

102.3

105.9

112.0

128.2

162.8

181.7

Manufacturing

43.1

53.8

56.3

40.8

39.1

45.0

46.1

48.4

50.7

53.6

56.7

Power & Communication

85.9

94.5

95.8

80.4

74.1

88.0

80.6

79.4

73.5

73.5

80.1

Mining & Petroleum

97.9

105.0

75.0

87.8

109.0

124.1

130.4

138.8

140.1

134.6

147.4

Other

91.8

103.4

84.5

62.0

57.3

61.9

64.5

66.0

72.4

81.8

85.5

654.8

497.7

392.3

382.4

384.3

433.8

486.6

504.3

597.7

662.0

670.3

Exports

1647.3

1741.8

1583.8

1765.6

1890.6

1957.5

2010.1

2060.0

2130.1

2187.1

2265.0

Imports

2350.9

2288.7

1976.0

2228.1

2336.4

2388.2

2422.3

2468.1

2614.8

2754.4

2881.1

Federal Government

1078.7

1152.3

1217.7

1270.7

1237.9

1220.3

1157.4

1129.8

1123.8

1113.8

1106.7

State & Local Government

1836.2

1842.5

1871.4

1820.8

1754.5

1742.8

1739.2

1744.6

1758.5

1774.0

1793.8

Final Sales of Domestic Product Total Consumption

Nonresidential Fixed Investment Equipment & Software Information Processing Equipment

Aircraft Other Equipment Structures Commercial & Health

Residential Fixed Investment

20

U.S. Forecast | May 2014

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

Table 3. Quarterly Summary of the Forecast of the U.S. 2013Q4

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.

2.6 2.7 3.3 2.8 2.9 3.5 5.7 10.9 -0.8 31.9 -21.7 -3.5 28.3 311.1 4.8 -1.8 23.6 -29.9 -13.1 -2.8 3.1 -7.9 9.5 1.5 -12.8 0.0

2014Q1

0.1 0.7 3.0 0.8 0.1 4.4 -2.0 -5.5 -14.8 -38.4 -20.2 10.4 -10.7 -43.9 -0.7 0.2 -7.6 27.0 9.0 0.1 -13.3 -5.8 -7.6 -1.4 0.7 -1.3

2014Q2

3.3 3.6 2.3 7.6 3.5 1.0 8.4 13.1 18.1 43.9 21.6 9.5 15.4 -46.1 -0.8 6.9 5.9 0.5 -5.9 17.0 11.8 10.8 5.0 1.3 0.8 1.6

2014Q3

2.4 2.8 2.4 6.2 0.5 2.4 5.8 8.8 16.9 20.0 19.3 11.5 -3.0 -6.9 -3.9 -0.3 3.0 7.6 -13.7 1.3 4.0 12.4 4.9 4.5 0.7 0.6

2014Q4

2.6 2.9 2.7 4.7 3.0 2.3 7.1 8.5 13.5 10.9 15.0 12.8 -1.8 0.7 -8.0 6.2 7.6 8.2 -6.0 12.4 5.2 19.4 4.6 7.5 0.4 0.6

2015Q1

2015Q3

2015Q4

2016Q1

2016Q2

Composition of Real GDP, Percent Change, Annual Rate 2.6 2.8 3.0 2.9 2.9 2.9 3.0 2.8 3.1 2.8 3.0 2.9 2.8 3.0 3.3 3.3 3.4 3.1 5.1 6.1 6.3 7.6 6.6 5.0 2.7 3.0 3.5 3.2 3.2 2.7 2.5 2.6 2.8 2.6 2.9 2.9 7.3 5.4 6.6 5.8 5.2 7.6 9.9 9.4 8.3 6.8 4.7 8.0 14.6 13.5 14.7 14.0 12.8 12.1 12.8 11.5 12.7 11.0 9.5 10.1 16.3 16.3 16.8 16.1 15.6 14.3 13.4 8.0 5.8 6.3 4.7 4.7 1.9 5.2 0.8 -2.9 -8.2 7.3 4.5 3.8 5.1 7.5 4.6 6.8 -7.3 -1.1 4.4 -2.2 -18.2 9.9 6.0 -0.4 7.4 6.8 8.2 13.0 8.8 20.0 36.2 31.3 26.2 32.4 10.1 -1.5 -0.5 0.7 7.9 7.0 -4.3 -14.6 -1.1 -1.9 -1.2 6.5 8.8 -12.2 -10.1 -11.8 -5.5 1.9 5.3 14.7 17.0 20.2 13.5 9.8 20.3 21.2 21.2 14.9 7.9 6.4 3.5 2.0 3.5 2.0 1.9 2.2 6.2 6.1 6.3 6.8 4.7 4.7 -1.1 -1.4 -1.4 -0.3 -1.1 -0.8 0.8 1.0 0.7 0.8 0.7 1.1

2016Q3

3.1 3.1 3.3 5.9 2.8 3.0 6.2 6.2 10.4 12.3 12.3 5.5 -0.8 6.1 6.0 10.5 17.5 15.6 2.9 7.7 6.3 6.7 3.2 4.6 -0.8 1.1

2016Q4

3.4 3.3 3.5 5.9 2.9 3.3 6.6 6.4 8.4 10.5 8.9 6.8 0.9 5.4 -5.8 10.3 14.4 9.7 4.5 11.5 6.0 4.1 4.1 4.5 -0.7 1.2

2017Q1

2.4 2.6 2.9 5.1 2.5 2.7 5.8 5.2 7.5 8.3 8.0 7.3 -1.9 3.6 -13.4 8.9 8.9 0.9 13.6 12.7 4.1 0.5 3.7 4.8 -0.5 1.1

2017Q2

2.7 2.7 3.4 6.1 2.8 3.1 5.6 5.3 7.8 10.9 7.6 5.0 1.5 4.6 12.8 8.7 8.9 5.0 13.2 11.0 2.9 -2.5 3.6 4.7 -0.6 1.1

2017Q3

2.7 2.7 3.3 5.7 2.7 3.1 5.0 5.0 7.6 13.5 5.8 3.0 3.5 7.4 10.5 5.6 6.7 2.7 7.8 6.1 2.4 -2.1 3.5 4.1 -0.6 1.0

Billions of Dollars 15942.3 15946.6 16076.9 16172.6 16276.1 16382 16494.2 16617.2 16735.1 16855.1 16974.3 17104.7 17246.5 17349.3 17466.3 17583 17089.6 17149.6 17364.8 17564.6 17763.9 17964.1 18152.9 18356.5 18544.7 18757.4 18954.6 19166.3 19398.3 19589.9 19788.2 19983.5 Prices & Wages, Percent Change, Annual Rate 1.9 1.5 1.5 1.3 1.7 1.2 0.7 1.3 0.9 1.6 2.1 1.7 1.6 1.6 1.6 -0.6 -1.4 0.3 -0.2 0.9 2.5 2.5 2.6 2.6 2.8

1.6 1.1 1.6 0.9 2.0

1.3 1.9 1.6 3.8 1.0

2.1 2.8 2.0 6.0 2.0

2.2 2.3 2.1 3.0 2.3

2.0 1.7 2.1 0.9 2.2

97.5 2.3 4.8 76.4 88.9 76.9 15.587 1.008 4.343 7.0 1.8 -652 -324

98.7 -1.7 4.4 76.2 65.7 80.9 15.591 0.923 4.043 6.7 1.5 -702 -373

102.2 0.8 2.6 76.7 67.0 83.2 16.108 0.964 4.266 6.5 2.0 -675 -355

99.4 0.3 3.2 77.0 59.2 84.2 15.948 1.039 4.520 6.5 2.0 -633 -344

95.1 1.0 2.7 77.1 52.9 85.2 15.957 1.129 4.640 6.4 1.5 -634 -359

87.7 0.9 3.5 77.2 42.1 86.2 16.008 1.229 4.832 6.3 1.6 -679 -367

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))

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

0.07 0.05 0.12 1.60 2.76 3.68 4.36 1834 15.2 0.992 6.1

0.09 0.03 0.11 1.72 2.75 3.53 4.38 1880 10.4 0.995 1.1

0.09 0.05 0.13 1.74 2.95 3.76 4.55 1885 1.1 1.002 2.8

0.09 0.05 0.13 1.76 3.08 4.05 4.72 1887 0.3 1.011 3.6

0.09 0.06 0.13 1.79 3.16 4.11 4.82 1880 -1.4 1.015 1.4

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)

