U.S. Forecast May 2015

U.S. Forecast

May 2015

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 2015 - 2018 May 2015 Report

Published quarterly by the Institute for Economic Competitiveness, College of Business Administration, University of Central Florida Copyright Š 2015 Institute for Economic Competitiveness. All rights reserved.

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

H IGH LIGH T S OF T H E 2Q 2 015 U. S. F OR EC A S T In this Issue of the U.S. Forecast: • They name hurricanes, tropical storms and even winter storms but they don’t name economic recoveries. If they did, our current six-year-old recovery should be named Lucy, after the Charles Schulz Peanuts character of the same name.

HIGHLIGHTS

• The strength of the U.S. dollar will continue to slow export growth and boost import growth. Thus, net exports will increasingly hold down U.S. real GDP growth in the years to come. The 4th quarter of 2014 was the first taste of trade’s drag on the U.S. economy.

• The Fed will commence a cycle of raising interest rates starting in the 1st quarter of 2016 (though we cannot rule out a token increase in late 2015).

This action will bring an end to a six-year stretch where gains in the stock market averaged double digits. The S&P 500 will average just 2.7% growth during 2016-2018. The steadily declining gains will be accompanied by increased volatility.

• Real GDP growth in the 1st quarter of 2015 will likely be revised to a negative growth rate before rising in the 2nd quarter to a still tepid 1.9%.

Growth will end up at 2.2% in 2015, 2.7% in 2016, 2.7% in 2017, and 2.4% in 2018 as the Federal Reserve tightens the reins on economic growth.

• Consumption spending growth, briefly spurred higher by cheap gasoline, should stabilize at a somewhat higher level than the paltry 2.2% average during this recovery. Average growth in real consumer spending from 2015 through 2018 will average 2.8%. While certainly not robust, it is a darn sight better than the measly growth that preceded it.

• Consumers are coming down from a temporary high caused by inhaling the vapors of cheap gasoline. As gas prices climbed from their lows, this euphoria and its upward impact on consumer confidence has already started to fade.

• The housing market continues to recover, but signals are mixed. The housing market should slowly but steadily improve through 2017 when rising rates take their toll and housing starts level off. Housing starts will rise from around 1.00 million in 2014 to 1.48 million in 2018.

• Payroll employment growth remains sluggish. Employer mandates from the Affordable Care Act will weigh on private sector hiring, especially for fulltime jobs. Consequently, payrolls will expand 2.0% in 2015 and 1.4% in 2016.

Growth in 2017 slips to 1.3% before easing to just 1.0% in 2018. Substantive changes to the healthcare law could ameliorate some of its detrimental employment effects.

• Unemployment rates (U-3) are expected to fall slightly to 5.3% in the 4th quarter of 2015. Unemployment should decline to 5.1% and stabilize there in 2017 before drifting upward in 2018. Underemployment (U-6) remains a serious problem and currently stands at 10.8%.

U . S . F orecast

They Give Names to Hurricanes Why Not Economic Recoveries?

The Great Recession officially ended in June 2009.

Like the Great Depression, this hopefully oncein-a-lifetime downturn in economic activity will be referred to by this name rather than the dates during which From Peanuts by Charles Shultz the recession lasted. The ’90-’91 recession, 2001 recession, and the ten others that preceded it following the Great Depression don’t have the distinction of being labeled by anything other than the dates of each contraction.

Hurricanes, on the other hand, have had a long history of being referred to by name. Going back several hundred years, hurricanes in the West Indies were named after the Saint’s day on which the hurricane occurred. This practice gave rise to the papal phenomena of having hurricanes with the same name but distinguished by “the first” and “the second.” Hurricane San Felipe II hit Puerto Rico in 1928; San Felipe I had struck in 1876.

In the early 1950’s hurricanes were named using the military’s phonetic alphabet: Able, Baker, Charlie, Dog, etc. This alphabet has since been replaced by the International Civil Aviation Organization’s alphabet: Alfa, Bravo, Charlie, Delta, and so on. There hasn’t been a hurricane named Delta, however, as the phonetic naming

gave way in 1953 to using female names for storms.

This lowpressure sexism came to an end in the late 1970’s when both men’s and women’s names were used to name storms.

There is a list of names that are recycled every six years and for storms that cause particular damage the name is retired and replaced in the six-year list.

I am not sure, but I suspect that a bronze bust of the retired hurricane is put on display in a Hurricane Hall of Fame at the Weather Channel’s headquarters.

Speaking of the Weather Channel, it was not content with just having its reporters out in the middle of named hurricanes and tropical storms pelted by rain while hoisting their wind meters in the air to breathlessly report wind speeds in live shots from affected areas. So in 2012, to criticism from other weather forecasters, the Weather Channel began assigning names to winter storms.

This allowed for dramatic graphics to be created and more opportunities for their reporters to get out in the middle of storms, now armed with yardsticks to measure the depth of the snowfall. Not to mention the opportunity for their reporters to wildly hop around, scream and shout, and otherwise exhibit

Institute for Economic Competitiveness

5

U . S . F orecast

the behavior of a Powerball winner celebrating their $200 million winning ticket.

have a high trajectory and long distance. The path Charlie had imagined the football would follow never materialized. Instead, at the last moment, Witness Jim Cantore’s reaction to thunder snow: www.weather.com/tv/shows/amhq/video/jim-cantore- Lucy, the placeholder, would snatch the football away and Charlie Brown would kick and miss, excited-over-thundersnow flying into the air letting out a loud, “Aaugh!” then I am not sure where the Weather Channel goes landing flat on his back. Time and again Lucy from here. Will individual clouds each get a name? would give Charlie Brown assurances that this time “Cumulus Cloud Carol is expected to pass in front she would not pull the football away, and Charlie of the sun at 1:25pm – get ready for some shade, Brown would fall for it each and every time.

Sioux City!”

This economic recovery has made Charlie Economic recoveries, including our current one, Browns out of a lot of economists, politicians, and aren’t assigned names the way storms or pernicious policy makers. For six years now the economy has recessions are dubbed, but maybe that should repeatedly fooled many that it was embarking on change. Our current recovery, now six years old, a high trajectory of growth, only to leave them has been vexing in its own right. Many economists, lying on their back wondering what had happened. policy makers, and even the Federal Reserve have Robust growth has been repeatedly snatched away consistently predicted throughout these six years during this recovery, and it has earned the right to that strong growth was on the horizon. From the be called the Lucy Recovery.

V-shaped predictions for the recovery in 2009 to As a side note, the list of winter storm names Vice President Joe Biden’s “Summer of Recovery” that the Weather Channel used during this past in 2010, to the second and third quarters of 2014 winter season included the name of another Peanuts when real GDP growth reached 4.6% and 5.0% character, Linus. I can only imagine how many respectively, the illusion of strength in this recovery times Jim Cantore and his peers commented how has proven time and again to be little more than an Linus had “blanketed” a region in snow. economic mirage.

Good grief!

Strong economic growth has repeatedly slipped from our grasp over the six years of this recovery.

Just when it was thought to be in place, it was pulled away again and again.

No, recoveries don’t get names, but if they did I think we could turn to Charles Shultz’s iconic comic strip, Peanuts, to find a name for this one.

The name of this recovery should be the Lucy Recovery.

Repeatedly, Lucy would entice Charlie Brown to kick a football that she promised to place-hold for him. Ever gullible, Charlie Brown would give himself a running start toward that football, building momentum for a kick that was sure to 6

U.S. Forecast | May 2015

U . S . F orecast

ANXIOUS INDEX Economists’ Anxiety Rising The most recent release (2nd quarter of 2015) of the Survey of Professional Forecasters by the Federal Reserve Bank of Philadelphia suggests that the 38 forecasters surveyed for the publication are 11.03% worried that a decline in real GDP will occur in the 3rd quarter of 2015. This quarter’s release reflects a jump in forecasters’ anxiety, their worries heightened by a sharp deceleration of 4th quarter real GDP growth to 2.2% from a 3rd quarter surge of 5.0%, and a first reading on GDP growth for the 1st quarter that came in at just 0.2%.

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 2015, the index stands at 11.03, which means that forecasters believe there is an 11.03% chance that real GDP will decline in the 3rd quarter of 2015.

The forecasters also report just a 9.30% chance that we are currently (as of the 2nd quarter of 2015) experiencing a contraction in real GDP. According to the panel, the probability that real GDP growth will turn negative is averaging around 13.26% through the end of the 2nd quarter of 2016, which implies that the forecasters’ assignment of probability for a contraction in real GDP in the upcoming year has increased since last quarter’s survey.

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 still below the average level

Figure 3.

The Anxious Index Probability of Decline in Real GDP in the Following Quarter Quarterly, 1968:Q4 to 2015:Q2 100 90 80

60 50 40 30 20 10 0

1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Probability (percent)

70

Source: Survey of Professional Forecasters, Philadelphia Federal Reserve Bank Institute for Economic Competitiveness

7

U . S . F orecast

during the economic recovery (13.60), and is 1.73 points higher than the previous quarter.

The 2nd quarter of 2015 reading of the Anxious Index is the highest since the 4th quarter of 2013.

GDP OUTLOOK Ho Hum, Meandering Toward the Next Recession Lucy’s done it again. Following two consecutive quarters of data that led some to declare once more that we are experiencing a robustly growing economy, figures on real GDP growth from the 4th quarter of 2014 and 1st quarter of 2015 have snatched that football away again. The 4.6% and 5.0% growth rates of the second and third quarter of 2014 were nothing but Lucy’s false assurances that she would indeed hold the ball this time and that the robust economy we’ve been awaiting was just about to kick off. Recent data has left us flat on our backs yet again. Growth from the fourth quarter of 2014 came in at just 2.2%, and the first reading of real GDP growth for the first quarter of 2015 was just 0.2%, a near-zero growth that stands a good chance of being revised in the second and third estimates to reveal a contraction of the economy in the first three months of this year.

The next four quarters of GDP growth will not deliver us from mediocrity as the Lucy Recovery plods onward. Growth will be 1.9% in Q2 2015 followed by 2.8% in Q3, 2.5% in Q4, and 2.9% in Q1 of 2016. Average quarterly growth from there through the end of the forecast horizon (2018 Q4) will be 2.6%.

We expect real GDP growth to be just 2.2% in 2015, 2.7% in 2016, and hold steady at 2.7% in 2017. As the tightening of monetary policy begins to restrain growth, GDP growth will decelerate to 2.4% in 2018.

8

U.S. Forecast | May 2015

The Affordable Care Act employer mandates are finally being implemented in 2015 and 2016, while the Dodd-Frank financial regulatory reform law continues to be a drag on the financial sector of the economy. In a recent interview on CNBC, the Commissioner of the Securities Exchange Commission (SEC) stated,

“…the burden isn’t necessarily as much as the regulations that came from Dodd-Frank. Some of them are just completely nonsensical. I mean, nothing to do with the financial crisis, aren’t really germane to the function of the SEC and that’s what happens when you get a runaway piece of legislation.”

I can’t think of a more damning comment about the excesses of Dodd-Frank than from a regulator calling a regulatory law a “runaway piece of regulation.” This is akin to a bureaucrat declaring that their budget is too big, or my teenage daughter stating she spends too much time on her smartphone.

Nearly five years have passed since these two massive bills were signed into law, and neither one has been fully implemented, nor will they be anytime soon. In the same interview, the SEC commissioner revealed that the SEC would be writing rules for another five to ten years! This implies that Dodd-Frank will be fully implemented fifteen years after it became law. If it takes fifteen years to implement a law, it stands to reason that the law is too overbearing and complex, perhaps unnecessary? The Ten Commandments only took two stone tablets to be delivered from Mount Sinai.

Each word of the Dodd-Frank law has resulted in 42 additional words of regulations. If DoddFrank had overseen the writing of the Ten Commandments, Moses would have had to haul 84 stone tablets down from the top of Mount Sinai. I am not sure if Moses could have made it through the arduous process of 42 trips up and down the mountain.

U . S . F orecast

Legislative action to decisively resolve policy uncertainty and to provide some regulatory relief does not look likely before the 2016 presidential election (even after, depending on the outcome).

In absence of any regulatory respite, growth will average just 2.5% for the 2015-2018 forecast horizon.

CONSUMER SPENDING Cheaper Gasoline Not the Accelerant for Consumer Spending It Was Supposed to Be

Following the fastest growth in consumer spending in this recovery to date in the fourth quarter of 2014, consumer spending growth plummeted by nearly 57% in the 1st quarter of 2015, a sadly familiar pattern that has emerged in this recovery. Fourth quarter growth of 4.4% decelerated to just 1.9% in the 1st quarter as consumers pulled back yet again. Cheap gasoline was not the accelerant for consumer spending that it might have been; the temporary high it provided faded quickly, as even consumers’ moods did not stay aloft. The mid-May reading of the University of Michigan’s consumer sentiment index plunged to 88.6 from 95.9 in April, erasing six months’ worth of gains.

Average gasoline prices in the U.S. have increased from a low of $2.03 in January to around $2.75 today. This reversal may have played a role in the souring of consumer confidence. The realization that cheap gasoline was once again a transitory phenomenon and not a permanent decline may have depressed both consumers’ moods and their willingness to spend what is increasingly looking like a temporary windfall.

of gasoline could ever generate.

