U.S. Forecast December 2015

U.S. Forecast

December 2015

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

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

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

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

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

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

Publications of the Institute for Economic Competitiveness are made possible by the following staff: Dr. Sean Snaith, Director Angela Ayala, Administrative Assistant Diana Merchant, Researcher Leigh Durden, Researcher Mariah Coughlin, Researcher

This forecast was prepared based upon assumptions reflecting the Institute for Economic Competitiveness’ judgments as of the date it bears. Actual results could vary materially from the forecast. Neither the Institute for Economic Competitiveness nor the University of Central Florida shall be held responsible as a consequence of any such variance. Unless approved by the Institute for Economic Competitiveness, the publication or distribution of this forecast and the preparation, publication or distribution of any excerpts from this forecast are prohibited.

H IGH LIGH T S OF T H E 4 Q 2 015 U. S. F OR EC A S T In this Issue of the U.S. Forecast: • It’s a Wonderful Life? Not for community banks under the weight of the Dodd-Frank. • Is it time to start thinking about that dreaded “R” word? Economists’ anxiety about a recession is the highest it has been since the 2nd quarter of 2013.

HIGHLIGHTS

• The rest of the world is still a drag. Net exports will weigh down real GDP growth through the end of 2018. The stronger U.S. dollar and weaker GDP growth abroad have eroded foreign spending on U.S. goods and services. • The Federal Reserve is on the precipice of a tightening cycle, which involves raising interest rates for the first time since 2006. The Fed will take baby steps raising interest rates this cycle, which will be warranted by our tepid recovery and low inflation. • Real GDP growth in the 4th quarter of 2015 will be weighed down by inventory adjustment and a weak foreign sector coming in at a tepid 2.1%. Growth will end up at 2.4% in 2015, 2.7% in 2016, 2.7% in 2017, and 2.6% in 2018 as the Federal Reserve gradually raises interest rates. • Consumption spending growth is the brightest star in our economic constellation (think Little Dipper). Growth in real consumer spending from 2015 through 2018 will average 3.0%. The consumer is the key driver of growth right now; let’s hope she has stamina. • The housing market continues to gradually recover at a subdued pace. The housing market will slowly but steadily improve through 2018 when rising rates take their toll and housing starts level off. Housing starts will rise from around 1.1 million in 2015 to 1.47 million in 2018. In 2005, starts were nearly 2.1 million but mortgages were widely available then. • Payroll employment growth in 2015 has slowed from 2014. Employer mandates from the Affordable Care Act enforced in 2015 and 2016 weigh on private sector hiring, especially for full-time jobs. Consequently, payrolls will expand 2.1% in 2015, 1.5% in 2016, and 1.2% in 2017 before easing to just under 1.2% in 2018. • Unemployment rates (U-3) are expected to stabilize around 5.1%, give or take 0.1 percentage points through 2018. Slowing job growth will just be enough to keep up with labor force growth. Underemployment (U-6) remains a persistent problem and currently stands at 9.9%.

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Bedford Falls and Dodd-Frank Would it be Such a Wonderful Life Under this Massive Regulatory Burden?

It’s that time of the year again: TV channels will begin running classic holiday movies over and over again. No, I am not talking about “A Christmas Story”, though I do need to get my leg lamp out of storage. I am talking about the 1946 Frank Capra film, “It’s a Wonderful Life,” starring Donna Reed and James Stewart.

In the movie, James Stewart plays a young man, George Bailey, dreaming of life outside his small town of Bedford Falls where his family runs the local Bailey Building and Loan, a depository institution that specializes in residential mortgage lending in the town. When his father unexpectedly passes away, George is compelled to put his dreams on hold and take over the Building and Loan.

that they have deposited in the Bailey Building and Loan, George explains: “No, but you... you... you’re thinking of this place all wrong. As if I had the money back in a safe. The money’s not here. Your money’s in Joe’s house...(to one of the men) ...right next to yours. And in the Kennedy house, and Mrs. Macklin’s house, and a hundred others. Why, you’re lending them the money to build, and then, they’re going to pay it back to you as best they can. Now what are you going to do? Foreclose on them?”