14304 2.2 12625 1.8 11726 0.8 4.3 1905 7.9

14426 3.5 12728 3.3 11780 1.9 4.1 2013 24.8

14543 3.3 12824 3.0 11811 1.1 3.8 2077 13.3

14720 5.0 12965 4.5 11888 2.7 3.8 2060 -3.3

14888 4.7 13115 4.7 11987 3.4 3.9 2070 2.0

15106 6.0 13304 5.9 12124 4.7 4.4 2010 -11.1

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 (NIPA Bil. $) Current Account Balance (Bil. $)

2015Q2

1.4 1.4 1.6 1.0 2.6

1.4 1.5 1.6 0.6 2.6

1.5 1.8 1.6 1.4 2.7

1.6 1.4 1.7 0.4 2.7

1.4 1.5 1.5 0.8 2.5

1.3 1.4 1.5 0.9 2.4

Other Key Measures 87.6 84.2 85.8 91.7 0.9 1.3 1.4 1.7 2.2 2.8 2.0 2.6 77.2 77.3 77.1 77.0 43.2 41.7 44.0 41.3 89.0 89.9 90.6 89.9 16.074 16.108 16.233 16.213 1.338 1.429 1.468 1.499 4.926 4.976 5.010 5.048 6.2 6.2 6.1 6.1 1.7 1.6 1.6 1.6 -681 -671 -670 -717 -378 -411 -448 -470

94.5 1.7 3.0 76.9 40.1 88.9 16.227 1.530 4.926 6.1 1.6 -738 -496

96.4 1.9 2.9 76.8 41.5 88.6 16.225 1.566 4.844 6.1 1.7 -754 -522

97.2 2.1 2.9 76.8 43.0 88.8 16.259 1.589 4.816 6.1 1.8 -785 -537

97.2 1.3 1.6 76.4 36.3 87.9 16.251 1.584 4.789 6.1 1.3 -802 -558

97.6 1.8 1.5 76.1 35.6 87.6 16.282 1.553 4.711 6.1 1.3 -838 -568

98.0 1.7 1.4 75.7 35.3 87.6 16.247 1.551 4.657 6.1 1.2 -855 -577

Financial Markets, NSA 0.29 0.89 1.36 1.88 0.25 0.94 1.35 1.86 0.39 1.34 1.71 2.26 1.92 2.34 2.47 2.89 3.29 3.65 3.71 3.92 4.25 4.56 4.57 4.70 4.96 5.27 5.53 5.72 1859 1806 1751 1720 -4.3 -10.9 -11.8 -6.9 1.010 1.004 1.003 1.001 -1.7 -2.3 -0.7 -0.8

2.42 2.39 2.78 3.30 4.05 4.80 5.94 1705 -3.4 1.001 0.0

2.96 2.89 3.30 3.71 4.19 4.87 6.13 1685 -4.7 1.002 0.8

3.46 3.34 3.70 4.03 4.30 4.88 6.34 1673 -2.6 1.004 0.4

3.9 3.7 4.0 4.3 4.5 4.9 6.5 1675 0.3 1.004 0.0

4.0 3.8 4.0 4.3 4.5 4.8 6.6 1689 3.4 1.003 -0.1

4.0 3.7 3.9 4.3 4.5 4.7 6.6 1712 5.7 1.003 -0.1

Incomes 15456 15639 4.8 4.8 13632 13801 5.3 5.0 12359 12480 3.9 4.0 4.7 4.8 2032 2027 2.3 -1.0

16039 4.5 14172 5.0 12734 3.7 5.2 1984 3.1

16221 4.6 14360 5.4 12863 4.1 5.3 1985 0.2

16425 5.1 14562 5.7 12998 4.3 5.5 2014 6.0

16653 5.7 14745 5.1 13119 3.8 5.6 1945 -13.1

16855 4.9 14941 5.4 13253 4.2 5.7 1959 2.9

17047 4.6 15131 5.2 13383 4.0 5.8 1961 0.4

15277 4.6 13459 4.7 12241 3.9 4.5 2021 2.2

15862 5.8 14001 5.9 12617 4.5 5.1 1969 -10.9

Institute for Economic Competitiveness

21

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

Table 4. Quarterly Gross Domestic Product

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

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

15942.3 15946.6 16076.9 16172.6 16276.1 16382.0 16494.2 16617.2 16735.1 16855.1 16974.3 17104.7 17246.5 17349.3 17466.3 17583.0 15815.0 15842.0 15982.8 16092.5 16206.9 16326.5 16438.7 16563.2 16678.7 16801.3 16921.6 17050.4 17190.6 17300.2 17417.8 17534.8 10831.5 10912.3 10973.6 11037.7 11112.6 11190.3 11274.5 11366.6 11458.8 11554.0 11641.9 11737.1 11839.4 11925.2 12024.4 12122.9

Durables

1357.8 1360.5 1385.6 1406.5 1422.8 1440.6 1462.2 1484.7 1512.0 1536.3 1555.3 1577.9 1600.8 1620.9 1645.2 1668.3

Nondurables

2365.5 2366.4 2386.9 2389.6 2407.4 2423.5 2441.6 2462.6 2481.8 2501.5 2518.0 2535.7 2554.1 2569.8 2587.3 2604.7

Services

7124.8 7201.7 7219.9 7262.7 7304.7 7350.0 7396.6 7447.4 7496.2 7550.0 7604.2 7661.5 7724.7 7777.0 7837.1 7897.9

Nonresidential Fixed Investment Equipment & Software

2022.5 2012.1 2052.9 2081.9 2117.8 2155.6 2183.9 2219.3 2250.6 2279.3 2321.3 2356.6 2394.3 2428.1 2461.6 2491.5 954.8

941.3

970.8

991.5 1012.0 1036.2 1059.7 1081.1 1099.1 1111.9

307.7

295.6

308.2

320.5

330.8

342.2

353.2

365.5

377.6

389.2

400.4

410.4

418.8

426.4

434.5

442.5

91.2

80.8

88.5

92.6

95.0

97.9

100.7

103.7

106.5

108.9

111.5

114.8

117.7

120.1

123.3

127.2

106.8

100.9

106.0

110.8

114.7

119.1

123.7

128.6

133.5

138.4

143.1

147.3

150.5

153.4

156.3

158.5

Industrial Equipment

192.7

197.5

202.0

207.6

213.9

220.8

225.0

228.2

231.7

234.4

237.1

240.3

244.2

248.6

251.6

253.5

Transportation Equipment

231.8

225.3

233.6

231.8

230.8

231.9

234.8

235.3

233.6

228.6

232.7

232.2

232.7

231.6

232.5

234.5

41.3

35.7

30.6

30.1

30.1

30.5

30.8

31.1

31.7

32.1

32.6

33.1

33.5

33.8

34.2

34.8

54.3

54.2

54.1

53.5

52.4

51.5

51.3

51.9

51.6

49.1

50.2

51.0

50.2

48.4

49.9

51.2

436.4

436.6

444.0

443.6

450.3

456.9

456.5

464.7

472.4

481.8

496.8

509.3

521.9

533.2

544.4

551.9

112.1

109.9

111.5

112.3

114.4

116.9

122.3

132.1

141.4

149.9

160.8

167.4

173.1

176.8

180.6

183.6

44.9

47.7

47.8

48.6

49.6

50.8

50.6

50.6

50.6

51.6

52.5

54.4

55.7

55.8

56.5

56.9

Information Processing Equipment Computers & Peripherals Communications Equipment

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

1133.4 1150.5 1168.3 1183.3 1198.7 1213.5

80.3

82.1

80.9

77.9

76.7

75.9

73.0

72.8

72.4

72.2

73.3

73.9

74.7

77.1

79.5

81.0

133.5

133.6

138.9

139.4

143.5

146.5

141.8

138.1

133.9

132.0

132.6

135.1

138.8

143.0

146.8

149.0

66.5

64.1

65.9

66.6

67.5

68.3

70.7

73.5

77.0

79.5

81.3

82.6

83.8

84.6

85.3

85.8

489.0

481.8

494.4

509.0

532.1

557.3

584.8

613.6

635.2

647.3

657.4

668.2

674.9

675.8

671.5

668.0

Exports

2063.7 2023.2 2047.8 2072.6 2096.3 2114.4 2124.8 2134.6 2146.4 2165.1 2175.7 2192.7 2214.9 2234.8 2254.9 2274.2

