U.S. Forecast February 2007

U.S. Forecast Februar y 2007

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

Message From D ea n T h o ma s L . K e o n

A b o ut U n i v e r s it y o f C e n t r al F l o r ida ( U C F ) T h e Un i ve r s i t y o f C e n t r a l Fl o r i d a i s a public, multi-campus, metropolitan r e s e a r c h u n i v e r s i t y, d e d i c a t e d t o

Happy New Year! This is our first U.S. Economic Forecast for 2007. Employment rates, energy prices, inflation and Gross Domestic Product are just a sample of the national forecasts that are addressed in this publication. As we head into the first quarter, this report indicates that we do not anticipate much of a change in the economy from the end of last year.

serving its surrounding communities with their diverse and expanding populations, technological corridors, and international partners. The mission of the university is to offer high-quality undergraduate and graduate education, student development, and continuing education; to conduct research and creative activities; and to provide services that enhance the intellectual, cultural, environmental, and economic development of the metropolitan region, address national and international issues in key areas, establish UCF as a major presence, and contribute to the global c o m m u n i t y.

A b o ut t h e C o lle g e o f B u s i n e s s A dmi n i s t r ati o n The College of Business Administration a d v a n c e s t h e u n i v e r s i t y ’s m i s s i o n

Another area that remains the same since last year is the great research being conducted by our Institute for Economic Competitiveness. We began producing this forecast last quarter and have received tremendous feedback from both the academic and business communities. In fact, the Institute is receiving national recognition for its economic research. As mentioned in the last issue, information from the forecast is included in exclusive panels including the USA Today Sur vey of Top Economists, Livingston Sur vey, Sur vey of Professional Forecasters, Reuters and Bloomberg monthly sur veys. This places UCF in an elite group of just five business schools in the nation that are included in these sur veys.

I am proud of the research being conducted by both the Institute as well as the UCF College of Business Administration. Our faculty and students are involved in a variety of business-related research projects and many faculty members ser ve as editors and contributors of major academic journals.

and goals in providing intellectual leadership through research, teaching, and service. The college is striving to enhance graduate programs, while maintaining the strong undergraduate base. The college delivers research and quality business education programs at the undergraduate, masters, doctoral, and executive levels to citizens of the state of Florida and to select clientele n a t i o n a l l y a n d i n t e r n a t i o n a l l y.

Please take a moment to read this economic forecast report. It’s a fine example of our research efforts.

n Thomas L . Keo Sincerely,

Thomas L. Keon Dean

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

F o r eca s t f o r t h e N at i o n Forecast 2006 - 2009 Febr uar y 2007 Repor t

Published quarterly by the Institute for Economic Competitiveness, College of Business Administration, University of Central Florida Copyright Š 2007 Institute for Economic Competitiveness. All rights reserved.

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 1 Q 2 0 0 7 F OR E C A ST

H I GHL I GHTS

In this quarter’s U.S. forecast (not the same old song and dance) from the University of Central Florida’s Institute for Economic Competitiveness: •

Those expecting the Federal Reserve to cut short-term interest rates may find themselves singing a Bob Marley tune: Waiting in Vain.

•

What do Bigfoot, the Loch Ness Monster, the housing bubble, and Kevin Costner have in common?

•

2007 begins not with a bang but not exactly with a whimper.

Economic growth in the first half of the year will be tepid, but look for the economy to accelerate in the 2nd half of the year.

•

Energy prices continue to march to the beat of a different drummer.

The theme song for this sector comes courtesy of The Wiggles.

•

The U.S economy will slow through the 2nd quarter of 2007 before accelerating back to 3% growth in 2008.

•

Core inflation remains above the Fed’s comfort zone of 1%-2%, while the rate of overall CPI inflation falls below 2% in 2008.

•

The housing soufflé continues to cool: Housing starts decline through 2007 as mortgage rates slowly creep to 7.14% in 2009.

Excess supply of new and existing homes in many markets will put downward pressure on prices.

•

Unemployment rates end their three-year slide and rise slightly in 2007, but they will remain below 5% through 2009. Payroll job growth slows to 1% in 2007 before recovering to 1.7% in 2009.

•

The dollar will continue to depreciate against major trading partners through 2008. The trade deficit will experience a modest improvement over the same period.

U . S . F o r eca s t

Ti m e f o r an E c o n o m ic V a l iu m ?

coined by The New York Times reporter David Leonhardt, is the probability of a decline in real GDP in the quarter after a survey is taken. In the survey taken in the 1st quarter of 2007, the index stands at 14.98%, which means that forecasters believe there is a 14.98% chance that real GDP will decline in the 4th quarter of 2006.

Prior to each of the previous six recessions, the anxious index showed steep increases and surpassed the 20% level. The graph below illustrates the historical values of the anxious index, with the gray bars indicating periods of recession. The current levels of the anxious index suggest that there is some reason to be alarmed about the possibility of an imminent decline in GDP. As the forecast horizon is lengthened, however, economists’ estimates of the probability of a decline in real GDP increase to 18.82% for the 4th quarter of 2007.

Does the cooling of the once red-hot housing market, coupled with an economy that is losing momentum and a slower than expected holiday shopping season, have economic forecasters concerned that a recession is just around the corner? The most recent release (4th quarter 2006) of the Survey of Professional Forecasters by the Federal Reserve Bank of Philadelphia revealed that the 45 forecasters surveyed for this publication, including the author, are increasingly concerned that a decline in real GDP may occur in the 1st quarter of the new year.

The survey asks panelists to estimate the probability that real GDP will decline in the quarter in which the survey is taken and the probability of a decline in each of the following four quarters. The anxious index, a term

FIGURE 1

The Anxious Index Probability of Decline in Real GDP in the Following Quarter Quarterly, 1968:Q4 to 2006:Q4 100 90

70 60 50 40 30 20

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0

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10

1968

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80

Survey Date

Institute for Economic Competitiveness

U . S . F o r eca s t

Will the Fed Cut I n t e r e s t Ra t e s A n y Ti m e S o o n ?

“I Don’t Want to Wait in Vain…”

Waiting in Vain - Bob Marley

As the 4th quarter of 2006 came to a close, many analysts predicted that the Fed would cut interest rates. The cooling of the housing soufflé was at the heart of this contention. The economy was showing clear signs of slowing, and the concern is that the worst was yet to come.

Bottom lines in Detroit were/are hemorrhaging red, as higher energy costs made the highmargin pick-up truck and SUV segment an albatross around the Big Three’s collective necks.

Manufacturing, in general, continues to suffer, and the ISM manufacturing diffusion index has fallen below the 50 level, which marks the cutoff between growth and contraction. Energy prices have retreated from their highs, and this shift in energy prices was a dangerous accelerant for inflation with the potential to spread beyond the CPI and into the core CPI. The decline in prices diminishes this risk. These factors point the Fed in a direction toward a rate cut.

Are those expecting a cut going to be waiting in vain? The Fed will almost certainly keep interest rates unchanged at the Federal Open Market Committee (FOMC) meeting at the end of January and probably at the March meeting as well. What will happen beyond this point?

We are calling for two 25 basis point cuts in the federal funds rate over the course of 2007, probably not until the end of the 2nd quarter and during the 3rd quarter. The Fed remains vigilant about containing the threat of inflation, and well they should. Containing inflation is the central bank’s primary role and the single best thing it can do to promote long-run economic growth.

U.S. Forecast

The economy continues to throw off mixed signals. Housing is clearly in a contraction period, and other areas mentioned above indicate cooling as well. The Fed continues to point toward tight conditions in the labor market and high-capacity utilization rate in the economy.

One member of the FOMC committee, Jeffrey Lacker, preferred that the Fed actually raise the federal funds rate 25 basis points, and other voices from within the system have been hawkish toward fighting inflation. Do these central bankers doth protest too much? Are these real concerns or simply an attempt to talk inflation down from the ledge?

Risks remain on both the inflation side and the recession side, and, in light of these competing threats, it is likely that the Fed will continue to hold rates steady, and I believe that there is a growing chance that rates could remain unchanged for all of 2007. Both the Fed and the public will have to wait and see what the data reveals over the course of the year.

T h e N ew Yea r B e g in s , B u t N o t wi t h a B an g

“So this is the New Year and I Don’t feel Any Different” The New Year - Death Cab for Cutie

2006 appears to have ended on a stronger note than we had forecasted in October. Our forecast for real GDP growth for the quarter has been raised from 1.9% to 2.3%, largely on the backs of better-than-anticipated consumer spending. A drop in energy prices heading into the 4th quarter appears to have taken a little bit of the “bah humbug” out of the holiday shopping season.

Heading into 2007, we are not anticipating much of a change in the economy. The 1st and 4th quarters will blend together with no real economic distinction between the years as 2006

U . S . F o r eca s t

ends and 2007 begins. Growth in the first half of 2007 will be tepid, with real GDP growth forecast to be 2.0% and 2.3% in the first two quarters of the year. The second half of the year should witness economic growth, which will accelerate into 2008 when growth will resume a pace in excess of 3%. The multi-year housing “bender” that the economy went on is exacting its toll. This particular hangover will not be cured by a couple of ibuprofen tablets. This period of excess is probably better compared to overeating during the holidays. Those extra pounds that are so easily added to our waistlines do not disappear overnight. It takes months of exercise and diet to undo the damage done by all that eating.

As many of us know, working off the weight is exponentially more difficult than putting it on, and the economic poundage the housing market provided will be both difficult and time consuming to lose. However, after a year of pain and sweating in 2007, the worst will be over, and 2008 will witness a fitter, leaner economy ready to resume a rigorous regimen of growth.

E ne r g y P r ice s

“Well We’re Gonna go Up, Then Go Down Get Back Up and Turn Around”

Can Your Point Your Fingers and Do the Twist?

- The Wiggles

The volatility of energy prices during the past fifteen months has been both a blessing and a curse for the economy. Although prices were rising before the hurricanes hit in September of 2005, it was after hurricanes Katrina and Rita that the economy took a seat on the energy roller coaster. Just like a ride at your favorite amusement park, there is a feeling of fear and anxiety as you climb the hill that is followed

by laughter and exhilaration as you speed down the opposite side and race toward the next big dip. Energy prices have given us the economic equivalent of this theme-park staple.

As we watch gasoline prices climb on our daily commutes, dread builds as we anticipate the next time we have to fill up that SUV. There are very few commodities that we purchase where we are reminded on a daily basis of how prices are changing. Trips to the grocery store occur a few times each month, and, in between trips, the price of a loaf of bread fades from our consciousness. This is not the case with gasoline. There is virtually a filling station or convenience store on every corner, giving us a constant reminder of energy prices several times a day. Consequently, I believe these prices have an impact on the consumer psyche far greater than the price of any other single good or service.

Retail spending during the holiday shopping seasons the past two years gives this point some credence. In the shopping season following these hurricanes when energy prices hit levels that, at that time, were new records, consumer spending ground to a near standstill. A significant decline in energy prices preceded this year’s shopping season, and early indicators are that the 2006 holiday shopping season, while not record breaking, was much improved over its predecessor. We are predicting that total consumption spending will show 4.0% growth in the 4th quarter of 2006 (compared to 0.8% growth in the 4th quarter of 2005).

At the time of this forecast’s release, energy prices are in the midst of another downward spiral that some oil analysts believe could test the $50-per-barrel floor. A fall in energy prices will free up disposable income for consumers and, in some sense, help bolster consumer confidence.

The volatility of energy prices, however, has made consumers wary. If this price drop proves to be as short-lived as the previous two, consumer confidence may ultimately fall, causing consumers to further tighten their belts and reduce spending.

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U . S . F o r eca s t

I nve s t m en t After five years (2002-2006) of robust, doubledigit growth, corporate bottom lines will not be so padded going forward. During this remarkable run, after-tax profits grew at rates in excess of 15% in each of the past five years, with 2005 profits growing at an incredible 32.6%. The availability of retained earnings, from several years of high profitability, and low interest rates spurred firms to increase investment spending, albeit with a lag from the time profits began their ascent. Nonresidential fixed investment growth jumped from 3.3% in 2005 to 10.4% in 2006 after two years of declining investment spending.

Rising interest rates, slowing profit growth, and increased economic uncertainty will cause a deceleration in the growth rate of investment spending over the forecast horizon, but not a decline that will have a profoundly negative impact on growth over this forecast horizon.

Transportation equipment growth will accelerate over the three-year forecast horizon.

Boeing continues to reap the windfalls of Airbus’ failures. Customers continue to abandon ship from Airbus, as strategic blunders and production delays have given Boeing a clear advantage in the battle of these two titanic aircraft manufacturers.

Residential fixed-investment growth, on the other hand, will turn negative in 2006 and continue to contract through 2008. 2007 will bring with it a double-digit decline, as developers cut back on projects in the wake of high inventories and moderated demand. In 2009, the housing sector should be out of the doldrums, and residential fixed investment should return to a sustainable growth rate of 3.9%.

G o ve r n m en t Spen d in g The 2006 mid-term elections resulted in Republicans losing both the House and the Senate to the Democrats. The results of the election may be good or bad news to you, depending on your political leaning. However, it is clearly good news for those that wish to

U.S. Forecast

see federal spending curtailed. With different parties in control of the legislative and executive branches of government, we have a system of checks and balances on spending that does not exist when one party runs both branches.

Consequently, we expect that federal government spending growth will continue to fall through the end of our forecast horizon.

As a flood of presidential hopefuls announce their intentions to run, the one issue that, with no uncertainty, has the potential to do the most harm to the country’s economy has been missing from these announcements. I don’t recall a single politician saying that he or she would fix the problem of Social Security, Medicare, and Medicaid.

As I wrote in the October 2006 forecast, “The myopia that afflicts most politicians, an inability to see beyond the next election, continues to keep the entitlements issue, which may be the greatest single threat to the economic future of the United States, off of the legislative table.”

Sorry to quote myself, but Federal Reserve Chairman Ben Bernanke has recently added his voice, as did his predecessor Alan Greenspan, to the choir that is trying to get policy makers’ heads out of the sand to deal with this problem.