Through no fault of his own, the Building and Loan teeters on the edge of insolvency and in his despair George contemplates suicide before a bumbling guardian angel, Clarence, appears to save George from this fate. George complains to Clarence that he wishes he were never born, and Clarence, with some help from the heavens, shows George what the world would be like if in fact he were never born.

The scene is a fun and useful pedagogical tool for teaching about bank runs and financial panics, but it also points to the unique role of community banks. George Bailey knows the names of his borrowers and calls them out to the mob that has assembled in the Building and Loan, demonstrating that behind the financial transactions that take place, there are relationships. This type of knowledge and relationship between borrower The movie was unsuccessful at the box office at the and lender simply cannot take place with larger time of its release but has since gone on to take its institutions. Do the mortgage underwriters at Bank place as one of the best American films of all time. of America know the borrowers personally? Would It is a heartwarming film in and of itself, but it has they be able to call them out by name if their paths also been a useful teaching tool for my courses in crossed in the lobby of a local branch? Of course Money and Banking. not, but that is not the role of large scale banks. One scene in the movie dramatizes a bank run It is, however, the unique role of community on the Bailey Building and Loan. I would show banks. The role that these banks play in gathering it to explain how a fractional reserve banking and considering information that is not collected system works and how confidence in the system is and used in the data-driven models used by necessary for it to function properly. As depositors larger banks to make lending decisions. The are demanding that George Bailey give them all Institute for Economic Competitiveness

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technologies that are employed by larger banks are imperfect substitutes for the knowledge, skills, and interpersonal relationships that permeate traditional community banks. The ability to gather and process such nontransparent information for consideration in the lending process is at the heart of relationshipbased lending that community banks engage in, and may well be the reason for the traditionally lower rates of loan defaults that community banks enjoy. Community banks are often located in rural areas and in many cases provide the only physical access to banking offices in these areas.1 They play an outsized role in agricultural lending controlling; 77% of all these loans with the smallest community banks holding 55% of them (as of Q2 2014.) Community banks made more than 50% (as of Q2 2014) of small business loans for $1 million or less and 46% of the $1.1 trillion (as of Q2 2014) of commercial real estate loans.

Since the passage of the Dodd-Frank financial regulatory reform law, community banks have experienced large losses in both market share and lending volume. A trend in consolidations for community banks has nearly doubled since the passage of the law. There are fewer community banks and they are making a smaller share of loans.

The number of de novo banks, which are newly formed banks as opposed to spinoffs of existing banks seeking new charters, during the period 2011 to 2013, totaled to a grand sum of just four. During the period 2002 to 2008 de novo banks averaged around 100. Low net interest income plays a role in this depressed entry rate, but other historical periods of similarly low net interest income in 2001 and 1981-82 saw entry rates at much higher levels. The increased burden of regulatory compliance, 1 See the following report, The State and Fate of Community Banking, where the data referenced in this section were drawn. www.hks.harvard.edu/ content/download/74695/1687293/version/1/file/Final_State_and_ Fate_Lux_Greene.pdf

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the longer period of FDIC scrutiny post-2009, and more rigorous application processes for new banks have severely diminished entry to the community banking industry, further compounding the declining number of these banks and their shrinking share of lending. Small businesses rely on loans from community banks and the economy relies on the jobs that small businesses create (63% of net new private sector jobs are created by small businesses). If community banks continue to struggle under the regulatory burden we have foisted upon them, the cost to our economy in terms of reduced availability of credit and slower job creation will continue to mount.