Imports

2446.4 2437.6 2445.3 2472.1 2517.4 2555.7 2593.6 2633.2 2676.6 2707.8 2739.0 2770.2 2800.8 2834.0 2866.6 2895.6

Federal Government

1124.8 1126.9 1129.1 1131.1 1132.3 1129.1 1125.0 1121.0 1120.3 1117.1

State & Local Government

1743.3 1737.7 1744.5 1746.9 1749.4 1752.8 1757.2 1760.2 1763.7 1766.7 1771.6 1776.4 1781.4 1786.4 1791.4 1796.0

22

U.S. Forecast | May 2014

1114.8

1112.6

1110.6

1109.1 1107.5 1105.9

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

Table 5. Annual Employment History 2007

2008

2009

2010

Forecast 2011

2012

2013

2014

2015

2016

2017

Millions Total Nonfarm Employment

137.93

137.17

131.22

130.27

131.85

134.10

136.36

138.73

141.04

143.35

145.39

Private Nonfarm

115.72

114.67

108.67

107.78

109.76

112.18

114.50

116.83

119.03

121.23

123.12

Mining

0.66

0.71

0.64

0.65

0.74

0.80

0.82

0.87

0.89

0.90

0.94

Construction

7.63

7.16

6.02

5.52

5.53

5.65

5.83

6.06

6.50

7.16

7.65

Manufacturing

13.88

13.40

11.85

11.53

11.73

11.93

12.00

12.13

12.26

12.28

12.23

Trade, Transportation and Utilities

26.63

26.29

24.90

24.64

25.07

25.47

25.86

26.35

26.63

26.80

27.05

Transportation & Warehousing

4.54

4.51

4.24

4.19

4.30

4.42

4.49

4.60

4.74

4.90

5.07

Financial Activities

8.35

8.20

7.84

7.70

7.70

7.78

7.88

7.93

7.98

7.93

7.89

Education & Health

18.61

19.16

19.55

19.89

20.23

20.70

21.10

21.42

21.84

22.43

22.95

Professional & Business Services

17.95

17.74

16.57

16.72

17.33

17.93

18.57

19.25

19.97

20.49

20.90

3.03

2.98

2.80

2.71

2.67

2.68

2.68

2.66

2.61

2.74

2.76

Leisure & Hospitality

13.43

13.44

13.07

13.04

13.35

13.77

14.24

14.61

14.82

14.96

15.15

Government

22.22

22.50

22.55

22.49

22.09

21.92

21.86

21.90

22.01

22.12

22.28

2.74

2.76

2.83

2.98

2.86

2.82

2.77

2.70

2.67

2.63

2.60

19.48

19.74

19.72

19.51

19.23

19.10

19.09

19.20

19.34

19.49

19.68

Information

Federal State & Local

Growth Rates Total Nonfarm Employment

1.12

-0.55

-4.34

-0.71

1.21

1.71

1.69

1.74

1.67

1.63

1.43

Private Nonfarm

1.13

-0.90

-5.23

-0.80

1.83

2.21

2.07

2.03

1.89

1.84

1.56

Mining

5.74

6.77

-14.61

11.75

13.58

2.26

4.26

7.34

0.42

2.70

3.11

Construction

-1.95

-9.21

-16.57

-3.40

1.87

1.79

3.32

5.02

9.22

9.81

4.66

Manufacturing

-2.05

-5.36

-11.37

0.60

1.76

1.48

0.69

1.08

0.90

-0.09

-0.55

Trade, Transportation and Utilities

1.17

-3.31

-4.83

0.75

1.97

1.46

1.91

1.60

0.67

0.74

1.03

Transportation & Warehousing

0.89

-2.70

-6.16

1.98

2.44

2.74

1.71

2.48

3.12

3.59

3.22

Financial Activities

-1.16

-2.28

-4.32

-0.88

0.51

1.25

1.06

0.89

-0.26

-0.34

-0.81

Education & Health

2.96

2.72

1.83

1.71

1.86

2.37

1.70

1.37

2.42

2.75

2.25

Professional & Business Services

1.64

-3.60

-5.15

2.98

3.57

3.28

3.76

3.75

3.55

2.42

1.61

-0.04

-3.14

-6.02

-2.28

-0.38

-0.12

0.30

-1.08

2.10

1.83

0.89

Leisure & Hospitality

2.15

-1.66

-2.46

1.27

2.81

3.14

3.45

2.03

1.04

1.21

1.29

Government

1.16

0.98

-0.18

-0.94

-1.39

-0.37

-0.17

0.46

0.35

0.68

0.71

Federal

0.54

1.11

2.46

4.81

-0.82

-0.93

-2.88

-1.54

-1.51

-1.28

-1.34

State & Local

1.25

0.97

-0.53

-1.32

-1.47

-0.28

0.23

0.75

0.62

0.95

0.98

Information

Institute for Economic Competitiveness

23

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

Table 6. Quarterly Employment

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

Employment (Millions) Total Nonfarm Employment

137.2 137.8 138.4 139.1 139.6 140.2 140.8 141.3 141.9 142.5 143.0 143.6 144.3 144.7 145.2 145.6

Private Nonfarm

115.4 115.9 116.6 117.2 117.7 118.2 118.8 119.3 119.9 120.4 120.9 121.5 122.1 122.5 122.9 123.3