Consumer spending averaged a paltry 2.3% growth rate from the 3rd quarter of 2009 through the 1st quarter of 2015. There have been occasional swells in spending growth, but those have been short-lived. In the 4th quarter of 2014, real consumption spending surged 4.4%, the fastest growth rate of the recovery to date, but as 2015 progresses, that pace of consumer spending will not be sustained.

In this Lucy Economic Recovery, U.S. consumers have exhibited only temporary glimpses of their knack for spending seen in previous recoveries. In the wake of such flashes, however, consumers pull back and return to the weaker pattern of spending that is more indicative of this illusory recovery that began in June of 2009.

First quarter growth in consumption spending reflects the new, less favorable trend in gasoline prices, as well as another deceleration, and possibly contraction, of real GDP growth. Real consumption spending growth slipped to just 1.9% in the 1st quarter of 2015, the weakest since the 1st quarter of 2014 when the U.S. economy contracted by 2.1%.

Continued improvement in the labor market, further repairs to household balance sheets, and a greater willingness of banks to lend should strengthen the underpinning of consumer spending.

These are stronger and longer-lasting supports for consumer spending than a fleeting decline in gasoline prices.

Real consumption spending is forecasted to accelerate from the 1st quarter of 2015, lifting growth in that full year to 3.0%, and then decelerating through the end of our forecast If gasoline prices continue to rise, we can horizon. Consumption spending growth is expected expect that consumer confidence will continue to to fall to 2.8% in 2016, 2.7% in 2017, and 2.5% in abate. When it comes to sustained momentum in consumer spending growth, wage and salary growth 2018. coupled with increasing opportunities in the labor market will have a greater impact than a cheap tank Institute for Economic Competitiveness

9

U . S . F orecast

short-term rates in the future cause long-term rates to rise today). We expect the 10-year Treasury yield In 2013, the pace of real private nonresidential to average 2.1% in 2015, 2.6% in 2016, 3.1% in investment growth slowed sharply under a rising swell of economic policy uncertainty (the Affordable 2017, and 4.0% in 2018.

Business spending on equipment and software Care Act, Dodd-Frank, the fiscal cliff, etc.), will grow at an annual average rate of 5.8% during and grew by just 3.0% for the year. The pace of 2015 through 2018. Investment spending growth in investment growth picked up in 2014 to 6.3%, but st computers and peripherals will enjoy double-digit after contracting in the 1 quarter of 2015, growth is again expected to waver in 2015, slowing to 3.1%. growth in 2016 after contracting in 2013, 2014, In 2016, as uncertainty begins to fade in the face of and 2015. Spending on communications equipment should expand at an average annual rate of 10.3% a presidential race that promises a different policy during 2015-2018, while industrial equipment path going forward, investment spending growth purchases average 6.4% growth over the same time will rise to 6.2% before easing to 6.0% in 2017. frame.

In 2018, growth will fall as higher interest rates and slowdowns in overall economic growth push Investment in nonresidential structures investment growth down to 4.6%. experienced a burst of activity in 2012 and INVESTMENT

Interest rates will remain historically low for much of the upcoming year before the Federal Reserve begins the process of tightening. The cost of borrowing—either explicit or the implicit (opportunity) cost of using retained earnings for investment—cannot explain the lackluster investment spending growth during this recovery as interest rates have lingered at such low levels.

Economic policy uncertainty has obscured the horizon over which planned investments are made and has suppressed the pace of investment growth for the six years of the recovery to date.

While interest rates will remain low for the remainder of this year, they will rise over the rest of our forecast horizon. With quantitative easing growing more distant in the rearview mirror, we think the Fed will begin slowly hiking the federal funds rate in the 1st quarter of 2016 (there is a possibility of a token increase in the federal funds rate later this year, but it will not represent the start of a sustained path of interest rate hikes).

Longer-run interest rates will begin to rise before the federal funds rate as the expectation of higher short-term interest rates in the future work their way through the yield curve (expectations of higher 10

U.S. Forecast | May 2015

expanded at a 13.5% clip. Investment growth plunged year over year, contracting by 0.5% in 2013.

The roller coaster ride continues in 2014 and 2015 as growth jumped to 8.2% in 2014, and is expected to plunge again to -7.5% in 2015. Investment in non-residential structures will bounce back in 2016, 2017, and 2018 with growth of 2.1%, 8.5%, and 8.7%, respectively.

Investment growth in transportation equipment decelerated sharply in 2013 to 7.9% from 22.7% in 2012, before rebounding to 13.0% in 2014. This type of investment will have an average growth rate of 2.3% during the four-year stretch from 2015 through 2018, and in that final year, growth will be flat. In the middle of this span (2016), growth will be slightly negative. Investment in this sector is highly volatile due to purchases of high-priced passenger aircraft that cause extreme swings in investment spending growth from quarter to quarter and year to year. This is very clear considering the fact that from 2010 to 2012 growth averaged more than 23% per year.

Residential fixed investment grew 12.0% in 2013 and then skidded to 1.6% in 2014. Growth will average 7.6% through 2015-2018, with a

U . S . F orecast

peak growth rate in 2016 of 12.7%. In the final year of our forecast, 2018, real residential fixed investment will be dampened quite a bit by both higher mortgage rates (expected to average 5.9% on a 30-year fixed mortgage that year) and a balance between supply and demand in the housing market that will diminish the rate of price appreciation. As a result, growth is expected to be just 1.8% in the final year of our forecast. In 2018, real residential fixed investment will be just over $663 billion.

government spending is expected to continue to contract at a slower rate. During 2015-2018, real federal government spending is expected to contract at an average of 0.4%. Over that same time horizon, state and local governments will oversee spending growth at an average of 1.0%.

We expect housing starts to continue to gradually accelerate over the next several years, reaching more than 1.47 million in 2018. Average levels of annual housing starts from 2015-2018 will be 1.3 million.

In 2018 housing starts are expected to show an increase of 570,000 starts from 2013. As a point of reference, housing starts in 2005 were nearly 2.1 million.

spending push the deficit to $518.9 billion. In 2016, the deficit will shrink again to $437.2 billion, but starting in 2017 deficits will once again be on the rise. There is no sign of a balanced budget in the federal government’s future.

The combination of higher revenues from economic growth, new taxes, and sizeable assistance from the Federal Reserve are, along with lower government spending, helping to shrink the size of Housing finance must become more accessible the annual budget deficit. The Fed is holding more to an expanded pool of borrowers if the market is than $2.46 trillion in U.S. Treasury debt and more going to make a smooth transition from investor-led than $1.73 trillion in mortgage-backed securities. purchases to more traditional mortgage-financed The Fed turns most of the spoils of being able to consumer purchases. The needed modifications create money right back to the U.S. Treasury. to the Dodd-Frank law are unlikely to be enacted The federal budget deficit fell in 2014 for the third before 2017, though there may be the opportunity year in a row, when it stood at $483 billion. We for some smaller tweaks to the “runaway piece of are forecasting deficits to tick up in 2015 as slower legislation.� economic growth and the likelihood of greater

GOVERNMENT SPENDING The contraction in federal government spending over the past four years will take a minor hiatus in 2015 as threats like the Islamic terrorist organization, ISIS, will necessitate somewhat higher defense-related spending. Beyond this, and through 2018, federal government spending is expected to remain a drag on GDP growth.

The 2014-2015 reining in of the pace of 2013 sequester cuts sharply slowed the rate at which government spending was contracting from -5.7% in 2013 to -1.9% in 2014. Beyond 2015, federal

Although our projected deficits through 2018 are relatively smaller than the $1 trillion-plus deficits that were the norm in 2009-2012, the additional debt added to the national debt over the next four years will be more than $1.9 trillion, pushing the national debt total over the $20 trillion mark.

A serious risk associated with persistent deficits and a large and growing level of debt is interest rates rising faster than we are currently forecasting, which would result in a rapidly rising burden of servicing this debt. The persistently low interest rates on U.S. Treasury bonds have numbed any pain from the record borrowing needed to finance federal budget deficits in recent years. Higher interest rates could quickly cause that anesthesia to wear off.

Institute for Economic Competitiveness

11

U . S . F orecast

Net interest on the national debt is expected to be $227 billion in 2014, and the Congressional Budget Office projects that figure to more than triple to $722 billion in 2024. If the interest rate on our national debt rises, the pain of financing this debt could become more acute and severe consequences owing to our lack of fiscal discipline will begin to manifest themselves.

Currently, the national debt is over $18.2 trillion and rising. This represents a debt of nearly $154,258 per taxpayer and over $56,800 per citizen. Unfunded liabilities of the U.S. are even more frightening; Social Security, Medicare, and Medicare part D represent nearly $96.5 trillion in liabilities, a figure that boils down to more than $815,948 per taxpayer.

NET EXPORTS Net exports became a drag on real GDP growth for the U.S. in the 4th quarter of 2014 after contributing to the 5.0% GDP growth in the 3rd quarter of that year. In the 3rd quarter, net exports were a positive contributor to real GDP growth, adding 0.78 percentage points to overall growth as real import growth swung from 11.3% in the 2nd quarter to -0.9%. In the 4th quarter of 2014, net exports alone dragged real GDP growth down by 1.03 percentage points. This drag has worsened in the 1st quarter of 2015.

The net exports boost to GDP growth in the 3rd quarter of 2014 will give way to a persistent drag on GDP growth through the end of 2018. The U.S. dollar has run a streak of appreciation, surging higher in the second half of 2014, against our trading partners that we are forecasting to last for 2015.

Over time, a stronger dollar boosts imports and erodes exports by making our goods and services more expensive to foreigners and, at the same time, making imported goods and services cheaper 12

U.S. Forecast | May 2015

to U.S. consumers, thus exacerbating the trade deficit. This will be intensified by relatively stronger growth, the 1st half of 2015 notwithstanding, in the U.S. GDP while many of our trading partners are experiencing slower, sometimes much slower, GDP growth. U.S. buyers will thus have income to purchase more foreign goods and services while foreign buyers will have relatively less income to spend on our goods and services.

Overall, export growth continues through the end of our 2018 forecast period. Growth will remain fairly constant during the three-year span covering 2016-2018. Real export growth from 2015-2018 will average 3.9%, while real import growth will average 5.1% over the same time frame.

Real net exports will average -$625.5 billion during 2015-2018, with the trade balance worsening each successive year on the back of the robust appreciation of the dollar and a weaker global demand for U.S. goods and services.

The four-year period in which the dollar has strengthened (2012-2015) is due to the relative strength of the U.S. recovery and the expected upward movement in U.S. interest rates as the Federal Reserve contemplates tightening interest rates in late 2015 or early 2016. Meanwhile, the European Central Bank has been forced to be more aggressive in its stance on policy and has announced the implementation of quantitative easing policies as the Fed did in the U.S. over the past several years.

Other countries, China for example, are also using policies to stimulate growth that over time should help support growth of U.S. exports.

The current account deficit will improve slightly until the second quarter of 2015, at which point the appreciation of the dollar that began in 2012 will begin to manifest itself in a worsening of the current account in 2016-2017 before stabilizing around $533 billion in 2018. Current account balances will average -$478.2 billion during 2015-

U . S . F orecast

2018. There will be continued worsening of the deficit in 2016-2018, and in 2018 the current account deficit will be -$532.7 billion.

Recent estimates by the Economic Policy Institute on the number of “missing workers”—potential workers who, as a result of a weak labor market, are neither working nor looking for work—is now 3.14 million in the U.S. If these workers were U N E M P LOY M E N T actively still looking for work, the current headline The U.S. headline unemployment rate (U-3, in the unemployment rate (U-3) would be 7.3%. jargon of the Bureau of Labor Statistics) has been The Bureau of Labor Statistics (BLS) does a misleading indicator of how the labor market and produce alternative measures of labor market economy have been performing for most of this weakness. The broadest measure of unemployment, economic recovery, so much so that the Federal U-6, takes into account discouraged workers Reserve has shifted away from its previous focus (currently 306,000 workers) as well as those who are on this statistic as a trigger for tightening U.S. underemployed (currently 6.5 million workers)— monetary policy. working part-time, but not by choice—and workers The national headline unemployment rate in who are marginally attached to the labor force and April decreased slightly from 5.5% to 5.4%, the have looked for work in the past 12 months but are lowest level since 2008. The unemployment rate not currently looking, yet indicate a willingness to declined despite the growth in the labor force work (1.02 million workers). (which includes people who are working, as well as The U-6 measure remains distressingly high at people not working, but actively looking for work) 10.8% in April 2015, down 0.5 points from the of 166,000.

January 2015 level of 11.3%, and down 6.4 points The April jobs report again showed stronger from its peak of 17.2% in April 2010. U-6 has been payroll job growth compared to the downwardly in double digits for 83 straight months, nearly seven revised job growth of just 85,000 in March. The years.

223,000 jobs added to payrolls in April puts the average growth in monthly payrolls for 2015 at 194,000. The average monthly gains in 2015 are a sharp deceleration from the average gain of 324,000 per month in the last quarter of 2014. For the entire five-year span from 2010 through 2014, the average monthly gains in payroll jobs have been 182,000.

