U.S. Forecast September 2014

U.S. Forecast

September 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 September 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 Ashley Miller, 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 3 Q 2 0 14 U . S . F O R E C A S T In this Issue of the U.S. Forecast: • Tangled up and blue: the Atlanta Fed’s labor market spider graph.

• Strengthening of the U.S. dollar will work to slow export growth and boost import growth. Thus, net exports will hold down U.S. real GDP growth in the coming years.

HIGHLIGHTS

• The Fed will commence a cycle of raising interest rates starting in the 3rd quarter of 2015. This action will bring an end to the five years of double-digit gains in the stock market. The S&P 500 will average just 1.0% growth during 2015-2017.

• Real GDP growth in the 3rd quarter of 2014 will be 3.5%, before easing again in the 4th quarter to 2.5%. Growth will gradually rise to 2.5% in 2015, 2.7% in 2016, and 2.9% in 2017 as the Federal Reserve tightens interest rates.

• Consumption spending growth should slowly improve over the forecast horizon. The 2014 holiday shopping season should be an improvement over last year’s disappointing season. Retailers may also be able to scale back the heavy discounting needed to goad consumers to spend.

• Real consumer spending is expected to grow an average of 2.8% 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 continued labor market recovery will both support consumption spending growth.

• The housing market continues to recover. Mortgage credit availability will be an essential part of the continued recovery. The housing market should steadily improve through 2016 when rising rates take their toll and housing starts level off. During 2014-2017, housing starts will rise from 1,016,336 in 2014 to 1,507,899 in 2017.

• Payroll employment growth remains sluggish. Inhibiting 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 1.8% in 2014 and 1.6% 2015. Growth in 2016 slips to 1.4% before easing to 1.3% in 2017 as the Affordable Care Act is fully implemented.

• Unemployment rates (U-3) are expected to fall very gradually to 5.7% in the 4th quarter of 2017. Underemployment (U-6) remains a serious problem and currently stands at 12.0%.

U . S . F orecast

When First We Practice to Deceive The Atlanta Fed’s Labor Market Spider Chart Shows, In the Face of Headline Data, Persistent Weakness in the U.S. Labor Market

The staff at the Atlanta Federal Reserve Bank have spun together 13 labor market indicators into a single chart. The Labor Market Spider Chart allows for a quick assessment of the health of the broader labor market.

Focusing on just one or two data series can entangle the observer in a false sense of how well the labor market is faring. Headline unemployment (U-3) and changes in payroll employment are the two data points that get the lion’s share of attention when the Bureau of Labor Statistics releases its monthly report on the U.S. labor market. Looking only at these indicators, you could spin a tale of how wonderful the U.S. labor market is doing.

the values of these indicators in December 2007 which was the prerecession peak in the labor market. The solid line is the value of these indicators as of August 2014.

Movement along each one of the thirteen strands in the spider chart from the inner circle toward the outer circle represents improvement along each of these dimensions of the labor market’s health. Six of the thirteen measures have already exceeded their prerecession peak levels.

However, the remaining seven, including all four measures of utilization and two of the three confidence measures remain below prerecession levels.

Fed Chair Janet Yellen has referred on several The spider chart incorporates these two measures occasions to ongoing slack in the labor market. This slack alongside 11 others for a wider look at the health of the is reflected in the weak recovery of the indicators in the U.S. labor market. The chart, displayed in Figure 1, Atlanta Fed Labor Market Spider Chart: Levels is utilization quadrant of the Atlanta Fed’s spider chart. divided into four quadrants each capturing a December 2007 (prerecession peak) December 2009 (postrecession trough in employment) August 2012 August 2013 different dimension of the labor market. The August 2014 Figure 1. Labor Marker Spider Chart, August 2014 Levels upper left quadrant shows leading indicators of the labor market and includes initial claims Payroll employment for unemployment, firms unable to fill job Temporary help Job openings services employment openings and temporary help services. The lower left quadrant displays measures of labor market utilization and includes workers who Firms unable to fill job Hires openings want to work full-time but can only find part time work, the job finding rate, workers marginally attached to the labor force and unemployment. The lower right quadrant Hiring plans Initial claims displays indicators of confidence in the labor market and includes the number of employee quits, job availability and hiring plans.

The upper right quadrant reflects employer Work part time for Job availability economic reasons behavior and includes data measuring payroll employment, hires and job openings.

The light grey dashed-line inner circle represents the values of these indicators at the time of the trough in employment that took place in December 2009 (the labor market’s bottom actually occurred after the official end of the recession which was June 2009). The dark grey dashed-line outer circle represents

Quits

Job finding rate

Marginally attached workers

Unemployment

Note: JOLTS data are May to July average.

Sources: U.S. Bureau of Labor Statistics, U.S. Department of Labor, National Federation of Independent Business, The Conference Board, and Haver Analytics Copyright 2014 Federal Reserve Bank of Atlanta. All Rights Reserved. Permission is granted to reproduce for personal and educational use only.

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

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Figure 2. Atlanta Fed Spider Graph for a Robust Labor Market

Source: Charlotte’s Web, author’s poor sense of humor

Two of these indicators, work part-time for economic reasons and marginally attached workers, are also reflected in the persistently high levels of the broadest measure of unemployment, U-6, which still stands at 12.0%.

This slack in the labor market has kept wage growth low and is part of the reason why consumer spending growth has remained muted in the sixth year of this economic recovery. Many are touting the fact that the U.S. has exceeded prerecession levels of payroll employment, or the fact that the U.S. labor market has added 200,000+ jobs for the six months prior to August’s 142,000 job gain as evidence that the U.S. is healthy and recovering robustly. A quick glance at the Atlanta Fed’s spider chart ensnares these claims in a tangle of data that suggests the labor market’s recovery still has a long way to go. This also leaves room for the Fed to take their time while deliberating when and how quickly to raise interest rates in 2015.

What will the Atlanta Fed’s spider graph look like once the labor market is full recovered? Probably something like Figure 2.

Anxious Index Economists not worried about recession The most recent release (3rd quarter of 2014) of the Survey of Professional Forecasters by the Federal Reserve Bank of Philadelphia suggests that the 40 forecasters 6

U.S. Forecast | September 2014

surveyed for the publication are just 9.74% convinced that a decline in real GDP will occur in the 4th quarter of 2014. This quarter’s release reflects a very slight decline in forecasters’ anxiety, their worries allayed by a rebound of 2nd quarter real GDP growth to 4.2% from a 1st quarter contraction of 2.1%. 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 of 2011, and this year’s 1st quarter survey result that pegged the anxious index a 9.3%. The index has dropped significantly from its peak level during this recovery of 23.04% in the 4th quarter of 2012.

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 9.74%, which means that forecasters believe there is a 9.74% chance that real GDP will decline in the 3rd quarter of 2014.

The forecasters also report just a 7.63% chance that we are currently (as of the 3rd 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 11.59% through the end of the 3rd quarter of 2015, which implies the forecasters’ assignment of probability for a contraction in real GDP in the upcoming year has increased slightly since last quarter’s survey.

Figure 3 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 0.32 points lower than the 2nd quarter.

GDP Outlook The economic recovery that commenced when the Great Recession came to an end in June 2009 is now in its sixth year. For many it does not feel as if they have been experiencing five years of prosperity. Real GDP growth has during the years 2010-2013 averaged just 2.2%. We are forecasting that same percentage growth

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Figure 3.

The Anxious Index Probability of Decline in Real GDP in the Following Quarter Quarterly, 1968:Q4 to 2014:Q3 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

10

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

for 2014, thus the average for the five full years of this recovery will be the same. The first five years of the previous recovery (2002-2006) saw average real GDP growth of 2.9%. During that span there were two years of growth in excess of 3.0%: 2004 and 2005 when real GDP growth came in at 3.8% and 3.3% respectively.

The fastest annual growth experienced thus far in the current recovery was 2.5% growth in 2010. During that 2002-2006 time period real GDP growth exceeded the 2010 growth rate in four of those five years. In this quarter’s forecast we are projecting a modest acceleration of growth through the end of 2017, when real GDP growth will approach, but not exceed 3.0%.

The most recent four quarters of real GDP growth have spanned a range from 4.5% to a negative 2.1%. During the second half of 2013, revised annualized real GDP growth was 4.5% in Q3 and 3.5% in Q4. That was the first time in this recovery when there were back-to-back quarters of real GDP growth in excess of 3.0%.

The 1st quarter of 2014 put an abrupt end to that streak when, hampered in part by a frigid winter, the economy contracted for the first time since Q2 of 2009. However, it appears we will experience another two quarters of

back-to-back 3.0%-plus growth in real GDP in the wake of that 1st quarter contraction. Second quarter real GDP growth currently stands at 4.6%, and we are predicting a 3.5% growth rate in the third quarter.

The Affordable Care Act and Dodd Frank financial regulatory reform law continue to be a drag on the economy. More than 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.

In 2015 we are expecting real GDP growth of 2.5%, and 2.7% in 2016 before rising slightly to 2.9% 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 legislative action is taken to resolve policy uncertainty (not likely before the 2016 presidential election), or the economy is knocked back into recession. In absence of either of these events, growth will average 2.4% for the eight years of recovery beginning in 2010.

Institute for Economic Competitiveness

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Will the Wayward Consumer Come Home Soon?

from pre-crisis levels, and an even more remarkable $27.4 trillion gain from the bottom of the financial crisis.

To further put that consumption growth number in perspective, the average quarterly annualized rate of consumption spending growth from 1995Q1 through 2007Q3 (excluding the 2001 recession) was 4.3%. This is nearly double the average consumption spending growth rate of our current recovery.

As we discussed in our March 2014 U.S. Forecast publication, part of the answer may be found by examining commercial banks’ lending activity. 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 the first half of 2014 shows that this decline is continuing at a 5.2% rate, and in the first two months of the third quarter that decline has occurred at a similar pace.

CONSUMER SPENDING Consumer spending has averaged a paltry 2.2% growth rate from the start of the recovery in mid-2009 through the 2nd quarter of 2014. There have been occasional surges in spending growth, but they have always been short-lived. There have been four quarters where growth has been in excess of 3.0%—2010Q2, 2010Q4, 2013Q1 and 2013Q4—but these have been followed by rapid deceleration in spending growth during the quarters that followed. If you exclude those four quarters from the calculation of the average consumption spending growth rates since the recession’s end, the 2.2% average becomes just 1.9%.

Historically, however, housing wealth has had a significant impact on consumer spending, more so than financial asset wealth. But this time around, the growth of wealth has not resulted in a sustained boost in consumer spending.

In this economic recovery U.S. consumers will exhibit a flash of the spending prowess that they have displayed in previous recoveries, but only then pull back and return to the weak pattern of spending growth that led up to these temporary bursts in spending.

In the March U.S. Forecast we examined both supplyand demand-side reasons that home equity lending continues to contract. The disconnect between rising home equity wealth and consumption spending may persist for many years and as a result the home equity finance-boosted consumption spending that has been present in previous recoveries may remain absent as this recovery lumbers on.

Through the middle of 2014 there have not been consecutive quarters where U.S. consumption spending grew at 3.0% or greater during the entirety of this recovery. The most recent example of this type of a pullback was the 4th quarter of 2013 when 3.7% growth was then followed with just 1.2% growth in the 1st quarter of 2014.

Consumer spending is still not yet being boosted by the recovery of a significant amount of lost home equity wealth. Home equity wealth of the U.S. household sector is still $2.4 trillion below peak levels prior to the housing crisis. However since the low point of the housing market, U.S. households have recovered $4.7 trillion dollars in lost housing wealth.

Financial wealth, fueled by tremendous bull runs in the stock and bond markets, has rocketed past precrisis levels. Household financial asset values are over $67 trillion as of the latest Flow of Funds report1. This represents a gain of $15.6 trillion in financial asset wealth 1

http://www.federalreserve.gov/releases/z1/Current/z1r-5.pdf 8

U.S. Forecast | September 2014

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.

The availability of credit and even subprime credit for auto loans has helped fuel solid growth in the sales of light vehicles. But for now, the appetite for home equity lending has not returned.