Mining

0.8

0.8

0.9

0.9

0.9

0.9

0.9

0.9

0.9

0.9

0.9

0.9

0.9

0.9

0.9

0.9

Construction

5.9

5.9

6.0

6.1

6.2

6.3

6.4

6.6

6.7

6.9

7.1

7.2

7.4

7.5

7.6

7.7

Manufacturing

12.0

12.1

12.1

12.2

12.2

12.2

12.3

12.3

12.3

12.3

12.3

12.3

12.3

12.3

12.2

12.2

Trade, Transportation and Utilities

26.1

26.2

26.3

26.4

26.5

26.6

26.6

26.7

26.7

26.7

26.8

26.8

26.9

26.9

27.0

27.1

Transportation & Warehousing

4.5

4.6

4.6

4.6

4.6

4.7

4.7

4.8

4.8

4.8

4.9

4.9

5.0

5.0

5.1

5.1

Financial Activities

7.9

7.9

7.9

7.9

8.0

8.0

8.0

8.0

7.9

7.9

7.9

7.9

7.9

7.9

7.9

7.9

Education & Health

21.2

21.3

21.4

21.5

21.5

21.6

21.8

21.9

22.0

22.2

22.4

22.5

22.6

22.7

22.9

23.0

Professional & Business Services

18.8

19.0

19.2

19.4

19.5

19.7

19.9

20.1

20.2

20.3

20.4

20.5

20.7

20.8

20.9

20.9

2.7

2.7

2.7

2.7

2.7

2.6

2.6

2.6

2.7

2.7

2.7

2.7

2.7

2.8

2.8

2.8

Leisure & Hospitality

14.4

14.5

14.6

14.6

14.7

14.8

14.8

14.8

14.9

14.9

14.9

15.0

15.0

15.1

15.1

15.2

Government

21.9

21.8

21.9

21.9

22.0

22.0

22.0

22.0

22.0

22.1

22.1

22.1

22.2

22.2

22.3

22.3

2.7

2.7

2.7

2.7

2.7

2.7

2.7

2.7

2.7

2.6

2.6

2.6

2.6

2.6

2.6

2.6

19.1

19.1

19.2

19.2

19.3

19.3

19.3

19.4

19.4

19.4

19.5

19.5

19.6

19.6

19.7

19.7

Information

Federal State & Local

Growth Rates Total Nonfarm Employment

1.83

1.48

1.96

1.99

1.45

1.54

1.73

1.62

1.60

1.57

1.61

1.67

1.74

1.28

1.31

1.18

Private Nonfarm

2.16

1.79

2.24

2.16

1.63

1.75

1.97

1.88

1.84

1.76

1.78

1.85

1.91

1.39

1.43

1.28

Mining

4.32

5.09

9.06 10.94

3.35

1.95

3.10

-2.67

-0.77

-0.63

3.07

4.65

3.55

4.92

2.57

2.61

Construction

2.76

4.76

4.74

4.20

6.00

6.41

8.05 10.72 10.47

9.85 10.01

9.55

8.47

6.60

4.91

3.74

Manufacturing

1.61

1.33

1.19

1.58

0.20

2.20

0.79

0.14

0.44

0.42

-0.48

0.09

-0.39

-0.01

-0.52

-0.71

Trade, Transportation and Utilities

2.66

1.48

1.79

1.54

1.56

0.69

0.96

0.68

0.34

0.40

0.96

0.83

0.74

0.96

1.12

1.06

Transportation & Warehousing

4.23

2.68

2.50

1.55

3.20

3.35

3.05

3.01

3.07

3.05

4.07

3.56

3.69

3.93

3.22

3.00

Financial Activities

0.15

0.29

0.46

0.86

1.95

0.96

0.40

-1.19

-1.22

-0.60

0.01

-0.39

-0.37

-0.43

-0.82

-0.99

Education & Health

1.46

1.16

1.85

1.58

0.88

1.85

3.34

2.19

2.32

2.79

3.24

2.18

2.80

1.56

2.71

2.12

Professional & Business Services

3.16

3.36

4.07

4.29

3.29

3.81

4.11

3.56

2.73

2.17

1.97

2.49

3.08

1.86

1.23

1.73

Information

0.15

-3.00

-1.34

3.76

-3.74 -10.78

-4.20

9.98 13.41

4.96

0.39

1.51

0.46

1.31

1.63

0.58

Leisure & Hospitality

3.20

2.35

2.49

1.49

1.80

2.23

0.50

0.62

0.82

1.08

0.49

1.68

1.60

0.69

1.39

1.57

Government

0.10

-0.15

0.48

1.07

0.45

0.43

0.44

0.23

0.33

0.52

0.66

0.72

0.82

0.67

0.69

0.62

-2.02

-2.75

-1.71

-0.06

-1.66

-1.78

-1.78

-1.03

-1.44

-1.14

-1.63

-1.14

-1.19

-1.05

-1.11

-1.54

0.41

0.22

0.79

1.23

0.75

0.74

0.75

0.40

0.57

0.75

0.97

0.97

1.09

0.91

0.94

0.91

Federal State & Local

24

U.S. Forecast | May 2014

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

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

2013Q4

2014Q1 2014Q2 2014Q3 2014Q4

2015Q1 2015Q2 2015Q3 2015Q4

2016Q1 2016Q2 2016Q3 2016Q4

2017Q1 2017Q2 2017Q3

GDP

107.1 107.5 108.0 108.6 109.1 109.7 110.1 110.5 110.8 111.3 111.7 112.1 112.5 112.9 113.3 113.7

Consumption

107.7 108.1 108.6 109.1 109.4 109.7 109.9 110.3 110.6 111.0 111.3 111.6 112.0 112.4 112.7 113.1

Durables Motor Vehicles Furniture

93.9

93.4

93.0

92.7

92.4

92.1

91.8

91.4

91.1

90.8

90.4

90.1

89.7

89.3

89.0

88.6

111.4 111.3 111.7 111.9 112.0 112.1 112.3 112.5 112.6 112.8 112.9 113.0 113.1 113.1 113.2 113.3 90.6

90.0

89.2

89.0

88.9

88.8

88.7

88.6

88.4

88.1

87.9

87.6

87.3

87.1

86.8

86.5

Other Durables

103.7 103.0 102.6 102.8 103.0 103.2 103.4 103.5 103.7 103.8 104.0 104.1 104.2 104.3 104.4 104.5

Nondurables

112.2 112.4 113.0 113.4 113.4 113.2 112.8 113.1 113.0 113.5 113.6 113.8 114.2 114.4 114.6 114.8

Food

108.0 108.4 109.6 111.1 111.3 111.5 111.5 111.5 111.5 111.5 111.7 111.8 111.9 112.1 112.3 112.4

Clothing & Shoes

105.6 105.7 105.8 105.7 105.6 105.5 105.4 105.4 105.2 105.2 105.0 104.9 104.7 104.6 104.4 104.2

Gasoline & Oil

150.6 148.8 150.3 147.7 145.6 142.1 137.8 138.8 136.9 139.1 138.7 138.6 140.1 139.3 139.5 139.6

Fuel

149.2 160.9 152.9 153.9 150.6 147.9 145.3 146.0 145.1 146.8 146.9 147.3 148.7 148.5 148.9 149.3

Services

108.5 109.2 109.8 110.5 111.1 111.7 112.2 112.7 113.2 113.8 114.3 114.8 115.4 115.9 116.5 117.0

Housing

107.2 107.9 108.7 109.4 110.1 110.8 111.3 111.7 112.1 112.6 113.1 113.5 114.0 114.5 114.9 115.4

Electricity

105.3 108.0 109.3 109.3 109.3 109.5 109.6 109.5 109.2 108.8 109.0 109.5 110.1 110.7 111.5 112.5

Natural Gas Water & Sewer Telephone

89.4

96.4 100.0 104.7 106.5 105.1 102.3

99.8

99.1

97.9

99.8 100.9 102.9 103.5 103.6 103.9

124.8 125.8 126.8 127.8 128.9 130.0 131.1 132.1 133.1 134.1 135.1 136.0 137.0 137.9 138.9 139.8 97.2

97.3

96.9

96.5

96.1

96.1

95.9

95.6

95.3

95.1

94.9

94.7

94.5

94.2

93.9

93.7

Transportation

108.6 108.7 109.1 109.8 110.3 110.6 111.0 111.4 111.8 112.2 112.6 113.0 113.5 113.9 114.2 114.6

Other Services

112.1 112.8 113.7 113.9 114.2 114.8 115.4 116.0 116.7 117.4 118.1 118.9 119.6 120.3 121.0 121.7