Bernanke told the Senate Budget Committee, “If early and meaningful action is not taken, the U.S. economy could be seriously weakened, with future generations bearing much of the cost.”

Let me translate Bernanke’s comment for you. “If Baby Boomers do not accept higher retirement ages and cuts in benefits, with elimination of benefits for some, they are screwing over their children and grandchildren.”

We can get all riled up and foam at the mouth about climate change on a planet that is 4.5 billion years old based on 100 years’ worth of data, but why can’t we do anything to stop the Social Security train as it speeds toward certain doom?

We expect government spending growth to slow to less than 1% from 2007-2009. The eventual reduction of military expenditures in

U . S . F o r eca s t

Iraq will help slow spending growth. However, the slowing economy will also lead to lower tax revenues, and these two factors taken together will result in a deficit that will worsen slightly during the 2007 fiscal year before improving slightly during the 2008 and 2009 fiscal years.

State and local government spending will expand at a decreasing rate from 2% growth in 2006 to 1.7% growth in 2009. Many states are still playing catch-up after three years of sub 1% growth in spending and a backlog of projects extended by infrastructure needs, stemming from the housing boom. The slowing is due, in part, to a decline in the revenue windfalls that this boom provided via impact fees, real estate, and sales taxes.

Net Exports Large current account deficits, swelled in recent quarters by rising oil prices, will continue to put pressure on the U.S. dollar to depreciate against its major trading partners. The pace of this depreciation moderated in 2005 and so far in 2006; however, the depreciation of the dollar will gain momentum in 2007 and 2008.

Net exports will finally begin to respond to the multiyear slide in the value of the dollar and the slowing of economic growth in the U.S. in 2007, and the trade deficit will continue to improve through 2009, as the trade balance hits the upward portion of the “J-curve.” Net exports respond with a lag to a depreciation of the domestic currency and can worsen in response to depreciation initially, the downward portion of the “J”. The current account, however, will improve slightly in 2007 and 2008 before worsening in 2009 due, in part, to debt service on the increasing amount U.S. debt held by foreigners.

While the trade deficit, particularly the U.S. trade deficit with China, is a major concern among politicians, China seems to only be willing to take baby steps toward revaluation of the renminbi. Since China moved from a

policy of fixing the value of its currency against the U.S. dollar to fixing it against a basket of currencies, the Chinese currency has appreciated 6% against the dollar. It will likely appreciate further this year but still remain significantly undervalued against the dollar. This is not entirely a bad thing. The flip side to trade deficits is a surplus in the capital account, which reflects U.S. borrowing from foreigners. The willingness of foreigners (China and Japan in particular) to purchase U.S. Treasury bonds in record amounts has kept interest rates in the United States much lower than they otherwise would have been.

Without these purchases, both residential and nonresidential investment would have suffered from the crowding out that was a major issue during the Reagan era. Yields on U.S. Treasury bonds have remained low, and this has prevented the housing slowdown from becoming a housing meltdown.

I nf l a t i o n Inflation is down but not out. Even after two years of tightening by the Fed, it still remains a concern of the central bank. Dropping energy prices have helped diminish the probability that the economy might reach a flash point with price inflation further infusing itself into the public’s expectations, and this is a good thing. A slowing economy is also providing a release valve through which pricing pressure can vent. It is, however, far too early to declare that inflation is dead.

Labor markets remain very tight, and the unemployment rate is at levels that, prior to 2000, have not been seen since the 1970s. Labor costs are being pushed upward, and this shift, coupled with evidence of slowing productivity growth, again raises the specter of a wage-price inflation spiral. Productivity growth in recent years has been a heavy-duty shock absorber that allowed firms to pay higher wages to workers without raising prices for consumers. As productivity rises, each worker can produce more output and revenue, which can then be used to meet increases in labor costs.

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U . S . F o r eca s t

Inflationary expectations, a key gauge of how deeply rooted the inflation problem may be, continue to remain contained. The spread between the 10-year Treasury bond and the 10 inflation indexed Treasury bond has fallen in recent months. This spread can be thought as a gauge of inflationary expectations. One potential caveat here is the official reserve purchases of Treasury bonds by foreign central banks. These actions are primarily for the purpose of exchange rate management and, as much as they have lowered the yield on 10-year bonds, they may be distorting this spread. However, survey data on inflationary expectations does indicate that expectations remain contained. The Philadelphia Federal Reserve Banks Survey of Professional Forecasters shows that the average rate of CPI inflation is 2.5% for the next 10 years.

Looking ahead, we expect CPI inflation to moderate over the forecast horizon. Consumer price inflation should fall from the 2006 level to around 2% in 2007-2009. Core inflation will decline as well, but not as far as the overall CPI. We anticipate core CPI inflation to decline from 2.9% in 2006 to 2.2% in 2009. This level of core inflation is above the reported 1%-2% comfort range for the Federal Reserve, but if it does not begin to rise any further above these levels, the Fed may have to begrudgingly accept them.

U ne m p l o y m en t Unemployment rates have been steadily falling since 2003, a trend that will end in 2007. The slight uptick in unemployment is no cause for alarm, and by 2009, unemployment rates will fall below the 2006 levels. Proposed increases of minimum wages will have no perceivable impact on unemployment rates. Claims that increases in minimum wages lead to higher unemployment for unskilled workers hold true only if the new wage represents a binding price floor. When market wage rates are already at or above the proposed minimum wage levels, there is no effect on this market. In this tight labor market, this is clearly the case. Liberals may be left with a warm

U.S. Forecast

feeling over having done something good, but the tail is not wagging the dog in this instance.

The market raised the minimum wage, not legislation.

The unemployment rate will rise through 2007 and hit 5.0% before the year ends. In the second quarter of 2008, the unemployment rate will begin to decline once again, and we are forecasting it to fall to 4.3% in the 4th quarter of 2009. The decline in the unemployment rate will be driven by strong GDP growth in 2008 and 2009. The slight increase in unemployment will be fueled by job losses in the manufacturing and information sectors. Job losses in construction will also add to the unemployment rate, but losses in that sector should only impact 2007 rates. Manufacturing and the information sector’s losses are more structural in nature.

Manufacturing will remain a victim of global competition, and the information sector is still in a period of consolidation. Companies continue to adjust to the changing landscape of the digital age, where publishers, newspapers, and magazines still grapple with their role in the new economy.

H o u s in g Ma r k e t

“It’s the End of the World as We Know it, and I Feel Fine.”

It’s the End of the World As We Know It (And I Feel Fine) - R.E.M.

Who doesn’t enjoy a scary story or a story about the apocalypse? From ancient myths to countless Hollywood horror films to campfire tales to the Loch Ness monster, people love a frightful tale of gloom and doom. Perhaps that is part of the reason that we were deluged by the myth of the housing bubble during the past several years.

U . S . F o r eca s t

Reality has set in; the housing bubble proliferation of adjustable rate mortgages as a way metaphor has proven incorrect, and the housing for consumers to purchase houses left many at soufflé metaphor, discussed in our previous risk of facing sharply higher mortgage payments forecast book (U.S. Forecast, October 2006, if mortgage rates had surged upward from their Institute for Economic Competitiveness), appears record lows. to have been a more accurate prediction of what Despite the tightening of monetary policy and is currently transpiring in the economy. We no continued federal deficits, interest rates have not longer see articles in the media claiming that risen to levels witnessed during the Reagan era. some housing markets in the U.S. were 60%, This, as we discussed in the previous forecast, 70%, or even 80% overvalued, as was the case is due in large part to foreign purchases, most during the peak of housing bubble hysteria. notably those of Asian countries, of U.S. treasury (From this, were we to believe that, in some bonds that have kept yields on 10-year bonds in regions, houses were only worth 1/5 of their the 4.5% range, thus constraining the rise in 30market value at that time? Did even the most year mortgage rates to around 6.25%. extreme prognosticators of housing market doom No doubt we will continue to read stories believe this to be true?) Instead, we see forecasts about folks who purchased houses using in a few areas of the country that mortgage rates that may see 10-15% price declines featured very low by the end of 2008. A 15% price “teaser” rates that are Forget about him; decline hardly qualifies for a now facing higher keep your eye on the bursting of a speculative bubble mortgage payments as housing bubble. and probably is better described these rates adjust to as the slow cooling of soufflé or, market. But the wide if you have had your fill of food scale ARMageddon metaphors, the overshooting of is unlikely to occur, housing prices now slowly falling as interest rates are back to equilibrium. forecasted to rise Confronted with the actual slowly to just over performance of the housing 7.0% by the end of market in recent years, the 2009. Ultimately, denizens of housing doom have we will place the not given up their harried cries; housing bubble and they are just changing their the ARMageddon tune a bit. The latest from these alongside Kevin horsemen of the apocalypse is a Costner’s movies call for a housing ARMageddon.

Waterworld and The The ARM in Armageddon, in Postman as the two this case, refers to adjustable rate latest tales of the mortgages. During the housing apocalypse that just run-up, affordability became an didn’t pan out. issue for many potential home buyers, and one way to redress the problem was to finance home purchases with adjustable rate mortgages. The

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Photo Credit: Roger Patterson

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Institute for Economic Competitiveness

mobile and Light Truck Sales Fe b r u a r y 2 0 0 7 (Millions Vehicles)

Charts

99 00 01 02 03 04 05 06 07 08 Auto Sales Light Truck Sales

F OR E C A ST f o r t h e na t i o n

U . S . F o r eca s t C h a r t s

30-Year Mortgage Rates and Housing Starts 8.5

(Mortgage rates - Left axis, %)

2.20

8.0

2.00

7.5 7.0

1.80

6.5

1.60

6.0

1.40

5.5 5.0

97 98 99 00 01 02 03 04 05 06 07 08 09 30-Year Fixed Mortgage Rate Housing Starts - Millions

1.20

Automobile and Light Truck Sales 11.0

(Millions Vehicles)

10.0 9.0 8.0 7.0 6.0

97 98 99 00 01 02 03 04 05 06 07 08 09 Auto Sales Light Truck Sales

Consumer Prices 4.0

(% Change Year Ago)

3.0 2.0 1.0 0.0

97 98 99 00 01 02 03 04 05 06 07 08 09 Consumer Price Index Core Consumer Price Index Institute for Economic Competitiveness

11

U . S . F o r eca s t C h a r t s

Federal Budget Surplus (Billions of Dollars)

300.0 200.0 100.0 0.0 -100.0 -200.0 -300.0 -400.0 -500.0

97 98 99 00 01 02 03 04 05 06 07 08 09 Federal Budget Surplus

Real GDP Growth and Federal Funds Rate 8.0

(%)

6.0 4.0 2.0 0.0 -2.0

97 98 99 00 01 02 03 04 05 06 07 08 09 Quarterly Growth Rate Real GDP Fed Funds Rate

Money Supply

20.0

(Annual Growth Rate %)

15.0 10.0 5.0 0.0 -5.0 -10.0

12

U.S. Forecast

96 97 98 99 00 01 02 03 04 05 06 07 08 09 Annual Growth Rate of M2 Annual Growth Rate of M1

U . S . F o r eca s t C h a r t s

Industrial Production 130.0

(2002=100)

120.0 110.0 100.0 90.0 80.0

97 98 99 00 01 02 03 04 05 06 07 08 09 Industrial Production

Manufacturing Employment 18.0

(Millions)

17.0 16.0 15.0 14.0 13.0

97 98 99 00 01 02 03 04 05 06 07 08 09 Manufacturing Employment

Total Nonfarm Payroll Employment 145.0

(Millions)

140.0 135.0 130.0 125.0 120.0

97 98 99 00 01 02 03 04 05 06 07 08 09 Total Nonfarm Employment Institute for Economic Competitiveness

13

U . S . F o r eca s t C h a r t s

Real Disposable Income and Consumption 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 -1.0

(% Change Year Ago)

96 97 98 99 00 01 02 03 04 05 06 07 08 09 Real Disposable Income Consumption

Civilian Unemployment Rate 6.5

(%)

6.0 5.5 5.0 4.5 4.0 3.5

97 98 99 00 01 02 03 04 05 06 07 08 09 Unemployment Rate

Yield Curve 7.0

(%)

6.0 5.0 4.0 3.0 2.0 1.0

14

U.S. Forecast

97 98 99 00 01 02 03 04 05 06 07 08 09 1-Year T-Bill Yield 5 Year Treasury Bond Yield 25 year Treasury Bond Yield

U . S . F o r eca s t C h a r t s

0 -100 -200 -300 -400 -500 -600 -700 -800

Trade Balance and Real Exchange Rate

1.20 1.10 1.00 0.90 0.80 0.70

97

98

99 00 01 02 03 04 05 06 07 08 09 Trade Balance (Billions $) Left axis U.S. Dollar Real Exchange Rate (2000 = 1.0) Right axis

0.60

Twin Deficits 400.0

(Billions of Dollars)

200.0 0.0 -200.0 -400.0 -600.0 -800.0 -1000.0

97 98 99 00 01 02 03 04 05 06 07 08 09 U.S. Federal Budget Surplus Current Account

Change in Real Business Inventories 150.0

(Billions of 2000 Dollars)

100.0 50.0 0.0 -50.0 -100.0

97 98 99 00 01 02 03 04 05 06 07 08 09 Change in Real Business Inventories Institute for Economic Competitiveness