Real consumer spending growth is expected to fall to a 1.6% rate of growth in the 3rd quarter of 2014. The pace of spending should pick up from there as growth for the 4th quarter of 2014 is expected to be 2.7%. It should be an improved holiday shopping season this year compared to the disappointment of last year.

The up and down pattern of consumer spending

2

http://www.federalreserve.gov/releases/h8/current/

U . S . F orecast growth should give way to a more stable profile as the recovery continues. Continued improvement in the labor market, repairs to household balance sheets, and a greater willingness of banks to lend should prove to be stabilizing forces to consumer spending, putting it on a smoother trajectory over the next several years.

Real consumption spending is forecasted to accelerate through the end of our forecast from 2.2% in 2014, 2.5% in 2015, 3.0% in 2016, and then to 3.3% in 2017, ten years after the start of the Great Recession.

INVESTMENT Real nonresidential fixed investment spending grew at 7.6% in 2011 and 7.3% in 2012. In 2013 the pace of investment growth slowed significantly under a rising wave of policy uncertainty, and grew by just 3.0% for the year. The pace of investment growth is expected to pick up in 2014 and ease slightly in 2015 before accelerating in 2016-2017.

Investment growth is expected to be 5.8% in 2014, 4.7% in 2015, and 4.9% in 2016. Rising interest rates do not offset the boost to investment from declining policy uncertainty to weigh too heavily on investment growth in 2017 as it accelerates to 6.0%.

Interest rates will remain historically low for at least another year before the Federal Reserve begins the process of tightening. The cost of borrowing, either explicitly or the implicit or opportunity cost of using retained earnings, has not been an impediment for investment during this recovery when interest rates have hovered at such low levels. Policy uncertainty, as we have discussed on multiple occasions in previous U.S. Forecast publications, is the real culprit in weighing down these investment decisions by clouding the horizon over which investments are made.

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 3.0% in 2013, down from 7.3% the year before. As the fog of policy uncertainty begins to slowly lift, spending will pick up from 2013. In 2014 nonresidential investment spending will grow 5.8% before easing in 2015 to 4.7% and 4.9% in 2016 as the Fed begins to push interest rates upward. Investment growth will accelerate in 2017 to 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 in the near term has also been accompanied by the tapering of purchases that were part of the third round of quantitative easing undertaken by the Fed. The completion of the taper in October will give birth to the eventual onset of their exit strategy. We think the Fed will begin slowly hiking the federal funds rate in the third quarter, but longer run rates will begin to rise earlier as expectations of higher short-term interest rates work their way through the yield curve. We expect the 10-year Treasury yield to average 2.6% in 2014, 3.7% in 2016, and 4.2% in 2017.

Business spending on equipment and software will grow at an annual average rate of 6.0% in 2014 through 2017. Investment spending growth in computers and peripherals will resume solid growth after contracting in 2013 and 2014. Spending on communications equipment should expand at an average annual rate of 8.5% during 2014-2017, while industrial equipment purchases average 7.2% growth over the same time frame.

Investment in nonresidential structures experienced a burst of activity in 2012 and expanded at a 13.0% clip, up from 2.3% growth in the previous year. Investment growth plunged year-over-year and contracted 0.3% in 2013. The roller coaster ride continues in 2014 and 2015 with growth jumping to 7.4% in 2014, then plunging again to under 1.0% in 2015. Investment in non-residential structures will bounce back in 2016 and 2017 with growth of 5.4% and 9.3% respectively. The turbulence that has plagued this type of investment spending during this business cycle looks like it will be with us for a few more years.

Investment growth in transportation equipment decelerated sharply in 2013 to 7.9%. This type of investment will have an average growth rate of 2.2% during the four-year stretch from 2014 through 2017, and in that final year, growth will be just 2.2%. In the middle of this span, growth will be negative in 2015 and 2016. Investment in this component is quite volatile due to purchases of aircraft that cause extreme swings in investment growth from quarter to quarter.

Residential fixed investment grew by 13.5% in 2012 and 12.0% in 2013. Growth will average 8.4% through 2014-2017 with a peak growth rate in 2016 of 14.5%. In the final year of our forecast, 2017, real residential fixed Institute for Economic Competitiveness

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U . S . F orecast investment will be dampened by both higher mortgage rates (expected to average 6.2% on a 30-year fixed mortgage that year) and a balance between supply and demand in the housing market that will significantly dampen the rate of price appreciation. Growth is expected to be 2.1% in the final year of our forecast. In 2017, real residential fixed investment will be just under $670 billion.

Housing prices continue to rise, but the pace of these increases has slowed. Declining levels of investor purchases are taking some wind out the housing market’s sails. Housing finance must become available to an expanded pool of borrowers if the market is going to make a smooth transition from investor-led purchases to more traditional mortgage-financed consumer purchases.

If mortgage availability does not improve over the next few years, the likelihood of such a transition will be greatly diminished.

Rising home prices and diminishing 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 1.51 million in 2017.

That level represents an increase of nearly 580,000 starts from 2013. Tight mortgage lending standards could, if not redressed, alter the course of the recovery in the housing sector.

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 defanged the spending cuts in the original sequester, paring back spending cuts by $63 billion over 2014-15.

The 2014-2015 easing of sequester cuts will sharply slow the rate at which government spending was contracting from -5.7% in 2013 to -2.4% in 2014 and just -0.6% in 2015. Beyond 2015, government spending is expected to continue to contract as military spending declines as the war in Afghanistan is wound down. During 2014-2017 real government spending is expected to contract at an average of 1.1%.

will grow until the Fed finishes the taper of the latest of three rounds of quantitative easing. The Fed turns most of the proceeds from holding that debt right back to the U.S. Treasury.

The federal budget deficit fell to $680 billion in 2013.

This was the first time in four years that the annual deficit did not exceed $1 trillion. We are forecasting that the deficit will continue to decline in 2014, when it is expected to be $507 billion.

There is no political will to implement fiscal discipline in Washington, D.C. Even the relatively small spending cuts in the sequester quickly became unpalatable to congress. As a result, we expect that the budget deficit will only contract slightly in the next couple years. Next year the budget deficit is expected to be $484 billion falling to $479 billion in 2016 before rising again to $548 billion in 2017. However, if military continues to intensify in Iraq and Syria – something the President seems reluctant to do – these deficit numbers will grow larger.

Although we are projecting deficits through 2017 that are relatively smaller than the $1 trillion-plus deficits that were the norm in 2009-2012, the additional debt added to the national debt over the next four years will be nearly $2.7 trillion, thus pushing the national debt total over $20 trillion.

If interest rates rise faster than we are currently forecasting, this will result in a more rapidly rising burden of servicing this debt. The persistent low interest rates on U.S. Treasury bonds have anesthetized the pain of the borrowing needed to finance record federal budget deficits in recent years. When this anesthesia wears off, the pain of this deficit financing could become more acute and consequences of our lack of fiscal discipline will become more apparent.

Currently, the national debt is over $17.75 trillion and rising. This represents a debt of nearly $152,157 per taxpayer and over $55,668 per citizen. Unfunded liabilities of the U.S. are even more frightening. Social Security, Medicare part D, and Medicare represent more than $116 trillion in liabilities, and that boils down to more than $996,538 per taxpayer.

The combination of higher revenues from economic growth, new taxes, and an assist from the Federal Reserve N E T E X P O R T S are, along with lower government spending, working to Net exports will become an increasing hindrance shrink the size of the annual budget deficit. The Fed is for real GDP growth in the U.S. through the end of holding more than $2.4 trillion in U.S. Treasury debt that the forecast horizon, 2017Q4. In the second quarter of 10

U.S. Forecast | September 2014

U . S . F orecast 2014, real exports grew by 10.1% following a contraction of 9.2% in the first quarter of the year. This helped to dramatically lessen the impact of net exports on real GDP growth in the second quarter. The improvement in export growth resulted in an increase in the contribution of net exports to GDP growth increasing by 1.23%.

In the short run, the net exports boost to GDP growth should continue through the end of 2014. However, the U.S. dollar has begun a streak of appreciation against our trading partners that we are forecasting to last for the next two and a half years.

In the near term, an appreciating dollar will lower the dollar value of exports from the U.S. and at the same time raise the dollar value of imports into the U.S. In this way, a stronger dollar will initially improve the trade deficit. Over time however, a stronger dollar will boost imports and work to decrease exports leading to a worsening of the trade deficit.

Overall, export growth continues through the end of our 2017 forecast period. However, real export growth from 2014-2017 is expected to flatten out, averaging just 3.1% while real import growth will average 4.3% over the same time frame.

Real net exports will average -$516.3 billion 20142017, with the trade balance worsening in each successive year on the back of a stronger dollar and a weaker global demand for U.S. goods and services.

The five year period of strengthening of the dollar (2012-2016) is due to the relative strength of the U.S. recovery and the eventual upward movement in U.S. interest rates as the Federal Reserve begins to tighten interest rates in late 2015. The Eurozone continues to battle recession or near recession in many countries. Any growth 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 the Eurozone. Meanwhile, the European Central Bank has been forced to be more aggressive in its stance on policy and is teetering on the brink of implementing quantitative easing policies as the Fed has done over the past several years.

The current account deficit will improve into mid-2015 at which point a multiyear appreciation of the dollar that began in 2012 will begin to manifest itself in a worsening of the current account in 2015-2017. Current account balances will average -$429.9 billion during 2014-2017,

with a worsening of the deficit in 2016-2017, erasing the improvements in 2015.

U N E M P LOY M E N T The U.S. headline unemployment rate (U-3 in the nomenclature of the Bureau of Labor Statistics) is a one of the strands in the spider chart discussed earlier. For most of the economic recovery the unemployment rate has been a faulty gauge of how the labor market and economy have been performing, so much so that the Fed has shifted itself away from a heavy focus on this statistic.

The national headline unemployment rate took a small drop in August to 6.1%, but this was driven in part by a decline in the labor force of 80,000 in the same month.

This monthly decrease in the U.S. labor force was the 27th time the labor force experienced a month-over-moth decline during this recovery.

The August jobs report again showed weaker job growth with 142,000 new workers on business payrolls.

This was the weakest gains this year since the 144,000 workers added in January. In between January and August the economy added an average of 240,000 jobs every month.

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 and why the Federal Reserve Bank of Atlanta’s Labor Market Spider Chart is a good approach to do just that.

Given its complexity and the frustrating 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 August 2013, the labor force participation rate remains 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 neither working nor 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 9.6%.

The Bureau of Labor Statistics (BLS) does produce

3

http://www.epi.org/publication/missing-workers/ Institute for Economic Competitiveness

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alternative measures of labor market weakness. The broadest measure of unemployment, U-6, takes into account discouraged workers as well as those who are underemployed—working part-time but not by choice— and workers who are marginally attached to the labor force and have looked for work in the past 12 months but are not currently looking, yet indicate a willingness to work.

U-6 remains distressingly high at 12.0% in August, down just 1.6 points from the August 2013 level of 13.6%, and down 5.2 points from its peak of 17.2% in April 2010. U-6 has been in double digits for 75 straight months.

When the Affordable Care Act mandates are finally enforced 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 given the significant financial incentive currently in the ACA, it may mistakenly signal healthier labor market by pushing up payrolls.

How would this work? A single full-time payroll job split into two part-time jobs would add an additional worker to the company’s payroll figures. In the payroll employment data there is no distinction made between full and part-time employees, just a count of the number of people on the payroll.