Bedford Falls was a dismal place without the Bailey Building and Loan and our economy is worse off with a community banking sector crippled by excessive regulation. It’s time to revisit and pare back the Dodd-Frank law after conducting a thorough cost benefit analysis of the 2,700-page law – an analysis that never happened as the bill was hastily assembled. We passed the bill five years ago and have seen much (but not all) of what is in it. For the sake of community banks and the borrowers that depend on them, we need to revisit these decisions with the benefit of hindsight and the knowledge of the unintended consequences this law has spawned. Let’s see if we can earn our regulatory guardian angel their wings. Besides, what small business would want to ask Mr. Potter for a loan? www.youtube.com/watch?v=I3so-EETuqA

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ANXIOUS INDEX Economists’ Anxiety at Its Highest Since 2013 The most recent release (4th quarter of 2015) of the Survey of Professional Forecasters by the Federal Reserve Bank of Philadelphia suggests that the 38 forecasters surveyed for the publication put a 13.00% chance that a decline in real GDP will occur in the 1st quarter of 2016. This quarter’s release reflects an increase in forecasters’ anxiety, and their worries are the highest since the 2nd quarter of 2013. 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 the survey is taken. In the survey

taken in the 4th quarter of 2015, the index stands at 13.00, which means that forecasters believe there is a 13.00% chance that real GDP will decline in the 1st quarter of 2016.

The forecasters also report just a 7.73% chance that we are currently (as of the 4th quarter of 2015) experiencing a contraction in real GDP. According to the panel, the probability that real GDP growth will turn negative is averaging around 13.49% through the end of the 4th quarter of 2016, which implies the forecasters’ assignment of probability for a contraction in real GDP in the upcoming year has increased since last quarter’s survey. The graph below plots the historical values of the anxious index, where the gray bars indicate periods of recession in the U.S. economy. The current level of the anxious index is still below the average level during the economic recovery (13.34), but it is nearly 3 points higher than the previous quarter’s reading.

Figure 1. The Anxious Index Probability of Decline in Real GDP in the Following Quarter Quarterly, 1968:Q4 to 2015:Q4 100

80 70 60 50 40 30 20 10 0

1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Probability (percent)

90

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

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GDP OUTLOOK This year was supposed to be the breakout year for GDP growth that many economists and analysts were predicting as late as mid-2014. This year’s growth would finally break out of the pattern of underwhelming growth that has defined this economic recovery. Many were calling for real GDP growth in excess of 3.0% for the first time in this recovery and for the first time since 2005 in the U.S. economy. In our December 2014 U.S. Forecast, we forecasted that real GDP growth would be 2.3% in 2015, but it looks like we were a bit pessimistic, as growth will come in at 2.4%. The next four quarters of GDP growth will be an improvement over the previous four quarters, but growth will not ignite. Growth will be 2.1% in Q4 of 2015, followed by 3.1% in Q1 of 2016, 2.9% in Q2 of 2016, and 2.9% in Q3 of 2016. Average quarterly growth from there through the end of the forecast horizon (2018 Q4) will be 2.7%.

In 2016 we are expecting real GDP growth of 2.7%, and again at that same rate in 2017, and then dipping slightly to 2.6% in 2018. The gradual tightening of monetary policy begins to restrain the economy, GDP growth decelerates to 2.5% in 2018. The Fed is contemplating whether or not to start hiking interest rates in December, though many were convinced that the federal funds rate would begin to rise in September. However, this did not transpire. The data, in my mind, does not support rising rates. There is little sign of inflationary pressures building, robust GDP growth taking root, or a labor market that has strengthened to the point where it consistently can push up wages and salaries. I still think the Fed should wait until 2016 before it begins to raise rates, but a December increase would not come as a surprise to anyone given the multitude of hawkish statements being made by Fed officials. In fact, given all these comments a failure to raise rates in the absence of a 8

U.S. Forecast | December 2015

dramatic release of economic data could undermine the credibility of our central bank.