15

1999

891.2 893.0 213.0 83.9 651.7

787.6 555.8 360.6 195.2 986.1 735.7 15.2 232.9 264.7 44.1 103.6

2000

History 2001

2002

2003

2004

2005

FeFederal b r u aGovernment r y 2 0 0 7Receipts and Expenditures

2006

Forecast 2007

2008

2053.9 999.1 219.5 87.8 691.7

2016.2 994.5 164.7 85.8 717.5

1853.2 830.5 150.5 87.3 734.3

1879.9 774.5 197.8 89.7 758.9

2001.0 801.4 244.5 94.6 802.2

2246.8 927.9 326.4 101.1 855.4

2546.9 1071.0 386.4 104.0 919.6

2641.1 1116.0 378.9 108.0 969.3

2732.3 1145.4 385.0 110.8 1018.5

1864.4 578.8 370.3 208.5 1038.1 770.0 18.3 247.3 263.2 46.1 189.5

1969.5 612.9 392.6 220.3 1131.4 838.7 14.0 276.1 240.2 53.1 46.7

2101.1 679.7 437.1 242.5 1243.0 916.9 18.8 304.6 213.7 39.1 -248.0

2252.1 756.4 497.2 259.2 1328.7 963.7 23.6 338.5 196.5 45.4 -372.2

2383.0 825.9 551.3 274.7 1393.3 1015.4 25.9 349.0 205.3 45.5 -382.0

2555.9 878.3 589.3 289.0 1476.7 1078.6 33.9 361.1 238.0 61.8 -309.2

2701.2 928.3 620.3 307.9 1558.5 1172.5 23.5 359.3 266.1 54.4 -154.3

2876.3 962.0 643.6 318.4 1668.5 1251.4 30.0 383.7 303.2 53.4 -235.2

3022.3 989.3 660.3 329.0 1768.8 1324.2 31.5 409.6 323.6 53.8 -290.0

State and Local Government Receipts and Expenditures 893.2 236.6 35.6 621.1 11.0 247.3

915.8 242.7 30.2 642.8 13.7 276.1

929.0 221.3 32.2 675.5 15.8 304.6

979.5 226.6 35.3 717.5 19.8 338.5

1060.9 248.4 43.1 769.4 24.3 349.0

1154.4 275.2 58.0 821.2 25.3 361.1

1240.1 305.3 68.3 866.5 24.9 359.3

1282.6 315.6 65.2 901.8 25.8 383.7

1342.5 334.3 65.6 942.6 26.8 409.6

186.3 065.0 252.4 -3.8 -10.0 1.8 0.0 50.4

1269.5 1142.8 271.7 -4.5 -7.1 1.9 0.0 50.0

1368.2 1212.8 305.2 5.2 3.6 2.0 0.0 4.8

1444.3 1281.5 332.0 16.5 -1.6 2.0 0.0 -34.2

1514.6 1336.0 353.0 24.8 0.7 2.2 0.0 -20.4

1605.5 1400.4 382.9 29.7 4.1 2.4 0.0 -12.9

1703.9 1494.5 402.3 30.7 10.8 2.4 0.0 -3.3

1779.8 1599.9 395.2 32.3 7.7 2.6 0.0 17.1

1867.9 1687.6 420.8 34.3 3.9 2.7 0.0 10.5

1958.1 1765.3 453.1 37.4 1.1 2.7 0.0 20.8

t ab l e s

840.4 214.5 35.8 590.2 9.8 232.9

F OR E C A ST f o r t h e na t i o n

U . S . F o r eca s t Tab l e s Table 1. Annual Summary of the U.S. Forecast

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

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

Real GDP Nominal GDP

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

Oil - WTI ($ per barrel) Productivity (% change) Industrial Production (% change) Factory Operating Rate Nonfarm Inven. Chg. (Bil. of 2000 $) 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. $)

1998

1999

2000

2001

History 2002

4.2 4.2 5.0 11.3 4.0 4.2 9.3 13.3 22.0 44.7 16.0 3.6 6.3 39.3 21.4 5.2 5.8 3.4 15.4 -7.7 5.4 7.6 2.5 11.7 -1.1 3.6

4.4 4.5 5.1 11.8 4.6 4.0 12.1 12.7 21.2 41.4 19.2 -0.1 16.8 51.6 11.8 -0.4 3.2 -22.6 17.3 -8.5 0.9 6.1 4.3 11.4 2.2 4.7

3.7 3.8 4.7 7.4 3.8 4.5 11.1 9.4 17.4 21.1 30.1 7.7 -4.0 2.8 -10.3 6.8 6.3 -5.4 15.1 27.7 2.9 0.8 8.8 13.2 0.9 2.7

0.8 1.6 2.5 4.3 2.0 2.4 9.2 -4.8 -1.6 2.6 -7.1 -8.4 -11.7 3.7 -25.3 -2.1 -5.0 -10.2 3.0 18.5 -4.8 0.4 -5.3 -2.6 3.9 3.2

C omposition of Real G DP, Percent C hange 1.6 2.5 3.9 3.2 1.2 2.5 3.5 3.5 2.7 2.8 3.9 3.5 7.2 5.8 6.4 5.5 2.5 3.2 3.6 4.5 1.9 1.9 3.5 2.6 8.7 -4.1 -8.8 3.3 -6.1 2.8 7.2 9.0 -4.6 5.8 10.2 8.5 5.4 13.1 14.3 18.0 -21.0 1.4 10.5 12.4 -7.3 2.9 -4.0 8.1 -10.9 -6.2 19.4 12.8 -26.6 -22.3 -6.8 -20.9 -0.4 -8.7 27.7 16.7 -17.0 -3.9 2.2 1.1 -15.6 -6.4 2.6 -0.8 -41.2 -6.0 5.2 21.4 -1.5 -12.6 -12.4 -6.5 -23.1 18.2 13.4 11.0 -15.4 -4.3 3.1 -5.1 4.8 8.4 10.0 8.6 -2.0 1.3 9.2 6.8 3.5 4.1 10.8 6.1 7.0 6.8 4.3 1.5 3.1 0.2 0.5 0.5

2003

2004

2005

2006

2007

Forecast 2008

2009

3.3 3.1 3.2 5.2 3.7 2.5 10.4 6.8 9.0 16.7 12.8 6.4 1.0 -6.9 7.3 8.9 7.0 12.4 2.9 10.8 13.7 -4.0 8.7 5.9 1.9 2.0

2.3 2.5 2.8 1.6 3.0 3.0 9.4 4.6 7.1 19.3 4.0 2.5 5.8 29.8 -11.2 8.3 6.4 4.8 10.3 11.6 8.1 -14.8 8.6 3.2 1.5 1.9

3.2 3.2 2.9 3.1 2.7 2.9 7.0 5.8 8.5 20.2 4.5 0.3 9.3 14.0 5.8 0.4 -2.0 14.6 6.4 -4.0 1.4 -0.1 9.5 3.9 1.3 1.8

3.6 3.5 3.3 5.2 3.0 3.1 5.5 7.4 7.5 19.9 4.0 4.5 14.5 7.7 23.6 1.4 3.7 13.6 1.0 -9.6 3.2 3.9 9.3 5.8 0.2 1.7

Billions of Dollars 9066.9 9470.4 9817.0 9890.7 10048.9 10301.1 10703.5 11048.6 11414.3 8747.0 9268.4 9817.0 10128.0 10469.6 10960.8 11712.5 12455.8 13243.1

1.1 1.5 2.3 -0.5 3.4

1.6 2.6 2.0 2.9 3.5

Prices & Wages, Percent C hange, Annual Rate 1.7 2.2 3.1 3.1 2.4 2.2 1.9 3.3 3.7 1.9 2.0 1.2 2.1 2.1 2.6 1.0 3.5 4.5 5.1 0.3 3.1 3.9 3.7 2.9 3.1

2.2 3.4 2.6 3.8 4.4

2.4 1.9 2.7 -1.1 4.0

14.4 19.3 30.4 2.8 2.9 2.8 6.1 4.7 4.6 81.7 80.8 80.1 71.2 71.5 57.8 104.6 105.8 107.6 15.506 16.888 17.342 1.621 1.647 1.573 4.492 4.636 4.614 4.5 4.2 4.0 2.6 2.4 2.2 70 122 236 -214 -300 -415

26.0 2.6 -3.5 73.9 -31.8 89.2 17.115 1.601 4.727 4.7 0.0 127 -389

26.1 4.1 0.1 73.0 15.2 89.6 16.816 1.710 4.997 5.8 -1.1 -160 -472

Federal Funds Rate (%) 3-Month Treasury Bill Rate (%) 1-Year Treasury Note Yield (%) 5-Year Treasury Note Yield (%) 10-Year Treasury Note Yield (%) 25-Year Treasury Note Yield (%) 30-Year Fixed Mortgage Rate (%) S&P 500 Stock Index (% change) Exchange Rate, Major Trading Partners (% change (negative = depreciation))

5.35 4.79 5.05 5.15 5.26 5.58 6.94 1084 24.8 0.969 4.8

4.97 4.63 5.08 5.54 5.64 5.86 7.43 1326 22.3 0.953 -1.6

6.24 5.81 6.11 6.15 6.03 5.95 8.06 1427 7.7 1.000 4.9

3.89 3.43 3.48 4.55 5.02 5.50 6.97 1192 -16.4 1.060 6.0

1.67 1.61 2.00 3.82 4.61 5.42 6.54 996 -16.7 1.044 -1.5

Personal Income (Bil. of $) (% change) Disposable Income (Bil. of $) (% change) Real Disposable Income (Bil. Of 2000 $) (% change) Saving Rate (%) After-Tax Profits (Billions of $) (% change)

7423 7.3 6396 6.8 6664 5.8 4.3 470 -14.8

7802 5.1 6695 4.7 6862 3.0 2.4 517 10.1

8430 8.0 7194 7.5 7194 4.8 2.4 508 -1.6

8724 3.5 7487 4.1 7333 1.9 1.8 504 -0.9

8882 1.8 7830 4.6 7562 3.1 2.4 576 15.2

O ther 31.1 3.7 1.1 74.2 14.0 87.6 16.643 1.854 5.443 6.0 -0.3 -375 -528

11675.4 12052.3 12487.5 13826.9 14545.9 15373.8

2.0 2.5 2.1 3.9 2.9

2.0 1.9 2.1 1.6 3.2

2.0 1.9 2.2 0.8 3.5

Measures 41.5 56.6 3.0 2.3 2.5 3.2 76.6 78.8 47.0 19.6 95.2 88.6 16.866 16.948 1.949 2.073 5.912 6.170 5.5 5.1 1.1 1.5 -411 -321 -665 -792

66.1 2.1 4.1 80.4 43.6 87.2 16.480 1.809 5.705 4.6 1.4 -248 -865

60.2 1.6 1.8 79.9 26.6 89.6 16.386 1.512 5.261 4.9 1.0 -275 -823

60.8 2.4 2.3 79.7 30.3 91.8 16.592 1.612 5.118 4.9 1.4 -272 -800

60.3 2.1 3.2 79.8 48.2 95.2 16.834 1.728 5.144 4.5 1.7 -259 -823

Financial Markets, N SA 1.13 1.35 3.21 1.01 1.36 3.13 1.24 1.89 3.62 2.97 3.43 4.05 4.02 4.27 4.29 5.05 5.12 4.56 5.82 5.84 5.86 964 1131 1207 -1.3 18.0 6.8 0.916 0.840 0.825 -12.3 -8.1 -1.7

4.96 4.72 4.93 4.74 4.79 4.87 6.41 1311 8.6 0.814 -1.3

4.90 4.65 4.79 4.52 4.56 4.67 6.17 1417 8.2 0.771 -5.3

4.75 4.62 4.84 4.87 4.93 5.07 6.54 1489 5.1 0.727 -5.7

4.94 4.78 5.08 5.40 5.49 5.74 7.08 1576 5.8 0.696 -4.3

10898 6.4 9535 5.5 8322 2.7 -0.9 1319 18.0

11458 5.1 10013 5.0 8578 3.1 -0.8 1354 2.7

12097 5.6 10581 5.7 8886 3.6 -0.2 1412 4.3

12866 6.4 11241 6.2 9254 4.1 0.5 1408 -0.3

9164 3.2 8163 4.2 7730 2.2 2.1 665 15.6

Incomes 9731 6.2 8682 6.4 8011 3.6 2.0 844 27.3

10239 5.2 9036 4.1 8105 1.2 -0.4 1119 32.6

Institute for Economic Competitiveness

17

U . S . F o r eca s t Tab l e s Table Real Domestic Table 2. 2.

Annual RealGross G ross Domestic Product Product

1998

Gross Domestic Product Final Sales of Domestic Product Total Consumption Durables

1999

2000

2001

History 2002

2003

2004

2005

2006

2007

Forecast 2008

2009

9066.9 9470.4 9817.0 9890.7 10048.9 10301.1 10703.5 11048.6 11414.3

11675.4 12052.3 12487.5

8997.6 9404.1 9760.5 9921.0 10036.5 10285.1 10648.3 11025.2 11361.9

11642.0 12016.0 12434.0

6125.8 6438.6 6739.4 6910.4

7841.2

8090.4

8318.8

8556.4

8838.4

900.7

964.8

1020.6

1085.7

1145.3

1204.9

1224.6

1262.2

1327.9

2037.1

2103.0

2179.2

2276.8

2361.8

2431.8

2498.2

2572.4

Services

3614.9 3758.0 3928.8 4023.2

4100.4

4178.8

4323.9

4436.6

4548.1

4683.7

4818.5

4968.5

1037.8 1133.3 1232.1 1180.5

1071.5

1081.8

1145.8

1223.8

1315.0

1389.6

1447.4

1529.6

Information Processing Equipment Computers & Peripherals Communications Equipment

863.3

7577.1

1794.4 1876.6 1947.2 1986.7

Equipment & Software

804.5

7295.4

Nondurables

Nonresidential Fixed Investment

720.3

7099.3

745.6

840.2

918.9

874.2

820.2

843.1

904.2

984.9

1051.8

1100.2

1163.8

1250.0

328.9

398.5

467.6

459.0

437.4

462.7

509.3

552.6

602.3

645.3

699.9

752.3

59.5

83.9

101.6

103.7

108.9

123.2

140.7

165.9

193.5

231.0

277.6

332.8

80.0

95.4

124.1

114.7

90.5

91.4

100.7

113.2

127.5

132.5

138.4

144.0

Industrial Equipment

148.1

147.9

159.2

145.7

134.5

138.4

132.7

143.5

152.5

156.4

156.9

164.0

Transportation Equipment

144.0

167.6

160.8

141.7

126.3

118.3

141.6

158.3

159.7

168.7

184.4

211.1

22.0

31.7

32.6

33.5

23.9

17.8

16.7

12.7

11.3

14.2

16.2

17.5

41.0

45.7

40.9

30.4

30.1

27.4

35.1

40.6

43.6

38.7

40.9

50.5

294.5

293.2

313.2

306.1

253.8

243.5

248.7

251.5

273.9

296.5

297.5

301.6

125.4

129.4

137.6

130.3

109.8

102.6

105.2

104.4

111.6

118.6

116.2

120.5

Manufacturing

43.7

33.9

31.8

28.5

16.7

15.4

16.2

19.6

22.0

23.1

26.5

30.1

Power & Communication

34.7

40.8

46.8

48.2

47.1

41.0

35.8

33.5

34.3

37.9

40.2

40.6

Mining & Petroleum

23.3

21.3

27.2

32.0

24.5

29.0

32.8

36.4

40.4

45.0

43.2

39.0

Other

67.4

67.9

69.9

66.6

55.9

53.4

55.1

52.2

59.3

64.0

64.9

67.0

Residential Fixed Investment

418.3

443.6

446.9

448.5

469.9

509.4

559.9

608.0

582.5

495.4

494.6

514.1

Exports

966.5 1008.2 1096.3 1036.7

1013.3

1026.1

1120.4

1196.1

1300.4

1411.9

1546.5

1689.7

Imports

1170.3 1304.5 1475.8 1435.8

1484.6

1545.0

1711.3

1815.3

1922.6

1983.3

2061.5

2180.7

Aircraft Other Equipment Structures Commercial & Health Care

Federal Government State & Local Government

18

U.S. Forecast

601.4

643.4

687.1

716.6

727.6

741.6

752.5

762.6

763.8

1063.0 1113.2 1142.8 1179.0

561.3

573.7

578.8

1215.5

1217.8

1223.9

1230.4

1255.4

1279.2

1302.2

1323.8

U . S . F o r eca s t Tab l e s Table 3. Quarterly Summary of the Forecast of the U.S.