This shift to part-time labor 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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U . S . F orecast C harts

30-Year Mortgage Rates and Housing Starts 9.0

(Mortgage rates - Left axis, %)

2.5

8.0

2.0

7.0

1.5

6.0

1.0

5.0

0.5

4.0 3.0

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

0.0

Automobile and Light Truck Sales 11.0

(Millions Vehicles)

10.0 9.0 8.0 7.0 6.0 5.0 4.0

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)

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)

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 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 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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(%)

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

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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 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

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)

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

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 1000.0 500.0

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 | September 2014

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

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

50

Real Disposable Income and Consumption 6.0

(% Change Year Ago)

4.0 2.0 0.0 -2.0 -4.0

-400

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

-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 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

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

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 | September 2014

(%)

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

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

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

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

Real GDP Nominal GDP

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

2007

2008

2009

2010

2011

2012

2013

2014

1.8 2.0 2.2 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 9.3 2.5 1.7 1.5

-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

1.6 1.7 2.3 6.1 1.8 1.8 7.6 13.6 1.6 -1.8 2.0 21.0 37.6 28.4 33.0 2.3 -0.3 -1.6 -7.6 26.4 -9.1 0.7 6.9 5.6 -2.7 -3.3

2.3 2.2 1.8 7.3 0.7 1.3 7.3 6.9 3.2 5.0 11.4 4.2 22.7 14.2 14.6 13.5 8.6 15.7 21.4 13.2 9.5 13.5 3.3 2.3 -1.8 -1.2

2.2 2.2 2.4 6.8 1.9 1.9 3.0 4.6 3.1 -0.1 8.3 3.9 7.9 -0.8 -5.0 -0.5 3.4 -1.2 -7.5 0.6 3.1 12.0 3.0 1.1 -5.7 0.5

2.1 2.1 2.2 6.1 1.5 1.8 5.8 6.4 4.6 -1.5 4.7 11.7 10.0 1.7 9.0 7.4 6.2 7.5 15.9 7.0 -0.6 3.6 2.6 3.0 -2.4 0.9

14873.8 14830.4 14418.8 14783.8 15020.6 15369.2 15710.3 14477.6 14718.6 14418.7 14964.4 15517.9 16163.2 16768.1

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

72.3 1.6 2.5 78.7 36.5 85.6 16.089 1.342 4.418 4.6 1.1 -162 -719

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

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

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

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

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

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

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

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

11995 5.3 10507 4.7 10821 2.1 3.0 1303 -5.4

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

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

2.1 3.1 1.7 6.0 2.1

Forecast 2015 2016

2.5 2.7 2.5 5.3 2.5 2.1 4.7 6.6 11.5 6.2 12.9 7.7 -0.8 3.1 -13.3 0.8 9.1 7.6 -13.0 -0.2 6.8 13.5 3.0 3.7 -0.6 1.1

2.7 2.8 3.0 5.8 3.0 2.6 4.9 5.2 9.8 6.5 10.4 3.6 -2.7 5.4 -6.1 5.4 19.5 1.9 -4.7 -2.4 12.7 14.5 2.8 5.0 -1.2 0.9

2017

2.9 2.9 3.3 6.6 2.8 2.9 6.0 5.7 6.4 6.0 6.1 5.9 2.2 5.5 2.5 9.3 16.7 3.4 4.4 7.6 8.8 2.1 4.1 5.5 -0.5 1.2

16047.1 16442.5 16891.5 17387.7 17403.2 18140.4 18954.9 19847.6

1.8 2.1 2.1 2.0 2.0

1.5 1.5 1.8 1.2 1.9

1.6 1.9 1.8 2.1 2.0

1.7 1.4 1.9 0.7 2.4

1.7 1.5 1.8 0.8 2.8

1.7 1.7 1.8 1.6 2.9

95.1 94.2 0.1 1.0 3.3 3.8 73.9 75.5 36.6 65.9 67.4 76.5 12.735 14.4 0.612 0.8 3.792 4.1 8.9 8.1 1.2 1.7 -1297 -1089.2 -459 -460.8

98.0 0.9 2.9 76.1 55.2 79.2 15.5 0.9 4.5 7.4 1.7 -680.2 -400.3

98.0 0.7 4.0 77.1 62.7 81.6 16.3 1.0 4.4 6.3 1.8 -507.7 -417.7

88.5 1.6 2.7 77.3 39.5 88.3 16.4 1.3 4.9 6.0 1.6 -484.0 -378.7

97.0 2.1 2.9 77.1 30.6 85.8 16.6 1.5 5.0 5.9 1.4 -479.0 -423.7

98.1 2.1 2.6 76.8 39.4 85.2 16.9 1.5 4.7 5.8 1.3 -548.6 -499.4

0.1 0.1 0.2 0.8 1.8 2.9 3.7 1379.6 8.9 0.9 3.8

0.1 0.1 0.1 1.2 2.4 3.4 4.0 1642.5 19.0 1.0 3.4

0.1 0.0 0.1 1.7 2.6 3.5 4.2 1931.6 17.7 1.0 1.5

0.3 0.3 0.5 1.9 3.2 4.2 4.9 1988.9 3.1 1.0 2.4

2.0 2.0 2.3 3.0 3.7 4.5 5.6 1964.3 -1.2 1.0 0.4

3.6 3.4 3.5 4.0 4.2 4.6 6.2 1988.8 1.2 1.0 -0.3

13888 5.2 12384 4.9 11676 3.0 7.2 1681 17.9

14167 2.0 12505 1.0 11651 -0.2 4.9 1761 4.7

14748 4.1 13003 4.0 11939 2.5 5.2 1857 5.4

15375 4.2 13497 3.8 12239 2.5 5.2 1907 2.9

16133 4.9 14187 5.1 12691 3.7 5.8 1884 -1.2

17013 5.5 14988 5.6 13208 4.1 6.4 1823 -3.2

Institute for Economic Competitiveness

19

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

Table 2. Real Gross Domestic Product History 2007

2008

2009

2010

Forecast 2011

2012

2013

2014

2015

2016

2017

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

14873.8 14830.4 14418.8 14783.8 15020.6 15369.2 15710.3

16047.1 16442.5 16891.5 17387.7

14836.2 14865.8 14566.3 14722.2 14979.0 15304.3 15636.7

15964.1 16386.8 16845.2 17331.8

10041.6 10007.2

10933.1 11209.9 11548.7 11931.8

9847.0 10036.3 10263.5 10449.7 10699.7

Durables

1141.7

1083.2

1023.3

1085.7

1151.5

1235.7

1319.0

1399.9

1474.2

1559.7

1663.4

Nondurables

2239.3

2214.7

2175.1

2223.5

2263.2

2280.1

2322.6

2357.4

2415.3

2487.5

2557.5

Services

6656.4

6708.6

6648.5

6727.6

6851.4

6942.4

7073.1

7199.2

7351.0

7541.2

7763.5

1948.4

1934.5

1633.5

1673.8

1802.3

1931.8

1990.6

2106.8

2205.2

2312.6

2451.0

898.3

836.1

644.3

746.7

847.9

905.6

947.2

1008.0

1074.3

1130.6

1194.6

279.9

281.0

256.1

281.4

285.9

295.0

304.0

318.1

354.5

389.1

414.0

Computers & Peripherals

72.8

77.1

76.8

84.7

83.0

86.8

86.7

85.4

90.6

96.5

102.2

Communications Equipment

96.2

91.5

79.4

90.2

91.8

102.3

110.4

115.5

130.3

143.9

152.7

Industrial Equipment

205.3

195.5

152.1

151.3

183.3

190.3

197.7

220.8

237.5

246.0

260.5

Transportation Equipment

188.8

146.2

70.6

127.5

173.9

211.4

228.2

250.5

248.3

241.5

246.9

30.2

30.0

17.7

22.1

27.9

31.0

30.7

30.3

30.8

32.5

34.2

48.1

42.6

30.8

36.2

48.1

54.5

51.6

56.3

48.6

45.6

46.8

509.0

540.2

438.2

366.3

374.7

423.8

421.7

452.9

456.6

481.1

525.8

189.9

182.8

126.7

95.2

94.7

102.8

106.3

112.9

123.1

147.2

171.5

Manufacturing

43.1

53.8

56.3

40.8

39.1

44.9

44.3

47.6

51.1

52.1

53.9

Power & Communication

85.9

94.5

95.8

80.4

74.1

89.6

82.8

95.1

82.7

78.7

82.2

Mining & Petroleum

97.9

105.0

75.0

87.8

110.9

124.5

125.2

134.0

133.5

130.3

140.3

Other

91.8

103.4

84.5

62.0

56.2

61.5

63.4

63.0

67.2

75.7

82.3

654.8

497.7

392.3

382.4

384.5

436.5

488.4

505.8

574.1

656.7

669.8

Exports

1646.4

1740.8

1587.7

1776.6

1898.3

1960.1

2019.8

2072.0

2133.0

2192.3

2282.9

Imports

2359.0

2298.6

1983.2

2235.4

2357.7

2412.6

2440.3

2514.5

2607.0

2736.8

2887.1

Federal Government

1078.7

1152.3

1217.7

1270.7

1236.4

1214.4

1145.3

1117.3

1110.6

1097.4

1092.2

State & Local Government

1836.2

1842.5

1871.4

1820.8

1761.0

1739.5

1748.5

1763.6

1783.1

1798.5

1820.0

Nonresidential Fixed Investment Equipment & Software Information Processing Equipment

Aircraft Other Equipment Structures Commercial & Health

Residential Fixed Investment

20

U.S. Forecast | September 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. 2014Q1

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.

-2.1 -1.0 1.2 3.2 0.0 1.3 1.6 -1.0 -7.7 -39.0 1.7 14.1 0.2 -34.4 8.1 2.9 -8.8 2.9 19.8 11.5 -17.3 -5.3 -9.2 2.2 -0.1 -1.2

2014Q2

4.2 2.8 2.5 14.3 1.9 0.8 8.4 10.7 26.3 26.3 41.6 26.9 2.3 -69.7 32.0 9.4 15.1 2.0 -15.2 26.7 16.5 7.2 10.1 11.0 -0.9 2.9

2014Q3

3.5 3.6 1.6 4.4 1.0 1.3 7.4 9.3 10.7 16.4 6.8 3.0 19.8 10.2 18.7 7.7 1.8 40.0 11.9 5.0 -3.1 21.4 1.1 -3.3 1.1 1.3

2014Q4

2.5 3.0 2.7 3.2 2.9 2.5 3.9 5.2 13.0 4.4 14.0 9.9 -9.6 31.4 -41.3 -2.7 10.5 7.7 -21.7 -3.5 4.1 6.0 4.0 1.2 0.3 1.1

2015Q1

2.1 2.5 3.0 7.0 2.5 2.6 4.4 6.3 9.5 1.0 11.0 8.5 -3.1 8.5 -15.8 -0.1 8.9 5.9 -14.7 0.1 3.4 13.3 2.3 5.7 -1.1 0.9

2015Q2

2015Q4

2016Q1

2016Q2

2016Q3

Composition of Real GDP, Percent Change, Annual Rate 1.9 2.3 2.4 2.8 3.0 3.2 2.1 2.3 2.6 2.9 3.1 3.0 2.4 2.4 2.6 3.4 3.2 3.2 4.3 3.4 5.0 7.1 6.6 5.8 2.7 3.0 2.7 3.4 2.8 2.9 2.1 2.1 2.2 2.7 2.8 3.0 3.0 4.4 4.9 3.6 6.1 6.2 6.4 5.8 4.5 3.4 6.9 6.1 9.1 10.9 10.9 10.5 9.9 7.4 2.1 6.5 6.6 6.9 8.2 6.4 11.4 11.7 11.3 11.2 10.0 8.5 6.7 2.4 2.6 2.4 3.5 5.5 0.1 -2.4 -5.2 -9.3 4.3 0.9 2.2 4.8 6.1 4.6 7.4 4.9 -17.3 -1.2 -5.2 -22.5 10.1 8.0 -4.7 2.9 7.1 3.2 7.4 9.5 8.5 7.3 20.6 20.0 24.9 26.0 3.3 -1.4 -5.8 2.5 6.0 8.6 -21.5 -7.3 -4.9 -5.1 -0.6 -0.7 -9.3 -0.8 3.2 -8.5 -2.6 0.3 3.5 23.0 19.4 10.5 7.5 10.8 13.7 18.2 18.4 15.6 13.4 9.7 2.3 3.3 2.4 2.3 2.1 3.4 4.7 5.0 4.9 5.4 4.8 4.6 -1.4 -1.4 -0.3 -1.1 -0.8 -2.7 1.1 0.7 0.9 0.6 1.1 1.2