Given the frustrating nature of this recovery and the complexity of trying to sift through often contradictory data, particularly when it comes to jobs data, the U.S. labor market simply cannot be sufficiently assessed by a single metric such as the headline unemployment rate (U-3). This is particularly true because as of April 2015 the labor force participation rate of 62.8% remains at its lowest point since March 1978.

Institute for Economic Competitiveness

13

U . S . F orecast C harts

30-Year Mortgage Rates and Housing Starts 9.0

(Mortgage rates - Left axis, %)

8.0

2.0

7.0

1.5

6.0

1.0

5.0

0.5

4.0 3.0

2.5

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 30-Year Fixed Mortgage Rate Housing Starts - Millions

0.0

Automobile and Light Truck Sales 11.0

(Millions Vehicles)

10.0 9.0 8.0 7.0 6.0 5.0 4.0

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Auto Sales Light Truck Sales

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

14

U.S. Forecast | May 2015

(Billions of 2000 Dollars)

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Change in Real Business Inventories

U . S . F orecast C harts

Consumer Prices (% Change Year Ago)

6.0 4.0 2.0 0.0 -2.0

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Consumer Price Index Core Consumer Price Index

Federal Budget Surplus 500.0

(Billions of Dollars)

0.0 -500.0 -1000.0 -1500.0

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Federal Budget Surplus

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

(%)

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Fed Funds Rate Institute for Economic Competitiveness

15

U . S . F orecast C harts

Real GDP Growth and Federal Funds Rate (%)

10.0 5.0 0.0 -5.0 -10.0

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Quarterly Growth Rate Real GDP Fed Funds Rate

Industrial Production 120.0

(2002=100)

110.0 100.0 90.0 80.0

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Industrial Production

Private Fixed Nonresidential Investment 3000.0

(Billions of Dollars)

2500.0 2000.0 1500.0 1000.0

16

U.S. Forecast | May 2015

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Private Fixed Nonresidential Investment

U . S . F orecast C harts

Manufacturing Employment 18.0

(Millions)

17.0 16.0 15.0 14.0 13.0 12.0 11.0

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Manufacturing Employment

Money Supply

40.0

(Annual Growth Rate %)

30.0 20.0 10.0 0.0 -10.0 -20.0

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Annual Growth Rate of M2 Annual Growth Rate of M1

Total Nonfarm Payroll Employment 150.0

(Millions)

145.0 140.0 135.0 130.0 125.0

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Total Nonfarm Employment Institute for Economic Competitiveness

17

U . S . F orecast C harts

Oil and Consumer Confidence 140.0

Oil ($ Per Barrel) - Left Axis

120

120.0

110

100.0

100

80.0

90

60.0

80

40.0

70

20.0

60

0.0

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Price of Oil WTI Consumer Sentiment

50

Real Disposable Income and Consumption 6.0

(% Change Year Ago)

4.0 2.0 0.0 -2.0 -4.0

-400

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Real Disposable Income Consumption

Trade Balance and Real Exchange Rate

1.50 1.40

-500

1.30

-600

1.20

-700

1.10

-800

1.00 0.90 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Trade Balance (Billions $) Left axis U.S. Dollar Real Exchange Rate (2000 = 1.0) Right axis

18

U.S. Forecast | May 2015

0.80

U . S . F orecast C harts

Twin Deficits 500.0

(Billions of Dollars)

0.0 -500.0 -1000.0 -1500.0

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 U.S. Federal Budget Surplus Current Account

Civilian Unemployment Rate 10.0

(%)

9.0 8.0 7.0 6.0 5.0 4.0 3.0

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Unemployment Rate

Yield Curve 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0

(%)

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 1-Year T-Bill Yield 5 Year Treasury Bond Yield 30 year Treasury Bond Yield Institute for Economic Competitiveness

19

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

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

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.

2009

2010

-0.3 0.2 -0.3 -5.1 -1.1 0.8 -0.6 -6.9 0.7 6.3 -4.5 -4.7 -22.9 -0.8 -11.0 6.4 -3.6 25.9 11.8 7.3 13.2 -24.0 5.9 -2.6 6.8 0.3

-2.8 -2.0 -1.6 -5.3 -1.8 -0.9 -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 -8.7 -13.6 5.7 1.6

2.5 1.1 1.9 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 11.9 12.8 4.4 -2.7

2011

2012

2013

2014

Billions of Dollars 14830.4 14418.8 14783.8 15020.6 15369.2 15710.3 16085.6 14718.6 14418.7 14964.4 15517.9 16163.2 16768.1 17418.9

1.2 1.6 1.0 4.2 1.9

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

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

79.4 3.3 5.7 71.1 65.9 71.8 11.555 0.586 3.705 9.6 -0.7 -1294 -444

95.1 0.2 3.3 73.9 36.6 67.4 12.735 0.612 3.792 8.9 1.2 -1297 -459

Other Measures 94.2 98.0 93.0 1.0 0.9 0.7 3.8 2.9 4.2 75.5 76.1 77.2 65.9 55.2 65.2 76.5 79.2 84.1 14.425 15.522 16.404 0.784 0.930 1.001 4.125 4.473 4.334 8.1 7.4 6.2 1.7 1.7 1.9 -1089 -680 -483 -461 -400 -411

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

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

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

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

Financial Markets, NSA 0.14 0.11 0.09 0.09 0.06 0.03 0.18 0.13 0.12 0.76 1.17 1.64 1.80 2.35 2.54 2.92 3.45 3.34 3.66 3.98 4.17 1380 1643 1931 8.9 19.0 17.7 0.946 0.977 1.010 3.8 3.3 3.3

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

12430 3.6 10994 4.6 10987 1.5 5.0 1073 -17.5

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

12429 2.8 11238 2.7 11055 1.0 5.6 1470 23.4

13202 6.2 11801 5.0 11331 2.5 6.0 1428 -2.9

13888 5.2 12384 4.9 11676 3.0 7.2 1681 17.9

Incomes 14167 2.0 12505 1.0 11651 -0.2 4.9 1761 4.7

14729 4.0 12986 3.8 11939 2.5 4.9 1827 3.7

Forecast 2016 2017

2.7 2.8 2.8 5.8 2.7 2.4 6.2 8.3 12.5 13.7 15.6 10.0 -0.5 -4.6 -1.9 2.1 14.0 -9.7 -1.1 -6.3 11.8 12.7 4.5 6.5 -0.3 1.1

2.7 2.8 2.7 6.2 2.4 2.2 6.0 5.9 8.3 7.5 11.5 7.3 1.7 4.8 2.5 8.5 14.2 -12.0 5.3 10.5 16.6 9.5 4.5 5.2 -0.9 0.8

2018

2.4 2.5 2.5 5.2 2.3 2.1 4.6 3.6 5.7 4.8 5.4 4.1 0.0 4.8 -0.5 8.7 13.3 1.8 6.2 8.8 7.5 1.8 4.9 4.0 -0.6 1.0

16445.4 16895.6 17353.0 17777.0 18003.7 18859.7 19745.5 20604.1

Prices & Wages, Percent Change, Annual Rate 2.1 1.8 1.5 1.5 1.1 3.1 2.1 1.5 1.6 -0.2 1.7 2.1 1.8 1.7 1.7 6.0 1.9 1.2 1.9 -4.4 2.2 1.9 1.9 2.1 2.7

0.8 -0.3 1.7 -2.6 1.4

U.S. Forecast | May 2015

2015

Composition of Real GDP, Percent Change 1.6 2.3 2.2 2.4 2.2 1.7 2.2 2.2 2.3 2.3 2.3 1.8 2.4 2.5 3.0 6.1 7.3 6.8 6.9 6.4 1.8 0.7 1.9 1.8 2.3 1.8 1.3 1.9 2.1 2.7 7.6 7.3 3.0 6.3 3.1 13.6 6.9 4.6 6.4 5.4 1.6 3.2 3.1 2.8 7.1 -1.8 5.0 -0.1 -2.4 -0.9 2.0 11.4 8.3 -0.1 8.8 21.0 4.2 3.9 12.9 4.3 37.6 22.7 7.9 13.0 7.9 28.4 14.2 -0.8 18.9 7.7 33.0 14.6 -5.0 15.2 10.7 2.3 13.5 -0.5 8.2 -7.5 -0.3 8.6 3.4 7.7 5.2 -1.6 15.7 -1.2 12.7 21.3 -7.6 21.4 -7.5 12.7 -12.4 26.4 13.2 0.6 8.2 -27.4 -9.1 9.5 3.1 1.0 -0.4 0.7 13.5 12.0 1.6 6.5 6.9 3.3 3.0 3.2 1.5 5.6 2.3 1.1 4.0 4.7 -2.7 -1.8 -5.7 -1.9 0.4 -3.3 -1.2 0.5 1.0 1.1

1.9 3.8 2.3 6.4 2.9

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

20

2008

2.0 2.0 2.0 1.8 2.7

1.9 2.4 2.1 2.8 3.0

1.9 2.5 2.1 2.6 3.1

56.9 0.2 1.5 77.0 66.4 94.6 16.8 1.1 4.7 5.4 2.0 -518.9 -422.2

67.1 2.0 3.1 77.6 53.9 92.7 17.2 1.3 5.0 5.1 1.4 -437.2 -432.1

78.2 1.9 3.4 77.3 45.9 92.9 17.6 1.4 4.9 5.1 1.3 -444.0 -525.8

90.4 2.0 2.8 76.6 40.2 93.2 17.4 1.5 4.8 5.3 1.0 -502.5 -532.7

0.1 0.1 0.2 1.5 2.1 2.8 3.8 2111.0 9.4 1.2 15.7

0.7 0.7 0.8 1.9 2.6 3.3 4.4 2219.7 5.2 1.2 -0.7

2.0 2.0 2.1 2.8 3.1 3.6 5.0 2294.8 3.4 1.1 -4.0

3.6 3.4 3.6 3.9 4.0 4.4 5.9 2284.9 -0.4 1.1 -5.3

15303.9 15944.6 16771.8 17623.4 3.9 4.2 5.2 5.1 13450.9 13959.3 14677.6 15447.4 3.6 3.8 5.1 5.2 12347.0 12613.5 13011.9 13424.1 3.4 2.2 3.2 3.2 5.1 4.5 5.0 5.5 2058.5 2197.1 2156 2172.3 12.634 6.8307 -1.831 0.7572

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

Table 2. Real Gross Domestic Product History 2008

2009

2010

2011

Forecast 2012

2013

2014

2015

2016

2017

2018

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

14830.4 14418.8 14783.8 15020.6 15369.2 15710.3 16085.6

16445.4 16895.6 17353.0 17777.0

14865.8 14566.3 14722.2 14979.0 15304.3 15636.7 15996.9

16358.5 16824.7 17289.6 17718.8

10007.2

11296.9 11617.4 11929.1 12228.1

9847.0 10036.3 10263.5 10449.7 10699.7 10969.0

Durables

1083.2

1023.3

1085.7

1151.5

1235.7

1319.0

1410.0

1499.8

1587.1

1685.1

1772.1

Nondurables

2214.7

2175.1

2223.5

2263.2

2280.1

2322.6

2364.8

2418.3

2483.1

2542.0

2600.7

Services

6708.6

6648.5

6727.6

6851.4

6942.4

7073.1

7218.6

7412.4

7590.9

7759.8

7925.9

1934.5

1633.5

1673.8

1802.3

1931.8

1990.6

2116.4

2182.6

2318.8

2458.1

2571.4

836.1

644.3

746.7

847.9

905.6

947.2

1008.2

1062.9

1150.5

1218.5

1262.7

281.0

256.1

281.4

285.9

295.0

304.0

312.5

334.6

376.2

407.4

430.8

Computers & Peripherals

77.1

76.8

84.7

83.0

86.8

86.7

84.6

83.8

95.2

102.3

107.3

Communications Equipment

91.5

79.4

90.2

91.8

102.3

110.4

110.1

119.5

138.2

154.0

162.4

Industrial Equipment

195.5

152.1

151.3

183.3

190.3

197.7

223.3

232.6

255.8

274.5

285.6

Transportation Equipment

146.2

70.6

127.5

173.9

211.4

228.2

257.6

277.3

275.9

280.6

280.6

30.0

17.7

22.1

27.9

31.0

30.7

35.9

37.7

35.8

37.5

39.3

42.6

30.8

36.2

48.1

54.5

51.6

59.5

65.5

64.2

65.8

65.4

540.2

438.2

366.3

374.7

423.8

421.7

456.2

421.7

430.2

467.0

507.5

182.8

126.7

95.2

94.7

102.8

106.3

114.5

120.5

137.4

156.8

177.5

Manufacturing

53.8

56.3

40.8

39.1

44.9

44.3

49.9

60.4

54.4

47.6

48.4

Power & Communication

94.5

95.8

80.4

74.1

89.6

82.8

92.3

80.7

79.7

84.0

89.2

Mining & Petroleum

105.0

75.0

87.8

110.9

124.5

125.2

135.5

97.7

89.7

99.1

107.7

Other

103.4

84.5

62.0

56.2

61.5

63.4

64.0

63.7

71.3

82.9

89.1

497.7

392.3

382.4

384.5

436.5

488.4

496.2

528.6

595.5

651.6

663.1

Exports

1740.8

1587.7

1776.6

1898.3

1960.1

2019.8

2084.7

2115.9

2211.0

2310.4

2423.7

Imports

2298.6

1983.2

2235.4

2357.7

2412.6

2440.3

2537.3

2657.0

2829.5

2977.2

3095.1

Federal Government

1152.3

1217.7

1270.7

1236.4

1214.4

1145.3

1123.5

1128.0

1124.1

1113.8

1107.0

State & Local Government

1842.5

1871.4

1820.8

1761.0

1739.5

1748.5

1765.3

1784.4

1803.7

1817.6

1836.6

Nonresidential Fixed Investment Equipment & Software Information Processing Equipment