Table 3. Q uarterly Summary of the U.S. Forecast

2006Q 3 2006Q 4 2007Q 1 2007Q 2 2007Q 3 2007Q 4 2008Q 1 2008Q 2 2008Q 3 2008Q 4 2009Q 1 2009Q 2 2009Q 3 2009Q 4

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.

1.9 1.9 2.8 6.2 1.5 2.8 9.6 7.5 9.7 20.4 10.5 0.2 4.0 -41.6 4.4 14.9 23.4 10.9 15.2 9.6 7.1 -20.1 6.7 5.5 1.2 1.9

2.3 3.1 4.0 7.1 5.6 2.5 0.0 0.0 1.0 2.2 6.1 -1.6 5.6 203.0 19.1 0.0 0.2 -13.6 -14.4 -0.2 13.2 -20.7 7.2 -1.2 3.8 1.5

2.0 2.2 2.5 -2.5 2.6 3.4 8.0 6.9 10.8 30.6 6.3 6.4 8.0 -0.4 -46.6 10.6 7.7 -7.8 16.3 20.6 6.2 -21.0 9.2 5.2 4.3 2.2

2.3 2.1 2.3 -0.7 2.3 2.9 7.2 5.1 7.5 19.5 4.2 2.4 9.2 22.5 -18.6 12.0 8.0 16.9 21.4 18.9 3.6 -13.8 8.8 3.8 -1.8 1.5

C omposition of Real G DP, Percent C hange, Annual Rate 2.6 2.8 3.6 3.4 3.6 3.4 2.9 2.8 3.7 3.2 3.4 3.2 2.6 2.6 3.0 2.8 3.1 3.1 1.2 2.0 4.5 2.2 5.4 5.1 3.0 2.4 2.8 2.8 2.7 2.6 2.7 2.8 2.9 2.9 2.9 3.0 4.7 2.9 3.5 3.7 5.1 5.3 5.6 5.0 6.1 5.6 5.4 7.1 8.0 8.5 9.3 8.0 6.9 7.1 18.7 20.1 17.8 18.7 18.8 19.2 4.6 6.0 4.6 4.1 3.0 2.9 0.3 -1.1 -0.2 1.0 -0.3 4.0 11.3 6.8 8.3 7.9 9.8 14.8 10.4 13.4 19.3 8.6 8.5 9.0 0.2 2.8 3.1 12.7 15.8 17.1 2.6 -2.2 -2.8 -1.0 4.3 0.7 -3.5 -6.8 -4.1 -2.7 3.3 4.4 19.0 15.1 5.6 15.0 19.2 16.5 13.4 12.3 2.4 -0.7 5.4 -3.7 3.2 -10.2 -8.1 -6.1 1.9 -13.2 1.7 1.8 -0.8 1.5 2.0 4.3 -5.1 -2.2 2.5 2.5 4.1 2.9 9.4 9.5 9.1 9.0 9.3 9.4 2.4 4.3 3.5 3.6 5.1 6.0 0.0 2.1 4.9 -0.7 -0.2 -0.2 1.2 2.2 1.9 1.8 1.7 1.7

3.7 3.7 3.5 7.1 3.1 3.0 6.4 8.7 7.6 18.5 4.7 5.9 19.0 8.0 39.1 0.4 1.0 10.1 2.5 -9.8 2.9 4.5 8.6 5.8 0.3 1.6

3.6 3.5 3.4 4.8 3.1 3.2 6.4 7.3 7.6 17.8 4.8 7.0 9.5 5.3 6.8 4.0 5.1 24.5 3.5 -7.7 3.0 2.4 8.8 6.0 0.5 1.6

3.5 3.5 3.6 7.5 3.0 3.2 5.3 5.6 6.8 17.6 3.3 7.6 2.6 8.7 -9.3 4.4 11.8 5.5 4.0 -9.1 1.7 2.4 8.7 6.4 1.3 1.7

Billions of Dollars 11443.5 11509.2 11567.2 11633.5 11709.7 11791.3 11897.4 11998.3 12105.2 12208.4 12319.0 12433.8 12544.5 12652.8 13322.6 13444.3 13608.6 13745.4 13898.7 14054.7 14253.4 14443.6 14645.9 14840.5 15055.2 15267.5 15480.9 15691.7 Prices & Wages, Percent C hange, Annual Rate 1.8 1.7 2.0 1.9 2.0 2.3 2.2 2.1 1.8 2.0 2.0 2.0 2.1 2.1 2.2 4.3 2.5 2.3 1.5 1.2 3.0 2.8 3.1 3.1 3.5

1.9 2.9 2.9 0.1 3.5

1.3 -2.3 1.6 -2.8 3.1

2.9 3.0 2.1 6.7 3.0

1.7 2.4 2.3 2.2 3.0

70.5 0.2 3.9 80.9 53.3 84.0 16.578 1.714 5.483 4.7 1.4 -166 -902

59.9 1.2 -0.2 80.2 32.2 92.1 16.191 1.528 5.521 4.5 1.2 -158 -837

58.9 1.6 1.1 80.1 26.4 90.3 16.293 1.507 5.436 4.7 1.0 -182 -831

59.7 2.4 1.6 80.0 32.1 89.7 16.320 1.496 5.314 4.9 0.5 -184 -826

60.8 2.5 2.0 79.9 24.4 89.4 16.455 1.513 5.173 5.0 0.8 -183 -819

Federal Funds Rate (%) 3-Month Treasury Bill Rate (%) 1-Year Treasury Note Yield (%) 5-Year Treasury Note Yield (%) 10-Year Treasury Note Yield (%) 25-Year Treasury Note Yield (%) 30-Year Fixed Mortgage Rate (%) S&P 500 Stock Index (% change) Exchange Rate, Major Trading Partners (% change (negative = depreciation))

5.25 4.91 5.09 4.84 4.90 4.99 6.57 1288 2.1 0.805 -2.2

5.25 4.90 4.98 4.59 4.62 4.73 6.24 1390 31.4 0.804 -0.1

5.17 4.80 4.88 4.45 4.52 4.65 6.16 1402 3.4 0.792 -6.3

4.92 4.59 4.69 4.39 4.47 4.59 6.11 1421 5.7 0.777 -7.6

Personal Income (Bil. of $) (% change) Disposable Income (Bil. of $) (% change) Real Disposable Income (Bil. Of 2000 $) (% change) Saving Rate (%) After-Tax Profits (Billions of $) (% change)

10965 5.8 9598 6.4 8330 4.1 -1.2 1363 8.4

11097 4.9 9707 4.5 8437 5.1 -0.9 1295 -20.0

11259 5.8 9847 5.8 8501 3.0 -0.8 1330 10.9

11385 4.5 9944 4.0 8542 2.0 -0.9 1344 4.0

Oil - WTI ($ per barrel) Productivity (% change) Industrial Production (% change) Factory Operating Rate Nonfarm Inven. Chg. (Bil. of 2000 $) 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. $)

3.6 3.4 3.2 3.8 3.0 3.2 5.5 7.8 7.2 18.6 4.3 4.9 17.6 5.9 33.3 -0.4 4.2 5.1 -0.4 -16.0 4.1 5.5 8.9 5.7 0.3 1.6

1.9 1.9 2.1 1.3 3.2

2.1 2.1 2.2 1.3 3.4

1.9 1.7 2.2 0.3 3.4

2.0 2.0 2.3 0.8 3.8

2.0 1.9 2.2 0.8 3.4

O ther Key Measures 62.3 60.3 60.4 2.6 2.1 2.2 2.2 2.5 2.8 79.7 79.7 79.7 20.8 28.2 33.2 90.1 91.5 92.3 16.563 16.515 16.609 1.561 1.596 1.627 5.113 5.107 5.121 5.0 4.9 4.8 1.5 1.6 1.7 -222 -230 -222 -814 -795 -792

60.1 1.9 2.9 79.6 39.3 93.2 16.679 1.666 5.131 4.7 1.7 -208 -798

61.2 2.1 3.1 79.7 45.4 93.8 16.714 1.705 5.094 4.6 1.7 -203 -811

59.6 2.2 3.5 79.8 47.4 94.9 16.803 1.721 5.143 4.5 1.7 -202 -819

60.0 2.0 3.7 79.9 51.0 95.6 16.856 1.735 5.151 4.4 1.8 -191 -828

60.1 2.0 3.6 79.8 49.1 96.4 16.964 1.749 5.186 4.3 1.7 -187 -835

4.75 4.63 4.81 4.61 4.63 4.72 6.17 1413 -2.3 0.763 -7.1

Financial Markets, N SA 4.75 4.75 4.75 4.75 4.58 4.59 4.62 4.63 4.79 4.79 4.82 4.85 4.63 4.68 4.79 4.93 4.63 4.69 4.83 5.01 4.71 4.78 4.95 5.16 6.24 6.31 6.45 6.61 1431 1445 1478 1504 5.1 3.9 8.9 7.2 0.751 0.741 0.731 0.722 -6.2 -5.6 -5.2 -4.9

4.75 4.64 4.91 5.10 5.19 5.39 6.78 1530 7.0 0.713 -4.7

4.75 4.67 4.97 5.24 5.33 5.56 6.92 1553 5.9 0.705 -4.5

5.00 4.82 5.12 5.43 5.51 5.77 7.10 1566 3.3 0.698 -4.1

5.00 4.82 5.12 5.47 5.55 5.81 7.14 1583 4.2 0.692 -3.7

5.00 4.82 5.12 5.47 5.56 5.81 7.14 1601 4.7 0.687 -2.6

11521 4.8 10067 4.9 8602 2.8 -0.9 1370 7.8

11665 5.0 10194 5.1 8668 3.0 -0.8 1373 0.9

Incomes 11830 12006 5.7 5.9 10350 10505 6.1 6.0 8756 8846 4.1 4.1 -0.5 -0.2 1389 1407 4.7 5.3

12367 6.1 10809 5.6 9012 3.7 0.0 1426 0.6

12564 6.4 10980 6.3 9107 4.2 0.2 1417 -2.5

12764 6.4 11152 6.3 9206 4.4 0.4 1411 -1.9

12966 6 11328 6 9303 4 1 1404 -2

13170 6 11503 6 9400 4 1 1399 -2

61.4 2.4 1.9 79.7 23.4 89.0 16.476 1.530 5.120 5.0 1.3 -195 -818

12183 5.9 10659 5.9 8931 3.8 -0.1 1424 4.9

Institute for Economic Competitiveness

19

U . S . F o r eca s t Tab l e s Table Quarterly Table 4. Q4. uarterly G ross Domestic Gross Product Domestic Product 2006Q 3 2006Q 4 2007Q 1 2007Q 2 2007Q 3 2007Q 4 2008Q 1 2008Q 2 2008Q 3 2008Q 4 2009Q 1 2009Q 2 2009Q 3 2009Q 4 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