2016Q4

3.3 3.2 3.6 6.6 3.1 3.3 6.3 5.9 6.1 4.5 6.3 6.9 0.7 6.2 -6.0 10.1 21.9 3.2 0.6 6.5 10.7 5.0 4.1 5.0 -1.5 1.0

2017Q1

2.9 2.8 3.2 7.3 2.6 2.7 6.0 5.4 6.1 5.6 5.8 7.2 -0.6 4.6 -10.7 9.6 14.1 2.8 6.8 9.5 9.2 2.1 4.4 6.6 1.7 1.2

2017Q2

2.8 2.7 3.4 6.8 2.9 3.0 6.2 6.2 6.6 7.9 5.7 6.3 5.9 4.1 19.3 9.5 14.5 -0.2 8.1 10.1 7.3 -3.9 4.6 5.7 -0.6 1.3

2017Q3

2.6 2.7 3.3 6.8 2.7 2.9 5.4 4.9 5.2 4.7 4.0 4.6 5.2 8.9 12.6 8.7 10.1 2.6 6.1 12.5 7.0 -3.9 4.3 5.0 -0.6 1.2

2017Q4

2.6 2.6 3.2 5.2 2.6 3.0 4.7 3.7 5.3 5.6 4.1 2.6 2.2 3.4 1.5 7.9 6.2 6.8 7.2 11.4 6.8 -2.5 4.8 5.3 -0.6 1.3

Billions of Dollars 15831.7 15994.3 16131.2 16231.1 16314.3 16390.9 16483.3 16581.6 16696.4 16821.3 16954.3 17094.2 17215.8 17333.2 17445.6 17556 17044 17311.3 17537.3 17720.1 17884.4 18048.3 18227.2 18401.8 18619.6 18833.3 19062.4 19304.3 19528.8 19744.2 19955 20162.3 Prices & Wages, Percent Change, Annual Rate 1.8 1.7 1.4 2.0 1.6 0.7 1.6 0.7 2.0 1.5 1.7 1.8 1.7 1.8 1.8 -1.2 1.1 -0.8 2.2 0.6 2.5 2.7 2.9 2.9 2.8

1.3 1.9 1.6 4.0 1.0

2.1 3.0 2.5 3.7 3.4

1.7 1.5 1.8 -0.5 1.7

1.7 2.1 2.0 1.7 2.2

1.7 0.9 2.0 1.3 2.4

98.7 -4.5 3.9 76.2 33.3 80.9 15.651 0.925 4.043 6.7 1.5 -560 -445

103.0 2.3 5.3 77.1 80.8 82.8 16.495 0.997 4.273 6.2 2.2 -589 -421

97.4 2.2 3.6 77.5 77.2 80.5 16.622 1.057 4.627 6.1 2.0 -596 -416

92.9 1.5 3.8 77.7 59.7 82.1 16.384 1.086 4.755 6.0 1.8 -564 -390

88.9 1.1 1.9 77.5 46.8 88.8 16.434 1.135 4.794 5.9 1.2 -603 -396

90.8 1.5 1.7 77.4 41.1 89.8 16.455 1.238 4.844 6.0 1.6 -592 -372

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))

0.07 0.05 0.12 1.60 2.76 3.68 4.36 1834 15.2 0.992 6.1

0.09 0.03 0.10 1.66 2.62 3.44 4.23 1900 15.2 0.985 -2.8

0.09 0.03 0.11 1.66 2.47 3.24 4.13 1978 17.4 0.993 3.1

0.09 0.05 0.13 1.72 2.59 3.49 4.25 2014 7.3 1.003 4.3

0.10 0.07 0.14 1.82 2.94 3.91 4.57 2010 -0.6 1.012 3.3

0.16 0.13 0.25 1.88 3.22 4.19 4.92 1997 -2.6 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)

14485 4.9 12773 4.8 11810 3.4 4.9 1735 -11.0

14703 6.2 12980 6.6 11933 4.2 5.3 1840 26.5

14841 3.8 13092 3.5 11994 2.1 5.4 1912 16.7

14965 3.4 13167 2.3 12018 0.8 5.0 1942 6.3

15161 5.4 13317 4.6 12124 3.6 5.1 1884 -11.4

15297 3.6 13422 3.2 12194 2.3 5.1 1895 2.2

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. $)

2015Q3

1.7 1.5 1.8 1.0 2.9

1.8 1.9 1.9 1.7 2.9

1.8 1.6 1.8 1.3 2.9

1.7 1.9 1.8 1.9 2.9

1.7 1.9 1.7 2.5 2.9

1.6 1.8 1.7 1.7 2.9

Other Key Measures 86.9 87.3 94.1 97.3 2.0 2.1 2.3 2.3 2.1 2.5 3.3 3.2 77.3 77.0 77.1 77.1 39.4 30.8 27.1 26.1 87.7 87.1 86.6 86.5 16.441 16.437 16.511 16.574 1.318 1.380 1.434 1.478 4.913 4.994 5.102 5.134 6.0 6.0 6.0 6.0 1.3 1.1 1.4 1.5 -582 -564 -606 -617 -373 -374 -394 -416

98.2 2.3 3.3 77.2 32.4 85.0 16.561 1.518 4.950 5.9 1.5 -616 -436

98.3 2.3 3.2 77.1 36.7 85.2 16.602 1.545 4.883 5.9 1.6 -641 -448

97.4 1.9 2.5 77.1 39.4 85.9 16.7 1.5 4.9 5.8 1.2 -651 -472

97.8 1.9 2.1 76.9 40.1 84.8 16.9 1.5 4.8 5.8 1.1 -677 -495

98.3 1.9 2.0 76.7 39.0 84.9 16.9 1.5 4.6 5.7 1.0 -691 -510

98.7 2.0 1.7 76.4 39.1 85.3 16.9 1.5 4.6 5.7 1.0 -718 -520

Financial Markets, NSA 0.28 0.71 1.21 1.70 0.35 0.78 1.25 1.73 0.64 1.14 1.63 2.12 1.92 2.05 2.42 2.81 3.30 3.38 3.53 3.64 4.26 4.31 4.38 4.47 5.02 5.15 5.33 5.52 1979 1969 1965 1966 -3.6 -1.9 -0.8 0.1 1.017 1.024 1.024 1.022 0.6 3.1 -0.3 -0.7

2.21 2.20 2.59 3.19 3.76 4.51 5.68 1963 -0.5 1.020 -0.9

2.71 2.66 3.04 3.55 3.91 4.59 5.91 1963 0.1 1.018 -0.5

3.2 3.1 3.5 3.9 4.1 4.6 6.2 1972 1.8 1.0 -0.2

3.7 3.4 3.6 4.0 4.2 4.6 6.2 1981 1.9 1.0 0.1

3.7 3.5 3.6 4.0 4.2 4.6 6.2 1994 2.6 1.0 -0.2

3.7 3.5 3.6 4.0 4.2 4.7 6.2 2007 2.6 1.0 -0.2

Incomes 15601 15834 4.3 6.1 13693 13902 4.1 6.3 12366 12503 3.2 4.5 5.3 5.6 1924 1879 -0.4 -9.2

16225 5.0 14275 5.6 12750 4.1 5.9 1881 -0.2

16447 5.6 14491 6.2 12891 4.5 6.1 1895 3.0

16697 6.2 14686 5.5 13017 4.0 6.3 1833 -12.4

16919 5.4 14895 5.8 13151 4.2 6.4 1823 -2.3

17121 4.9 15091 5.4 13274 3.8 6.5 1815 -1.6

17316 4.6 15280 5.1 13390 3.5 6.6 1820 1.1

15439 3.8 13555 4.0 12270 2.5 5.1 1926 6.8

16027 5.0 14082 5.3 12621 3.8 5.7 1882 0.6

Institute for Economic Competitiveness

21

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

Table 4. Quarterly Gross Domestic Product

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

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

15831.7 15994.3 16131.2 16231.1 16314.3 16390.9 16483.3 16581.6 16696.4 16821.3 16954.3 17094.2 17215.8 17333.2 17445.6 17556.0 15782.6 15890.6 16032.0 16151.3 16250.1 16334.0 16428.0 16535.2 16653.8 16779.6 16906.0 17041.3 17160.0 17276.7 17390.1 17500.3 10844.3 10910.4 10952.5 11025.2 11107.5 11174.6 11242.1 11315.4 11409.5 11499.1 11591.3 11694.7 11786.6 11884.8 11981.3 12074.5

1355.0 1401.0 1416.2 1427.6 1452.0 1467.3 1479.7 1498.0 1524.0 1548.6 1570.4 1595.7 1624.2 1651.1 1678.5 1699.8

Nondurables

2341.9 2352.9 2358.8 2375.9 2390.5 2406.2 2424.1 2440.5 2461.3 2478.1 2495.9 2514.8 2530.9 2549.3 2566.5 2583.1

Services

7165.4 7180.4 7203.2 7247.9 7293.9 7331.3 7369.3 7409.7 7459.9 7511.0 7565.9 7627.9 7679.0 7735.4 7791.0 7848.7

Nonresidential Fixed Investment Equipment & Software

2051.5 2093.3 2131.1 2151.4 2174.6 2190.7 2214.4 2241.1 2261.0 2294.6 2329.5 2365.5 2400.4 2436.8 2469.2 2497.5 974.8

999.8 1022.2 1035.3 1051.3 1067.8 1083.0 1095.1 1104.3 1122.8 1139.6 1155.9 1171.3 1189.0 1203.4 1214.5

298.1

316.0

324.2

334.3

341.9

349.5

358.6

368.0

377.3

386.4

393.4

399.2

405.2

411.7

416.9

422.4

79.9

84.7

88.0

88.9

89.2

89.6

91.0

92.5

94.1

95.9

97.4

98.5

99.9

101.8

103.0

104.4

106.3

116.0

117.9

121.8

125.1

128.5

132.1

135.7

139.3

142.7

145.6

147.9

150.0

152.0

153.6

155.1

Industrial Equipment

209.0

221.9

223.5

228.9

233.6

237.4

238.8

240.4

241.8

243.9

247.2

251.3

255.7

259.6

262.5

264.3

Transportation Equipment

245.3

246.8

258.2

251.8

249.8

249.9

248.4

245.1

239.2

241.8

242.3

242.7

242.4

245.8

249.0

250.4

36.5

27.1

27.8

29.7

30.4

30.5

30.9

31.4

31.7

32.3

32.7

33.2

33.5

33.9

34.6

34.9

54.0

57.8

60.4

52.9

50.6

48.3

48.1

47.5

44.6

45.6

46.5

45.8

44.5

46.5

47.9

48.1

441.9

452.0

460.4

457.3

457.1

451.6

454.9

462.7

466.4

474.7

485.7

497.4

509.0

520.6

531.7

541.9

109.0

112.9

113.4

116.2

118.7

121.2

123.3

129.2

135.3

143.0

151.5

159.2

164.5

170.2

174.4

177.0

45.2

45.5

49.5

50.4

51.1

51.5

51.3

50.6

50.9

51.6

52.7

53.1

53.5

53.5

53.8

54.7

Information Processing Equipment Computers & Peripherals Communications Equipment

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

98.2

94.2

96.9

91.2

87.6

82.5

80.9

79.9

78.8

78.7

78.6

78.7

80.0

81.6

82.8

84.2

127.6

135.4

137.0

135.8

135.8

132.6

132.3

133.4

130.4

129.6

129.7

131.7

134.8

138.0

142.2

146.1

61.3

63.6

63.1

63.8

64.3

64.9

68.3

71.4

73.2

74.6

76.5

78.5

80.2

81.6

83.0

84.4

485.3

493.8

518.3

525.9

542.5

560.3

584.2

609.3

631.8

652.1

667.4

675.6

679.2

672.4

665.9

661.6

Exports

2026.9 2076.2 2082.1 2102.8 2114.8 2127.2 2139.3 2150.6 2168.6 2180.9 2198.8 2221.1 2245.2 2270.6 2294.5 2321.5

Imports

2474.1 2539.7 2518.2 2525.9 2561.0 2590.6 2622.3 2654.0 2689.2 2720.8 2751.5 2785.5 2830.4 2869.8 2905.3 2942.9