The timing of the first interest rate hike, be it in December or in the first part of 2016, is far less important than the path that short-term interest rates will follow over the next several years. This tightening cycle will be different than those which preceded it, the Fed will move very slowly with future interest rate hikes after the first. Taking small steps as it raises rates temporally spread out, will allow the Fed to gauge how the economy is faring and digest additional data as it is released. We expect the federal funds rate to slowly drift higher beginning in either December or January, reaching 3.0% in the 2nd quarter of 2018 and holding there. If the next recession sets in between now and 2018—which is a real possibility—the Fed would have to reverse its course on interest rates and since there would be little room for downward movement in interest rates, the Fed would likely have to engage in another round of quantitative easing. Would this be called QE IV or does the count reset back to QE I with the distinction that it is version 2.0? CONSUMER SPENDING Consumers are the Largest Contributor to Real GDP Growth Amid Scrooge-like Contributions from Other Sectors of the Economy

The U.S. consumer is spending at the fastest pace of the recovery to date. However, holiday shopping growth is expected by the National Retail Federation to be 3.7% this year, down from 4.1% growth last year. Consumers are not spending as freely as they did in the previous expansion, but have at least loosened their collars and their pocketbooks as well. The improvement in consumer spending growth is all the more important now when looking at the other main sectors of the economy, which continue

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to face headwinds that persistently suppress growth.

annual growth is expected to waver in 2015 for the full year, slowing to 3.3%. In 2016, as economic The labor market continues to recover. Strong policy uncertainty begins to abate and as a wage and salary growth continue to remain out of the grasp of most U.S. workers with annual growth presidential race promises some clarity on the policy hovering around 2.2% for several years. The housing path going forward, investment spending growth rises to 5.6%, before easing a bit to 4.9% in 2017. In market continues to recover and as housing prices 2018, investment growth slows further as modestly increase, home equity rises lifting more consumers higher interest rates increase borrowing costs and back above water in their mortgages. Oil and gasoline prices remain near their lows, leaving more a slowdown in overall economic growth pushes disposable income in the wallets of U.S. consumers. investment growth down to 4.4%. While this gasoline windfall cannot take the place Interest rates remain historically low as the of more robust growth in wages and salaries, it Federal Reserve is on the cusp of beginning the nonetheless helps support consumer spending on process of tightening. The cost of borrowing—either other goods and services and helps bolster consumer explicit or implicit (opportunity) cost of using confidence. As a result, consumer-spending growth retained earnings for investment—doesn’t explain is expected to accelerate to around 3.2% for 2015 the dampened rate of investment spending growth and ease to 3.0% in 2016. This would be the fastest during this recovery as interest rates have lingered rate of consumer spending growth over a two-year at levels 200 basis points below the average rate on period since 2005-2006. the ten-year bond during the previous recovery. As we have argued for several years now, economic If sustained momentum in consumer spending policy uncertainty and the doubling down on growth is to be attained, then wage and salary the regulatory burden that has been growing for growth coupled with expanded opportunities in decades are the most likely reasons that businesses the labor market will be essential to diminishing have been hesitant to invest. No monetary policy, the need to rely on low gasoline prices to support however easy, can offset the noxious effects they consumer expenditures. have had on investment spending. Real consumption spending growth is forecasted While interest rates are still quite low as the Fed to peak from 3.2% in 2015, before easing slightly pushes up the federal fund rate, overall interest in 2016 without slipping below the 3.0% level. rates will rise in the economy, a process that will As the Fed tightens interest rates over the course play itself out over the rest of our forecast horizon. of the next several years, higher borrowing and Longer run interest rates rise ahead of the federal opportunity costs will weigh down on U.S. funds rate, as the expectation of higher short-term consumers. Consumption spending growth is expected to ease to 2.9% in 2017, and 2.8% in 2018. interest rates in the future will work their way through the yield curve, because expectations of higher short-term rates in the future cause longINVESTMENT term rates to rise today. The fact that longer term In 2014, the pace of real private nonresidential rates have not as yet moved much higher suggests fixed investment grew by 6.2%, more than doubling that markets believe that increases in the federal the previous year’s growth rate of 3.0%. But after funds rate will be quite gradual once they begin. growing just 1.6% in the 1st quarter and then We expect the ten-year Treasury bond yield to growing 4.1% in the 2nd quarter of 2015, growth average 2.1% in 2015, 2.5% in 2016, 2.8% in 2017, again decelerated in the 3rd quarter to 2.4%. Thus, and 3.4% in 2018. Institute for Economic Competitiveness