Institute for Economic Competitiveness

25

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

Table 8. Percent Change in Implicit Price Deflators

2013Q4

2014Q1 2014Q2 2014Q3 2014Q4

2015Q1 2015Q2 2015Q3 2015Q4

2016Q1 2016Q2 2016Q3 2016Q4

2017Q1 2017Q2 2017Q3

GDP

1.6

1.3

2.1

2.2

2.0

1.9

1.5

1.5

1.3

1.7

1.4

1.4

1.5

1.6

1.4

1.3

Consumption

1.1

1.4

2.0

1.8

1.3

1.2

0.8

1.3

1.0

1.4

1.2

1.2

1.4

1.3

1.2

1.2

-2.2

-2.5

-1.3

-1.3

-1.5

-1.4

-1.4

-1.4

-1.4

-1.5

-1.6

-1.6

-1.6

-1.6

-1.7

-1.7

0.9

-0.4

1.5

0.9

0.3

0.4

0.5

0.6

0.6

0.5

0.4

0.3

0.3

0.3

0.2

0.2

Furniture

-3.4

-2.7

-3.6

-0.9

-0.6

-0.2

-0.4

-0.7

-0.9

-1.1

-1.1

-1.2

-1.2

-1.2

-1.3

-1.3

Other Durables

-2.8

-2.9

-1.6

1.0

0.8

0.7

0.5

0.6

0.6

0.6

0.5

0.5

0.5

0.5

0.4

0.3

Nondurables

-0.5

0.5

2.2

1.5

-0.1

-0.7

-1.2

0.9

-0.2

1.5

0.5

0.7

1.4

0.6

0.8

0.7

0.1

1.4

4.7

5.4

0.8

0.8

0.0

-0.1

0.0

0.2

0.4

0.5

0.6

0.6

0.5

0.5

Clothing & Shoes

-2.4

0.2

0.3

-0.2

-0.4

-0.3

-0.4

-0.2

-0.4

-0.4

-0.5

-0.5

-0.6

-0.5

-0.7

-0.8

Gasoline & Oil

-3.1

-4.7

4.1

-6.7

-5.6

-9.4

-11.6

2.9

-5.5

6.9

-1.4

-0.2

4.6

-2.5

0.7

0.1

Fuel

7.6

35.5

-18.5

2.6

-8.2

-7.1

-6.6

1.8

-2.5

4.8

0.4

1.0

3.7

-0.5

1.2

0.9

Services

2.2

2.4

2.4

2.4

2.2

2.2

1.8

1.9

1.9

1.8

1.9

1.9

1.9

2.0

1.8

1.8

Housing

2.8

2.7

2.8

2.7

2.7

2.3

1.8

1.6

1.6

1.7

1.7

1.7

1.6

1.6

1.6

1.5

Electricity

4.1

10.5

5.3

-0.2

0.0

0.7

0.4

-0.2

-1.2

-1.2

0.5

1.9

2.2

2.2

2.9

3.8

-5.5

35.2

15.7

20.4

7.1

-5.2

-10.2

-9.7

-2.7

-4.9

8.4

4.2

8.2

2.4

0.3

1.4

Water & Sewer

4.0

3.0

3.3

3.3

3.4

3.4

3.3

3.2

3.2

3.0

2.9

2.9

2.9

2.8

2.7

2.7

Telephone

0.7

0.2

-1.4

-1.9

-1.4

0.0

-0.8

-1.2

-1.4

-0.8

-0.8

-1.0

-0.9

-1.1

-1.1

-1.1

Transportation

1.6

0.2

1.6

2.6

1.7

1.4

1.2

1.5

1.4

1.7

1.4

1.5

1.6

1.5

1.3

1.2

Other Services

2.9

2.6

3.1

0.9

1.0

2.0

2.1

2.4

2.3

2.4

2.4

2.5

2.4

2.4

2.4

2.4

Durables Motor Vehicles

Food

Natural Gas

26

U.S. Forecast | May 2014

U . S . F orecast T ables

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

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

2007

2008

History 2009 2010 2011

2012

2013

2014

Forecast 2015 2016

2017

GDP

97.3

99.2 100.0 101.2 103.2 105.0 106.5

108.3 110.2 111.9 113.5

Consumption

97.1 100.1 100.0 101.7 104.1 106.0 107.2

108.8 110.1 111.5 112.9

Durables

103.8 101.8 100.0

Motor Vehicles

102.0

Furniture

101.1 100.4 100.0

98.6

97.6

96.5

94.7

99.7 100.0 105.7 108.6 110.4 111.1 95.8

94.2

94.0

92.1

92.9

91.6

90.2

88.8

111.7 112.4 112.9 113.2 89.3

88.6

87.7

86.6

Other Durables

95.7

98.9 100.0 100.4 103.6 104.2 104.1

102.9 103.4 104.0 104.5

Nondurables

97.2 102.7 100.0 103.1 109.1 111.8 112.0

113.0 113.0 113.8 114.7

Food

93.2

98.9 100.0 100.3 104.3 106.7 107.8

110.1 111.5 111.7 112.3

Clothing & Shoes

99.9

99.1 100.0

99.3 101.0 104.7 105.6

105.7 105.4 105.0 104.3

Gasoline & Oil

117.1 136.6 100.0 118.2 148.6 153.9 150.2

148.1 138.9 139.1 139.6

Fuel

107.7 146.0 100.0 117.0 148.7 150.6 148.6

154.6 146.1 147.4 149.1

Services

96.0

98.9 100.0 101.7 103.5 105.7 107.8

110.1 112.5 114.6 116.7

Housing

95.7

98.3 100.0 100.1 101.4 103.7 106.2

109.0 111.5 113.3 115.1

Electricity

91.2

97.1 100.0 100.2 102.1 102.0 104.2

109.0 109.4 109.3 112.0

Natural Gas

112.7 128.2 100.1

98.1

95.4

86.1

90.4

101.9 101.6 100.4 104.2 127.3 131.6 135.6 139.3

Water & Sewer

89.0

94.2 100.0 106.3 111.8 118.0 123.2

Telephone

97.2

98.7 100.0

Transportation

92.1

97.0 100.0 102.0 104.7 106.8 108.0

109.5 111.2 112.8 114.4

Other Services

93.0

97.3 100.0 103.1 105.7 108.3 111.2

113.6 115.7 118.5 121.3

99.3

97.5

97.7

97.3

96.7

95.7

94.8

Institute for Economic Competitiveness

93.8

27

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

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

2017

GDP

2.5

1.9

0.4

1.8

1.8

1.8

1.4

1.9

1.5

1.5

1.4

Consumption

3.3

1.6

1.2

1.3

2.6

1.7

1.0

1.6

1.1

1.3

1.2

-2.0

-2.1

-0.9

-2.1

-0.6

-1.5

-1.9

-1.6

-1.4

-1.6

-1.7

0.1

-4.1

5.6

2.9

3.1

0.9

0.8

0.6

0.5

0.4

0.2

-1.6

0.3

-2.0

-4.4

-0.2

-0.5

-3.0

-1.9

-0.6

-1.2

-1.3

Other Durables

2.2

3.2

1.3

0.6

3.2

-0.5

-0.2

-0.7

0.6

0.5

0.4

Nondurables

6.3

1.2

2.8

2.2

5.8

1.9

-0.2

1.0

-0.3

1.0

0.7

Food

4.9

6.9

-1.8

1.3

5.1

1.2

0.8

3.1

0.2

0.4

0.5

Clothing & Shoes

-1.2

-0.9

1.5

-1.4

4.3

2.5

0.2

0.0

-0.3

-0.5

-0.7

Gasoline & Oil

30.9

4.8

26.8

13.4

19.5

4.9

-2.9

-3.2

-5.9

2.5

-0.1

Fuel

27.7

22.4

-0.8

15.7

26.2

2.9

-1.2

2.8

-3.6

2.5

0.8

Services

3.3

2.5

1.1

1.5

2.0

2.1

1.9

2.4

1.9

1.9

1.8

Housing

3.1

2.5

0.9

0.3

1.9

2.3

2.5

2.7

1.8

1.7

1.6

Electricity

5.0

8.2

-0.4

0.5

2.5

-0.8

3.4

3.9

-0.1

0.8

3.1

Natural Gas

3.4

19.1

-18.3

-1.2

-2.0

-4.8

3.6

19.6

-6.9

4.0

2.7

Water & Sewer

5.2

6.8

6.0

5.7

4.9

6.0

3.7

3.3

3.3

2.9

2.7

Telephone

1.3

2.0

0.6

-1.1

-1.5

0.1

-0.3

-1.1

-0.9

-0.9

-1.2

Transportation

3.3 5.9 2.2 1.5 3.1 and 1.3its Components 1.4 1.5 1.4 Table 11. Personal Income

1.5

1.3

Other Services

3.2

2.2 Forecast 2.4

2.4

Durables Motor Vehicles Furniture

Table 11. Personal Income and its Components

2007

4.8

2008

2.4

2009

History 2.8 2.7 2010

2011

2.1

2012

2.8

2013

1.9

2014

2015

2016

2017

Personal Income Billions Current Dollars Personal Income

11995.8 12430.6 12082.1 12435.2 13191.3 13743.8 14135.3

14644.1 15369.4 16136.7 16947.7

Wages & Salaries

7899.1

8079.2

7787.8

7967.3

8278.5

8611.6

8860.1

9186.9

9609.0 10065.7 10524.2

Other Labor Income

1041.4

1075.1

1077.5

1120.4

1145.4

1170.6

1190.6

1218.8

1266.8

1341.5

1426.6

941.1

979.5

937.6

986.7

1082.6

1149.6

1221.2

1286.0

1353.3

1412.5

1458.5

Nonfarm Income Farm Income

38.1

47.0

35.5

46.0

72.6

75.4

127.7

106.5

104.9

104.4

104.5

Rental Income

189.4

262.1

333.7

402.8

484.4

541.2

590.6

613.1

611.6

600.4

598.7

Dividends

816.6

805.5

547.9

544.6

680.5

746.9

768.5

806.7

902.7

948.3

957.1

Interest Income

1350.1

1361.6

1263.9

1195.0

1204.1

1211.6

1229.2

1263.4

1353.7

1511.5

1755.8

Transfer Payments

1722.8

1884.0

2140.2

2276.9

2306.9

2358.3

2444.3

2531.9

2653.7

2786.1

2904.3

499.7

516.9

506.3

514.7

423.8

436.4

574.9

600.0

639.1

679.3

712.7

Personal Income

5.3

3.6

-2.8

2.9

6.1

4.2

2.9

3.6

5.0

5.0

5.0

Wages & Salaries

5.3

2.3

-3.6

2.3

3.9

4.0

2.9

3.7

4.6

4.8

4.6

Other Labor Income

4.4

3.2

0.2

4.0

2.2

2.2

1.7

2.4

3.9

5.9

6.3 3.3

Personal Social Insurance Tax

Percent Change, Annual Rate

Nonfarm Income

-7.5

4.1

-4.2

5.3

9.7

6.2

6.2

5.3

5.2

4.4

Farm Income

5.9

24.9

-21.8

30.4

59.2

4.2

69.4

-16.2

-1.4

-0.5

0.1

Rental Income

5.3

52.4

18.4

20.1

21.1

8.2

8.7

2.3

-1.7

-1.1

-0.5

10.0

-11.0

-32.5

22.8

19.4

24.0

-1.4

6.7

11.3

1.9

0.7

9.9

-2.2

-8.9

-2.7

0.6

1.7

1.9

4.2

8.2

14.2

15.5

Transfer Payments

8.1

10.3

14.8

5.5

0.2

3.4

3.1

3.9

4.9

5.2

4.5

Personal Social Insurance Tax

4.9

2.6

-1.8

2.4

-13.3

4.6

44.5

4.7

6.7

6.2

4.7

Dividends Interest Income 28

U.S. Forecast | May 2014

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

Table 12. Personal Consumption Expenditures (Current Dollars)