11443.5 11509.2 11567.2 11633.5 11709.7 11791.3 11897.4 11998.3 12105.2 12208.4 12319.0 12433.8 12544.5 12652.8 11381.6 11468.9 11533.1 11594.4 11678.6 11761.8 11870.2 11964.0 12066.1 12163.5 12268.3 12381.0 12488.3 12598.4 8111.2 8191.5 8242.8 8290.4 8344.1 8398.0 8461.5 8521.1 8588.1 8654.8 8724.2 8800.6 8874.4 8954.3 1208.8 1230.2 1222.7 1220.7 1224.3 1230.6 1244.5 1251.4 1268.4 1284.5 1296.6 1319.6 1335.3 1360.2 2360.1 2393.3 2408.7 2422.5 2440.5 2455.4 2472.6 2489.8 2506.9 2523.5 2542.7 2562.6 2582.5 2601.7 4566.6 4595.7 4635.0 4668.4 4699.5 4731.8 4765.6 4800.8 4835.9 4871.8 4910.5 4947.9 4987.8 5027.9 1334.2 1334.1 1360.7 1385.1 1401.3 1411.4 1423.6 1436.9 1455.1 1474.2 1494.5 1518.4 1542.6 1563.0 1060.7 1060.6 1078.9 1092.6 1107.8 1121.7 1138.8 1154.9 1170.3 1191.1 1214.4 1240.9 1263.5 1281.4 608.6 610.2 626.7 638.4 651.2 665.0 680.5 694.2 706.1 718.7 731.6 745.4 759.6 772.6 198.6 199.6 214.9 225.4 235.9 247.8 258.8 270.9 283.6 297.2 311.0 325.4 339.9 354.9 126.3 128.2 130.2 131.6 133.1 135.1 136.6 138.0 139.0 140.0 141.5 143.2 144.9 146.2 153.9 153.3 155.8 156.7 156.8 156.4 156.3 156.7 156.5 158.1 160.0 162.4 165.2 168.3 157.5 159.7 162.8 166.6 171.3 174.2 177.8 181.4 185.8 192.6 201.1 210.6 215.6 217.0 8.9 13.4 13.4 14.1 14.5 15.0 15.7 16.0 16.4 16.8 17.0 17.3 17.6 17.9 43.2 45.3 40.0 38.1 38.1 38.4 38.7 39.9 41.5 43.3 46.9 51.5 52.4 51.1 282.0 282.0 289.4 298.1 300.1 298.4 296.3 295.6 298.8 299.3 299.0 299.3 302.3 305.6 115.6 115.6 117.9 120.2 119.2 117.1 116.0 115.2 116.1 117.4 118.6 118.9 120.5 124.0 22.9 22.1 21.7 22.6 23.6 24.5 24.9 25.8 27.0 28.2 28.5 29.2 31.0 31.5 35.4 34.1 35.5 37.4 38.7 39.9 40.1 40.0 40.6 40.2 40.1 40.4 40.8 41.2 41.5 41.5 43.6 45.6 46.0 44.8 43.9 43.3 43.5 42.0 40.4 39.4 38.6 37.7 60.4 62.4 63.4 64.0 64.2 64.5 64.4 64.6 64.9 65.6 66.3 66.8 67.3 67.6 570.3 540.8 512.4 494.8 488.5 485.8 488.9 492.0 497.0 500.6 507.5 513.2 516.3 519.4 1310.0 1333.6 1364.4 1394.6 1427.2 1461.3 1494.4 1528.0 1563.4 1600.2 1635.6 1670.9 1707.6 1744.6 1938.8 1933.1 1958.0 1976.7 1988.6 2009.8 2027.2 2045.3 2071.1 2102.3 2132.5 2163.3 2196.0 2231.2 738.9 746.0 754.1 750.7 750.7 754.6 763.9 762.6 762.1 761.8 762.3 762.8 763.8 766.3 1260.3 1265.0 1271.9 1276.7 1280.5 1287.5 1293.6 1299.5 1305.0 1310.7 1315.9 1321.0 1326.2 1331.9

Table 5. Annual Employment

Table 5. Annual Employment 1998

1999

2000

2001

History 2002

2003

2004

2005

2006

2007

Forecast 2008

2009

Millions Total Nonfarm Employment Private Nonfarm Mining Construction Manufacturing Trade, Transportation, and Utilities Transportation & Warehousing Financial Activities Education & Health Professional & Business Services Information Leisure & Hospitality Government Federal State & Local

125.924 128.992 131.792 131.832 130.342 129.993 131.424 133.459 135.363 106.014 108.680 111.002 110.711 108.834 108.412 109.804 111.653 113.376 0.565 0.518 0.520 0.532 0.512 0.503 0.523 0.560 0.614 6.147 6.545 6.788 6.826 6.716 6.732 6.974 7.278 7.488 17.560 17.323 17.266 16.442 15.257 14.507 14.315 14.234 14.217 25.186 25.770 26.225 25.986 25.499 25.289 25.532 25.906 26.066 4.167 4.298 4.412 4.373 4.224 4.185 4.247 4.346 4.416 7.462 7.646 7.688 7.808 7.848 7.976 8.030 8.142 8.321 14.445 14.795 15.109 15.643 16.201 16.588 16.952 17.342 17.747 15.142 15.954 16.670 16.481 15.977 15.984 16.391 16.876 17.326 3.219 3.418 3.629 3.629 3.394 3.188 3.117 3.065 3.063 11.232 11.544 11.860 12.032 11.989 12.176 12.493 12.799 13.067 19.910 20.312 20.790 21.120 21.508 21.582 21.620 21.806 21.987 2.771 2.770 2.865 2.763 2.766 2.761 2.731 2.725 2.706 17.139 17.542 17.925 18.357 18.743 18.820 18.889 19.081 19.280

136.724 138.588 140.949 114.483 116.162 118.304 0.630 0.622 0.600 7.328 7.333 7.515 14.011 13.900 13.894 26.222 26.731 27.184 4.499 4.649 4.832 8.420 8.446 8.525 18.140 18.395 18.683 17.797 18.582 19.522 3.030 3.005 3.031 13.381 13.640 13.870 22.241 22.425 22.645 2.719 2.730 2.747 19.522 19.695 19.898

G rowth Rates Total Nonfarm Employment Private Nonfarm Mining Construction Manufacturing Trade, Transportation, and Utilities Transportation & Warehousing Financial Activities Education & Health Professional & Business Services Information Leisure & Hospitality Government Federal State & Local 20

U.S. Forecast

2.57 2.82 -1.10 5.74 0.82 1.97 3.51 3.95 2.54 5.66 4.37 1.96 1.27 -1.23 1.69

2.44 2.51 -8.37 6.47 -1.35 2.32 3.13 2.48 2.42 5.36 6.18 2.77 2.02 -0.04 2.35

2.17 2.14 0.52 3.74 -0.33 1.77 2.66 0.54 2.13 4.49 6.21 2.74 2.36 3.44 2.19

0.03 -0.26 2.38 0.57 -4.78 -0.91 -0.86 1.57 3.53 -1.11 0.02 1.46 1.59 -3.40 2.41

-1.13 -1.69 -3.81 -1.62 -7.17 -1.87 -3.39 0.50 3.57 -3.04 -6.47 -0.36 1.84 0.09 2.10

-0.27 -0.39 -1.80 0.24 -4.91 -0.82 -0.91 1.63 2.39 0.05 -6.05 1.56 0.34 -0.15 0.42

1.10 1.28 3.98 3.60 -1.31 0.96 1.49 0.68 2.19 2.55 -2.22 2.60 0.18 -1.09 0.37

1.55 1.68 7.17 4.36 -0.56 1.47 2.33 1.39 2.30 2.96 -1.67 2.45 0.86 -0.22 1.01

1.43 1.54 9.52 2.90 -0.12 0.62 1.61 2.20 2.33 2.67 -0.07 2.09 0.83 -0.68 1.05

1.01 0.98 2.67 -2.13 -1.45 0.60 1.88 1.19 2.22 2.72 -1.09 2.41 1.16 0.46 1.26

1.36 1.47 -1.17 0.06 -0.79 1.94 3.32 0.31 1.41 4.40 -0.81 1.94 0.83 0.42 0.89

1.70 1.84 -3.56 2.48 -0.04 1.69 3.93 0.94 1.57 5.06 0.86 1.69 0.98 0.62 1.03

U . S . F o r eca s t Tab l e s Table Quarterly Table 6. Q6. uarterly Employment Employment 2006Q 3 2006Q 4 2007Q 1 2007Q 2 2007Q 3 2007Q 4 2008Q 1 2008Q 2 2008Q 3 2008Q 4 2009Q 1 2009Q 2 2009Q 3 2009Q 4 Employment (Millions) Total Nonfarm Employment Private Nonfarm Mining Construction Manufacturing Trade, Transportation, and Utilities Transportation & Warehousing Financial Activities Education & Health Professional & Business Services Information Leisure & Hospitality Government Federal State & Local

135.6 113.6 0.6 7.5 14.2 26.1 4.4 8.3 17.8 17.4 3.1 13.1 22.0 2.7 19.3

136.0 113.9 0.6 7.5 14.2 26.1 4.4 8.4 17.9 17.5 3.1 13.2 22.1 2.7 19.4

136.3 114.1 0.6 7.4 14.1 26.1 4.5 8.4 18.0 17.6 3.1 13.3 22.2 2.7 19.5

136.5 114.3 0.6 7.3 14.0 26.1 4.5 8.4 18.1 17.7 3.0 13.4 22.2 2.7 19.5

136.8 114.6 0.6 7.3 14.0 26.2 4.5 8.4 18.2 17.9 3.0 13.4 22.2 2.7 19.5

137.2 114.9 0.6 7.3 14.0 26.4 4.5 8.4 18.2 18.0 3.0 13.5 22.3 2.7 19.6

Total Nonfarm Employment Private Nonfarm Mining Construction Manufacturing Trade, Transportation, and Utilities Transportation & Warehousing Financial Activities Education & Health Professional & Business Services Information Leisure & Hospitality Government Federal State & Local

1.38 1.33 7.66 0.39 -0.43 0.23 2.00 1.22 2.81 2.90 -0.83 2.71 1.66 0.54 1.82

1.22 1.10 7.90 -2.73 -1.77 0.73 1.58 1.46 2.79 2.00 0.26 3.35 1.79 -1.15 2.20

0.99 0.92 3.40 -3.84 -1.26 0.64 1.63 1.77 2.67 1.97 -0.09 2.17 1.35 1.32 1.35

0.52 0.49 -7.99 -2.99 -4.08 0.02 1.28 0.76 1.19 3.39 -1.27 3.36 0.68 0.83 0.65

0.80 0.95 -0.11 -1.61 -0.46 1.25 2.93 0.29 1.70 3.78 -3.31 0.04 0.05 0.66 -0.03

1.29 1.31 1.54 -0.38 0.44 1.94 2.81 -0.07 1.48 3.18 -5.09 2.17 1.15 0.50 1.24

137.8 115.4 0.6 7.3 13.9 26.5 4.6 8.4 18.3 18.2 3.0 13.6 22.3 2.7 19.6

138.3 115.9 0.6 7.3 13.9 26.7 4.6 8.4 18.3 18.5 3.0 13.7 22.4 2.7 19.7

138.9 116.4 0.6 7.3 13.9 26.8 4.7 8.5 18.4 18.7 3.0 13.6 22.5 2.7 19.7

139.4 116.9 0.6 7.4 13.9 26.9 4.7 8.5 18.5 18.9 3.0 13.7 22.5 2.7 19.8

140.0 117.5 0.6 7.4 13.9 27.0 4.8 8.5 18.6 19.2 3.0 13.8 22.6 2.7 19.8

140.6 118.0 0.6 7.5 13.9 27.1 4.8 8.5 18.7 19.4 3.0 13.9 22.6 2.7 19.9

141.3 118.6 0.6 7.5 13.9 27.2 4.9 8.5 18.7 19.7 3.0 13.9 22.7 2.7 19.9

141.9 119.1 0.6 7.6 13.9 27.3 4.9 8.6 18.7 19.9 3.0 13.9 22.8 2.8 20.0

1.65 1.78 -2.15 2.12 -0.97 2.05 4.48 1.14 2.33 5.78 0.30 -0.60 0.96 0.24 1.06

1.66 1.80 -2.89 1.58 -0.32 1.97 3.68 0.50 1.62 4.79 0.06 2.37 0.93 0.24 1.02

1.70 1.85 -4.09 2.61 0.14 1.15 3.46 0.81 1.86 4.76 0.79 2.70 0.90 0.24 1.00

1.74 1.91 -4.52 2.83 0.34 1.89 4.03 0.75 1.37 5.04 1.14 1.61 0.84 0.24 0.92

1.76 1.86 -4.34 3.84 0.45 1.60 4.32 2.01 1.07 5.06 1.19 0.37 1.20 1.57 1.14

1.71 1.76 -4.59 3.61 0.79 1.39 3.70 1.68 0.57 4.22 0.49 1.87 1.47 3.49 1.19

G rowth Rates 1.50 1.63 -0.73 0.52 -0.90 2.58 3.22 0.21 0.93 4.33 -0.20 2.87 0.83 0.33 0.90

1.58 1.70 -1.68 0.15 -1.04 2.03 3.78 0.04 1.12 5.05 3.46 2.74 0.94 0.33 1.03

Table 7. Q Implicit Price Deflators (2000= 100) Deflators (2000=100) Table 7.uarterly Quarterly Implicit Price 2006Q 3 2006Q 4 2007Q 1 2007Q 2 2007Q 3 2007Q 4 2008Q 1 2008Q 2 2008Q 3 2008Q 4 2009Q 1 2009Q 2 2009Q 3 2009Q 4 GDP Consumption Durables Motor Vehicles Furniture Other Durables Nondurables Food Clothing & Shoes Gasoline & Oil Fuel Services Housing Household Operations Electricity Natural Gas Water & Sewer Telephone Domestic Service Other Household Transportation Other Services

116.4 115.2 89.0 99.6 73.0 99.0 116.4 115.7 91.3 185.4 187.5 121.0 121.1 121.4 133.3 157.7 129.7 95.2 120.4 127.1 117.7 128.1

116.8 115.1 88.5 99.1 72.3 99.2 114.2 116.3 91.2 154.4 177.3 122.0 122.3 121.7 133.4 153.9 131.2 95.9 123.9 128.0 117.6 129.7

117.6 115.8 88.2 99.5 71.5 99.4 115.1 117.0 91.3 160.3 174.8 122.9 123.2 123.2 133.6 165.9 132.5 95.8 124.5 128.9 118.5 130.9

118.2 116.4 88.0 99.9 70.7 99.5 115.6 117.7 91.2 161.7 169.2 123.7 123.9 123.9 134.5 169.6 133.7 95.4 125.0 129.6 119.5 131.9

118.7 117.0 87.9 100.3 70.0 99.5 116.2 118.5 91.1 162.6 165.1 124.6 124.6 125.0 135.3 176.9 134.9 95.1 125.5 130.4 120.4 132.9

119.2 117.6 87.7 100.7 69.4 99.6 116.8 119.2 91.0 163.7 165.1 125.3 125.3 125.8 136.0 180.8 136.2 94.9 126.1 131.2 121.1 133.8

119.8 118.2 87.6 101.1 68.8 99.7 117.3 119.8 90.9 164.1 164.8 126.2 126.0 126.5 136.7 184.6 137.4 94.6 126.5 132.0 121.9 134.8

120.4 118.8 87.5 101.5 68.2 99.8 117.6 120.4 90.8 162.5 163.3 127.0 126.8 127.0 137.3 187.2 138.6 94.2 127.0 132.8 122.7 135.7

121.0 119.4 87.4 101.8 67.7 100.0 118.1 121.1 90.8 162.1 163.0 127.8 127.6 127.3 137.8 187.4 139.8 93.9 127.5 133.5 123.5 136.7

121.6 119.9 87.3 102.1 67.3 100.1 118.6 121.7 90.8 161.6 162.4 128.6 128.3 127.6 138.2 188.5 140.9 93.6 127.9 134.3 124.3 137.7

122.2 120.6 87.3 102.4 66.9 100.3 119.2 122.3 90.8 162.7 163.3 129.5 129.1 127.8 138.5 188.2 142.1 93.3 128.3 135.0 125.1 138.8

122.8 121.1 87.2 102.7 66.5 100.4 119.5 122.9 90.8 161.2 162.3 130.3 129.9 127.8 138.8 186.3 143.2 93.0 128.7 135.8 126.0 139.9

123.4 121.8 87.2 103.0 66.1 100.6 120.1 123.5 90.9 160.9 162.3 131.1 130.7 127.9 139.1 184.4 144.4 92.7 129.1 136.5 126.9 141.1

Institute for Economic Competitiveness

124.0 122.4 87.1 103.3 65.8 100.8 120.6 124.2 90.9 160.5 162.2 132.0 131.5 128.0 139.5 183.0 145.6 92.4 129.5 137.3 127.7 142.2 21

U . S . F o r eca s t Tab l e s Table 8. 8.