Federal Government

1117.4

State & Local Government

1750.2 1762.8 1768.4 1773.1 1777.0 1781.8 1784.8 1788.6 1791.2 1796.0 1801.2 1805.7 1811.2 1817.2 1822.8 1828.8

22

U.S. Forecast | September 2014

1114.9

1118.1

1118.9

1115.8

1111.7

1107.8 1107.0 1103.9 1101.5 1094.1 1089.9 1094.6 1092.9 1091.4 1089.8

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

Table 5. Annual Employment 2007

2008

History 2009 2010

2011

2012

2013

2014

Forecast 2015 2016

2017

Millions Total Nonfarm Employment

137.93

137.17

131.22

130.27

131.85

134.10

136.36

138.83

140.99

142.92

144.75

Private Nonfarm

115.72

114.67

108.67

107.78

109.76

112.18

114.50

116.92

119.00

120.84

122.50

Mining

0.66

0.71

0.64

0.65

0.74

0.80

0.82

0.86

0.89

0.90

0.93

Construction

7.63

7.16

6.02

5.52

5.53

5.65

5.83

6.04

6.41

6.97

7.46

Manufacturing

13.88

13.40

11.85

11.53

11.73

11.93

12.00

12.15

12.30

12.29

12.25

Trade, Transportation and Utilities

26.63

26.29

24.90

24.64

25.07

25.47

25.86

26.39

26.69

26.91

27.09

Transportation & Warehousing

4.54

4.51

4.24

4.19

4.30

4.42

4.49

4.62

4.76

4.92

5.08

Financial Activities

8.35

8.20

7.84

7.70

7.70

7.78

7.88

7.95

7.97

7.95

7.83

Education & Health

18.61

19.16

19.55

19.89

20.23

20.70

21.10

21.46

21.84

22.22

22.57

Professional & Business Services

17.95

17.74

16.57

16.72

17.33

17.93

18.57

19.23

19.83

20.38

20.89

3.03

2.98

2.80

2.71

2.67

2.68

2.68

2.67

2.66

2.68

2.69

Leisure & Hospitality

13.43

13.44

13.07

13.04

13.35

13.77

14.24

14.62

14.86

14.98

15.17

Government

22.22

22.50

22.55

22.49

22.09

21.92

21.86

21.90

21.99

22.08

22.25

2.74

2.76

2.83

2.98

2.86

2.82

2.77

2.71

2.68

2.65

2.61

19.48

19.74

19.72

19.51

19.23

19.10

19.09

19.19

19.30

19.43

19.64

Information

Federal State & Local

Growth Rates Total Nonfarm Employment

1.12

-0.55

-4.34

-0.71

1.21

1.71

1.69

1.81

1.56

1.37

1.28

Private Nonfarm

1.13

-0.90

-5.23

-0.80

1.83

2.21

2.07

2.11

1.78

1.55

1.37

Mining

5.74

6.77

-14.61

11.75

13.58

2.26

4.26

5.95

1.16

2.73

2.74

Construction

-1.95

-9.21

-16.57

-3.40

1.87

1.79

3.32

4.65

7.37

8.94

5.32

Manufacturing

-2.05

-5.36

-11.37

0.60

1.76

1.48

0.69

1.64

0.62

-0.34

-0.37

Trade, Transportation and Utilities

1.17

-3.31

-4.83

0.75

1.97

1.46

1.91

1.81

0.73

0.98

0.47

Transportation & Warehousing

0.89

-2.70

-6.16

1.98

2.44

2.74

1.71

2.97

3.15

3.63

2.74

Financial Activities

-1.16

-2.28

-4.32

-0.88

0.51

1.25

1.06

1.26

-0.51

-0.39

-2.08

Education & Health

2.96

2.72

1.83

1.71

1.86

2.37

1.70

1.77

1.44

2.26

1.33

Professional & Business Services

1.64

-3.60

-5.15

2.98

3.57

3.28

3.76

3.57

2.74

3.10

1.79

-0.04

-3.14

-6.02

-2.28

-0.38

-0.12

0.30

0.59

0.18

-0.69

0.63

Leisure & Hospitality

2.15

-1.66

-2.46

1.27

2.81

3.14

3.45

2.10

1.51

0.43

1.96

Government

1.16

0.98

-0.18

-0.94

-1.39

-0.37

-0.17

0.38

0.42

0.41

0.99

Federal

0.54

1.11

2.46

4.81

-0.82

-0.93

-2.88

-1.32

-0.99

-1.51

-1.51

State & Local

1.25

0.97

-0.53

-1.32

-1.47

-0.28

0.23

0.63

0.62

0.67

1.33

Information

Institute for Economic Competitiveness

23

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

Table 6. Quarterly Employment

2014Q12014Q22014Q32014Q42015Q12015Q22015Q32015Q42016Q12016Q22016Q32016Q42017Q12017Q22017Q32017Q4

Employment (Millions) Total Nonfarm Employment

137.8 138.5 139.2 139.8 140.2 140.8 141.3 141.6 142.1 142.6 143.2 143.7 144.2 144.6 144.9 145.3

Private Nonfarm

115.9 116.6 117.3 117.9 118.3 118.8 119.3 119.6 120.1 120.6 121.1 121.6 122.0 122.4 122.7 123.0

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

0.92

0.92

0.93

0.94

Construction

5.9

6.0

6.1

6.2

6.2

6.3

6.5

6.6

6.7

6.9

7.0

7.2

7.33

7.43

7.51

7.58

Manufacturing

12.1

12.1

12.2

12.2

12.3

12.3

12.3

12.3

12.3

12.3

12.3

12.3 12.27 12.27 12.25 12.22

Trade, Transportation and Utilities

26.2

26.3

26.5

26.6

26.6

26.7

26.7

26.8

26.8

26.9

26.9

27.0 27.05 27.08 27.12 27.14

Transportation & Warehousing

4.6

4.6

4.6

4.7

4.7

4.7

4.8

4.8

4.9

4.9

4.9

5.0

5.03

5.06

5.10

5.13

Financial Activities

7.9

7.9

8.0

8.0

8.0

8.0

8.0

8.0

8.0

8.0

8.0

7.9

7.90

7.85

7.81

7.76

Education & Health

21.3

21.4

21.5

21.6

21.7

21.9

21.9

21.9

22.0

22.2

22.3

22.4 22.46 22.53 22.60 22.71

Professional & Business Services

19.0

19.2

19.3

19.5

19.6

19.8

19.9

20.0

20.2

20.3

20.5

20.6 20.77 20.86 20.94 21.00

2.7

2.7

2.7

2.7

2.6

2.6

2.7

2.7

2.7

2.7

2.7

Leisure & Hospitality

14.5

14.6

14.7

14.7

14.8

14.8

14.9

14.9

15.0

15.0

15.0

15.0 15.04 15.12 15.21 15.29

Government

21.8

21.9

21.9

21.9

22.0

22.0

22.0

22.0

22.0

22.1

22.1

22.1 22.17 22.22 22.28 22.34

2.7

2.7

2.7

2.7

2.7

2.7

2.7

2.7

2.7

2.7

2.6

19.1

19.2

19.2

19.2

19.3

19.3

19.3

19.4

19.4

19.4

19.5

19.5 19.54 19.60 19.67 19.75

Information

Federal State & Local

2.7

2.6

2.69

2.62

2.69

2.62

2.70

2.60

2.70

2.59

Growth Rates Total Nonfarm Employment

1.48

2.22

2.00

1.74

1.23

1.62

1.27

1.09

1.35

1.45

1.52

1.56

1.20

1.13

1.02

0.95

Private Nonfarm

1.78

2.49

2.22

2.06

1.40

1.84

1.44

1.18

1.57

1.65

1.68

1.77

1.26

1.16

1.01

0.92

Mining

4.91

5.68

7.15

5.54

3.41

0.56

0.26

0.36

1.03

2.94

3.96

2.85

3.49

1.76

2.73

2.87

Construction

4.67

4.17

3.95

5.49

5.69

6.05

7.98

8.96

8.16

8.77

9.10

8.60

7.39

5.67

4.31

3.46

Manufacturing

1.30

1.19

2.30

1.72

1.05

1.77

-0.31

-0.04

0.06

-0.82

-0.17

-0.43

0.09

-0.15

-0.47

-0.94

Trade, Transportation and Utilities

1.53

2.34

1.87

1.45

0.93

0.54

1.01

0.41

0.78

1.10

1.05

0.98

0.46

0.43

0.61

0.37

Transportation & Warehousing

2.73

3.16

2.89

3.10

3.53

2.95

3.14

2.97

3.14

3.98

3.69

3.70

3.31

2.71

2.65

2.29

Financial Activities

0.29

1.19

1.69

1.87

-0.21

-1.04

-0.51

-0.28

0.07

0.40

-0.72

-1.34

-1.62

-2.08

-2.38

-2.24

Education & Health

1.18

2.34

1.92

1.63

1.41

3.38

0.74

0.22

2.09

2.61

1.81

2.54

0.84

1.40

1.21

1.88

Professional & Business Services

3.32

4.13

3.37

3.44

3.10

3.12

2.63

2.09

2.89

2.97

3.06

3.49

2.67

1.87

1.43

1.20

-3.00

-0.60

1.37

4.57

-8.33

-0.37

5.26

4.17

-2.68

-1.78

1.04

0.66

0.79

1.20

0.57

-0.04

2.32

2.84

2.03

1.20

1.57

1.73

1.54

1.23

0.90

-0.10

0.51

0.39

1.18

2.04

2.41

2.21

Government

-0.14

0.83

0.81

0.03

0.29

0.41

0.34

0.63

0.17

0.35

0.65

0.45

0.87

0.95

1.03

1.11

Federal

-2.65

-0.64

0.31

-2.31

-0.88

-0.76

-0.96

-1.36

-1.33

-1.85

-1.40

-1.48

-1.21

-1.34

-1.67

-1.80

0.22

1.04

0.88

0.36

0.46

0.57

0.52

0.91

0.38

0.66

0.93

0.72

1.15

1.26

1.40

1.50

Information Leisure & Hospitality

State & Local

24

U.S. Forecast | September 2014

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

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

2014Q1 2014Q2 2014Q3 2014Q4

2015Q1 2015Q2 2015Q3 2015Q4

2016Q1 2016Q2 2016Q3 2016Q4

2017Q1 2017Q2 2017Q3 2017Q4

GDP

107.7 108.3 108.7 109.2 109.6 110.1 110.6 111.0 111.5 112.0 112.4 112.9 113.4 113.9 114.4 114.8

Consumption

108.2 108.8 109.2 109.6 109.8 110.1 110.5 110.7 111.2 111.6 112.0 112.4 112.8 113.3 113.7 114.1

Durables Motor Vehicles Furniture

93.1

92.7

92.4

92.2

92.0

91.8

91.6

91.3

91.0

90.7

90.4

90.1

89.8

89.5

89.2

88.9

110.7 110.8 111.2 111.7 112.3 112.7 113.2 113.5 113.8 114.0 114.1 114.4 114.6 114.8 115.0 115.2 90.0

89.0

88.5

88.4

88.4

88.3

88.2

88.1

87.9

87.7

87.5

87.2

87.0

86.8

86.5

86.3

Other Durables

102.6 102.2 102.6 102.9 103.1 103.3 103.5 103.7 103.9 104.0 104.2 104.4 104.6 104.8 104.9 105.1

Nondurables

112.2 113.2 113.8 114.1 113.8 113.5 113.9 113.7 114.3 114.5 114.7 115.1 115.3 115.7 116.0 116.3

Food

108.3 109.5 110.3 110.2 110.4 110.4 110.4 110.5 110.7 111.0 111.3 111.7 112.0 112.3 112.6 112.8

Clothing & Shoes

105.8 106.4 107.0 107.0 106.9 106.8 106.7 106.6 106.5 106.5 106.5 106.4 106.3 106.3 106.2 106.1

Gasoline & Oil

147.4 150.6 150.5 151.7 146.6 142.1 144.1 140.0 143.6 142.6 141.0 141.6 140.1 140.8 141.0 141.5