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

Consumer Expenditures by Type Billions Current Dollars

Consumer spending on… all goods & services

11662.2 11790.8 11914.9 12037.4 12158.5 12278.9 12396.2 12537.3 12671.6 12821.0 12957.0 13103.4 13264.4 13403.2 13555.8 13706.5

durable goods

1275.7 1270.2 1289.3 1304.4 1314.7 1326.6 1341.8 1357.6 1377.7 1394.7 1406.4 1421.0 1435.9 1448.1 1463.7 1477.7

furniture and appliances

288.4

285.3

285.9

286.9

286.9

289.3

293.8

297.0

300.4

304.5

308.1

310.4

313.0

315.3

317.6

319.6

information processing equipment

100.6

100.0

100.4

101.8

102.8

104.1

105.6

107.1

108.4

109.3

110.2

111.3

112.6

113.5

114.6

115.7

motor vehicles and parts

427.8

428.3

443.2

450.2

455.8

459.5

463.0

468.5

478.8

485.6

487.7

493.6

498.2

501.3

507.0

511.4

other durable goods

142.4

142.1

142.8

144.0

144.8

145.6

146.8

148.0

149.1

149.9

150.6

151.5

152.6

153.4

154.3

155.2

nondurables clothing & shoes

2654.7 2659.1 2696.7 2709.7 2729.1 2742.9 2755.2 2784.8 2804.9 2838.0 2860.5 2885.8 2916.6 2938.6 2964.6 2989.5 364.8

361.2

364.9

369.1

373.8

376.2

380.5

385.3

388.8

393.0

396.5

400.3

403.6

406.7

411.2

27.4

32.2

31.8

26.2

25.6

25.2

24.7

24.9

24.8

25.2

25.3

25.4

25.7

25.7

25.7

25.8

gasoline & motor oil

383.5

377.5

391.0

373.7

368.7

360.9

352.2

356.7

353.7

361.7

361.6

362.3

366.9

364.9

366.0

366.6

food

893.2

897.5

908.9

926.3

933.7

940.4

946.6

954.0

961.3

966.2

971.4

978.3

985.3

992.2

other nondurable goods

985.7

990.6 1000.2 1014.5 1027.3 1040.2 1051.2 1063.9 1076.3 1092.0 1105.7

1119.5

1135.1

1149.2

fuel oil & coal

415.3

999.0 1005.3 1162.7

1176.6

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

10831.5 10912.3 10973.6 11037.7 11112.6 11190.3 11274.5 11366.6 11458.8 11554.0 11641.9 11737.1 11839.4 11925.2 12024.4 12122.9

durable goods

1357.8 1360.5 1385.6 1406.5 1422.8 1440.6 1462.2 1484.7 1512.0 1536.3 1555.3 1577.9 1600.8 1620.9 1645.2 1668.3

furniture and appliances

318.2

316.9

320.5

322.4

322.8

325.8

331.2

335.3

340.0

345.5

350.6

354.3

358.4

362.1

365.9

369.4

information processing equipment

141.1

143.2

145.9

151.0

155.5

160.5

165.9

171.5

176.9

181.8

187.0

192.7

198.7

204.2

210.4

216.7

motor vehicles and parts

384.2

385.0

396.8

402.2

406.9

409.7

412.3

416.6

425.0

430.5

432.0

436.9

440.7

443.1

447.9

451.5

other durable goods

135.6

137.0

138.5

139.4

139.9

140.4

141.4

142.3

143.2

143.8

144.4

145.2

146.2

146.9

147.8

148.8

nondurables clothing & shoes

2365.5 2366.4 2386.9 2389.6 2407.4 2423.5 2441.6 2462.6 2481.8 2501.5 2518.0 2535.7 2554.1 2569.8 2587.3 2604.7 345.5