Percent C hange inChange Implicit Price in Deflators Table Percent Implicit Price Deflators 2006Q 3 2006Q 4 2007Q 1 2007Q 2 2007Q 3 2007Q 4 2008Q 1 2008Q 2 2008Q 3 2008Q 4 2009Q 1 2009Q 2 2009Q 3 2009Q 4 GDP Consumption Durables Motor Vehicles Furniture Other Durables Nondurables Food Clothing & Shoes Gasoline & Oil Fuel Services Housing Household Operations Electricity Natural Gas Water & Sewer Telephone Domestic Service Other Household Transportation Other Services

1.9 2.3 -1.1 0.4 -4.6 2.4 2.3 2.9 -1.3 6.0 14.9 3.0 4.5 1.2 2.8 -10.6 5.2 2.5 2.3 2.3 2.9 4.6

1.3 -0.6 -2.3 -2.1 -4.2 1.0 -7.9 2.1 -0.7 -66.8 -21.7 3.3 4.1 1.0 0.2 -9.7 4.5 2.9 11.9 2.8 -0.3 4.9

2.9 2.7 -1.0 1.5 -4.6 0.8 3.2 2.4 0.5 15.3 -5.7 3.2 3.1 4.9 0.7 31.1 4.0 -0.5 1.9 2.6 3.2 3.7

1.7 2.0 -0.9 1.6 -4.2 0.3 1.8 2.2 -0.6 3.4 -12.9 2.7 2.3 2.4 2.8 9.0 3.7 -1.5 1.6 2.4 3.2 3.1

1.8 2.1 -0.7 1.9 -4.0 0.3 2.1 2.7 -0.2 2.2 -9.6 2.7 2.1 3.5 2.2 17.2 3.6 -1.2 1.6 2.4 3.1 2.9

1.7 2.0 -0.7 1.6 -3.7 0.3 2.0 2.3 -0.5 2.8 0.0 2.5 2.2 2.4 2.3 8.8 3.7 -1.1 1.6 2.4 2.4 2.9

2.0 2.0 -0.6 1.5 -3.3 0.4 1.7 2.2 -0.5 1.0 -0.7 2.6 2.4 2.3 2.0 8.4 3.6 -1.2 1.5 2.4 2.6 2.9

1.9 1.8 -0.5 1.4 -3.1 0.4 1.2 2.1 -0.4 -3.9 -3.5 2.6 2.4 1.6 1.7 5.7 3.5 -1.6 1.5 2.3 2.4 2.7

2.0 2.0 -0.4 1.4 -2.9 0.5 1.6 2.2 -0.1 -1.0 -0.9 2.6 2.4 1.0 1.5 0.5 3.5 -1.3 1.4 2.3 2.8 3.0

1.9 1.9 -0.4 1.1 -2.7 0.5 1.5 2.0 -0.1 -1.1 -1.3 2.6 2.4 1.1 1.3 2.3 3.3 -1.5 1.3 2.2 2.5 3.0

2.1 2.1 -0.2 1.2 -2.4 0.7 2.0 2.0 0.1 2.5 2.2 2.6 2.4 0.6 0.8 -0.7 3.3 -1.1 1.3 2.2 2.8 3.3

1.9 1.9 -0.2 1.2 -2.3 0.7 1.3 1.9 0.1 -3.6 -2.4 2.5 2.4 0.1 0.8 -3.9 3.3 -1.5 1.3 2.3 2.6 3.1

2.0 2.1 -0.2 1.2 -2.2 0.8 1.7 2.1 0.2 -0.8 -0.1 2.6 2.5 0.2 1.0 -4.1 3.3 -1.2 1.3 2.2 2.9 3.3

2.0 2.0 -0.3 1.1 -2.2 0.6 1.6 2.0 0.0 -0.9 -0.3 2.6 2.5 0.3 1.1 -3.2 3.3 -1.3 1.3 2.2 2.6 3.3

Table 9.9.Annual ImplicitImplicit Price Deflators (2000= 100) Table Annual Price Deflators (2000=100)

GDP Consumption Durables Motor Vehicles Furniture Other Durables Nondurables Food Clothing & Shoes Gasoline & Oil Fuel Services Housing Household Operations Electricity Natural Gas Water & Sewer Telephone Domestic Service Other Household Transportation Other Services

22

U.S. Forecast

1998

1999

2000

2001

History 2002

2003

2004

2005

2006

2007

Forecast 2008

2009

96.5 96.0 104.2 99.2 111.6 102.5 93.8 95.9 103.0 71.9 71.8 95.3 94.3 98.1 99.1 84.5 95.5 106.1 93.1 93.3 95.4 93.5

97.9 97.6 101.6 99.6 104.7 100.8 96.2 97.7 101.3 78.2 72.7 97.4 96.9 98.1 98.4 84.9 97.6 103.5 95.8 96.3 97.5 96.5

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 99.1 100.0 100.0 100.0 100.0 100.0 100.0

102.4 102.1 98.1 100.5 94.1 100.3 101.5 102.9 98.0 96.3 101.7 103.3 103.9 104.6 108.1 118.8 102.9 98.0 103.8 104.9 101.7 104.0

104.2 103.5 95.8 100.1 88.7 99.5 102.1 105.0 95.4 90.4 91.7 106.0 107.8 103.7 106.8 101.1 106.2 98.1 107.6 109.5 102.9 108.3

106.4 105.6 92.4 97.7 83.3 97.9 104.1 107.0 93.0 105.2 109.7 109.4 110.4 107.7 109.3 123.8 110.2 97.2 110.3 114.8 106.0 113.1

109.4 108.4 90.8 97.2 79.9 98.0 107.6 110.3 92.7 123.9 125.4 112.9 113.2 109.9 111.4 134.2 116.7 95.2 112.8 117.8 108.4 117.8

112.7 111.5 90.2 99.0 76.9 97.7 111.5 112.7 91.7 150.8 159.5 116.5 116.2 115.6 118.3 160.3 122.9 94.4 116.6 122.1 112.7 122.6

116.0 114.6 89.0 99.4 73.5 98.5 115.0 115.3 91.3 170.7 179.4 120.5 120.3 121.6 132.6 164.1 129.0 95.1 120.8 126.8 116.9 127.5

118.4 116.7 88.0 100.1 70.4 99.5 115.9 118.1 91.1 162.0 168.5 124.1 124.3 124.5 134.8 173.3 134.3 95.3 125.3 130.0 119.9 132.4

120.7 119.1 87.5 101.6 68.0 99.9 117.9 120.8 90.8 162.6 163.4 127.4 127.2 127.1 137.5 186.9 139.1 94.1 127.2 133.1 123.1 136.2

123.1 121.5 87.2 102.8 66.3 100.5 119.8 123.2 90.8 161.3 162.5 130.7 130.3 127.9 139.0 185.5 143.8 92.8 128.9 136.2 126.4 140.5

U . S . F o r eca s t Tab l e s Table 10.10.

Percent C hange Change in Implicit Price Deflators Price Deflators Table Percent in Implicit

GDP Consumption Durables Motor Vehicles Furniture Other Durables Nondurables Food Clothing & Shoes Gasoline & Oil Fuel Services Housing Household Operations Electricity Natural Gas Water & Sewer Telephone Domestic Service Other Household Transportation Other Services

1998

1999

2000

2001

History 2002

2003

2004

2005

2006

2007

Forecast 2008

2009

1.1 0.9 -2.7 -1.0 -5.8 -0.7 0.0 1.8 -1.9 -13.0 -8.7 2.2 3.2 -0.9 -3.9 -1.9 3.2 -1.3 2.8 2.1 2.2 2.2

1.4 1.7 -2.4 0.4 -6.2 -1.6 2.5 1.9 -1.6 9.1 1.4 2.2 2.8 -0.1 -0.7 0.6 2.2 -2.4 2.9 3.3 2.2 3.3

2.2 2.5 -1.6 0.4 -4.5 -0.8 4.0 2.3 -1.3 28.6 37.8 2.7 3.2 1.9 1.6 16.5 2.5 -3.4 4.4 3.8 2.5 3.6

2.4 2.1 -1.9 0.5 -5.9 0.3 1.5 2.9 -2.0 -3.5 2.2 3.3 3.9 4.6 8.1 22.3 2.9 -2.0 3.8 4.9 1.7 4.0

1.7 1.4 -2.4 -0.4 -5.7 -0.8 0.6 2.0 -2.7 -5.0 -9.4 2.7 3.8 -0.9 -1.1 -13.5 3.2 0.2 3.7 4.3 1.2 4.1

2.1 2.0 -3.6 -2.4 -6.0 -1.6 2.0 1.9 -2.5 17.0 20.0 3.2 2.5 3.9 2.4 22.5 3.7 -0.9 2.5 4.9 2.9 4.4

2.8 2.6 -1.6 -0.4 -4.1 0.1 3.3 3.1 -0.4 18.1 14.7 3.2 2.5 2.1 1.9 8.4 6.0 -2.0 2.2 2.6 2.3 4.2

3.0 2.9 -0.7 1.8 -3.8 -0.4 3.6 2.2 -1.0 21.5 27.2 3.2 2.6 5.1 6.1 19.1 5.3 -0.9 3.4 3.6 4.0 4.1

2.9 2.8 -1.3 0.5 -4.4 0.8 3.1 2.3 -0.5 14.1 13.2 3.4 3.6 5.3 12.2 4.3 4.9 0.8 3.6 3.9 3.8 4.0

2.1 1.9 -1.2 0.7 -4.2 1.0 0.8 2.4 -0.1 -4.4 -5.9 3.0 3.3 2.3 1.7 6.3 4.2 0.3 3.7 2.6 2.6 3.8

1.9 2.0 -0.6 1.5 -3.4 0.4 1.7 2.3 -0.4 0.3 -3.0 2.6 2.3 2.1 2.0 8.0 3.6 -1.3 1.5 2.4 2.7 2.9

2.0 2.0 -0.3 1.2 -2.5 0.6 1.6 2.0 0.0 -0.8 -0.5 2.6 2.5 0.6 1.1 -0.8 3.4 -1.3 1.3 2.3 2.7 3.2

2005

2006

Table 11.11.

Personal Income and its C omponents Table Personal Income and its Components History 2002

1998

1999

2000

2001

Personal Income Wages & Salaries Other Labor Income Nonfarm Income Farm Income Rental income Dividends Interest Income Transfer Payments Personal Social Insurance Tax

7423.0 5019.4 529.7 598.4 29.4 137.5 350.0 933.3 978.6 317.2

7802.4 5357.1 562.4 649.7 28.6 147.4 335.6 928.6 1022.1 338.1

8429.7 5782.7 609.9 705.7 22.7 150.3 376.1 1011.0 1084.1 359.2

8724.1 5942.1 642.7 752.2 19.7 167.4 369.0 1011.0 1193.9 374.5

8881.9 6091.2 745.1 757.8 10.6 153.0 397.2 936.1 1286.2 384.8

Personal Income Wages & Salaries Other Labor Income Nonfarm Income Farm Income Rental income Dividends Interest Income Transfer Payments Personal Social Insurance Tax

7.3 7.7 6.5 10.4 -13.4 6.8 5.2 10.0 2.9 6.6

5.1 6.7 6.2 8.6 -2.0 7.3 -4.1 -0.5 4.4 6.6

8.0 8.0 8.5 8.6 -19.6 2.0 12.1 8.9 6.1 6.2

3.5 2.8 5.4 6.6 -12.8 11.5 -1.8 0.0 10.1 4.3

1.8 2.5 15.9 0.7 -46.1 -7.8 7.7 -7.4 7.8 2.7

2003

2004

2007

Forecast 2008

2009

Personal Income Billions C urrent Dollars 9163.6 6325.4 815.6 782.1 29.2 133.0 422.6 914.1 1351.0 396.5

9731.4 10239.2 10897.7 6650.3 7030.3 7491.3 866.1 933.2 992.8 874.9 940.5 991.7 36.2 30.3 23.2 127.1 72.8 76.0 537.1 574.4 639.6 890.8 945.0 1021.9 1426.5 1526.6 1600.4 419.3 448.3 483.8

11457.6 12096.6 12866.1 7835.5 8210.7 8666.6 1041.6 1071.2 1108.4 1028.9 1098.2 1176.3 24.7 23.6 24.8 72.2 57.1 45.8 721.9 803.3 875.0 1067.8 1141.2 1265.7 1700.4 1806.4 1916.8 508.9 534.7 566.1