Aircraft Other Equipment Structures Commercial & Health

Residential Fixed Investment

Institute for Economic Competitiveness

21

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

Table 3. Quarterly Summary of the Forecast of the U.S. 2015Q1

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

Real GDP Nominal GDP

0.2 -0.5 1.9 1.1 -0.3 2.8 -3.4 0.1 -8.0 -29.0 -2.6 -7.9 24.2 7.7 61.9 -23.1 -7.8 31.3 -19.3 -48.7 -24.7 1.3 -7.2 1.8 0.3 -1.5

2015Q2

1.9 3.2 2.8 8.5 3.3 1.8 2.6 8.8 14.9 19.2 4.6 19.3 -8.9 -36.8 -31.4 -13.9 4.7 18.9 -3.2 -52.8 7.9 10.7 3.2 1.9 1.9 2.8

2015Q3

2.8 3.0 3.2 7.9 2.6 2.6 4.7 8.9 12.5 7.6 18.3 7.6 -0.5 -5.8 1.9 -7.4 10.5 2.0 -3.4 -38.1 3.9 15.5 3.9 7.7 2.7 1.9

2015Q4

2.5 2.6 2.9 5.9 2.8 2.5 6.5 8.8 15.4 17.5 19.4 10.2 -4.3 -5.8 -1.8 0.6 10.2 1.2 -2.0 -11.1 3.7 10.6 3.9 8.0 -1.0 1.3

2016Q1

2.9 2.9 2.7 4.3 2.7 2.4 7.7 8.8 12.9 15.2 16.8 10.5 2.2 -7.0 10.7 7.3 16.8 5.0 -2.3 8.8 3.5 15.3 5.1 6.9 -1.8 1.0

2016Q2

2016Q4

2017Q1

2017Q2

2017Q3

Composition of Real GDP, Percent Change, Annual Rate 2.8 2.9 3.0 2.7 2.5 2.5 2.8 2.9 2.9 2.8 2.6 2.7 2.8 2.7 2.8 2.7 2.5 2.7 5.7 5.7 5.7 6.6 5.9 6.9 2.5 2.6 2.5 2.1 2.5 2.4 2.4 2.3 2.4 2.2 2.0 2.1 6.6 5.5 6.9 6.6 5.6 5.0 8.4 6.3 6.3 7.1 4.9 4.3 12.5 8.1 8.5 9.7 7.8 5.7 17.1 6.5 7.6 8.1 7.2 4.7 15.6 12.5 12.4 15.2 10.1 5.4 8.7 8.6 9.8 6.9 5.9 5.8 3.3 -0.8 -1.2 5.9 1.2 2.3 5.6 2.7 4.2 2.4 2.1 18.8 -7.7 -1.4 -5.7 18.4 1.6 0.2 4.2 4.4 12.4 8.4 9.4 8.1 16.0 16.0 20.5 10.3 11.8 15.1 -37.5 -29.3 -5.6 -10.8 -4.3 -5.3 1.3 2.0 -1.0 6.6 13.0 5.5 13.4 0.5 11.8 16.5 10.5 5.3 24.5 25.1 30.0 11.8 9.1 10.5 12.0 10.4 11.9 12.7 6.7 5.5 4.2 4.3 4.8 4.8 4.8 4.3 6.6 5.0 5.4 5.9 4.4 4.8 -1.0 1.6 -2.7 -1.4 -0.7 0.5 0.5 0.4 0.7 0.9 0.9 1.0

2017Q4

2.4 2.4 2.7 6.1 2.4 2.3 4.6 3.3 5.6 4.6 5.5 5.7 -2.5 1.4 -5.6 8.7 11.8 -5.1 7.4 12.0 9.6 2.0 4.7 4.5 -1.9 1.0

2018Q1

2.4 2.4 2.2 4.3 2.1 2.0 4.9 3.1 5.3 3.4 5.4 3.2 -1.1 1.8 -2.3 10.9 15.5 -0.1 8.5 12.2 10.6 1.2 5.2 3.5 -0.6 0.9

2018Q2

2.5 2.5 2.6 4.8 2.4 2.3 4.4 3.7 6.1 6.3 5.2 2.7 1.1 4.1 5.1 8.1 14.8 5.8 2.6 9.0 2.9 0.1 4.9 3.9 -0.5 1.3

2018Q3

2.6 2.6 2.5 4.5 2.5 2.2 3.9 3.7 5.4 4.3 4.5 3.3 0.9 5.7 0.4 6.5 9.6 14.1 5.0 1.5 3.7 0.4 5.2 3.4 0.7 1.1

2018Q4

2.3 2.3 2.4 4.3 2.2 2.1 3.9 3.6 5.4 5.8 3.6 3.1 1.0 3.5 0.8 6.6 9.5 15.1 2.1 4.6 3.4 -0.6 5.4 3.4 -1.7 1.1

Billions of Dollars 16304.8 16383.7 16495.4 16597.8 16715.8 16833.6 16953.5 17079.3 17193.7 17299.5 17408.7 17510.3 17612.5 17722.1 17836.6 17936.8 17710.0 17909.8 18108.0 18287.0 18510.0 18744.8 18974.0 19210.1 19426.8 19638.3 19855.7 20061.4 20278.3 20492.5 20719.1 20926.4

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

Prices & Wages, Percent Change, Annual Rate 2.3 2.0 2.0 1.8 1.9 2.9 2.8 2.8 1.6 2.5 2.1 2.1 2.0 2.1 2.1 4.5 3.9 3.3 1.1 2.9 2.7 2.9 2.9 3.1 3.1

-0.1 -3.1 1.7 -11.6 3.0

2.4 1.2 1.7 -4.7 2.6

1.7 1.5 2.2 1.4 2.7

1.5 1.2 2.1 0.8 2.7

2.0 1.6 2.0 1.2 2.5

48.7 -1.9 -1.0 77.2 105.5 95.5 16.596 0.969 4.407 5.6 2.2 -523 -465

58.3 0.4 -2.4 76.9 58.4 94.2 16.820 1.037 4.698 5.4 1.7 -591 -396

59.8 2.0 2.4 76.9 50.4 94.2 16.962 1.105 4.790 5.4 1.6 -581 -400

60.7 2.2 2.7 77.0 51.2 94.5 17.017 1.163 4.938 5.3 1.2 -536 -427

58.5 2.3 3.7 77.3 51.5 94.2 17.036 1.213 5.005 5.2 1.3 -526 -417

65.4 2.0 3.8 77.6 54.6 93.6 17.156 1.242 5.057 5.2 1.5 -499 -419

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))

0.11 0.03 0.22 1.45 1.97 2.55 3.73 2063 10.6 1.151 37.2

0.13 0.04 0.24 1.43 2.04 2.72 3.75 2101 7.5 1.164 4.6

0.13 0.12 0.24 1.51 2.16 2.93 3.85 2123 4.3 1.173 3.1

0.13 0.14 0.26 1.48 2.17 2.98 3.92 2156 6.4 1.181 2.9

0.27 0.29 0.42 1.64 2.36 3.14 4.10 2195 7.4 1.171 -3.2

0.54 0.56 0.67 1.88 2.61 3.32 4.36 2221 4.9 1.162 -3.1

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)

15107 4.0 13296 4.1 12259 6.2 5.5 1923 20.0

15244 3.7 13408 3.4 12326 2.2 5.3 2049 28.9

15367 3.3 13503 2.9 12376 1.6 5.0 2123 15.2

15498 3.5 13596 2.8 12427 1.7 4.7 2139 3.1

15683 4.9 13736 4.2 12513 2.8 4.7 2124 -2.8

15848 4.3 13865 3.8 12561 1.5 4.4 2207 16.6

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

22

2016Q3

U.S. Forecast | May 2015

1.9 2.7 2.1 3.6 3.1

1.8 2.6 2.1 2.3 3.1

2.0 2.6 2.1 2.7 3.2

1.7 2.4 2.1 2.0 3.1

1.8 2.5 2.1 3.0 3.1

1.8 2.4 2.1 2.1 3.0

Other Key Measures 69.4 75.2 73.2 76.7 2.1 2.1 1.9 1.8 4.1 4.3 3.4 2.6 77.8 77.9 77.7 77.4 52.2 57.2 53.2 47.1 91.7 91.3 92.6 92.5 17.236 17.277 17.463 17.538 1.287 1.349 1.388 1.427 5.017 4.987 4.943 4.837 5.1 5.1 5.1 5.1 1.3 1.2 1.4 1.3 -502 -507 -502 -511 -434 -459 -492 -518

80.0 1.9 2.5 77.2 42.8 93.0 17.652 1.438 4.811 5.1 1.3 -521 -538

83.1 1.9 2.8 77.0 40.4 93.5 17.664 1.448 4.821 5.1 1.1 -544 -555

86.2 2.0 2.8 76.8 38.4 93.2 17.547 1.464 4.808 5.2 0.8 -533 -547

89.1 2.2 3.0 76.7 40.5 93.5 17.473 1.470 4.786 5.2 0.9 -569 -527

91.9 2.3 2.9 76.6 41.7 93.3 17.387 1.480 4.741 5.3 0.8 -593 -523

94.5 2.0 2.7 76.4 40.1 92.9 17.297 1.487 4.745 5.4 0.7 -613 -534

Financial Markets, NSA 0.78 1.04 1.29 1.71 0.82 1.08 1.33 1.72 0.96 1.19 1.43 1.83 2.05 2.17 2.31 2.59 2.77 2.80 2.83 3.00 3.43 3.41 3.40 3.53 4.59 4.71 4.75 4.90 2227 2236 2262 2290 0.9 1.6 4.7 5.1 1.156 1.147 1.137 1.122 -2.1 -3.3 -3.4 -5.0

2.21 2.22 2.31 2.87 3.18 3.67 5.08 2309 3.4 1.105 -5.9

2.71 2.59 2.77 3.26 3.46 3.92 5.38 2319 1.7 1.088 -5.9

3.21 3.01 3.26 3.63 3.81 4.22 5.63 2313 -1.0 1.072 -6.1

3.67 3.42 3.70 3.96 4.09 4.45 5.91 2289 -4.1 1.057 -5.2

3.75 3.49 3.75 3.97 4.09 4.45 6.01 2265 -4.1 1.048 -3.6

3.75 3.49 3.73 3.94 4.06 4.42 5.98 2273 1.4 1.040 -2.9

Incomes 16224 16463 5.1 6.0 14208 14394 5.2 5.3 12737 12858 3.0 3.8 4.5 4.8 2238 2158 3.4 -13.6

16874 5.0 14770 5.4 13062 3.2 5.0 2158 0.4

17080 5.0 14967 5.4 13169 3.3 5.2 2152 -1.2

17309 5.5 15144 4.8 13257 2.7 5.3 2124 -5.0

17523 5.0 15352 5.6 13375 3.6 5.5 2164 7.6

17731 4.8 15553 5.3 13483 3.3 5.6 2199 6.7

17931 4.6 15741 4.9 13582 3.0 5.7 2202 0.6

16023 4.5 14028 4.8 12642 2.6 4.4 2219 2.3

16671 5.1 14579 5.2 12959 3.2 4.9 2156 -0.3

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

Table 4. Quarterly Gross Domestic Product 2015Q2

2015Q3

2015Q4

2016Q1

2016Q2

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

2017Q4

2018Q1

2018Q2

2018Q3

2018Q4

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

16304.8 16383.7 16495.4 16597.8 16715.8 16833.6 16953.5 17079.3 17193.7 17299.5 17408.7 17510.3 17612.5 17722.1 17836.6 17936.8 16176.3 16303.3 16425.3 16529.3 16647.5 16762.0 16884.2 17004.8 17123.0 17234.9 17348.3 17452.1 17556.2 17663.5 17776.8 17878.5 11173.1 11251.5 11340.2 11422.8 11498.5 11578.2 11656.8 11736.2 11814.3 11888.1 11967.1 12047.0 12114.0 12190.9 12267.4 12339.9

Durables

1457.4 1487.6 1516.2 1538.0 1554.1 1575.9 1598.0 1620.5 1646.7 1670.7 1699.0 1724.1 1742.3 1762.8 1782.4 1801.1

Nondurables

2391.9 2411.1 2426.6 2443.5 2460.0 2475.1 2490.9 2506.2 2519.3 2534.7 2549.5 2564.5 2577.8 2593.1 2608.8 2623.1