Fuel

161.2 152.0 147.5 148.6 150.3 147.9 149.3 147.1 149.6 149.5 149.0 149.8 149.2 150.0 150.6 151.3

Services

109.4 110.1 110.6 111.1 111.7 112.2 112.7 113.2 113.7 114.3 114.9 115.6 116.2 116.8 117.4 118.0

Housing

107.9 108.6 109.4 110.1 110.6 111.1 111.5 112.0 112.5 113.0 113.6 114.1 114.6 115.1 115.6 116.1

Electricity

107.6 107.3 107.6 105.7 106.0 106.4 106.6 106.4 106.2 106.4 107.0 107.6 108.2 109.1 110.4 111.6

Natural Gas Water & Sewer Telephone

96.3 100.2

97.2 102.5

99.4

96.4

94.0

92.7

92.0

92.1

93.4

94.0

95.0

95.6

98.3

99.7

125.9 126.9 128.2 129.3 130.5 131.7 132.9 134.0 135.1 136.2 137.3 138.4 139.4 140.4 141.4 142.5 97.1

97.0

96.8

96.5

96.5

96.4

96.2

95.9

95.7

95.5

95.3

95.2

95.0

94.8

94.6

94.4

Transportation

108.9 109.4 109.9 110.5 111.0 111.3 111.8 112.2 112.7 113.1 113.6 114.1 114.6 115.1 115.5 116.0

Other Services

113.0 113.7 114.2 114.4 114.9 115.5 116.1 116.8 117.6 118.3 119.1 119.9 120.7 121.4 122.2 123.0

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

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

GDP

1.3

2.1

1.7

1.7

1.7

1.8

1.7

1.4

2.0

1.6

1.7

1.8

1.8

1.7

1.7

1.6

Consumption

1.4

2.3

1.4

1.5

1.0

0.8

1.5

0.9

1.7

1.4

1.4

1.6

1.4

1.6

1.5

1.5

Durables

-2.8

-1.8

-1.5

-0.9

-0.7

-1.0

-1.0

-1.1

-1.3

-1.3

-1.3

-1.3

-1.3

-1.3

-1.4

-1.4

Motor Vehicles

-1.5

0.4

1.4

2.0

2.1

1.6

1.6

1.3

0.8

0.7

0.7

0.7

0.7

0.7

0.7

0.7

Furniture

-2.6

-4.5

-2.5

-0.4

0.0

-0.2

-0.5

-0.6

-0.9

-0.9

-1.0

-1.0

-1.0

-1.0

-1.1

-1.1

Other Durables

-2.9

-1.5

1.9

1.1

0.8

0.7

0.8

0.7

0.7

0.7

0.7

0.7

0.8

0.7

0.6

0.6

Nondurables

0.6

3.6

1.9

1.1

-1.1

-1.1

1.5

-0.8

2.3

0.7

0.5

1.4

0.7

1.4

1.1

1.2

Food

1.4

4.5

2.9

-0.2

0.6

0.0

0.1

0.4

0.7

1.1

1.2

1.3

1.3

1.1

0.9

0.9

Clothing & Shoes

0.2

2.5

2.2

-0.2

-0.4

-0.3

-0.4

-0.1

-0.4

-0.1

-0.2

-0.2

-0.3

-0.2

-0.4

-0.4

Gasoline & Oil

-4.7

8.9

-0.4

3.4

-12.9

-11.6

5.8

-11.0

10.9

-2.7

-4.5

1.8

-4.2

2.0

0.5

1.4

Fuel

35.1

-21.0

-11.3

3.0

4.6

-6.0

3.6

-5.7

7.0

-0.2

-1.4

2.1

-1.4

2.2

1.4

1.9

Services

2.3

2.6

1.7

2.1

2.0

1.7

1.9

1.9

1.9

2.1

2.2

2.2

2.2

2.1

2.2

2.1

Housing

2.7

2.8

2.9

2.3

2.0

1.7

1.6

1.7

1.8

1.9

1.9

1.9

1.9

1.8

1.7

1.7

Electricity

10.4

-1.3

1.3

-7.0

1.1

1.5

0.6

-0.7

-0.7

0.8

2.1

2.3

2.3

3.4

4.9

4.5

Natural Gas

35.1

17.4

-11.5

23.9

-11.7

-11.5

-9.7

-5.4

-3.1

0.6

5.7

2.4

4.4

2.5

12.1

5.6

Water & Sewer

3.0

3.3

4.1

3.7

3.8

3.7

3.5

3.5

3.4

3.3

3.3

3.1

3.0

2.9

2.9

2.9

Telephone

0.0

-0.8

-0.6

-1.4

0.3

-0.7

-0.9

-1.3

-0.7

-0.6

-0.8

-0.6

-0.9

-0.8

-0.9

-0.9

Transportation

0.3

1.7

1.8

2.3

1.7

1.3

1.6

1.5

1.8

1.6

1.7

1.8

1.7

1.7

1.6

1.6

Other Services

2.7

2.7

1.5

0.8

1.8

2.1

2.3

2.3

2.5

2.7

2.6

2.6

2.6

2.7

2.6

2.6

26

U.S. Forecast | September 2014

U . S . F orecast T ables

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

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

History 2007

2008

2009

2010

Forecast 2011

2012

2013

2014

2015

2016

2017

GDP

97.3

99.2 100.0 101.2 103.3 105.2 106.7

108.5 110.3 112.2 114.1

Consumption

97.1 100.1 100.0 101.7 104.1 106.1 107.3

108.9 110.3 111.8 113.5

Durables

103.8 101.8 100.0

Motor Vehicles

102.0

Furniture

101.1 100.4 100.0

98.6

97.7

96.5

94.7

99.7 100.0 105.7 108.9 110.4 111.1 95.8

94.2

94.0

92.1

92.6

91.7

90.5

89.3

111.1 112.9 114.1 114.9 89.0

88.2

87.6

86.7

Other Durables

95.7

98.9 100.0 100.4 103.6 104.1 103.9

102.6 103.4 104.1 104.9

Nondurables

97.2 102.7 100.0 103.1 109.2 111.8 112.0

113.3 113.7 114.6 115.8

Food

93.2

98.9 100.0 100.3 104.3 106.6 107.8

109.6 110.4 111.2 112.5

Clothing & Shoes

99.9

99.1 100.0

99.3 101.1 104.7 105.7

106.6 106.7 106.5 106.2

Gasoline & Oil

117.1 136.6 100.0 118.2 149.3 154.6 150.4

150.0 143.2 142.2 140.8

Fuel

107.7 146.0 100.0 117.0 148.8 150.7 149.0

152.3 148.6 149.5 150.3

Services

96.0

98.9 100.0 101.7 103.5 105.7 107.9

110.3 112.4 114.6 117.1

Housing

95.7

98.3 100.0 100.1 101.4 103.7 106.1

109.0 111.3 113.3 115.4

Electricity

91.2

97.1 100.0 100.2 101.8 101.8 103.9

107.1 106.3 106.8 109.8

Natural Gas

112.7 128.2 100.1

98.1

95.1

85.9

89.9

99.1

95.6

92.9

97.1

Water & Sewer

89.0

94.2 100.0 106.3 111.8 117.9 123.3

Telephone

97.2

98.7 100.0

Transportation

92.1

97.0 100.0 102.0 104.8 106.8 108.1

109.7 111.6 113.4 115.3

Other Services

93.0

97.3 100.0 103.0 105.6 108.3 111.3

113.8 115.8 118.7 121.8

99.3

97.5

97.7

97.2

127.6 132.3 136.8 140.9 96.8

96.2

95.4

Institute for Economic Competitiveness

94.7

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

1.9

1.8

1.4

1.7

1.7

1.8

1.7

Consumption

3.3

1.6

1.2

1.3

2.7

1.6

1.0

1.6

1.1

1.5

1.5

-2.0

-2.1

-0.9

-2.1

-0.5

-1.6

-2.0

-1.8

-0.9

-1.3

-1.4

0.1

-4.1

5.6

2.9

3.3

0.8

0.5

0.6

1.6

0.7

0.7

-1.6

0.3

-2.0

-4.4

-0.2

-0.5

-3.0

-2.5

-0.3

-0.9

-1.1

Other Durables

2.2

3.2

1.3

0.6

3.2

-0.6

-0.6

-0.3

0.7

0.7

0.7

Nondurables

6.3

1.2

2.8

2.2

5.9

1.9

-0.4

1.8

-0.4

1.2

1.1

Food

4.9

6.9

-1.8

1.3

5.1

1.2

0.8

2.1

0.3

1.1

1.0

Clothing & Shoes

-1.2

-0.9

1.5

-1.4

4.4

2.5

0.2

1.2

-0.3

-0.2

-0.3

Gasoline & Oil

30.9

4.8

26.8

13.4

20.4

4.6

-5.0

1.8

-7.4

1.4

-0.1

Fuel

27.7

22.4

-0.8

15.7

26.2

3.1

-1.2

1.4

-0.9

1.9

1.0

Services

3.4

2.5

1.1

1.5

2.1

2.1

2.1

2.2

1.9

2.1

2.1

Housing

3.1

2.5

0.9

0.3

1.9

2.3

2.5

2.7

1.8

1.9

1.8

Electricity

5.0

8.2

-0.4

0.5

2.4

-0.8

3.1

0.9

0.7

1.1

3.8

Natural Gas

3.4

19.1

-18.3

-1.2

-1.6

-4.3

2.5

16.2

-9.6

1.4

6.2

Water & Sewer

5.2

6.8

6.0

5.7

4.9

6.0

3.8

3.5

3.6

3.3

2.9

Telephone

1.3

2.0

0.6

-1.1

-1.5

0.1

-0.4

-0.7

-0.6

-0.7

-0.9

Transportation

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

1.7

1.7

Other Services

3.2

2.1 Forecast 2.6

2.6

Durables Motor Vehicles Furniture

Table 11. Personal Income and its Components

2007

4.7

2008

2.4

2009

History 2.8 2.7 2010

2011

2.2

2012

2.9

2013

1.9

2014

2015

2016

2017

Personal Income Billions Current Dollars Personal Income

11994.9 12429.6 12087.5 12429.4 13202.0 13887.7 14166.9

14748.4 15374.6 16133.2 17013.2

Wages & Salaries

7898.3

8078.2

7787.0

7961.5

8269.0

8606.5

8844.8

9253.5

9654.3 10099.2 10600.3

Other Labor Income

1041.4

1075.1

1077.5

1114.6

1142.0

1160.5

1193.9

1225.8

1265.8

1327.9

1404.2

941.1

979.5

937.6

986.7

1068.1

1187.9

1253.5

1316.1

1380.5

1438.2

1482.2

Nonfarm Income Farm Income

38.1

47.0

35.5

46.0

75.6

72.3

83.2

62.7

70.3

78.6

80.5

Rental Income

189.4

262.1

333.7

402.8

485.3

533.0

595.8

640.3

646.7

638.1

638.8

Dividends

816.6

805.5

553.8

544.6

682.3

832.7

824.6

855.1

906.4

964.2

972.1

Interest Income

1350.1

1361.6

1264.3

1195.1

1231.6

1255.9

1255.2

1273.1

1313.3

1452.2

1727.1

Transfer Payments

1722.8

1884.0

2140.2

2276.9

2307.9

2350.7

2414.6

2514.9

2635.1

2767.5

2888.5

499.7

516.9

506.3

514.7

423.9

437.3

578.4

614.4

651.1

692.0

729.9

Personal Income

5.3

3.6

-2.8

2.8

6.2

5.2

2.0

4.1

4.2

4.9

5.5

Wages & Salaries

5.3

2.3

-3.6

2.2

3.9

4.1

2.8

4.6

4.3

4.6

5.0

Other Labor Income

4.4

3.2

0.2

3.4

2.5

1.6

2.9

2.7

3.3

4.9

5.7

Personal Social Insurance Tax

Percent Change, Annual Rate

Nonfarm Income

-7.5

4.1

-4.2

5.3

8.2

11.2

5.5

5.0

4.9

4.2

3.1

Farm Income

5.9

24.9

-21.8

30.4

66.2

-4.2

15.1

-23.8

12.6

12.2

2.4

Rental Income

5.3

52.4

18.4

20.1

20.8

7.9

11.2

6.4

-1.5

-0.5

-0.2

10.0

-11.0

-33.4

23.8

23.5

48.6

-9.9

3.9

8.5

4.2

-0.5

9.9

-2.2

-9.2

-1.8

3.3

1.7

0.5

2.1

3.6

15.9

17.7

Transfer Payments

8.1

10.3

14.8

5.5

0.2

2.7

2.6

4.7

4.5

5.3

4.6

Personal Social Insurance Tax

4.9

2.6

-1.8

2.4

-13.5

5.0

45.0

6.7

5.7

6.5

5.3

Dividends Interest Income 28

U.S. Forecast | September 2014

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

Table 12. Personal Consumption Expenditures (Current Dollars)