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Business spending on equipment and software will grow at an annual average rate of 5.1% from 2015 through 2018. Investment spending growth in computers and peripherals will accelerate in 2016 as upgrade cycles kick in after contracting in 2014. Spending on communications equipment should expand at an average annual rate of 6.7% during 2015-2018, while industrial equipment purchases average 6.5% growth over the same time frame. Investment in nonresidential structures experienced a double-digit burst of activity in 2012 but investment growth plunged year over year and grew by just 1.6% in 2013. The wild oscillations continued during 2014 and 2015 after growth jumped to 8.1% in 2014, it is expected to turn negative again in 2015 with growth coming in at -0.8%. Investment in nonresidential structures will bounce back in 2016, 2017, and 2018 with growth of 5.3%, 3.5%, and 3.6%, respectively.

Investment growth in transportation equipment decelerated in 2015 to 9.1%, following five years of double-digit growth that averaged 33.5%. This type of investment will have an average growth rate of 4.2% during the four-year stretch over 2015 through 2018, with growth at 2.8% in that final year. Investment in this sector is highly volatile due to purchases of high-priced passenger aircraft that result in extreme swings in investment spending growth from quarter to quarter and year to year. Investment spending on aircraft will see annual growth rates ranging between 22.2% and -2.3% over the 2015-2018 time frame, volatility being the only constant over the horizon. Residential fixed investment growth slipped to 1.8% in 2014 after two years with 11.6% average growth. Growth will average 7.7% through 20152018 with a peak growth rate in 2016 of 9.5%. In the final year of our forecast (2018), real residential fixed investment will be dampened by both higher mortgage rates (expected to average 5.3% on a 30year fixed mortgage that year) and a slower rate of 10

U.S. Forecast | December 2015

price appreciation. As a result, growth is expected to be 3.8% in the final year of our forecast. In 2018, real residential fixed investment will be just over $653 billion.

We expect housing starts to gradually accelerate over the next several years, reaching a level just below 1.47 million in 2018. Average levels of annual housing starts from 2015-2018 will be 1.3 million, while 2018 housing starts are expected to show an increase of 572,000 starts from 2013. GOVERNMENT SPENDING In 2015, we will see a contraction in federal government spending growth. This year will be the fifth in a row that federal government spending has contracted. Beyond 2015 and through 2018, federal government spending is expected to continue to shrink, with the exception of 2016 with federal spending growing 2.5% in that year before contracting again in 2017 and 2018.

The partial undoing of the 2013 sequester cuts sharply slowed the rate at which government spending was contracting from -5.7% in 2013 to -2.4% in 2014. The sequester spending caps for 2016 and 2017 have been lifted by the Bipartisan Budget Act of 2015. Beyond 2015, federal government spending growth is expected to continue to hover around zero with the exception of the surge in spending in 2016. During 2015-2018, real federal government spending is expected to remain constant with an average growth of 0.0%. Over that same time horizon, state and local governments will oversee spending growth at an average of 1.2%.

The possibility of increased military spending that, in light of recent terrorist attacks, is a phenomenon that could reverse the projected declines in federal government expenditures. Austerity of any kind always seems to be an ephemeral event in Washington, D.C. and we should not be surprised if in fact this is once again the case.

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Higher revenues from economic growth, a slurry of new taxes, and a sizeable assist from the Federal Reserve in the form of historically low interest rates on U.S. Treasury bonds are, along with lower government spending, helping to shrink the size of the annual budget deficit. The Fed is still holding more than $2.46 trillion in U.S. Treasury debt and more than $1.74 trillion in mortgage-backed securities. The Fed turns most of the revenue it earns right back to the U.S. Treasury.