Services

7352.0 7385.1 7433.1 7479.4 7524.0 7569.4 7612.8 7657.5 7700.0 7738.2 7778.6 7822.2 7860.4 7904.4 7948.3 7990.5

Nonresidential Fixed Investment Equipment & Software Information Processing Equipment

2151.1 2164.9 2190.0 2224.5 2266.0 2302.5 2333.5 2373.0 2411.3 2444.6 2474.4 2502.3 2532.4 2559.8 2584.4 2609.1 1029.4 1051.4 1074.0 1096.8 1120.1 1142.9 1160.4 1178.3 1198.8 1213.2 1226.1 1236.0 1245.5 1257.0 1268.5 1279.7 318.2

329.4

339.2

351.6

362.4

373.3

380.6

388.4

397.5

405.0

410.7

416.4

421.8

428.1

433.8

439.5

79.5

83.1

84.6

88.1

91.3

94.9

96.4

98.2

100.2

101.9

103.1

104.2

105.1

106.7

107.9

109.4

114.7

116.0

121.0

126.5

131.5

136.3

140.4

144.6

149.8

153.4

155.4

157.5

159.6

161.6

163.4

164.9

Industrial Equipment

221.6

231.5

235.8

241.6

247.7

252.9

258.2

264.2

268.7

272.6

276.4

280.3

282.5

284.4

286.7

288.9

Transportation Equipment

283.1

276.6

276.2

273.2

274.7

276.9

276.4

275.6

279.6

280.4

282.0

280.3

279.5

280.3

280.9

281.6

41.4

37.0

36.4

35.9

35.2

35.7

35.9

36.3

36.5

36.7

38.3

38.5

38.6

39.0

39.6

39.9

70.2

63.8

64.1

63.9

65.5

64.2

64.0

63.0

65.8

66.0

66.1

65.1

64.8

65.6

65.6

65.7

437.6

421.5

413.4

414.1

421.4

425.8

430.5

443.2

452.2

462.5

471.6

481.5

494.1

503.9

511.9

520.1

117.2

118.6

121.6

124.5

129.5

134.4

139.5

146.1

149.7

154.0

159.5

164.0

170.0

176.0

180.0

184.2

58.2

60.8

61.1

61.3

62.1

55.2

50.6

49.9

48.5

47.9

47.3

46.7

46.7

47.3

48.9

50.7

Computers & Peripherals Communications Equipment

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

81.6

80.9

80.2

79.8

79.4

79.7

80.0

79.8

81.1

83.7

84.8

86.3

88.1

88.7

89.7

90.2

119.2

98.8

87.6

85.1

86.9

89.7

89.8

92.3

95.9

98.3

99.6

102.5

105.5

107.8

108.2

109.4

62.4

63.6

64.2

64.8

65.3

69.0

73.0

77.9

80.1

81.9

83.9

85.9

88.1

88.7

89.5

90.2

505.9

518.9

537.9

551.6

571.5

587.9

602.6

619.8

638.6

649.0

657.7

661.0

662.9

663.1

663.8

662.8

Exports

2088.0 2104.8 2125.1 2145.7 2172.4 2197.9 2223.8 2249.8 2273.8 2297.3 2321.8 2348.9 2378.7 2407.2 2438.2 2470.7

Imports

2610.2 2622.8 2671.6 2723.5 2769.4 2813.9 2848.6 2886.2 2928.1 2959.5 2994.0 3027.4 3053.8 3083.1 3108.7 3135.0

Federal Government

1120.9 1126.2 1133.9 1131.2 1125.9 1123.1 1127.5 1119.9

State & Local Government

1769.8 1781.9 1790.2 1795.8 1800.2 1802.6 1804.4 1807.5 1811.4 1815.3 1819.7 1824.1 1828.3 1834.2 1839.5 1844.5

1115.9

1114.0

1115.3

1110.0

1108.4 1106.9 1108.8 1104.1

Institute for Economic Competitiveness

23

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

Table 5. Annual Employment History 2008

2009

2010

2011

Forecast 2012

2013

2014

2015

2016

2017

2018

Millions Total Nonfarm Employment

137.169 131.220 130.269 131.843 134.098 136.394 139.023

141.83 143.767 145.657

147.06

Private Nonfarm

114.666 108.668 107.779 109.751 112.181 114.545 117.166

119.93 121.925 123.650

124.78

Mining

0.709

0.643

0.655

0.739

0.797

0.811

0.843

0.79

0.748

0.777

0.81

Construction

7.162

6.017

5.518

5.531

5.645

5.857

6.138

6.43

6.785

7.280

7.68

Manufacturing

13.403

11.848

11.529

11.725

11.926

12.018

12.188

12.34

12.420

12.489

12.53

Trade, Transportation and Utilities

26.294

24.905

24.641

25.067

25.471

25.856

26.376

26.96

27.161

27.308

27.39

Transportation & Warehousing

4.508

4.237

4.192

4.303

4.415

4.497

4.635

4.79

4.932

5.074

5.19

Financial Activities

8.204

7.838

7.695

7.697

7.783

7.886

7.978

8.11

8.071

7.962

7.85

Education & Health

19.157

19.548

19.888

20.231

20.697

21.096

21.473

21.96

22.344

22.624

22.89

Professional & Business Services

17.741

16.574

16.723

17.328

17.934

18.522

19.095

19.75

20.824

21.513

21.74

2.983

2.804

2.707

2.673

2.675

2.706

2.740

2.80

2.787

2.856

2.86

Leisure & Hospitality

13.441

13.074

13.042

13.351

13.773

14.259

14.709

15.12

15.153

15.258

15.47

Government

22.503

22.553

22.490

22.092

21.918

21.849

21.857

21.90

21.842

22.007

22.28

2.761

2.831

2.976

2.860

2.822

2.770

2.727

2.72

2.678

2.637

2.60

19.742

19.722

19.513

19.233

19.096

19.079

19.130

19.18

19.164

19.370

19.68

Information

Federal State & Local

Growth Rates Total Nonfarm Employment

-0.55

-4.34

-0.71

1.21

1.71

1.71

1.93

2.02

1.36

1.31

0.96

Private Nonfarm

-0.91

-5.23

-0.80

1.83

2.22

2.11

2.29

2.36

1.66

1.42

0.92

6.77

-14.61

11.68

13.57

2.32

3.07

5.09

-11.84

-0.47

5.05

3.74

Construction

-9.21

-16.57

-3.35

1.88

1.75

4.30

5.05

4.88

6.46

7.07

4.48

Manufacturing

-5.37

-11.38

0.65

1.75

1.45

0.95

1.72

0.86

0.54

0.51

0.25

Trade, Transportation and Utilities

-3.31

-4.83

0.76

1.95

1.48

1.85

2.02

1.94

0.28

0.70

-0.01

Transportation & Warehousing

-2.70

-6.16

2.14

2.38

2.66

1.93

3.55

3.08

2.69

3.03

1.69

Financial Activities

-2.28

-4.32

-0.90

0.50

1.25

1.22

1.56

1.10

-1.15

-1.39

-1.44

Education & Health

2.72

1.83

1.70

1.85

2.35

1.68

2.12

1.78

1.98

1.17

1.00

Professional & Business Services

-3.60

-5.15

2.96

3.56

3.32

3.23

3.45

3.82

5.50

2.05

0.77

Information

-3.14

-6.02

-2.35

-0.37

-0.19

1.95

1.34

1.75

-0.63

2.28

-0.08

Leisure & Hospitality

-1.66

-2.46

1.26

2.79

3.14

3.65

3.20

1.92

-0.31

1.50

1.24

Government

0.98

-0.18

-0.94

-1.39

-0.39

-0.25

0.27

-0.10

-0.04

1.10

1.33

Federal

1.11

2.46

4.80

-0.84

-1.03

-2.52

-0.57

-0.65

-1.81

-1.45

-1.45

State & Local

0.97

-0.53

-1.31

-1.47

-0.29

0.09

0.39

-0.02

0.21

1.45

1.70

Mining

24

U.S. Forecast | May 2015

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

Table 6. Quarterly Employment

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

Employment (Millions) Total Nonfarm Employment

141.0 141.6 142.2 142.6 143.0 143.6 144.0 144.5 145.0 145.4 145.9 146.3 146.6 146.9 147.2 147.5

Private Nonfarm

119.1 119.7 120.3 120.7 121.2 121.7 122.2 122.6 123.0 123.5 123.9 124.2 124.5 124.7 124.9 125.1

Mining

0.8

0.8

0.8

0.8

0.7

0.7

0.7

0.8

0.8

0.8

0.8

0.8

0.8

0.8

0.8

0.8

Construction

6.3

6.4

6.5

6.5

6.6

6.7

6.8

7.0

7.1

7.2

7.3

7.5

7.6

7.6

7.7

7.8

Manufacturing

12.3

12.3

12.3

12.4

12.4

12.4

12.4

12.4

12.5

12.5

12.5

12.5

12.5

12.5

12.5

12.5

Trade, Transportation and Utilities

26.8

26.9

27.1

27.1

27.1

27.2

27.2

27.2

27.2

27.3

27.4

27.4

27.4

27.4

27.4

27.4

Transportation & Warehousing

4.7

4.8

4.8

4.8

4.9

4.9

4.9

5.0

5.0

5.1

5.1

5.1

5.2

5.2

5.2

5.2

Financial Activities

8.1

8.1

8.1

8.1

8.1

8.1

8.1

8.0

8.0

8.0

7.9

7.9

7.9

7.9

7.8

7.8

Education & Health

21.8

21.9

22.1

22.0

22.1

22.3

22.4

22.5

22.5

22.6

22.7

22.7

22.8

22.9

22.9

23.0

Professional & Business Services

19.5

19.6

19.8

20.1

20.4

20.7

21.0

21.2

21.4

21.5

21.6

21.6

21.7

21.7

21.8

21.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.9

2.9

2.9

2.9

2.9

2.9

2.9

Leisure & Hospitality

15.0

15.1

15.2

15.2

15.2

15.1

15.1

15.1

15.2

15.2

15.3

15.4

15.4

15.4

15.5

15.6

Government

21.9

21.9

21.9

21.9

21.9

21.8

21.8

21.9

21.9

22.0

22.0

22.1

22.2

22.2

22.3

22.4

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

19.2

19.2

19.2

19.2

19.2

19.1

19.2

19.2

19.3

19.3

19.4

19.5

19.6

19.6

19.7

19.8

Information

Federal State & Local

Growth Rates Total Nonfarm Employment

2.22

1.64

1.60

1.19

1.27

1.46

1.27

1.24

1.38

1.31

1.29

1.14

0.80

0.86

0.81

0.66

Private Nonfarm

2.61

1.84

1.98

1.53

1.57

1.79

1.52

1.35

1.44

1.37

1.32

1.13

0.75

0.77

0.69

0.54

-8.40 -18.18 -12.75 -10.49

-4.44

-1.33

0.11

3.65

5.04

5.50

5.06

4.21

4.14

3.85

3.67

3.08

Mining Construction

6.37

2.90

4.69

5.19

5.42

5.59

6.45

7.77

7.57

7.50

6.72

5.76

5.42

4.88

4.11

3.20

Manufacturing

1.49

0.38

0.23

1.32

0.62

0.17

0.97

0.37

0.64

0.60

0.48

0.32

0.16

0.37

0.09

0.37

Trade, Transportation and Utilities

2.29

2.07

2.64

0.68

-0.01

0.62

0.42

0.11

0.37

0.93

1.10

0.40

0.23

0.10

-0.17

-0.19

Transportation & Warehousing

2.64

3.08

3.56

3.05

2.58

3.08

2.61

2.50

2.94

3.14

3.21

2.84

2.50

2.24

0.97

1.05

Financial Activities

2.02

1.48

1.53

-0.62

-0.61

-1.19

-1.41

-1.40

-1.00

-1.68

-1.55

-1.32

-0.99

-1.84

-1.66

-1.29

Education & Health

2.72

2.34

2.29

-0.24

1.73

3.36

1.74

1.11

0.49

1.27

1.21

1.72

0.58

1.49

1.10

0.81

Professional & Business Services

2.95

2.74

3.10

6.48

6.60

5.92

4.86

4.61

3.46

1.79

1.63

1.34

0.90

0.57

1.03

0.59

Information

2.58

2.53

0.50

1.40

-4.07

0.63

1.16

-0.25

7.77

3.62

-1.38

-0.88

0.66

0.49

-0.23

-1.21

Leisure & Hospitality

3.44

2.16

1.47

0.61

0.22

-1.07

-0.35

-0.02

0.76

1.38

2.04

1.80

0.89

1.11

1.42

1.55

Government

0.14

0.54

-0.45

-0.64

-0.35

-0.35

-0.12

0.65

1.08

0.99

1.15

1.17

1.14

1.38

1.44

1.35

Federal

0.15

0.29

-1.49

-1.56

-1.93

-1.94

-1.68

-1.69

-1.25

-1.22

-1.63

-1.71

-1.53

-1.49

-1.36

-1.43

State & Local

0.14

0.57

-0.30

-0.50

-0.13

-0.12

0.10

0.98

1.41

1.29

1.53

1.57

1.50

1.77

1.82

1.72

Institute for Economic Competitiveness

25

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

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

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

GDP

108.7 109.3 109.8 110.2 110.7 111.4 111.9 112.5 113.0 113.5 114.1 114.6 115.1 115.6 116.2 116.7