341.9

345.1

349.2

353.9

356.5

360.9

365.8

369.4

373.7

377.5

381.6

385.3

388.8

393.8

18.4

20.0

20.8

17.0

17.0

17.0

17.0

17.0

17.1

17.2

17.2

17.2

17.3

17.3

17.3

17.3

gasoline & motor oil

254.6

253.7

260.0

252.9

253.2

254.0

255.6

257.0

258.5

259.9

260.8

261.4

261.8

262.0

262.4

262.7

food

827.2

828.2

829.1

833.8

838.9

843.2

848.8

855.7

862.3

866.2

870.0

875.1

880.2

885.0

889.9

894.5

other nondurable goods

931.2

933.6

941.1

950.4

959.0

967.8

974.7

982.8

990.6 1001.0 1009.5 1017.9 1027.8 1035.5 1043.4 1051.9

fuel oil & coal

398.5

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

3.3

3.0

2.2

2.3

2.7

2.8

3.0

3.3

3.2

3.3

3.0

3.3

3.5

2.9

3.3

3.3

durable goods

2.7

0.8

7.4

6.0

4.6

5.0

6.0

6.2

7.3

6.4

4.9

5.8

5.8

5.0

6.0

5.6

furniture and appliances

2.1

-1.6

4.5

2.4

0.6

3.6

6.6

5.0

5.6

6.5

5.9

4.2

4.6

4.2

4.1

3.9

information processing equipment

4.7

5.8

7.7

13.9

11.9

13.0

13.5

13.5

12.5

11.2

11.4

12.1

12.5

11.2

12.0

11.9

motor vehicles and parts

-0.2

0.9

12.3

5.4

4.7

2.8

2.5

4.2

8.1

5.2

1.4

4.5

3.5

2.2

4.3

3.3

other durable goods

8.3

4.1

4.5

2.5

1.4

1.6

2.8

2.5

2.5

1.7

1.6

2.2

2.8

2.0

2.4

2.6

nondurables

2.9

0.1

3.5

0.5

3.0

2.7

3.0

3.4

3.1

3.2

2.6

2.8

2.9

2.5

2.7

2.7

clothing & shoes

4.4

-4.2

3.7

4.8

5.4

2.9

5.0

5.4

4.0

4.6

4.1

4.3

3.8

3.6

5.2

4.7

fuel oil & coal

63.0

35.8

15.7

-72.7

-0.4

0.5

0.0

0.5

0.9

2.1

0.6

1.0

0.6

0.3

-0.4

-0.1

gasoline & motor oil

-4.2

-1.5

10.1

-11.0

0.4

1.4

2.4

2.2

2.3

2.3

1.3

1.0

0.6

0.4

0.5

0.5

food

3.1

0.5

0.4

2.3

2.5

2.1

2.7

3.3

3.1

1.8

1.8

2.4

2.3

2.2

2.2

2.1

other nondurable goods

3.6

1.0

3.3

4.0

3.6

3.7

2.9

3.4

3.2

4.3

3.4

3.4

4.0

3.0

3.1

3.3

Institute for Economic Competitiveness

29

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

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

2008

2009

2010

Forecast 2011

2012

2013

2014

2015

2016

2017

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

9744.4 10005.5

9842.9 10201.9 10711.8 11149.6 11501.5

durable goods

1184.6

1102.3

1023.3

1070.7

1129.9

1202.7

1263.0

1294.7

1350.9

1414.5

1470.3

283.5

268.7

244.3

250.4

260.1

275.1

285.8

286.2

295.1

309.0

318.5

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

11975.4 12471.0 13036.4 13631.8

84.8

83.4

81.2

90.3

92.0

96.1

99.7

101.2

106.3

110.9

115.1

400.6

339.6

317.1

342.0

368.7

401.7

424.5

444.4

467.5

491.3

508.8

113.2

112.1

105.5

110.0

121.2

129.3

140.3

143.4

147.4

151.1

154.8

2176.9

2273.4

2175.1

2292.1

2472.8

2567.0

2622.9

2698.7

2772.0

2875.2

2977.1

323.7

319.5

306.5

320.6

338.3

354.6

362.7

367.3

382.7

398.3

412.9

25.6

30.8

24.3

26.2

29.4

26.7

25.6

29.0

24.9

25.4

25.7

gasoline & motor oil

319.9

358.3

260.2

307.3

379.5

390.4

383.1

377.7

355.9

363.1

366.3

food

737.3

772.9

770.0

788.9

833.0

863.3

884.0

916.6

950.6

975.3

1002.0

other nondurable goods

770.4

791.9

814.2

849.2

892.6

932.1

967.5

1008.1

1057.9

1113.1

1170.2

nondurables clothing & shoes fuel oil & coal

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

10035.5

9999.2

9842.9 10035.9 10291.3 10517.6 10727.9

1141.7

1083.2

1023.3

1085.7

1157.1

1246.7

1333.3

11009.1 11322.5 11693.1 12074.4 1393.8

1474.9

1567.6

1656.5

280.4

267.7

244.3

261.5

276.0

292.8

310.5

320.7

333.1

352.2

367.6

71.9

76.9

81.2

97.2

108.2

122.0

136.8

148.9

168.7

190.1

213.6

392.8

340.8

317.1

323.4

339.4

364.0

382.2

397.7

415.9

435.0

449.4

119.5

113.4

105.5

108.9

114.9

122.2

133.2

138.7

141.8

144.9

148.3

2239.3

2214.7

2175.1

2223.5

2266.0

2296.8

2342.0

2387.6

2452.4

2527.3

2596.0

323.9

322.3

306.5

322.7

334.9

338.9

343.3

347.5

363.1

379.5

395.9

23.8

21.1

24.3

22.4

19.8

17.7

17.2

18.7

17.0

17.2

17.3

gasoline & motor oil

273.2

262.4

260.2

259.9

255.4

253.7

255.0

254.9

256.3

261.0

262.5

food

791.3

781.9

770.0

786.5

798.8

809.4

820.2

832.5

852.5

872.9

892.1

other nondurable goods

825.2

828.3

814.2

833.0

861.6

885.1

916.5

946.0

979.0

1014.1

1048.1

nondurables clothing & shoes fuel oil & coal

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

1.5

-1.9

durable goods

4.1

furniture and appliances

0.9

information processing equipment

-0.1

3.1

2.0

2.0

2.3

2.6

3.1

3.3

3.3

-12.4

3.0

9.3

5.8

7.9

5.7

4.8

6.3

5.9

5.7

-9.1

-2.0

8.3

6.0

4.7

7.1

1.5

5.3

5.4

4.0

20.4

0.4

12.9

16.8

14.5

12.6

9.5

10.2

13.8

12.3

12.4

motor vehicles and parts

0.9

-23.0

7.9

11.0

3.8

7.3

2.3

6.0

4.5

3.7

3.3

other durable goods

3.3

-12.3

0.6

5.5

2.8

11.3

6.3

3.2

2.4

2.1

2.4

nondurables

0.1

-2.6

0.2

3.3

0.7

1.6

2.6

1.8

3.1

2.9

2.7

clothing & shoes

1.0

-3.2

-1.0

7.6

1.2

1.1

2.0

2.5

4.4

4.3

4.4

fuel oil & coal

-5.3

7.9

7.5

-7.6

-11.0

-4.9

11.9

0.5

0.5

1.1

-0.1

gasoline & motor oil

-3.3

-3.9

-1.1

2.2

-2.6

-0.9

1.4

-0.3

2.1

1.3

0.4

food

0.2

-3.7

2.1

2.1

0.3

1.9

1.7

1.4

2.8

2.1

2.1

other nondurable goods

1.2

-0.6

-0.6

3.6

2.9

2.9

4.0

3.0

3.3

3.8

3.3

30

U.S. Forecast | May 2014

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

Table 14. Business Fixed Investment History

2007

2008

2009

2010

Forecast 2011

2012

2013

2014

2015

2016

2017

Billions Current Dollars Business Fixed Investment

1920.6 1941.0 1633.4 1658.2 1809.9 1970.0 2047.1

2157.9 2325.7 2491.6 2658.2

Producers Dur. Equipment

885.8

825.1

644.3

731.8

832.7

907.6

939.7

986.6 1075.9 1146.9 1209.9

Nonresidential Structures

496.9

552.4

438.2

362.0

380.6

437.3

456.4

490.5

529.6

592.0

660.1

Non-Farm Buildings

293.9

317.5

249.1

173.7

170.2

190.9

203.4

221.8

255.5

318.1

360.8

Commercial

150.7

148.9

95.4

64.7

66.8

75.6

82.4

90.9

108.5

146.6

171.8

Industrial Other Buildings Utilities Mines & Wells

40.2

52.8

56.3

39.8

38.9

45.8

48.0

52.6

57.3

63.1

69.4

103.0

115.8

97.4

69.2

64.5

69.5

73.0

78.3

89.7

108.4

119.6

89.6

104.6

104.3

93.3

90.8

110.9

104.5

105.3

100.7

102.5

112.8

102.2

117.0

75.0

86.2

110.2

125.5

138.0

152.7

161.8

159.2

174.3

Billions 2005 Dollars Business Fixed Investment

1948.4 1934.5 1633.5 1673.8 1800.4 1931.8 1984.4

2066.2 2202.4 2337.9 2475.0

Producers Dur. Equipment

898.3

836.1

644.3

746.7

841.7

905.9

934.4

978.9 1069.0 1141.0 1205.2

Nonresidential Structures

509.0

540.2

438.2

366.3

374.1

421.6

426.9

443.6

462.6

502.4

547.1

Non-Farm Buildings

305.2

317.9

249.1

179.3

172.4

188.4

195.2

205.0

229.4

276.3

302.5

Commercial

159.9

151.7

95.4

66.6

67.4

74.0

78.8

84.4

98.2

128.6

145.6

43.1

53.8

56.3

40.8

39.1

45.0

46.1

48.4

50.7

53.6

56.7

102.6

112.8

97.4

71.9

65.9

69.3

70.2

72.1

80.5

94.3

100.5

Utilities

94.3

103.6

104.3

89.8

82.8

97.9

91.0

90.3

84.4

84.2

90.7

Mines & Wells

97.9

105.0

75.0

87.8

109.0

124.1

130.4

138.8

140.1

134.6

147.4

Industrial Other Buildings

Annual Growth Rate Business Fixed Investment

8.3

-5.6

-14.2

8.6

10.4

6.5

3.9

6.1

7.3

7.3

6.0

Producers Dur. Equipment

3.1

-15.9

-11.4

20.2

12.9

6.1

3.9

6.4

8.5

6.1

4.8

Nonresidential Structures

21.8

4.7

-32.2

-0.6

15.4

10.7

5.1

6.7

8.3

13.5

9.7

Non-Farm Buildings

22.5

-0.4

-34.0

-21.1

15.2

7.4

9.7

7.3

21.4

22.0

10.0

Commercial

17.3

-11.8

-44.7

-16.8

14.6

11.2

15.2

4.7

31.9

29.8

12.0

Industrial

48.0

22.5

-11.9

-28.8

41.2

7.6

4.0

15.1

6.2

14.6

7.4

Other Buildings

22.6

6.7

-29.7

-19.5

3.6

3.8

11.1

5.9

20.2

16.6

8.8

Utilities

51.4

2.5

-4.1

19.0

7.6

32.0

-7.4

-1.6

-3.0

4.7

11.8

1.8

24.4

-42.8

53.6

31.2

1.6

16.5

12.6

-2.3

5.0

8.8

Mines & Wells

Institute for Economic Competitiveness

31

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

Table 15. Government Receipts and Expenditures History 2007

2008

2009

2010

Forecast 2011

2012

2013

2014

2015

2016

2017

Federal Government Receipts and Expenditures Receipts

2660.8

2505.7

2230.1

2391.8

2516.7

2663.0

3040.8

3218.4

3360.0

3478.7

3563.9

Personal Tax and Nontax Receipts

1164.4

1101.7

857.2

893.8

1077.0

1149.2

1282.9

1361.6

1433.4

1468.1

1510.2

362.8

233.6

200.4

298.7

294.3

351.1

329.5

434.1

449.6

461.4

426.4

94.6

94.0

91.4

96.8

108.6

118.0

120.2

133.9

140.5

150.2

162.5

947.3

974.4

950.8

970.9

904.4

937.8

1093.9

1137.5

1206.2

1278.1

1340.9

Expenditures

2927.5

3140.9

3479.9

3721.3

3764.9

3772.7

3792.9

3879.6

4035.2

4227.0

4408.5

Purchases Goods & Services

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

1049.8

1155.6

1217.7

1303.9

1304.1

1295.7

1245.9

1230.0

1237.6

1239.7

1244.6

National Defense

678.7

754.1

788.3

832.8

835.9

817.2

770.8

755.2

759.7

759.3

761.0

Other

371.1

401.5

429.4

471.1

468.2

478.6

475.1

474.9

477.9

480.4

483.6

Transfer Payments

1673.5

1823.5

2135.6

2282.5

2274.3

2283.6

2349.3

2420.7

2542.7

2675.4

2785.2

To Persons

1258.9

1391.9

1608.9

1710.1

1728.2

1772.5

1838.2

1882.6

1960.6

2049.7

2135.9

42.3

45.1

52.7

50.6

56.5

49.9

48.6

47.5

53.0

53.8

55.0

Grants in Aid to State & Local Gov't

To Foreigners

359.0

371.0

458.1

505.3

472.5

443.2

444.0

471.8

509.9

552.2

574.2

Net Interest

386.1

368.4

330.8

351.0

394.1

398.3

390.9

415.1

442.6

495.4

556.8

48.7

56.2

57.4

66.7

70.3

82.9

81.3

76.2

73.0

71.3

Surplus (+) or Deficit (-)