The federal budget deficit will fall in 2015 for the fourth year in a row, down from nearly $1.3 trillion to under $439 billion. We are forecasting deficits to tick up in 2016, as faster economic growth cannot compensate for greater spending for entitlements, pushing the deficit to $518.7 billion. In 2017 the deficit will decline again to $478.1 billion and will continue to fall in 2018 when it hits $464.2 billion. The presidential election in 2016 could be an inflection point, where deficits could accelerate or stabilize. Election outcomes notwithstanding, there is little likelihood of a balanced budget in the federal government’s near future. The U.S. continues to travel down a fiscal highway that leads directly to Athens, Greece. We are now not by any stretch in the same dire straits as Greece, but with the existing structure of entitlements and the demographics of an aging population, if changes are not made to address these problems, we will eventually get there. Although we are projecting deficits through 2018 that are significantly smaller than the $1 trillionplus deficits that were the norm in 2009-2012, the additional debt added to the national debt over the next four years will be nearly $1.9 trillion, pushing the national debt total to over $20.6 trillion.

Currently, the national debt is over $18.7 trillion and rising. This represents a debt of nearly $157,166 per taxpayer and over $58,265 per citizen. The unfunded liabilities of the U.S. are even more alarming. These include Social Security, Medicare

parts A, B and D, and Federal debt held by the public federal employee and veteran benefits, representing more than $100.3 trillion in liabilities, boiling down to more than $840,050 per taxpayer. NET EXPORTS Net exports became a drag on real GDP growth in the U.S. in the 4th quarter of 2014 and even more so in the 1st quarter of 2015. Net exports shaved 0.89 percentage points off of Real GDP growth in that 4th quarter and after contributing to the 3.8% GDP growth in the 3rd quarter of that year. In the 3rd quarter of 2014, net exports were a positive contributor to real GDP growth, adding 0.39 percentage points to overall growth. In the 4th quarter of 2014, net exports subtracted 0.89 percentage points from the growth rate of real GDP. This drag worsened in the 1st quarter of 2015, when net exports subtracted nearly two full percentage points (1.92) from real GDP growth that came in at only 0.6%. Net exports provided a short-lived boost to GDP growth in the 2nd quarter of 2015. From that point that boost will give way to a persistent drag on GDP growth through the end of 2018. The U.S. dollar has run a streak of appreciation against the currencies of our major trading partners, surging higher in the second half of 2014 and continuing that run which we are forecasting to last through 2016. These gains are assisted by the intentional depreciation of the Yuan against the U.S. dollar engineered by the People’s Bank of China.

Over time, the stronger dollar boosts imports and reduces exports by making our goods and services more expensive to foreigners and at the same time making imported goods and services cheaper to U.S. consumers. This results in a worsening of the trade deficit. This trade deficit will be intensified by relatively stronger growth in U.S. GDP while many of our trading partners are experiencing slower, sometimes much slower, GDP growth. U.S. buyers Institute for Economic Competitiveness

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will thus have income to purchase more foreign goods and services while foreign buyers will have relatively less income to spend on our goods and services; this will feed into the effects of exchange rate movements.