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

Consumer Expenditures by Type Billions Current Dollars

Consumer spending on… all goods & services

11728.5 11867.8 11955.0 12079.6 12200.6 12299.2 12419.1 12529.3 12686.1 12829.9 12977.9 13146.4 13297.2 13460.3 13621.4 13778.4

durable goods

1262.3 1299.2 1308.1 1315.8 1335.8 1346.6 1354.8 1367.6 1386.9 1404.4 1419.4 1437.6 1458.3 1477.5 1496.8 1510.5

furniture and appliances

281.7

286.8

287.9

287.6

289.5

292.3

293.6

295.6

299.7

304.5

307.8

311.3

314.3

316.6

318.7

320.4

information processing equipment

101.2

103.1

103.5

104.4

106.3

107.4

108.0

108.9

109.8

110.9

112.0

113.4

114.7

115.9

117.1

118.3

motor vehicles and parts

426.9

447.2

452.4

456.5

465.7

469.5

473.4

480.6

490.1

496.4

501.9

507.9

516.9

525.6

534.3

537.7

other durable goods

139.4

140.6

140.5

141.6

143.3

143.9

144.3

144.9

145.8

146.7

147.4

148.7

149.9

150.8

151.9

153.0

nondurables clothing & shoes

2628.4 2664.1 2683.7 2710.4 2719.5 2730.2 2760.6 2774.0 2813.8 2838.0 2862.0 2893.7 2917.3 2948.4 2976.4 3004.4 357.8

364.8

366.1

367.9

368.8

371.7

375.4

378.4

384.5

388.8

393.1

397.3

400.7

406.1

410.2

32.8

27.0

25.4

27.0

27.3

26.8

27.0

26.6

27.2

27.2

27.1

27.3

27.2

27.4

27.5

27.6

gasoline & motor oil

374.3

382.5

379.9

382.8

369.2

359.1

364.9

356.1

367.2

366.4

363.7

366.2

363.1

365.5

366.4

367.7

food

879.4

885.7

894.7

904.8

913.7

921.7

931.1

939.8

946.9

954.3

963.3

972.4

981.4

990.4

other nondurable goods

984.0 1004.1 1017.6 1027.8 1040.6 1050.9 1062.2 1073.1 1087.9 1101.4

1114.9

1130.5

1144.9

1159.0

fuel oil & coal

413.1

998.8 1006.9 1173.5

1189.1

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

10844.3 10910.4 10952.5 11025.2 11107.5 11174.6 11242.1 11315.4 11409.5 11499.1 11591.3 11694.7 11786.6 11884.8 11981.3 12074.5

durable goods

1355.0 1401.0 1416.2 1427.6 1452.0 1467.3 1479.7 1498.0 1524.0 1548.6 1570.4 1595.7 1624.2 1651.1 1678.5 1699.8

furniture and appliances

312.7

322.1

325.4

325.5

327.6

331.0

332.8

335.6

341.1

347.3

352.0

356.9

361.2

364.9

368.2

371.3

information processing equipment

144.9

149.1

150.7

155.1

160.9

165.8

169.9

174.4

179.2

184.5

189.9

196.0

202.1

208.1

214.5

221.0

motor vehicles and parts

385.7

403.6

407.0

408.7

414.7

416.5

418.3

423.3

430.8

435.6

439.7

444.1

451.2

458.0

464.7

466.9

other durable goods

135.2

137.5

136.6

137.4

138.7

139.1

139.2

139.6

140.3

141.0

141.6

142.6

143.6

144.4

145.4

146.4

nondurables clothing & shoes

2341.9 2352.9 2358.8 2375.9 2390.5 2406.2 2424.1 2440.5 2461.3 2478.1 2495.9 2514.8 2530.9 2549.3 2566.5 2583.1 338.3

342.7

342.1

344.0

345.1

348.0

351.9

354.8

360.9

365.0

369.2

373.3

376.8

382.1

386.3

20.4

17.8

17.2

18.2

18.2

18.1

18.1

18.1

18.2

18.2

18.2

18.2

18.2

18.2

18.2

18.2

gasoline & motor oil

253.9

254.0

252.5

252.4

251.9

252.7

253.2

254.4

255.7

256.9

257.9

258.6

259.1

259.6

259.9

259.9

food

811.9

808.9

811.3

820.9

827.8

835.2

843.4

850.5

855.4

859.8

865.2

870.7

876.0

881.6

887.1

892.3

other nondurable goods

926.8

940.9

948.1

953.4

961.3

966.3

972.2

977.7

986.7

994.3 1001.8 1010.9 1018.3 1025.9 1033.8 1042.6

fuel oil & coal

389.5

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

1.2

2.4

1.5

2.7

3.0

2.4

2.4

2.6

3.3

3.1

3.2

3.6

3.1

3.3

3.2

3.1

durable goods

3.1

13.6

4.3

3.2

6.8

4.2

3.4

4.9

6.9

6.4

5.6

6.5

7.1

6.6

6.6

5.1

furniture and appliances

0.8

12.1

4.1

0.0

2.6

4.1

2.2

3.4

6.5

7.3

5.3

5.6

4.9

4.1

3.7

3.4

information processing equipment

8.7

11.5

4.3

11.7

15.0

12.0

9.9

10.7

10.9

11.9

11.6

12.9

12.3

12.0

12.3

12.1

motor vehicles and parts

5.4

18.7

3.3

1.7

5.9

1.7

1.7

4.8

7.1

4.5

3.7

4.1

6.3

6.1

5.9

1.9

other durable goods

2.6

6.9

-2.5

2.1

4.1

1.1

0.3

1.1

1.9

2.0

1.6

2.9

2.9

2.2

2.8

2.8

nondurables

0.0

1.9

1.0

2.9

2.4

2.6

3.0

2.7

3.4

2.7

2.9

3.0

2.6

2.9

2.7

2.6

clothing & shoes

-3.7

5.2

-0.7

2.2

1.3

3.4

4.4

3.3

6.9

4.5

4.6

4.5

3.7

5.6

4.4

3.3

fuel oil & coal

24.5

-51.2

-12.8

23.0

-0.9

-1.1

-0.4

0.2

1.5

0.3

0.2

0.3

0.7

0.0

0.3

-0.1

gasoline & motor oil food other nondurable goods

0.4

0.1

-2.4

-0.2

-0.8

1.3

0.8

1.9

2.0

1.8

1.7

1.0

0.8

0.7

0.4

0.0

-1.0

-1.5

1.2

4.8

3.4

3.6

4.0

3.4

2.3

2.1

2.5

2.5

2.4

2.6

2.5

2.4

1.4

6.2

3.1

2.2

3.4

2.1

2.4

2.3

3.7

3.1

3.0

3.7

2.9

3.0

3.1

3.4

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

9750.5 10013.6

9847.0 10202.2 10689.3 11083.1 11484.3

durable goods

1184.6

1102.3

1023.3

1070.7

1125.3

1192.1

1249.3

1296.3

1351.2

1412.1

1485.8

283.5

268.7

244.3

250.4

260.7

271.1

280.9

286.0

292.7

305.8

317.5

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

11907.7 12362.1 12910.1 13539.3

84.8

83.4

81.2

90.3

91.9

96.0

100.2

103.1

107.6

111.5

116.5

400.6

339.6

317.1

342.0

363.5

395.1

417.7

445.7

472.3

499.1

528.6

113.2

112.1

105.5

110.0

121.4

129.4

138.8

140.5

144.1

147.2

151.4

2176.9

2273.4

2175.1

2292.1

2471.1

2549.8

2601.9

2671.6

2746.1

2851.9

2961.6

323.7

319.5

306.5

320.6

338.9

353.7

360.7

364.2

373.6

390.9

407.5

25.6

30.8

24.3

26.2

29.2

26.8

26.6

28.1

26.9

27.2

27.4

gasoline & motor oil

319.9

358.3

260.2

307.3

380.4

388.6

381.8

379.9

362.3

365.9

365.7

food

737.3

772.9

770.0

788.9

829.1

854.9

872.2

891.2

926.6

959.2

994.4

other nondurable goods

770.4

791.9

814.2

849.2

893.5

925.7

960.7

1008.4

1056.7

1108.7

1166.6

nondurables clothing & shoes fuel oil & coal

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

10041.6 10007.2

9847.0 10036.3 10263.5 10449.7 10699.7 1151.5

1235.7

1319.0

10933.1 11209.9 11548.7 11931.8

1141.7

1083.2

1023.3

1085.7

1399.9

1474.2

1559.7

1663.4

280.4

267.7

244.3

261.5

276.6

288.4

305.1

321.4

331.7

349.3

366.4

71.9

76.9

81.2

97.2

108.0

121.7

137.3

149.9

167.8

187.4

211.4

392.8

340.8

317.1

323.4

333.8

357.9

376.0

401.2

418.2

437.6

460.2

119.5

113.4

105.5

108.9

115.1

122.4

132.0

136.7

139.2

141.3

145.0

2239.3

2214.7

2175.1

2223.5

2263.2

2280.1

2322.6

2357.4

2415.3

2487.5

2557.5

323.9

322.3

306.5

322.7

335.3

337.7

341.2

341.8

350.0

367.1

383.7

23.8

21.1

24.3

22.4

19.6

17.8

17.8

18.4

18.1

18.2

18.2

gasoline & motor oil

273.2

262.4

260.2

259.9

254.7

251.3

253.8

253.2

253.1

257.3

259.6

food

791.3

781.9

770.0

786.5

795.1

801.6

809.4

813.3

839.2

862.8

884.3

other nondurable goods

825.2

828.3

814.2

833.0

863.2

879.7

909.9

942.3

969.4

998.4

1030.1

2.6

3.4

3.2

nondurables clothing & shoes fuel oil & coal

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

1.4

-1.9

durable goods

4.1

-12.4

3.0

9.3

4.9

7.5

5.9

6.3

4.9

6.5

6.5

furniture and appliances

0.9

-9.1

-2.0

8.3

5.8

3.0

7.1

4.4

3.1

6.3

4.0

information processing equipment

-0.2

3.1

1.5

2.0

2.8

2.0

20.4

0.4

12.9

16.8

13.9

12.9

10.2

9.4

12.5

12.4

12.8

motor vehicles and parts

0.9

-23.0

7.9

11.0

1.5

7.7

3.1

7.6

3.6

4.9

5.1

other durable goods

3.3

-12.3

0.6

5.5

3.2

10.8

5.4

2.3

1.7

2.1

2.7

nondurables

0.1

-2.6

0.2

3.3

0.4

1.0

2.5

1.5

2.7

3.0

2.7

clothing & shoes

1.0

-3.2

-1.0

7.6

1.1

0.6

1.4

0.8

3.2

5.2

4.3

fuel oil & coal

-5.3

7.9

7.5

-7.6

-12.6

3.1

11.9

-0.6

-0.5

0.6

0.2

gasoline & motor oil

-3.3

-3.9

-1.1

2.2

-3.1

-1.4

2.0

-0.5

0.8

1.6

0.5

food

0.2

-3.7

2.1

2.1

-0.4

1.6

1.2

0.9

3.6

2.4

2.5

other nondurable goods

1.2

-0.6

-0.6

3.6

2.8

1.9

4.2

3.3

2.6

3.4

3.1

30

U.S. Forecast | September 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 1812.1 1972.0 2054.0