Consumption

108.5 108.8 109.1 109.4 109.8 110.4 111.0 111.5 111.9 112.5 113.1 113.6 114.2 114.8 115.4 115.9

Durables Motor Vehicles Furniture

90.8

90.3

90.1

89.8

89.4

89.1

88.8

88.5

88.3

88.1

87.8

87.6

87.4

87.1

86.9

86.7

110.1 110.4 110.8 111.0 111.1 111.3 111.4 111.6 111.9 112.1 112.4 112.7 112.9 113.1 113.3 113.5 87.2

86.9

86.9

86.8

86.7

86.6

86.4

86.2

86.1

85.9

85.8

85.7

85.5

85.4

85.3

85.1

Other Durables

101.0 100.3 100.3 100.3 100.4 100.5 100.7 100.9 101.2 101.5 101.7 101.9 102.2 102.4 102.6 102.9

Nondurables

108.6 108.8 109.1 109.1 109.4 110.5 111.4 112.3 112.4 113.2 113.9 114.6 115.5 116.3 117.0 117.7

Food

110.9 110.6 111.1 111.7 112.4 113.1 113.7 114.2 114.7 115.3 115.8 116.3 116.9 117.4 117.9 118.4

Clothing & Shoes

105.4 105.9 105.9 105.9 105.9 106.0 106.0 106.0 106.0 106.1 106.1 106.0 106.1 106.1 106.1 106.0

Gasoline & Oil

102.3 103.1 103.3

Fuel

116.1 118.5 122.1 122.4 122.0 127.8 131.5 136.0 134.5 137.4 140.1 143.2 146.6 149.5 152.3 155.1

Services

111.5 112.0 112.5 113.0 113.5 114.2 114.8 115.5 116.1 116.8 117.5 118.1 118.8 119.5 120.1 120.8

Housing

111.0 111.8 112.5 113.2 113.9 114.5 115.2 115.8 116.4 117.1 117.7 118.4 119.1 119.7 120.4 121.1

Electricity

109.2 108.8 107.5 106.9 106.3 106.4 107.2 108.1 108.8 109.8 111.1 112.4 113.1 113.7 114.5 115.4

Natural Gas Water & Sewer Telephone

89.2

85.3

80.0

99.8

78.0

98.8 104.4 108.2 112.9 109.7 112.5 115.1 118.1 121.6 124.5 127.3 130.0

76.4

78.1

81.6

81.8

82.8

83.3

86.2

86.5

87.1

86.1

87.8

87.6

131.4 132.8 133.9 135.1 136.3 137.5 138.7 139.9 141.1 142.3 143.6 144.9 146.1 147.4 148.8 150.1 94.4

93.8

93.8

93.7

93.6

93.5

93.4

93.3

93.2

93.1

93.0

92.9

92.8

92.7

92.7

92.6

Transportation

109.3 109.1 109.7 110.2 110.7 111.4 112.0 112.7 113.3 113.9 114.5 115.2 115.8 116.4 117.0 117.6

Other Services

115.6 116.1 116.9 117.6 118.4 119.1 119.8 120.5 121.3 122.1 122.9 123.8 124.6 125.5 126.4 127.2

26

U.S. Forecast | May 2015

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

Table 8. Percent Change in Implicit Price Deflators

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

GDP

-0.1

2.4

1.7

1.5

2.0

2.3

2.0

2.0

1.8

1.9

1.9

1.8

2.0

1.7

1.8

1.8

Consumption

-2.0

1.2

1.2

1.1

1.4

2.2

2.1

2.1

1.5

2.0

2.1

2.0

2.1

1.9

2.0

1.9

Durables

-2.8

-2.0

-1.2

-1.3

-1.6

-1.4

-1.3

-1.2

-1.1

-1.0

-1.0

-1.1

-1.1

-1.1

-1.1

-1.1

Motor Vehicles

-0.8

1.3

1.5

0.7

0.3

0.5

0.6

0.7

0.8

1.0

1.1

0.8

0.7

0.7

0.8

0.8

Furniture

-2.9

-1.2

-0.1

-0.3

-0.6

-0.7

-0.6

-0.8

-0.8

-0.7

-0.6

-0.6

-0.6

-0.6

-0.6

-0.7

Other Durables

-2.3

-2.9

-0.1

0.1

0.3

0.5

0.8

1.0

1.0

1.1

0.9

0.9

1.0

1.0

0.9

0.9

-11.5

0.9

1.2

-0.3

1.1

4.2

3.2

3.4

0.3

2.7

2.6

2.7

3.0

2.7

2.6

2.4

Food

-0.2

-0.9

1.8

2.0

2.6

2.6

2.0

1.9

1.8

1.8

1.9

1.9

1.9

1.8

1.7

1.5

Clothing & Shoes

-0.8

1.9

-0.1

0.1

0.0

0.2

0.1

0.1

0.1

0.1

0.0

0.0

0.1

0.0

-0.1

-0.1

Gasoline & Oil

-64.5

3.0

0.8

-12.9

-3.7

24.5

15.3

18.4

-10.7

10.8

9.5

10.8

12.4

9.8

9.2

8.7

Fuel

-41.9

8.5

12.7

0.9

-1.0

20.3

12.0

14.4

-4.2

8.8

8.2

8.9

9.8

8.2

7.8

7.4

Services

1.5

1.8

1.6

1.9

1.9

2.2

2.4

2.3

2.3

2.3

2.4

2.3

2.3

2.2

2.3

2.2

Housing

2.8

3.1

2.5

2.5

2.4

2.3

2.3

2.2

2.2

2.3

2.3

2.3

2.3

2.3

2.3

2.3

Electricity

4.6

-1.5

-4.5

-2.3

-2.1

0.3

2.9

3.4

2.7

3.5

5.1

4.6

2.6

1.9

2.8

3.3

-19.0

-16.3

-22.6

-9.5

-7.9

8.8

19.3

1.3

4.8

2.4

14.8

1.0

3.2

-4.8

8.4

-1.2

4.1

4.3

3.5

3.6

3.6

3.5

3.6

3.5

3.4

3.5

3.6

3.6

3.6

3.6

3.6

3.6

Telephone

-2.9

-2.6

0.0

-0.6

-0.2

-0.4

-0.6

-0.2

-0.5

-0.5

-0.4

-0.3

-0.4

-0.4

-0.3

-0.4

Transportation

-1.9

-0.7

2.0

1.9

1.9

2.4

2.4

2.4

2.1

2.2

2.2

2.2

2.3

2.1

2.1

1.9

Other Services

2.4

1.8

2.7

2.5

2.6

2.5

2.3

2.5

2.6

2.6

2.7

2.8

2.8

2.8

2.9

2.8

Nondurables

Natural Gas Water & Sewer

Institute for Economic Competitiveness

27

U . S . F orecast T ables

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

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

2008 GDP

2009

History 2010 2011 2012

2013

2014

2015

Forecast 2016 2017

2018

99.2 100.0 101.2 103.3 105.2 106.7 108.3

109.5 111.6 113.8 115.9

Consumption

100.1 100.0 101.7 104.1 106.1 107.3 108.8

108.9 110.7 112.8 115.1

Durables

101.8 100.0

Motor Vehicles Furniture Other Durables

98.6

97.7

96.5

94.7

92.4

99.7 100.0 105.7 108.9 110.4 111.1 110.6 100.4 100.0

95.8

94.2

94.0

92.1

88.8

90.2

89.0

88.0

87.0

110.6 111.4 112.3 113.2 87.0

86.5

85.9

85.3

98.9 100.0 100.4 103.6 104.1 103.9 102.3

100.5 100.6 101.6 102.5

102.7 100.0 103.1 109.2 111.8 112.0 112.7

108.9 110.9 113.5 116.6

Food

98.9 100.0 100.3 104.3 106.6 107.8 109.8

111.1 113.4 115.5 117.6

Clothing & Shoes

99.1 100.0

99.3 101.1 104.7 105.7 106.2

105.8 106.0 106.0 106.1

Gasoline & Oil

136.6 100.0 118.2 149.3 154.6 150.4 144.9

102.1 106.1 113.9 125.9

Fuel

146.0 100.0 117.0 148.8 150.7 149.0 148.3

119.7 129.3 138.8 150.9

Services

98.9 100.0 101.7 103.5 105.7 107.9 110.3

112.2 114.5 117.1 119.8

Housing

98.3 100.0 100.1 101.4 103.7 106.1 109.0

112.1 114.8 117.4 120.1

Electricity

97.1 100.0 100.2 101.8 101.8 103.9 107.6

108.1 107.0 110.5 114.2

Nondurables

Natural Gas

128.2 100.1

98.1

95.1

85.9

89.9

96.6

83.1

79.5

84.7

87.1

Water & Sewer

94.2 100.0 106.3 111.8 117.9 123.3 127.8

Telephone

98.7 100.0

Transportation

97.0 100.0 102.0 104.8 106.8 108.1 109.4

109.6 111.7 114.2 116.7

Other Services

97.3 100.0 103.0 105.6 108.3 111.3 113.9

116.6 119.5 122.5 125.9

28

U.S. Forecast | May 2015

99.3

97.5

97.7

97.2

96.5

133.3 138.1 143.0 148.1 93.9

93.5

93.1

92.7

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

Table 10. Percent Change in Implicit Price Deflators

GDP Consumption

2008

2009

1.9

0.4

History 2010 2011 2012 1.8

1.9

2013

2014

2015

1.4

1.2

1.4

1.8

Forecast 2016 2017 2.1

1.9

2018 1.8

1.6

1.2

1.3

2.7

1.6

1.0

1.1

0.4

2.0

1.9

2.0

Durables

-2.1

-0.9

-2.1

-0.5

-1.6

-2.0

-2.5

-1.8

-1.4

-1.0

-1.1

Motor Vehicles

-4.1

5.6

2.9

3.3

0.8

0.5

-0.7

0.7

0.5

0.9

0.7

Furniture

0.3

-2.0

-4.4

-0.2

-0.5

-3.0

-3.1

-1.1

-0.7

-0.7

-0.6

Other Durables

3.2

1.3

0.6

3.2

-0.6

-0.6

-1.6

-1.3

0.7

1.0

0.9

Nondurables

1.2

2.8

2.2

5.9

1.9

-0.4

-0.1

-2.4

3.0

2.1

2.7

Food

6.9

-1.8

1.3

5.1

1.2

0.8

2.8

0.7

2.3

1.8

1.7

Clothing & Shoes

-0.9

1.5

-1.4

4.4

2.5

0.2

-0.1

0.3

0.1

0.0

0.0

4.8

26.8

13.4

20.4

4.6

-5.0

-9.3

-18.4

13.6

5.1

10.0

22.4

-0.8

15.7

26.2

3.1

-1.2

-7.9

-4.9

11.4

5.4

8.3

Services

2.5

1.1

1.5

2.1

2.1

2.1

2.2

1.7

2.2

2.3

2.3

Housing

2.5

0.9

0.3

1.9

2.3

2.5

2.8

2.7

2.3

2.3

2.3

Electricity

8.2

-0.4

0.5

2.4

-0.8

3.1

2.9

-0.9

1.1

4.0

2.7

19.1

-18.3

-1.2

-1.6

-4.3

2.5

7.1

-16.8

5.4

5.8

1.4

Water & Sewer

6.8

6.0

5.7

4.9

6.0

3.8

4.1

3.9

3.6

3.5

3.6

Telephone

2.0

0.6

-1.1

-1.5

0.1

-0.4

-2.0

-1.5

-0.3

-0.4

-0.4

Transportation

5.9

2.2

1.5

3.1

1.3

1.6

0.9

0.3

2.3

2.2

2.1

Other Services

4.7

2.4

2.7

2.8

2.2

2.9

2.4

2.4

2.5

2.7

2.8

Gasoline & Oil Fuel

Natural Gas

Table 11. Personal Income and its Components

Table 11. Personal Income and its Components 2008

2009

2010

History 2011

2012

2013

2014

2015

Forecast 2016 2017

2018

Personal Income Billions Current Dollars Personal Income

12429.6 12087.5 12429.4 13202.0 13887.7 14166.9 14728.6

15303.9 15944.6 16771.8 17623.4

Wages & Salaries

8078.2

7787.0

7961.5

8269.0

8606.5

8844.8

9221.6

9636.3 10076.9 10567.7 11067.0

Other Labor Income

1075.1

1077.5

1114.6

1142.0

1160.5

1193.9

1226.4

1265.3

1312.2

1371.2

1436.1

979.5

937.6

986.7

1068.1

1187.9

1253.5

1316.6

1370.4

1453.5

1519.8

1562.9

Nonfarm Income

47.0

35.5

46.0

75.6

72.3

83.2

63.6

49.5

48.6

50.7

51.8

Rental Income

Farm Income

262.1

333.7

402.8

485.3

533.0

595.8

640.3

665.2

658.1

664.0

670.4

Dividends

805.5

553.8

544.6

682.3

832.7

824.6

860.6

903.5

934.5

980.8

1001.9

Interest Income

1361.6

1264.3

1195.1

1231.6

1255.9

1255.2

1264.7

1240.7

1283.0

1447.9

1665.7

Transfer Payments

1884.0

2140.2

2276.9

2307.9

2350.7

2414.6

2522.7

2649.9

2767.9

2895.4

3035.6

516.9

506.3

514.7

423.9

437.3

578.4

612.2

639.0

676.3

717.0

758.0

Personal Social Insurance Tax

Percent Change, Annual Rate Personal Income

3.6

-2.8

2.8

6.2

5.2

2.0

4.0

3.9

4.2

5.2

5.1

Wages & Salaries

2.3

-3.6

2.2

3.9

4.1

2.8

4.3

4.5

4.6

4.9

4.7

Other Labor Income

3.2

0.2

3.4

2.5

1.6

2.9

2.7

3.2

3.7

4.5

4.7

Nonfarm Income

4.1

-4.2

5.3

8.2

11.2

5.5

5.0

4.1

6.1

4.6

2.8

Farm Income

24.9

-21.8

30.4

66.2

-4.2

15.1

-22.7

-21.3

-1.8

4.6

2.3

Rental Income

52.4

18.4

20.1

20.8

7.9

11.2

7.0

0.8

-0.4

1.4

0.5

-11.0

-33.4

23.8

23.5

48.6

-9.9

6.7

3.1

4.3

4.0

2.4

Interest Income

Dividends

-2.2

-9.2

-1.8

3.3

1.7

0.5

-0.2

-1.5

7.7

14.2

14.4

Transfer Payments

10.3

14.8

5.5

0.2

2.7

2.6

5.4

4.3

4.8

4.8

4.9

2.6

-1.8

2.4

-13.5

5.0

45.0

6.1

4.5

5.9

6.0

5.7

Personal Social Insurance Tax

Institute for Economic Competitiveness

29

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

Table 12. Personal Consumption Expenditures (Current Dollars)