appreciation of the dollar that began in 2012 and is expected to continue through 2016 began to manifest itself in a worsening of the current account deficit. This is a process that began in 2014 and will continue through 2018. During that time frame the current account deficit will have grown from $390 Overall, export growth continues through the billion in 2014 to $579.5 billion in 2018. Current end of our 2018 forecast horizon and is expected account balances will average -$495.6 billion during to accelerate during that time frame. Growth will continue to accelerate slowly in 2016 before jumping 2015-2018. in 2017. Real export growth from 2015-2018 will average 3.4% while real import growth will average U N E M P L O Y M E N T 5.3% over the same time frame. The national headline unemployment rate (U-3) Real net exports will average -$645.6 billion in November held steady at the October reading during 2015-2018, with the trade balance of 5.0%, the lowest level since April 2008. A worsening in each successive year, following the significant increase of 273,000 people in the strong appreciation of the dollar leading weaker labor force from the previous month kept the global demand for U.S. goods and services and an unemployment rate in November from falling as the increased appetite for imported goods and services labor force participation rate ticked up from 62.4% in the U.S. to 62.5%. In November, the decrease in the number The five-year period of strengthening of the dollar of unemployed was just 29,000, a little more than 1/10th the size of the increase in the labor force, (2012-2016) is due to the relative strength of the which includes people who are working as well as U.S. recovery, which includes anticipated hikes in people not working, but who are actively (in the U.S. interest rates as the Federal Reserve begins four weeks prior to the survey) looking for work. tightening interest rates in December of 2015 or at the latest early 2016. China’s surprise depreciation The November jobs report showed weaker payroll of the Yuan in response to the weakening of job growth compared to October, indicating a growth in China and sharp contraction in the revised gain of 298,000 jobs. The 273,000 jobs stock market there will help boost exports to the added to payrolls in November puts the average U.S. Meanwhile, the European Central Bank growth in monthly payrolls for 2015 at 210,000. has been forced to take a more aggressive policy The average monthly gains thus far in 2015 are a stance cutting interest rates and has announced deceleration from the average monthly gains of the extension of its quantitative easing policies as 253,000 per month in the first eleven months of the Fed did in the U.S. over the past several years. 2014. For the entire nearly six-year span from 2010 The latest bailout for Greece has, for now, helped through November 2015, average monthly payroll slow further depreciation of the Euro. This could jobs gains have been 186,000. change in the months and years ahead and the Euro Given the historic weakness of this economic appears to be heading to par with the U.S. dollar recovery, the difficulty of trying to scrutinize oftenand may very well fall below that level in the not contradictory data, particularly when it comes too distant future. to jobs data, the health of the U.S. labor market The current account deficit improved slightly each year from 2011-2013. After which point the 12

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cannot be satisfactorily assessed by a single metric, such as the headline unemployment rate (U-3).

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This is particularly true because, as of November 2015, the labor force participation rate remains depressed at 62.5%, the lowest point since October 1977. Since the end of the recession the labor force participation rate has declined by 3.0 percentage points. This decline in the labor force participation rate has exaggerated the decline in U-3, putting the labor market in a better light when looking only at headline unemployment.

Some of the decline in the overall labor force participation rate is due to retiring Baby Boomers, although these demographics cannot fully explain the decline. If we limit ourselves to prime-age workers from 24 to 54, we still see a decline in labor force participation rates. In November this primeage participation rate stood at 80.8%, down from 83.3% at the start of the recession. We can conclude that there exists a greater slack in the labor market than the headline unemployment rate suggests and it is not solely attributable to aging Baby Boomers.

The Bureau of Labor Statistics (BLS) produces alternative measures of labor market weakness, including the broadest measure of unemployment (U-6). U-6 takes into account discouraged workers (currently 594,000 workers) as well as those classified as underemployed (currently 6.1 million workers) —working part-time but not by choice— and workers who are marginally attached to the labor force and have looked for work in the past 12 months but are not currently looking, yet indicate a willingness to work (1.7 million workers).

U-6 remains high at 9.9% in November 2015, down 1.4 points from the January 2015 level of 11.3%, and down 6.8 points from its peak of 17.1% in April 2010. U-6 remained in double digits for 88 straight months, more than seven years. October and November of 2015 represent the first time since April and May of 2008 that U-6 has had consecutive months in single digits.