G rowth Rates 3.2 3.8 9.6 3.2 269.0 -11.7 6.4 -2.3 5.0 3.0

6.2 5.1 6.2 11.9 28.1 -4.1 26.8 -2.5 5.6 5.7

5.2 5.7 7.7 7.5 -16.1 -45.4 8.1 6.1 7.0 6.9

6.4 6.6 6.4 5.5 -23.1 177.6 11.3 8.2 4.9 7.9

5.1 4.6 4.9 3.8 10.2 -4.9 12.9 4.5 6.2 5.2

5.6 4.8 2.8 6.7 -4.0 -21.0 11.3 6.8 6.2 5.1

6.4 5.6 3.5 7.1 4.8 -19.6 9.0 10.9 6.1 5.9

Institute for Economic Competitiveness

23

U . S . F o r eca s t Tab l e s Table 12. Personal Consumption Expenditures Table 12. Personal C onsumption Expenditures (C urrent Dollars)

(Current Dollars)

2006Q 3 2006Q 4 2007Q 1 2007Q 2 2007Q 3 2007Q 4 2008Q 1 2008Q 2 2008Q 3 2008Q 4 2009Q 1 2009Q 2 2009Q 3 2009Q 4 C onsumer Expenditures by Type Billions C urrent Dollars

Consumer spending on‌ all goods & services durable goods furniture & appliances computers & software motor vehicles & parts other durable goods nondurables clothing & shoes fuel oil & coal gasoline & motor oil food other nondurable goods

9346.7 1075.5 403.2 59.9 451.3 194.0 2747.7 358.7 23.2 346.3 1280.7 738.9

9425.1 1088.2 412.7 62.3 448.5 199.2 2732.0 366.0 23.4 289.7 1303.1 749.9

9547.8 1078.8 410.5 63.7 438.2 201.9 2771.6 370.0 22.3 302.8 1318.4 758.2

9651.1 1074.6 408.4 63.8 433.9 203.9 2799.8 368.4 22.0 306.1 1334.5 768.8

9765.4 1076.0 408.1 63.9 434.4 204.8 2835.5 369.9 21.7 312.4 1352.0 779.5

all goods & services durable goods furniture & appliances computers & software motor vehicles & parts other durable goods nondurables clothing & shoes fuel oil & coal gasoline & motor oil food other nondurable goods

8111.2 1208.8 551.7 187.5 452.9 199.7 2360.1 392.6 12.3 186.6 1106.8 671.5

8191.5 1230.2 570.9 199.9 452.6 204.7 2393.3 401.4 13.2 187.6 1120.2 681.7

8242.8 1222.7 574.6 211.5 440.6 207.2 2408.7 405.3 12.7 188.9 1126.6 686.8

8290.4 1220.7 577.6 218.4 434.5 209.2 2422.5 404.1 13.0 189.4 1134.2 692.9

8344.1 1224.3 583.0 225.8 433.0 210.0 2440.5 405.9 13.1 192.2 1141.2 698.4

all goods & services durable goods furniture & appliances computers & software motor vehicles & parts other durable goods nondurables clothing & shoes fuel oil & coal gasoline & motor oil food other nondurable goods

2.8 6.2 6.5 17.6 8.3 2.9 1.5 5.4 -19.8 6.7 -0.7 1.9

4.0 7.1 13.9 26.6 -0.3 10.0 5.6 9.0 28.9 2.3 4.8 6.1

2.5 -2.5 2.5 23.2 -10.7 4.8 2.6 3.9 -13.9 2.6 2.3 3.0

2.3 -0.7 2.2 13.0 -5.5 3.8 2.3 -1.2 9.0 1.0 2.7 3.6

2.6 1.2 3.7 13.6 -1.4 1.7 3.0 1.9 3.4 6.0 2.5 3.2

9877.4 10002.5 10119.1 10250.2 10380.2 10518.9 10660.5 10805.7 10957.5 1079.6 1090.3 1094.9 1108.7 1121.6 1131.5 1150.8 1164.1 1185.0 405.9 406.0 407.6 411.1 416.1 421.4 428.1 435.3 441.7 64.5 65.5 66.6 67.7 68.9 70.2 71.6 73.0 74.4 438.8 446.4 446.4 452.5 456.7 457.5 465.3 466.8 477.3 205.9 208.5 211.1 214.8 218.0 221.3 225.8 229.8 233.2 2867.3 2899.9 2928.8 2960.9 2991.9 3029.7 3063.5 3100.6 3136.4 371.9 375.4 377.8 380.8 383.1 387.1 391.8 396.4 400.2 21.5 21.3 21.3 21.1 21.1 21.1 21.1 21.1 21.1 315.2 317.6 317.1 317.7 317.7 321.7 321.4 323.0 324.2 1368.5 1385.0 1401.1 1417.5 1433.2 1449.4 1465.4 1482.0 1498.3 790.2 800.6 811.5 823.9 836.8 850.4 863.9 878.2 892.7

C onsumer Expenditures by Type Billions 2000 Dollars 8398.0 1230.6 585.2 234.4 435.6 211.1 2455.4 408.6 13.0 192.5 1148.4 703.7

8461.5 1244.5 590.3 244.8 441.6 213.7 2472.6 412.9 12.9 193.5 1156.0 708.7

8521.1 1251.4 597.3 256.0 440.0 216.3 2489.8 415.9 13.0 195.1 1163.3 714.0

8588.1 1268.4 606.9 267.7 444.5 220.0 2506.9 419.4 12.9 196.0 1170.5 720.2

8654.8 1284.5 618.5 280.1 447.4 223.1 2523.5 422.1 13.0 196.5 1177.5 726.9

8724.2 1296.6 630.0 293.2 446.8 226.3 2542.7 426.3 12.9 197.8 1185.0 733.7

8800.6 1319.6 643.8 307.4 453.1 230.5 2562.6 431.4 13.0 199.3 1192.4 740.3

8874.4 1335.3 658.2 322.0 453.1 234.3 2582.5 436.2 13.0 200.7 1199.6 747.2

8954.3 1360.2 671.7 337.2 462.1 237.6 2601.7 440.4 13.0 201.9 1206.8 754.3

3.2 3.8 7.5 18.7 -0.5 5.7 3.0 4.0 -1.2 2.6 2.5 3.8

3.5 7.1 8.7 19.3 5.6 7.5 3.1 4.8 1.5 3.2 2.5 3.6

3.4 4.8 9.0 19.1 0.1 6.7 3.1 4.5 0.2 2.8 2.4 3.8

3.6 7.5 8.2 18.9 7.9 5.5 3.0 3.8 0.3 2.4 2.4 3.8

Real C onsumer Expenditures Annual G rowth Rate

24

U.S. Forecast

2.6 2.0 1.5 15.2 2.4 2.0 2.4 2.7 -3.0 0.7 2.5 3.0

3.0 4.5 3.5 17.7 5.5 4.9 2.8 4.2 -2.6 2.1 2.7 2.8

2.8 2.2 4.8 18.3 -1.5 5.0 2.8 2.9 2.3 3.2 2.5 3.0

3.1 5.4 6.4 18.4 4.1 6.7 2.7 3.3 -2.4 1.8 2.5 3.5

3.1 5.1 7.6 18.5 2.6 5.7 2.6 2.6 0.9 1.1 2.4 3.7

U . S . F o r eca s t Tab l e s Table Personal Consumption Expenditures (2000 Dollars) Table 13.13.

Personal C onsumption Expenditures (2000 Dollars) History 1998

1999

2000

2001

2002

Forecast 2003

2004

2005

2006

2007

2008

2009

C onsumer Expenditures by Type Billions C urrent Dollars

Consumer spending on‌ all goods & services durable goods furniture & appliances computers & software motor vehicles & parts other durable goods nondurables clothing & shoes fuel oil & coal gasoline & motor oil food other nondurable goods

5879.5 750.2 273.1 37.0 336.1 121.0 1683.6 270.9 11.5 122.4 829.8 449.0

6282.5 817.6 293.9 40.4 370.8 132.1 1804.8 286.3 11.9 137.9 873.1 495.6

6739.4 863.3 312.9 43.8 386.5 141.8 1947.2 297.7 15.8 175.7 925.2 532.9

7055.0 883.7 312.1 42.0 407.9 143.0 2017.1 297.7 15.4 171.6 967.9 564.4

all goods & services durable goods furniture & appliances computers & software motor vehicles & parts other durable goods nondurables clothing & shoes fuel oil & coal gasoline & motor oil food other nondurable goods

6125.8 720.3 244.7 22.0 339.0 116.9 1794.4 263.1 16.0 170.3 865.6 481.1

6438.6 804.5 280.7 32.9 372.4 130.3 1876.6 282.7 16.4 176.3 893.6 508.6

6739.4 863.3 312.9 43.8 386.5 141.8 1947.2 297.7 15.8 175.7 925.2 532.9

6910.4 900.7 331.8 55.4 405.8 143.1 1986.7 303.7 15.2 178.3 940.2 549.2

7350.7 923.9 323.1 44.6 429.3 149.7 2079.6 303.5 14.2 164.5 1001.9 595.5

7703.6 942.7 331.5 46.6 431.7 157.1 2190.2 310.9 16.9 192.7 1046.0 623.7

8211.5 986.3 356.5 51.6 437.9 168.5 2345.2 325.1 18.4 230.4 1114.8 656.5

8742.4 1033.1 377.2 55.4 448.2 182.7 2539.3 341.8 21.9 280.2 1201.4 694.0

9269.8 1072.4 404.9 60.0 446.0 194.2 2714.8 358.8 22.8 316.7 1280.0 736.6

9710.4 10188.0 10735.6 1077.2 1103.9 1157.8 408.2 410.2 431.6 64.0 67.2 72.3 436.3 450.5 466.7 204.1 213.1 227.5 2818.5 2945.4 3082.6 370.0 379.3 393.9 21.9 21.2 21.1 309.1 317.5 322.5 1343.4 1409.2 1473.8 774.2 818.2 871.3

C onsumer Expenditures by Type Billions 2000 Dollars 7099.3 964.8 364.3 74.1 429.0 151.3 2037.1 318.3 15.5 181.9 954.6 567.1

7295.4 1020.6 397.8 94.8 442.1 161.9 2103.0 334.2 15.4 183.2 977.7 593.2

7577.1 1085.7 446.0 118.5 450.4 173.9 2179.2 350.9 14.6 186.0 1011.0 618.5

7841.2 1145.3 490.6 147.4 452.9 190.0 2276.8 372.7 13.7 185.9 1065.7 643.9

8090.4 1204.9 551.0 184.3 448.6 200.8 2361.8 393.1 12.7 185.4 1109.8 671.0

8318.8 1224.6 580.1 222.5 435.9 209.4 2431.8 406.0 13.0 190.7 1137.6 695.4

8556.4 1262.2 603.2 262.1 443.4 218.3 2498.2 417.6 13.0 195.3 1166.8 717.4

8838.4 1327.9 650.9 314.9 453.8 232.2 2572.4 433.6 13.0 200.0 1196.0 743.9

2.8 1.6 5.3 20.9 -2.8 4.3 3.0 3.3 2.5 2.9 2.5 3.6

2.9 3.1 4.0 17.7 1.7 4.2 2.7 2.9 -0.1 2.4 2.6 3.2

3.3 5.2 7.9 20.1 2.3 6.4 3.0 3.8 0.0 2.4 2.5 3.7

Real C onsumer Expenditures Annual G rowth Rate all goods & services durable goods furniture & appliances computers & software motor vehicles & parts other durable goods nondurables clothing & shoes fuel oil & coal gasoline & motor oil food other nondurable goods

5.0 11.3 13.1 59.9 11.2 8.5 4.0 7.0 -5.3 4.6 2.4 5.4

5.1 11.8 14.7 50.9 10.2 11.4 4.6 7.5 2.3 3.5 3.2 5.7

4.7 7.4 11.6 33.6 3.9 8.9 3.8 5.3 -3.4 -0.3 3.5 4.8

2.5 4.3 6.0 26.2 5.1 0.9 2.0 2.0 -3.9 1.5 1.6 3.1

2.7 7.2 9.8 34.1 6.1 5.8 2.5 4.8 2.7 2.1 1.5 3.3

2.8 5.8 9.1 27.6 3.1 7.0 3.2 5.0 -0.6 0.7 2.4 4.6

3.9 6.4 12.2 25.4 1.9 7.5 3.6 5.0 -5.0 1.5 3.4 4.3

3.5 5.5 10.0 24.4 0.6 9.3 4.5 6.2 -6.2 0.0 5.4 4.1

3.2 5.2 12.3 25.1 -0.8 5.7 3.7 5.5 -7.5 -0.2 4.2 4.2

Institute for Economic Competitiveness

25

U . S . F o r eca s t Tab l e s Table Business Fixed Investment Table 14.14.