2201.9 2325.6 2459.4 2632.5

Producers Dur. Equipment

885.8

825.1

644.3

731.8

838.2

904.1

949.7

Nonresidential Structures

496.9

552.4

438.2

362.0

381.6

446.9

457.2

503.4

519.6

560.5

626.0

Non-Farm Buildings

293.9

317.5

249.1

173.7

170.2

191.6

201.7

219.3

243.6

286.0

330.1

Commercial

150.7

148.9

95.4

64.7

66.8

75.6

83.4

94.2

104.1

126.9

152.8

Industrial Other Buildings Utilities Mines & Wells

1015.9 1084.7 1142.5 1212.0

40.2

52.8

56.3

39.8

39.0

45.8

46.3

51.7

58.1

62.0

66.9

103.0

115.8

97.4

69.2

64.5

70.2

72.0

73.5

81.3

97.1

110.4

89.6

104.6

104.3

93.3

90.7

112.2

105.6

122.1

111.1

109.4

116.9

102.2

117.0

75.0

86.2

112.3

133.1

139.7

152.4

154.2

153.3

166.3

Billions 2005 Dollars Business Fixed Investment

1948.4 1934.5 1633.5 1673.8 1802.3 1931.8 1990.6

2106.8 2205.2 2312.6 2451.0

Producers Dur. Equipment

898.3

836.1

644.3

746.7

847.9

905.6

947.2

Nonresidential Structures

509.0

540.2

438.2

366.3

374.7

423.8

421.7

452.9

456.6

481.1

525.8

Non-Farm Buildings

305.2

317.9

249.1

179.3

172.3

188.8

194.0

204.3

221.8

254.2

286.0

Commercial

159.9

151.7

95.4

66.6

67.3

73.9

79.8

87.8

95.6

114.6

135.1

43.1

53.8

56.3

40.8

39.1

44.9

44.3

47.6

51.1

52.1

53.9

102.6

112.8

97.4

71.9

65.9

70.0

69.8

68.7

75.0

87.8

97.7

Utilities

94.3

103.6

104.3

89.8

82.8

99.1

92.2

104.7

92.5

88.9

92.7

Mines & Wells

97.9

105.0

75.0

87.8

110.9

124.5

125.2

134.0

133.5

130.3

140.3

Industrial Other Buildings

1008.0 1074.3 1130.6 1194.6

Annual Growth Rate Business Fixed Investment

8.3

-5.6

-14.2

8.6

10.9

5.1

6.1

6.6

5.0

6.5

6.7

Producers Dur. Equipment

3.1

-15.9

-11.4

20.2

14.4

4.5

6.3

6.8

5.8

5.8

5.6

Nonresidential Structures

21.8

4.7

-32.2

-0.6

15.3

8.1

8.6

6.4

3.8

10.0

11.3

Non-Farm Buildings

22.5

-0.4

-34.0

-21.1

14.7

7.3

9.1

7.9

12.0

19.7

12.1

Commercial

17.3

-11.8

-44.7

-16.8

14.7

9.9

17.4

7.5

13.8

25.2

15.6

Industrial

48.0

22.5

-11.9

-28.8

37.4

8.1

1.2

17.6

5.4

9.9

7.4

Other Buildings

22.6

6.7

-29.7

-19.5

3.6

4.5

5.7

3.3

15.0

19.1

10.5

Utilities

51.4

2.5

-4.1

19.0

2.4

18.4

15.3

1.4

-8.2

1.4

9.3

1.8

24.4

-42.8

53.6

36.6

2.7

8.2

10.7

0.4

0.3

11.7

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

2503.7

2227.8

2391.8

2519.5

2684.1

3113.0

3310.1

3470.6

3595.3

3699.8

Personal Tax and Nontax Receipts

1164.4

1101.7

857.2

893.8

1076.6

1149.0

1286.8

1377.3

1493.5

1546.9

1607.6

362.8

233.6

200.4

298.7

299.4

369.5

384.9

495.7

491.6

491.2

448.2

94.6

94.0

91.4

96.8

108.6

115.0

120.9

134.3

140.2

148.9

162.1

947.3

974.4

950.8

970.9

904.0

938.1

1092.3

1155.2

1219.6

1292.1

1362.7

Expenditures

2926.4

3137.7

3476.6

3720.5

3763.7

3763.2

3762.1

3887.3

4055.8

4215.3

4384.0

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

1303.5

1291.4

1231.5

1215.1

1226.0

1226.7

1236.4

National Defense

678.7

754.1

788.3

832.8

837.0

818.0

769.9

757.1

764.5

762.0

767.6

Other

371.1

401.5

429.4

471.1

466.5

473.4

461.6

458.0

461.5

464.7

468.8

Transfer Payments

1672.4

1820.3

2132.4

2281.7

2272.4

2278.3

2322.0

2406.9

2537.0

2670.6

2783.5

To Persons

1258.9

1391.9

1608.9

1710.1

1727.3

1767.0

1806.8

1861.2

1938.4

2028.4

2116.3

41.3

41.9

49.4

49.7

55.6

48.8

46.4

36.6

53.1

53.9

55.1

Grants in Aid to State & Local Gov't

To Foreigners

359.0

371.0

458.1

505.3

472.5

444.4

450.0

490.1

526.0

568.4

591.7

Net Interest

386.1

368.4

330.8

351.0

398.0

401.5

393.0

436.9

467.3

488.8

530.4

48.7

56.2

57.4

66.7

66.7

75.0

73.6

70.7

67.5

65.9

Surplus (+) or Deficit (-)

Subsidies less Surplus of Gov't Entities

-265.6

45.4

-634.0 -1248.8

-1328.7

-1244.2

-1079.1

-649.1

-577.2

-585.2

-620.0

-684.2

Receipts

1900.6

1909.1

1919.2

1998.5

2030.5

2061.3

2125.6

2193.8

2300.1

2422.4

2530.7

Personal Tax/Nontax Receipts

1321.3

1328.9

1268.1

1305.7

1368.3

1424.8

1471.8

1493.2

1550.4

1615.6

1685.1

323.5

333.5

287.8

297.6

324.1

354.7

375.0

368.3

384.5

399.0

417.8

State and Local Government Receipts and Expenditures

Corporate Profits Indirect Business Tax and Nontax Accruals

57.9

47.4

45.6

47.7

50.2

53.2

55.3

58.9

59.7

59.0

57.0

Contributions for Social Insurance

18.9

18.7

18.6

18.2

18.2

17.7

17.7

17.7

18.2

19.1

20.0

359.0

371.0

458.1

505.3

472.5

444.4

450.0

490.1

526.0

568.4

591.7

2427.85 2509.73 2600.91

2697.4

Federal Grants-In-Aid Expenditures Purchases Goods & Services

1973.33 2074.15 2191.15 2235.85 2246.40 2293.78 2350.75 1752.2

1847.6

1871.4

1870.2

1865.3

1877.8

1912.4

1957.0

2019.3

2082.8

2160.6

460.9

477.8

566.1

612.0

582.2

556.3

570.8

615.7

661.4

714.4

748.7

Interest Received

17.3

36.0

114.3

123.0

125.9

143.7

137.0

132.7

130.6

129.5

130.5

Net Subsidies

25.6

25.0

22.8

21.4

17.9

16.6

14.8

14.6

13.9

13.1

12.3

2.2

2.6

2.2

2.3

2.7

3.4

3.7

4.1

4.2

4.2

4.3

-72.7

-165.1

-271.9

-237.3

-215.9

-232.6

-225.2

-234.1

-209.6

-178.5

-166.7

Transfer Payments

Dividends Received Surplus (+) or Deficit (-)

32

U.S. Forecast | September 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

-718.6

-723.1

-395.5

-512.7

-580.0

-568.3

-508.2

-518.5

-489.6

-521.6

-564.0

Current Account

-718.6

-686.6

-380.8

-443.9

-459.3

-460.8

-400.3

-417.7

-378.7

-423.7

-499.4

Exports -Goods & Services

1664.6

1841.9

1587.7

1852.3

2106.4

2194.2

2262.2

2340.5

2440.5

2538.8

2674.9

Merchandise Balance

-822.7

-834.0

-510.5

-649.1

-741.2

-742.7

-702.3

-723.1

-708.7

-746.4

-794.9

Food, Feed & Beverage

84.26

108.35

93.91

107.72

126.25

132.90

136.18

139.92

141.28

142.95

147.2

Industrial Supplies Excl Petroleum

316.3

386.9

293.5

388.6

485.3

482.4

492.1

513.3

552.4

592.6

629.0

Motor Vehicles & Parts

121.3

121.5

81.7

112.0

133.0

146.1

152.6

161.6

174.8

184.8

198.5

Capital Goods, Excl. MVP

433.0

457.7

391.5

447.8

494.2

527.5

534.6

544.8

546.1

553.8

581.0

Computer Equipment

45.6

43.9

37.7

43.8

48.5

49.3

48.1

48.9

49.5

54.1

60.7

Other

314.5

339.8

279.0

332.1

365.4

383.9

381.5

384.2

377.7

383.0

405.5

Consumer Goods, Excl. MVP

145.9

161.2

149.3

164.9

174.7

181.0

188.4

198.2

205.3

200.0

200.4

65.7

63.3

55.2

58.6

53.4

57.2

59.1

61.9

62.1

63.2

65.6

498.2

543.1

522.6

572.7

639.5

667.0

699.4

720.7

758.5

801.6

853.2

Other Consumer Services

Billions of Dollars Imports -Goods & Services

2383.2

2565.0

1983.2

2365.0

2686.4

2762.5

2770.4

2859.0

2930.1

3060.4

3238.8

Merchandise

2003.8

2149.4

1590.3

1949.8

2244.7

2306.0

2302.3

2368.9

2412.1

2504.5

2636.9

83.0

90.4

82.9

92.5

108.3

111.1

116.0

125.0

123.4

128.3

134.1

Petroleum & Products

346.7

476.1

267.7

353.6

462.1

434.3

387.6

362.9

361.8

343.6

315.9

Industrial Supplies Excl Petroleum

297.9

318.7

196.6

249.4

292.7

288.9

291.2

309.8

318.0

334.5

354.0

Motor Vehicles & Parts

258.5

233.2

159.2

225.6

255.2

298.5

309.6

326.6

322.8

327.6

351.6

Capital Goods, Excl. MVP

449.1

458.7

374.1

450.4

513.4

551.8

557.8

587.7

610.6

653.1

704.6

Computer Equipment

105.5

101.2

94.2

117.3

119.7

122.3

121.2

118.6

120.8

122.6

126.7

Other

309.2

322.0

249.2

301.9

358.2

389.4

389.7

417.8

439.7

480.3

527.5

Consumer Goods, Excl. MVP

479.8

485.7

429.9

485.1

515.9

518.8

533.9

547.8

555.6

583.2

628.2

Food, Feed & Beverage

Other Consumer

88.8

86.5

80.0

93.1

97.1

102.6

106.1

109.2

119.8

134.2

148.4

379.4

415.6

392.9

415.2

441.6

456.4

468.1

490.1

518.1

555.9

601.9

Net Exports Goods & Services

-712.6

-557.8

-395.4

-458.8

-459.4

-452.5

-420.5

-442.5

-474.0

-544.5

-604.2

Exports G & S

1646.4

1740.8

1587.7

1776.6

1898.3

1960.1

2019.8

2072.0

2133.0

2192.3

2282.9

Imports G & S

2359.0

2298.6

1983.2

2235.4

2357.7

2412.6

2440.3

2514.5

2607.0

2736.8

2887.1

Exports G & S

14.4

0.0

4.1

15.3

8.7

2.8

3.5

4.6

5.8

Services

Billions 2005 Dollars

Exports & Imports % Change 3.6

4.9

Imports G & S

8.9

-1.8

0.9

15.0

10.9

0.3

1.5

3.1

3.4

5.0

6.3

Real Exports G & S

9.9

-2.0

3.0

10.1

4.2

2.4

5.1

1.5

2.3

3.3

4.5

Real Imports G & S

0.9

-5.7

-3.6

12.2

3.5

0.4

2.5

2.8

5.1

5.0

5.7

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