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

Consumer Expenditures by Type Billions Current Dollars

Consumer spending on… all goods & services

12118.0 12239.2 12373.5 12497.5 12622.6 12779.7 12934.5 13091.3 13226.0 13374.6 13532.4 13691.3 13838.0 13993.1 14150.9 14301.9

durable goods

1323.2 1343.6 1365.3 1380.5 1389.6 1404.1 1419.2 1434.7 1453.8 1471.4 1492.5 1510.5 1522.2 1536.0 1549.0 1560.8

furniture and appliances

292.3

294.6

296.9

299.5

302.3

305.8

308.1

310.5

312.7

315.0

317.4

319.7

321.8

324.1

326.4

328.5

information processing equipment

105.9

106.2

107.9

108.7

109.5

110.4

111.3

112.4

113.6

114.7

115.8

117.0

117.5

118.5

119.4

120.1

motor vehicles and parts

456.2

474.9

488.6

497.5

502.1

507.5

515.7

523.0

533.7

542.1

553.4

561.5

565.1

569.5

573.4

576.6

other durable goods

139.2

138.9

139.6

140.1

140.0

140.9

141.2

142.1

143.0

144.0

145.1

146.3

147.1

148.1

149.0

149.9

nondurables

2596.5 2623.4 2648.5 2665.2 2690.3 2734.9 2774.3 2815.1 2831.9 2868.1 2903.4 2940.2 2977.5 3014.9 3052.4 3087.7

clothing & shoes

368.2

372.3

377.0

379.3

381.2

382.4

386.2

388.8

389.5

392.3

395.0

397.6

400.6

404.0

406.9

23.8

23.9

22.9

23.1

23.2

24.4

25.1

26.0

25.5

25.9

26.2

26.6

27.1

27.4

27.8

28.1

267.9

274.1

276.9

268.2

267.3

282.6

292.3

303.9

295.5

303.5

310.7

319.2

329.2

338.2

347.4

356.4

890.5

893.0

901.4

912.7

924.8

936.8

948.3

958.9

968.5

978.9

988.8

1046.2 1060.0 1070.3 1081.8 1093.7 1108.7

1122.4

1137.5

1152.9

1167.6

1182.6

fuel oil & coal gasoline & motor oil food other nondurable goods

408.7

998.5 1007.8 1016.9 1025.9 1034.5 1198.3

1212.8 1228.3 1244.4 1260.0

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

11173.1 11251.5 11340.2 11422.8 11498.5 11578.2 11656.8 11736.2 11814.3 11888.1 11967.1 12047.0 12114.0 12190.9 12267.4 12339.9

durable goods

1457.4 1487.6 1516.2 1538.0 1554.1 1575.9 1598.0 1620.5 1646.7 1670.7 1699.0 1724.1 1742.3 1762.8 1782.4 1801.1

furniture and appliances

335.2

338.9

341.6

345.0

348.6

353.3

356.5

360.1

363.3

366.6

369.9

373.2

376.2

379.4

382.7

385.8

information processing equipment

161.3

163.2

169.3

172.9

177.2

182.1

187.0

192.4

198.1

203.7

209.6

215.7

220.8

226.8

232.8

238.7

motor vehicles and parts

414.5

430.1

440.8

448.0

451.8

456.2

462.9

468.6

477.2

483.4

492.2

498.4

500.7

503.7

506.1

508.0

other durable goods

138.1

139.2

140.1

140.7

140.5

141.4

141.5

142.1

142.7

143.5

144.4

145.4

146.1

146.9

147.6

148.4

nondurables

2391.9 2411.1

clothing & shoes

2426.6 2443.5 2460.0 2475.1 2490.9 2506.2 2519.3 2534.7 2549.5 2564.5 2577.8 2593.1 2608.8 2623.1

349.2

351.5

356.0

358.1

359.9

360.9

364.4

366.8

367.4

369.9

372.5

374.9

377.7

380.9

383.6

20.5

20.2

18.7

18.9

19.0

19.1

19.1

19.1

19.0

18.8

18.7

18.6

18.5

18.3

18.2

18.1

gasoline & motor oil

261.9

266.0

268.1

268.9

270.5

270.7

270.2

269.3

269.3

269.6

269.8

270.2

270.6

271.6

272.9

274.2

food

803.2

807.3

811.2

817.3

822.9

828.1

834.2

839.5

844.1

849.3

854.0

858.2

862.3

866.1

870.2

874.1

other nondurable goods

968.0

977.3

984.1

991.9

999.2 1007.8 1014.6 1023.2 1031.2 1038.8 1046.5 1054.8 1061.2 1068.8 1076.9 1084.4