Subsidies less Surplus of Gov't Entities

-266.7

45.4

-635.1 -1249.8

-1329.5

-1248.3

-1109.7

-752.1

-661.2

-675.2

-748.2

-844.6

Receipts

1900.6

1909.1

1919.2

1998.5

2029.9

2039.5

2099.2

2176.6

2284.6

2399.2

2494.0

Personal Tax/Nontax Receipts

1321.3

1328.9

1268.1

1305.7

1366.3

1405.2

1457.0

1496.5

1552.2

1609.6

1667.1

323.5

333.5

287.8

297.6

327.0

348.8

375.7

374.5

387.0

394.7

404.4

State and Local Government Receipts and Expenditures

Corporate Profits Indirect Business Tax and Nontax Accruals

57.9

47.4

45.6

47.7

50.8

51.4

54.8

65.6

66.3

66.0

65.2

Contributions for Social Insurance

18.9

18.7

18.6

18.2

18.3

17.5

17.6

18.5

19.3

20.2

21.1

359.0

371.0

458.1

505.3

472.5

443.2

444.0

471.8

509.9

552.2

574.2

2392.36 2471.74 2563.48

2654.0

Federal Grants-In-Aid Expenditures Purchases Goods & Services

1973.33 2074.15 2191.15 2235.85 2242.98 2292.10 2320.15 1752.2

1847.6

1871.4

1870.2

1854.7

1871.3

1879.6

1919.8

1973.7

2033.6

2103.9

460.9

477.8

566.1

612.0

581.8

552.5

558.6

592.8

641.0

694.0

726.9

Interest Received

17.3

36.0

114.3

123.0

126.7

146.8

143.3

138.5

137.4

139.4

141.8

Net Subsidies

25.6

25.0

22.8

21.4

17.0

14.7

15.8

16.1

15.3

14.5

13.7

2.2

2.6

2.2

2.3

2.3

2.4

2.3

2.4

2.5

2.5

2.6

-72.7

-165.1

-271.9

-237.3

-213.1

-252.7

-220.9

-215.7

-187.2

-164.2

-160.0

Transfer Payments

Dividends Received Surplus (+) or Deficit (-)

32

U.S. Forecast | May 2014

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

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

2008

2009

2010

Forecast 2011

2012

2013

2014

2015

2016

2017

Billions of Dollars Net Exports Goods & Services

-709.8

-713.2

-392.2

-518.5

-568.8

-547.2

-497.3

-472.5

-485.6

-552.5

-594.8

Current Account

-713.4

-681.3

-381.6

-449.5

-457.7

-440.4

-379.3

-358.0

-400.9

-506.4

-572.9

Exports -Goods & Services

1665.7

1843.2

1583.8

1843.5

2101.2

2195.9

2259.9

2354.8

2463.6

2549.0

2659.5

Merchandise Balance

-822.7

-834.0

-510.6

-650.2

-744.1

-741.5

-703.9

-708.1

-719.1

-782.6

-824.7

Food, Feed & Beverage

84.28

108.33

93.93

107.70

126.20

132.83

132.05

141.37

140.24

137.17

140.8

Industrial Supplies Excl Petroleum

316.3

386.9

293.5

388.6

484.7

482.3

492.4

515.1

551.5

587.9

621.8

Motor Vehicles & Parts

121.3

121.5

81.7

112.0

132.9

146.2

152.1

152.9

167.7

181.1

193.3

Capital Goods, Excl. MVP

433.0

457.7

391.5

447.9

493.3

527.7

534.9

546.8

556.5

560.0

579.2

Computer Equipment

45.6

43.9

37.7

43.8

48.4

49.3

48.1

48.8

46.5

50.7

55.2

Other

314.5

339.8

279.0

332.1

364.7

384.0

381.2

388.2

390.3

391.7

408.0

Consumer Goods, Excl. MVP

146.0

161.3

149.4

165.3

174.9

181.8

188.7

195.7

206.6

203.2

198.5

64.5

62.0

54.6

57.1

61.7

65.3

66.9

71.0

73.6

75.3

77.7

500.4

545.5

519.1

565.1

627.6

659.9

692.9

732.0

767.5

804.3

848.2

Other Consumer Services

Billions of Dollars Imports -Goods & Services

2375.6

2556.4

1976.0

2362.0

2669.9

2743.1

2757.2

2827.3

2949.2

3101.5

3254.3

Merchandise

2000.3

2146.4

1587.3

1951.2

2234.6

2295.4

2296.0

2346.2

2433.4

2546.2

2655.5

83.0

90.4

82.9

92.5

108.3

111.1

116.1

118.5

122.3

127.5

132.8

Petroleum & Products

346.7

476.1

267.7

353.7

462.2

433.9

386.8

381.4

351.5

335.0

315.2

Industrial Supplies Excl Petroleum

297.9

318.7

196.6

249.4

293.0

290.0

291.9

314.1

329.6

331.7

335.3

Motor Vehicles & Parts

258.5

233.2

159.2

225.7

255.3

298.6

310.1

310.9

321.6

331.4

348.4

Capital Goods, Excl. MVP

449.1

458.7

374.1

450.4

513.5

551.7

557.6

579.4

621.9

676.8

723.9

Computer Equipment

105.5

101.2

94.2

117.3

119.7

122.2

121.4

122.6

122.2

125.0

128.5

Other

309.2

322.0

249.2

301.9

358.2

389.3

389.7

408.2

449.8

501.6

545.2

Consumer Goods, Excl. MVP

480.0

486.7

431.4

486.5

517.5

519.7

535.9

543.5

566.0

607.4

650.1

Food, Feed & Beverage

Other Consumer

85.1

82.5

75.5

93.1

85.1

90.6

97.9

98.4

120.5

136.5

149.8

375.3

410.0

388.7

410.8

435.3

447.7

461.2

481.1

515.8

555.3

598.8

Net Exports Goods & Services

-703.6

-546.9

-392.2

-462.6

-445.9

-430.8

-412.3

-408.1

-484.7

-567.3

-616.1

Exports G & S

1647.3

1741.8

1583.8

1765.6

1890.6

1957.5

2010.1

2060.0

2130.1

2187.1

2265.0

Imports G & S

2350.9

2288.7

1976.0

2228.1

2336.4

2388.2

2422.3

2468.1

2614.8

2754.4

2881.1

Exports G & S

14.5

0.0

3.5

15.2

9.2

3.7

4.9

4.2

3.0

4.1

4.4

Services

Billions 2005 Dollars

Exports & Imports % Change Imports G & S

9.0

-1.6

0.9

15.0

10.9

0.0

1.8

3.5

4.7

4.9

4.9

Real Exports G & S

9.9

-2.0

2.5

9.8

4.6

2.4

5.0

1.7

2.4

3.2

3.7

Real Imports G & S

0.8

-5.6

-3.6

11.9

3.6

0.1

2.9

3.0

6.3

4.6

4.5

Institute for Economic Competitiveness

33

In Appeciation

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

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

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

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

Responsiveness. You work directly with a decision

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

Consistency. We are a unified firm employing team-

members who are committed to the success of our clients.

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

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

Experience. The staff at Real Property Specialists is

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

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

SEAN M. SNAITH, PH.D.

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

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