Business Fixed Investment

1998

1999

2000

2001

History 2002

Business Fixed Investment Producers Dur. Equipment Nonresidential Structures Non-Farm Buildings Commercial Industrial Other Buildings Utilities Mines & Wells

1052.5 777.3 275.2 203.1 100.0 40.5 62.6 39.5 23.4

1133.9 851.7 282.2 207.6 109.1 32.6 65.8 44.5 20.6

1232.1 918.9 313.2 222.8 121.3 31.8 69.7 51.5 27.2

1176.8 854.2 322.6 216.4 118.2 29.5 68.7 54.4 39.2

1066.3 787.1 279.2 180.6 97.0 17.8 65.8 54.6 35.6

Business Fixed Investment Producers Dur. Equipment Nonresidential Structures Non-Farm Buildings Commercial Industrial Other Buildings Utilities Mines & Wells

1037.8 745.6 294.5 221.2 108.7 43.7 68.8 41.0 23.3

1133.3 840.2 293.2 216.6 113.5 33.9 69.2 45.9 21.3

1232.1 918.9 313.2 222.8 121.3 31.8 69.7 51.5 27.2

1180.5 874.2 306.1 208.4 114.2 28.5 65.6 52.8 32.0

1071.5 820.2 253.8 170.0 91.2 16.7 62.1 51.8 24.5

Business Fixed Investment Producers Dur. Equipment Nonresidential Structures Non-Farm Buildings Commercial Industrial Other Buildings Utilities Mines & Wells

8.7 8.3 10.0 10.1 12.2 7.7 8.3 16.8 5.0

7.7 9.6 2.6 2.3 9.2 -19.4 5.4 12.6 -11.9

8.7 7.9 10.9 7.4 11.2 -1.9 6.0 15.8 31.9

-4.4 -7.0 3.2 -2.7 -2.3 -7.0 -1.5 5.5 45.3

-9.3 -7.7 -13.4 -16.5 -17.8 -39.5 -4.2 1.3 -8.8

2003

2005

2006

2007

Forecast 2008

2009

1265.7 927.1 338.6 204.4 109.9 24.1 70.3 47.2 76.4

1397.2 987.1 410.1 240.2 123.5 29.0 87.6 51.2 107.0

1485.7 1039.1 446.6 264.0 133.6 31.6 98.8 57.6 112.4

1545.7 1104.6 441.0 269.6 131.2 37.4 101.1 62.3 95.0

1643.2 1189.2 453.9 290.9 140.9 44.1 105.9 64.6 82.5

1223.8 984.9 251.5 163.0 86.2 19.6 57.1 38.7 36.4

1315.0 1051.8 273.9 178.8 90.3 22.0 66.6 40.2 40.4

1389.6 1100.2 296.5 191.3 95.1 23.1 73.3 43.8 45.0

1447.4 1163.8 297.5 192.5 92.2 26.5 74.1 46.2 43.2

1529.6 1250.0 301.6 201.8 96.4 30.1 75.5 46.5 39.0

9.6 8.5 12.6 8.4 8.6 31.0 2.3 0.2 38.8

10.4 6.5 21.1 17.5 12.4 20.5 24.5 8.7 40.9

6.3 5.3 9.2 10.2 8.4 8.9 13.2 12.4 5.6

4.0 6.3 -1.2 2.1 -1.8 18.5 2.3 8.3 -15.5

6.3 7.7 2.9 7.9 7.4 17.9 4.7 3.7 -13.1

2004

Billions C urrent Dollars 1077.4 800.2 277.2 174.7 91.7 16.7 66.2 49.2 45.7

1155.3 854.5 300.8 188.6 101.3 18.5 68.9 47.2 54.9

Billions 2000 Dollars 1081.8 843.1 243.5 160.3 83.9 15.4 61.0 45.6 29.0

1145.8 904.2 248.7 163.4 87.1 16.2 60.0 40.8 32.8

Annual G rowth Rate

26

U.S. Forecast

1.1 1.7 -0.6 -3.1 -5.1 -4.6 0.6 -9.6 28.8

7.2 6.8 8.5 8.0 10.5 10.4 4.0 -3.9 20.2

U . S . F o r eca s t Tab l e s Table Government Table 15.15.

G overnment Receipts and Receipts Expenditures and Expenditures History 2002

1998

1999

2000

2001

2003

2004

2005

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

1773.8 825.8 204.3 81.1 613.8

1891.2 893.0 213.0 83.9 651.7

2053.9 999.1 219.5 87.8 691.7

2016.2 994.5 164.7 85.8 717.5

1853.2 830.5 150.5 87.3 734.3

1879.9 774.5 197.8 89.7 758.9

2001.0 801.4 244.5 94.6 802.2

2246.8 927.9 326.4 101.1 855.4

Expenditures Purchases Goods & Services National Defense Other Transfer Payments To Persons To Foreigners Grants in Aid to State & Local Gov't Net Interest Subsidies less Surplus of Gov't Entities Surplus (+) or Deficit (-)

1735.0 530.5 345.7 184.7 946.5 716.9 14.6 212.8 281.2 34.9 38.8

1787.6 555.8 360.6 195.2 986.1 735.7 15.2 232.9 264.7 44.1 103.6

1864.4 578.8 370.3 208.5 1038.1 770.0 18.3 247.3 263.2 46.1 189.5

1969.5 612.9 392.6 220.3 1131.4 838.7 14.0 276.1 240.2 53.1 46.7

2101.1 679.7 437.1 242.5 1243.0 916.9 18.8 304.6 213.7 39.1 -248.0

2252.1 756.4 497.2 259.2 1328.7 963.7 23.6 338.5 196.5 45.4 -372.2

2383.0 825.9 551.3 274.7 1393.3 1015.4 25.9 349.0 205.3 45.5 -382.0

2555.9 878.3 589.3 289.0 1476.7 1078.6 33.9 361.1 238.0 61.8 -309.2

794.9 201.2 34.9 558.8 10.4 212.8

840.4 214.5 35.8 590.2 9.8 232.9

893.2 236.6 35.6 621.1 11.0 247.3

915.8 242.7 30.2 642.8 13.7 276.1

929.0 221.3 32.2 675.5 15.8 304.6

979.5 226.6 35.3 717.5 19.8 338.5

1060.9 248.4 43.1 769.4 24.3 349.0

1154.4 275.2 58.0 821.2 25.3 361.1

1111.2 987.9 235.8 -1.0 -9.8 1.7 0.0 52.0

1186.3 1065.0 252.4 -3.8 -10.0 1.8 0.0 50.4

1269.5 1142.8 271.7 -4.5 -7.1 1.9 0.0 50.0

1368.2 1212.8 305.2 5.2 3.6 2.0 0.0 4.8

1444.3 1281.5 332.0 16.5 -1.6 2.0 0.0 -34.2

1514.6 1336.0 353.0 24.8 0.7 2.2 0.0 -20.4

1605.5 1400.4 382.9 29.7 4.1 2.4 0.0 -12.9

1703.9 1494.5 402.3 30.7 10.8 2.4 0.0 -3.3

2007

Forecast 2008

2009

2538.3 1061.8 385.6 101.9 921.6

2664.8 1132.7 387.9 103.7 968.7

2788.1 1184.4 403.6 106.6 1017.7

2954.1 1270.6 415.3 110.6 1077.6

2696.7 926.8 619.8 306.9 1551.5 1163.9 24.1 360.3 268.8 53.6 -158.5

2851.0 966.1 653.5 312.7 1649.2 1233.6 30.0 382.2 289.8 51.7 -186.2

3008.5 1002.5 679.7 322.8 1752.9 1313.0 31.5 404.8 308.8 52.1 -220.4

3149.7 1026.5 691.0 335.6 1855.6 1389.5 33.5 428.9 325.4 52.7 -195.6

1233.4 300.8 68.0 864.6 24.7 360.3

1278.0 311.7 67.4 898.8 25.2 382.2

1341.5 331.4 69.7 940.5 26.1 404.8

1406.7 354.5 70.1 982.1 27.3 428.9

1786.3 1599.5 401.3 32.6 8.6 2.6 0.0 3.7

1876.7 1677.5 429.7 34.0 5.9 2.7 0.0 -6.9

1955.4 1749.6 456.4 32.9 2.5 2.7 0.0 16.0

2046.8 1821.1 488.7 33.6 1.5 2.8 0.0 27.3

2006

Federal G overnment Receipts and Expenditures

State and Local G overnment Receipts and Expenditures Receipts Personal Tax/Nontax Receipts Corporate Profits Indirect Business Tax and Nontax Accruals Contributions for Social Insurance Federal Grants-In-Aid Expenditures Purchases Goods & Services Transfer Payments Interest Received Net Subsidies Dividends Received Net Wage Accruals Surplus (+) or Deficit (-)

Institute for Economic Competitiveness

27

U . S . F o r eca s t Tab l e s Table 16.16.

U.S. U.S. ExportsExports and Importsand of G oods and Services Table Imports of Goods and Services

1998

1999

2000

2001

History 2002

Net Exports Goods & Services Current Account Exports - Goods & Services Merchandise Balance Food, Feed & Beverage Industrial Supplies Excl Petroleum Motor Vehicles & Parts Capital Goods, Excl. MVP Computer Equipment Other Consumer Goods, Excl. MVP Other Consumer Services

-160.0 -213.5 955.9 -246.7 46.43 142.9 72.4 299.9 45.3 201.1 80.3 39.1 275.1

-260.5 -299.8 991.3 -346.0 45.98 142.4 75.3 311.3 46.8 211.6 80.9 41.4 294.1

-379.5 -415.2 1096.3 -452.4 47.85 166.7 80.4 357.0 55.5 253.4 89.4 43.1 312.0

-367.0 -389.0 1032.8 -427.2 49.43 155.3 75.4 321.7 47.6 221.6 88.3 41.0 301.6

-424.4 -472.4 1005.9 -482.3 49.60 153.5 78.9 290.5 38.6 201.5 84.4 40.7 308.4

-499.4 -527.5 1040.8 -547.3 55.03 168.3 80.7 293.7 39.9 207.1 89.9 36.9 316.4

Imports - Goods & Services Merchandise Food, Feed & Beverage Petroleum & Products Industrial Supplies Excl Petroleum Motor Vehicles & Parts Capital Goods, Excl. MVP Computer Equipment Other Consumer Goods, Excl. MVP Other Consumer Services

1115.9 928.9 41.2 50.6 142.5 148.7 269.5 72.5 175.2 217.2 59.3 186.9

1251.8 1045.5 43.6 67.8 147.9 179.0 295.7 81.5 190.5 242.1 69.5 206.3

1475.8 1243.5 46.0 120.2 172.8 195.9 347.0 89.8 230.9 282.0 79.6 232.3

1399.9 1168.0 46.6 103.6 164.8 189.8 298.0 74.0 192.7 284.5 80.7 231.9

1430.3 1189.4 49.7 103.5 158.4 203.8 283.3 75.2 182.7 308.0 82.8 241.0

1540.2 1284.0 55.8 133.1 174.4 210.1 295.9 76.5 195.3 334.0 80.6 256.2

2003

2005

2006

2007

Forecast 2008

2009

-716.7 -791.5 1303.2 -782.7 58.95 227.5 98.6 362.7 45.6 256.4 115.7 44.0 395.6

-769.7 -865.0 1463.8 -837.8 67.37 267.1 106.8 414.8 47.8 292.5 129.3 48.7 429.8

-710.9 -823.5 1618.7 -802.7 70.13 293.4 120.0 464.8 52.9 325.7 146.3 53.5 470.4

-657.0 -799.9 1795.3 -783.5 73.35 316.9 136.0 522.6 60.7 363.6 166.5 57.7 522.3

-635.5 -823.4 1978.5 -795.4 75.98 337.2 154.0 581.7 68.5 402.7 188.6 62.0 579.0

2019.9 1699.0 68.1 251.8 264.9 239.5 379.2 93.3 260.2 407.3 88.1 320.9

2233.6 1884.1 75.5 305.1 294.8 254.5 419.5 102.0 289.4 441.0 93.7 349.5

2329.6 1962.4 82.6 290.2 302.6 257.8 451.2 110.5 309.2 480.3 97.7 367.1

2452.3 2067.5 88.7 298.8 316.2 270.7 488.4 121.0 330.3 500.3 104.4 384.8

2614.1 2205.8 93.3 297.5 332.3 294.8 532.0 132.7 357.2 541.6 114.3 408.3

-622.3 1300.4 1922.6

-571.4 1411.9 1983.3

-515.0 1546.5 2061.5

-491.1 1689.7 2180.7

12.3 10.7 8.7 5.9

10.6 4.3 8.6 3.2

10.9 5.3 9.5 3.9

10.2 6.6 9.3 5.8

2004

Billions of Dollars -613.3 -665.3 1178.1 -665.4 56.60 199.5 89.2 331.6 42.8 238.8 103.1 38.9 359.3

Billions of Dollars 1791.4 1495.2 62.1 180.5 225.2 228.2 343.5 88.6 230.6 373.1 82.7 296.2

Billions 2000 Dollars Net Exports Goods & Services Exports G & S Imports G & S

-203.8 966.5 1170.3

-296.2 1008.2 1304.5

-379.5 1096.3 1475.8

-399.1 1036.7 1435.8

-471.4 1013.3 1484.6

0.1 5.6 2.5 11.7

3.7 12.1 4.3 11.4

10.6 18.0 8.8 13.2

-5.6 -4.9 -5.3 -2.6

-2.3 2.6 -2.0 3.5

-518.9 1026.1 1545.0

-590.9 1120.4 1711.3

-619.2 1196.1 1815.3

Exports & Imports % C hange Exports G & S Imports G & S Real Exports G & S Real Imports G & S

28

U.S. Forecast

3.5 7.8 1.3 4.1

13.2 16.3 9.2 10.8

10.6 12.8 6.8 6.1

Director, Institute for Economic Competitiveness.

Ph.D., Pennsylvania State University 1996; M.A., Pennsylvania State University 1994, B.S., Allegheny College 1989.

Sea n M . S n ait h , P h . D .

Sean Snaith is Director of the Institute for Economic Competitiveness in the College of Business Administration at the University of Central Florida.

Dr. Snaith received his B.S. in Economics from Allegheny College, and his M.A. and Ph.D. in Economics from Pennsylvania State University. He has taught at Penn State, the American University in Cairo, the University of North Dakota and the University of the Pacific. While at the University of North Dakota he served as the Director of the Bureau of Business and Economic Research and as Director of the Business Forecasting Center at the University of the Pacific.

Snaith also served with International Planning and Research, a Boston area consulting firm, where his work included forecasting, market sizing, economic analyses, and econometric modeling for a variety of clients including IBM, Dell, Compaq, and HewlettPackard.

Snaith is a director of the Association of University Business of Economic Research, a member of the National Association of Business Economics, and the American Economics Association. He is also a member of the Western Blue Chip Economic Forecast Panel, the Federal Reserve Bank of Philadelphia Survey of Professional Forecasters, Livingston Survey, Bloomberg U.S. Economic Indicator Survey and USA Today’s Quarterly Survey of Top Economists. He is frequently quoted in the media and has published articles on a variety of topics including exchange rate modeling, predicting educational outcomes, the economics of information technology, and telemedicine.

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

For more information Sean Snaith, Director Institute for Economic Competitiveness College of Business Administration University of Central Florida P.O. Box 161400 Orlando, FL 32816 PH: 407.823.1451 FAX: 407.823.1454 EMAIL: ssnaith@bus.ucf.edu www.iec.ucf.edu

U n i v e r s it y o f C e n t r al F l o r ida 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 PH 407.823.1453

FAX 407.823.1454

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