fuel oil & coal

385.4

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

1.9

2.8

3.2

2.9

2.6

2.8

2.7

2.7

2.7

2.5

2.7

2.7

2.2

2.5

2.5

2.4

durable goods

1.1

8.3

7.7

5.8

4.2

5.6

5.6

5.6

6.5

5.8

6.8

5.9

4.2

4.7

4.5

4.2

furniture and appliances

3.3

4.5

3.2

3.9

4.3

5.3

3.7

4.0

3.6

3.6

3.6

3.5

3.2

3.5

3.5

3.3

information processing equipment

7.8

4.8

14.9

8.5

10.0

11.0

10.9

11.5

11.8

11.4

11.5

11.5

9.5

11.0

10.5

10.2

-3.0

15.1

9.9

6.6

3.3

3.9

5.9

5.0

7.3

5.2

7.2

5.0

1.9

2.4

1.9

1.5

1.1

3.1

2.6

1.6

-0.5

2.5

0.2

1.7

1.9

2.1

2.6

2.7

1.8

2.2

2.1

2.0

nondurables

-0.3

3.2

2.6

2.8

2.7

2.5

2.6

2.5

2.1

2.4

2.3

2.4

2.1

2.4

2.4

2.2

clothing & shoes

-2.9

2.6

5.2

2.3

2.0

1.1

3.8

2.7

0.7

2.7

2.8

2.6

3.0

3.3

2.9

1.9

fuel oil & coal

56.1

-6.6

-28.6

2.6

3.7

1.5

0.6

-0.7

-2.5

-2.7

-2.4

-2.6

-2.8

-2.8

-2.2

-2.0

motor vehicles and parts other durable goods

gasoline & motor oil food other nondurable goods

30

U.S. Forecast | May 2015

1.7

6.3

3.1

1.2

2.4

0.3

-0.8

-1.3

0.0

0.5

0.3

0.5

0.7

1.4

1.9

1.9

-2.5

2.0

2.0

3.0

2.8

2.6

2.9

2.6

2.2

2.5

2.2

2.0

1.9

1.8

1.9

1.8

0.9

3.9

2.8

3.2

3.0

3.5

2.8

3.4

3.2

3.0

3.0

3.2

2.4

2.9

3.0

2.8

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

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

2009

2010

2011

Forecast 2012

2013

2014

2015

2016

2017

2018

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

10013.6

9847.0 10202.2 10689.3 11083.1 11484.3 11930.3

12307.0 12857.0 13456.1 14071.0

1102.3

1023.3

1070.7

1125.3

1192.1

1249.3

1302.5

1353.2

1411.9

1482.1

1542.0

268.7

244.3

250.4

260.7

271.1

280.9

287.5

295.8

306.7

316.2

325.2

83.4

81.2

90.3

91.9

96.0

100.2

103.9

107.2

110.9

115.3

118.9

339.6

317.1

342.0

363.5

395.1

417.7

447.8

479.3

512.1

547.7

571.2

112.1

105.5

110.0

121.4

129.4

138.8

139.8

139.5

141.1

144.6

148.5

2273.4

2175.1

2292.1

2471.1

2549.8

2601.9

2666.2

2633.4

2753.7

2885.9

3033.1

319.5

306.5

320.6

338.9

353.7

360.7

365.4

374.2

384.7

393.6

405.1

30.8

24.3

26.2

29.2

26.8

26.6

27.3

23.4

24.7

26.1

27.6

gasoline & motor oil

358.3

260.2

307.3

380.4

388.6

381.8

371.0

271.8

286.5

307.2

342.8

food

772.9

770.0

788.9

829.1

854.9

872.2

888.6

899.4

942.2

983.7

1021.3

other nondurable goods

791.9

814.2

849.2

893.5

925.7

960.7

1013.9

1064.6

1115.6

1175.4

1236.4

nondurables clothing & shoes fuel oil & coal

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

10007.2

9847.0 10036.3 10263.5 10449.7 10699.7 10969.0

11296.9 11617.4 11929.1 12228.1

1083.2

1023.3

1085.7

1151.5

1235.7

1319.0

1410.0

1499.8

1587.1

1685.1

1772.1

267.7

244.3

261.5

276.6

288.4

305.1

323.6

340.2

354.6

368.3

381.0

76.9

81.2

97.2

108.0

121.7

137.3

151.4

166.6

184.7

206.8

229.8

340.8

317.1

323.4

333.8

357.9

376.0

405.0

433.3

459.8

487.8

504.6

113.4

105.5

108.9

115.1

122.4

132.0

136.5

139.5

141.3

144.0

147.2

2214.7

2175.1

2223.5

2263.2

2280.1

2322.6

2364.8

2418.3

2483.1

2542.0

2600.7

322.3

306.5

322.7

335.3

337.7

341.2

344.2

353.7

363.0

371.2

381.9

21.1

24.3

22.4

19.6

17.8

17.8

18.3

19.6

19.1

18.8

18.3

gasoline & motor oil

262.4

260.2

259.9

254.7

251.3

253.8

256.2

266.2

270.2

269.7

272.3

food

781.9

770.0

786.5

795.1

801.6

809.4

809.6

809.8

831.2

851.4

868.2

other nondurable goods

828.3

814.2

833.0

863.2

879.7

909.9

947.5

980.3

1011.2

1042.8

1072.8

nondurables clothing & shoes fuel oil & coal

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

-1.9

-0.2

3.1

1.5

2.0

2.8

2.9

2.7

2.7

2.6

2.4

-12.4

3.0

9.3

4.9

7.5

5.9

8.2

5.9

5.4

6.4

4.5

-9.1

-2.0

8.3

5.8

3.0

7.1

6.6

3.8

4.4

3.6

3.4

0.4

12.9

16.8

13.9

12.9

10.2

11.5

9.4

11.3

12.1

10.7

motor vehicles and parts

-23.0

7.9

11.0

1.5

7.7

3.1

9.9

7.5

4.6

6.4

1.9

other durable goods

-12.3

0.6

5.5

3.2

10.8

5.4

2.7

2.1

1.0

2.3

2.0

nondurables

-2.6

0.2

3.3

0.4

1.0

2.5

2.2

2.1

2.6

2.3

2.3

clothing & shoes

-3.2

-1.0

7.6

1.1

0.6

1.4

3.1

1.8

2.4

2.2

2.8

7.9

7.5

-7.6

-12.6

3.1

11.9

-2.0

9.9

1.3

-2.6

-2.5

gasoline & motor oil

-3.9

-1.1

2.2

-3.1

-1.4

2.0

2.9

3.1

0.2

0.3

1.5

food

-3.7

2.1

2.1

-0.4

1.6

1.2

-0.7

1.1

2.7

2.2

1.8

other nondurable goods

-0.6

-0.6

3.6

2.8

1.9

4.2

4.6

2.7

3.2

3.1

2.8

fuel oil & coal

Institute for Economic Competitiveness

31

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

Table 14. Business Fixed Investment History

2008

2009

2010

2011

Forecast 2012

2013

2014

2015

2016

2017

2018

Billions Current Dollars Business Fixed Investment

1941.0 1633.4 1658.2 1812.1 1972.0 2054.0 2210.5

2290.0 2453.3 2639.8 2811.1

Producers Dur. Equipment

825.1

644.3

731.8

838.2

904.1

949.7 1017.3

Nonresidential Structures

552.4

438.2

362.0

381.6

446.9

457.2

506.9

475.5

497.4

552.8

620.2

Non-Farm Buildings

317.5

249.1

173.7

170.2

191.6

201.7

224.0

246.4

273.2

306.6

350.4

Commercial

148.9

95.4

64.7

66.8

75.6

83.4

96.7

104.4

120.4

140.3

165.0

Industrial

1077.2 1168.5 1251.7 1314.2

52.8

56.3

39.8

39.0

45.8

46.3

53.8

67.4

64.2

59.3

63.3

Other Buildings

115.8

97.4

69.2

64.5

70.2

72.0

73.5

74.6

88.5

107.1

122.2

Utilities

104.6

104.3

93.3

90.7

112.2

105.6

119.0

108.7

111.1

120.7

131.8

Mines & Wells

117.0

75.0

86.2

112.3

133.1

139.7

153.9

109.9

101.7

110.6

122.6

Billions 2005 Dollars Business Fixed Investment

1934.5 1633.5 1673.8 1802.3 1931.8 1990.6 2116.4

2182.6 2318.8 2458.1 2571.4

Producers Dur. Equipment

836.1

644.3

746.7

847.9

905.6

947.2 1008.2

Nonresidential Structures

540.2

438.2

366.3

374.7

423.8

421.7

456.2

421.7

430.2

467.0

507.5

Non-Farm Buildings

317.9

249.1

179.3

172.3

188.8

194.0

208.5

223.7

241.7

263.3

290.8

Commercial

151.7

95.4

66.6

67.3

73.9

79.8

90.1

95.4

108.5

123.4

140.8

53.8

56.3

40.8

39.1

44.9

44.3

49.9

60.4

54.4

47.6

48.4

Other Buildings

112.8

97.4

71.9

65.9

70.0

69.8

68.3

67.8

79.2

93.5

103.3

Utilities

103.6

104.3

89.8

82.8

99.1

92.2

102.3

91.8

90.8

94.9

100.2

Mines & Wells

105.0

75.0

87.8

110.9

124.5

125.2

135.5

97.7

89.7

99.1

107.7

Industrial

1062.9 1150.5 1218.5 1262.7

Annual Growth Rate Business Fixed Investment

-5.6

-14.2

8.6

10.9

5.1

6.1

7.3

2.9

7.9

7.2

6.2

Producers Dur. Equipment

-15.9

-11.4

20.2

14.4

4.5

6.3

6.6

6.4

8.2

6.3

4.9

4.7

-32.2

-0.6

15.3

8.1

8.6

8.4

-9.1

9.5

11.5

11.8

-0.4

-34.0

-21.1

14.7

7.3

9.1

12.5

7.6

12.7

11.4

15.1

-11.8

-44.7

-16.8

14.7

9.9

17.4

13.4

6.3

18.2

15.6

16.8

22.5

-11.9

-28.8

37.4

8.1

1.2

24.1

19.0

-12.0

-1.5

13.9

Other Buildings

6.7

-29.7

-19.5

3.6

4.5

5.7

3.8

1.5

29.5

13.8

13.6

Utilities

2.5

-4.1

19.0

2.4

18.4

15.3

-3.5

-3.8

3.4

11.3

7.5

24.4

-42.8

53.6

36.6

2.7

8.2

13.8

-37.0

7.2

10.5

10.0

Nonresidential Structures Non-Farm Buildings Commercial Industrial

Mines & Wells

32

U.S. Forecast | May 2015

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

Table 15. Government Receipts and Expenditures History 2008

2009

2010

2011

Forecast 2012

2013

2014

2015

2016

2017

2018

Federal Government Receipts and Expenditures Receipts

2503.7

2227.8

2391.8

2519.5

2684.1

3113.0

3300.8

3435.0

3630.3

3766.9

3930.6

Personal Tax and Nontax Receipts

1101.7

857.2

893.8

1076.6

1149.0

1286.8

1374.2

1470.3

1581.9

1669.1

1731.9

233.6

200.4

298.7

299.4

369.5

384.9

497.3

522.7

532.9

492.2

478.7

94.0

91.4

96.8

108.6

115.0

120.9

134.1

140.3

146.3

155.8

186.2

974.4

950.8

970.9

904.0

938.1

1092.3

1149.4

1199.8

1265.5

1341.6

1418.4

Expenditures

3137.7

3476.6

3720.5

3763.7

3763.2

3762.1

3883.1

3992.6

4138.7

4286.7

4507.5

Purchases Goods & Services

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

1155.6

1217.7

1303.9

1303.5

1291.4

1231.5

1219.2

1226.0

1237.4

1246.6

1260.8

National Defense

754.1

788.3

832.8

837.0

818.0

769.9

761.5

764.5

774.5

778.9

788.4

Other

401.5

429.4

471.1

466.5

473.4

461.6

457.7

461.4

462.9

467.8

472.4

Transfer Payments

1820.3

2132.4

2281.7

2272.4

2278.3

2322.0

2419.6

2551.8

2670.5

2791.6

2920.0

To Persons

1391.9

1608.9

1710.1

1727.3

1767.0

1806.8

1863.4

1946.6

2031.6

2126.7

2228.6

41.9

49.4

49.7

55.6

48.8

46.4

36.0

51.1

52.7

53.9

54.9

Grants in Aid to State & Local Gov't

To Foreigners

371.0

458.1

505.3

472.5

444.4

450.0

500.9

534.1

565.8

589.8

614.6

Net Interest

368.4

330.8

351.0

398.0

401.5

393.0

413.5

384.5

398.0

412.8

488.5

48.7

56.2

57.4

66.7

66.7

75.0

76.6

76.1

74.8

73.1

71.5

Surplus (+) or Deficit (-)

Subsidies less Surplus of Gov't Entities

-634.0 -1248.8

-1328.7

-1244.2

-1079.1

-649.1

-582.3

-557.6

-508.4

-519.8

-576.9

Receipts

1909.1

1919.2

1998.5

2030.5

2061.3

2125.6

2206.0

2286.7

2402.3

2518.8

2636.2

Personal Tax/Nontax Receipts

1328.9

1268.1

1305.7

1368.3

1424.8

1471.8

1495.1

1535.4

1605.2

1682.5

1759.6

333.5

287.8

297.6

324.1

354.7

375.0

368.7

382.7

403.3

425.1

444.1 62.9

State and Local Government Receipts and Expenditures

Corporate Profits Indirect Business Tax and Nontax Accruals

47.4

45.6

47.7

50.2

53.2

55.3

57.3

64.0

66.1

64.4

Contributions for Social Insurance

18.7

18.6

18.2

18.2

17.7

17.7

17.6

17.7

18.6

19.5

20.4

371.0

458.1

505.3

472.5

444.4

450.0

500.9

534.1

565.8

589.8

614.6

Federal Grants-In-Aid Expenditures Purchases Goods & Services

2074.15 2191.15 2235.85 2246.40 2293.78 2350.75 2430.70

2485.01 2563.19 2649.60 2760.45

1847.6

1871.4

1870.2

1865.3

1877.8

1912.4

1956.1

1982.1

2048.4

2121.1

2207.1

477.8

566.1

612.0

582.2

556.3

570.8

626.8

665.6

707.2

742.0

777.6

Interest Received

36.0

114.3

123.0

125.9

143.7

137.0

131.1

124.8

118.8

113.5

115.9

Net Subsidies

25.0

22.8

21.4

17.9

16.6

14.8

15.0

14.9

14.0

13.2

12.4

2.6

2.2

2.3

2.7

3.4

3.7

4.0

4.1

4.1

4.2

4.2

-165.1

-271.9

-237.3

-215.9

-232.6

-225.2

-224.8

-198.3

-160.9

-130.8

-124.2

Transfer Payments

Dividends Received Surplus (+) or Deficit (-)

Institute for Economic Competitiveness

33

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

Table 16. U.S. Exports and Imports of Goods and Services History 2008

2009

2010

2011

Forecast 2012

2013

2014

2015

2016

2017

2018

Billions of Dollars Net Exports Goods & Services

-723.1

-395.5

-512.7

-580.0

-568.3

-508.2

-538.2

-490.7

-500.6

-563.0

-627.7

Current Account

-686.6

-380.8

-443.9

-459.3

-460.8

-400.3

-410.6

-422.2

-432.1

-525.8

-532.7

Exports -Goods & Services

1841.9

1587.7

1852.3

2106.4

2194.2

2262.2

2337.0

2279.9

2423.5

2578.7

2749.5

Merchandise Balance

-832.5

-509.7

-648.7

-740.6

-742.1

-701.7

-735.8

-691.1

-710.3

-781.2

-861.4

Food, Feed & Beverage

108.35

93.91

107.72

126.25

132.90

136.18

139.95

124.81

134.66

141.20

148.15

Industrial Supplies Excl Petroleum

386.9

293.5

388.6

485.3

482.4

492.1

501.3

443.4

492.3

543.7

594.7

Motor Vehicles & Parts

121.5

81.7

112.0

133.0

146.1

152.6

159.9

149.5

167.4

183.8

199.4

Capital Goods, Excl. MVP

457.7

391.5

447.8

494.2

527.5

534.6

550.3

545.4

557.3

577.6

605.2

43.9

37.7

43.8

48.5

49.3

48.1

48.9

45.9

46.8

53.7

63.0

Other

Computer Equipment

339.8

279.0

332.1

365.4

383.9

381.5

388.9

381.4

392.7

406.5

421.7

Consumer Goods, Excl. MVP

161.2

149.3

164.9

174.7

181.0

188.4

198.6

199.5

201.9

199.2

197.1

63.3

55.2

58.6

53.4

57.2

59.1

64.7

55.9

56.8

58.5

63.3

543.1

522.6

572.7

639.5

667.0

699.4

722.2

761.3

813.2

874.8

941.7

Other Consumer Services

Billions of Dollars Imports -Goods & Services

2565.0

1983.2

2365.0

2686.4

2762.5

2770.4

2875.2

2770.6

2924.1

3141.7

3377.2

Merchandise

2149.4

1590.3

1949.8

2244.7

2306.0

2302.3

2385.5

2255.6

2365.7

2529.9

2713.6

90.4

82.9

92.5

108.3

111.1

116.0

126.8

124.9

120.2

125.8

133.6

Petroleum & Products

476.1

267.7

353.6

462.1

434.3

387.6

351.1

194.1

229.8

248.7

276.9

Industrial Supplies Excl Petroleum

318.7

196.6

249.4

292.7

288.9

291.2

314.2

301.6

314.4

331.7

348.4

Motor Vehicles & Parts

233.2

159.2

225.6

255.2

298.5

309.6

328.9

341.3

342.4

359.9

381.7

Capital Goods, Excl. MVP

458.7

374.1

450.4

513.4

551.8

557.8

595.8

607.1

643.9

697.9

747.3

Computer Equipment

101.2

94.2

117.3

119.7

122.3

121.2

121.5

123.0

128.2

133.7

140.3

Other

322.0

249.2

301.9

358.2

389.4

389.7

420.9

432.3

466.3

514.4

555.6

Consumer Goods, Excl. MVP

485.7

429.9

485.1

515.9

518.8

533.9

558.9

567.1

588.8

627.4

680.0

Food, Feed & Beverage

Other Consumer Services

86.5

80.0

93.1

97.1

102.6

106.1

109.8

119.5

126.2

138.4

145.6

415.6

392.9

415.2

441.6

456.4

468.1

489.7

515.0

558.4

611.8

663.6

-557.8

-395.4

-458.8

-459.4

-452.5

-541.1

-618.5

-666.8

-671.5

Billions 2005 Dollars Net Exports Goods & Services

-420.5

-452.6

Exports G & S

1740.8

1587.7

1776.6

1898.3

1960.1

2019.8

2084.7

2115.9

2211.0

2310.4

2423.7

Imports G & S

2298.6

1983.2

2235.4

2357.7

2412.6

2440.3

2537.3

2657.0

2829.5

2977.2

3095.1

Exports G & S

0.0

4.1

15.3

8.7

1.4

-1.0

7.3

6.0

6.8

Exports & Imports % Change 3.6

4.9

Imports G & S

-1.8

0.9

15.0

10.9

0.3

1.5

4.2

-2.8

7.1

7.5

7.1

Real Exports G & S

-2.0

3.0

10.1

4.2

2.4

5.1

2.7

1.0

4.8

4.4

5.2

Real Imports G & S

-5.7

-3.6

12.2

3.5

0.4

2.5

5.7

4.9

6.0

4.9

3.6

34

U.S. Forecast | May 2015

SEAN M. SNAITH, PH.D.

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

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