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30-Year Mortgage Rates and Housing Starts 9.0

(Mortgage rates - Left axis, %)

8.0

2.0

7.0

1.5

6.0

1.0

5.0

0.5

4.0 3.0

2.5

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

0.0

Automobile and Light Truck Sales 11.0

(Millions Vehicles)

10.0 9.0 8.0 7.0 6.0 5.0 4.0

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

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

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(Billions of 2000 Dollars)

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

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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 18 Consumer Price Index Core Consumer Price Index

Federal Budget Surplus 500.0

(Billions of Dollars)

0.0 -500.0 -1000.0 -1500.0

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

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

(%)

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

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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 18 Quarterly Growth Rate Real GDP Fed Funds Rate

Industrial Production 120.0

(2002=100)

115.0 110.0 105.0 100.0 95.0 90.0 85.0

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

Private Fixed Nonresidential Investment 3000.0

(Billions of Dollars)

2500.0 2000.0 1500.0 1000.0

16

U.S. Forecast | December 2015

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

U . S . F orecast C harts

Manufacturing Employment 18.0

(Millions)

17.0 16.0 15.0 14.0 13.0 12.0 11.0

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

Money Supply

40.0

(Annual Growth Rate %)

30.0 20.0 10.0 0.0 -10.0 -20.0

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

Total Nonfarm Payroll Employment 150.0

(Millions)

145.0 140.0 135.0 130.0 125.0

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

17

U . S . F orecast C harts

Oil and Consumer Confidence 140.0

Oil ($ Per Barrel) - Left Axis

120

120.0

110

100.0

100

80.0

90

60.0

80

40.0

70

20.0

60

0.0

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

50

Real Disposable Income and Consumption 6.0

(% Change Year Ago)

4.0 2.0 0.0 -2.0 -4.0

-400

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

Trade Balance and Real Exchange Rate

1.50 1.40

-500

1.30

-600

1.20

-700

1.10

-800

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

18

U.S. Forecast | December 2015

0.80

U . S . F orecast C harts

Twin Deficits 500.0

(Billions of Dollars)

0.0 -500.0 -1000.0 -1500.0

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

Civilian Unemployment Rate 10.0

(%)

9.0 8.0 7.0 6.0 5.0 4.0 3.0

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

Yield Curve 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0

(%)

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

19

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

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

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

Real GDP Nominal GDP

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

2009

2010

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

-2.8 -2.0 -1.6 -5.3 -1.8 -0.9 -15.5 -22.5 -8.3 0.7 -12.7 -22.2 -49.0 -40.0 -27.4 -18.9 -30.9 5.2 1.6 -27.7 -18.3 -20.7 -8.7 -13.6 5.7 1.6

2.5 1.1 1.9 6.1 2.2 1.2 2.6 15.9 10.0 11.2 13.6 -0.2 80.2 26.9 17.4 -15.7 -24.1 -27.7 -15.9 21.7 -26.3 -2.4 11.9 12.8 4.4 -2.7

2011

2012

2013

2014 #

Billions of Dollars 14830.4 14418.8 14783.8 15020.6 15354.6 15583.3 15961.7 14718.6 14418.7 14964.4 15517.9 16155.3 16663.2 17348.1

1.2 1.6 1.0 4.2 1.9

99.6 0.8 -3.4 74.8 -35.0 63.8 13.195 0.900 3.655 5.8 -0.6 -455 -691

61.7 3.2 -11.2 65.7 -146.0 66.3 10.402 0.554 3.868 9.3 -4.3 -1416 -384

79.4 3.3 5.6 70.9 65.9 71.8 11.555 0.586 3.705 9.6 -0.7 -1294 -442

95.1 0.2 3.0 73.7 36.6 67.4 12.735 0.612 3.792 8.9 1.2 -1297 -460

Other Measures 94.2 98.0 93.0 0.9 0.0 0.7 2.9 1.9 3.7 74.5 74.1 75.3 72.7 54.3 65.0 76.5 79.2 84.1 14.443 15.532 16.435 0.784 0.928 1.001 4.125 4.473 4.334 8.1 7.4 6.2 1.7 1.7 1.9 -1089 -680 -483 -450 -377 -390

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

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

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

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

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

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

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

12502 4.2 10994 4.6 10987 1.5 4.9 1073 -17.5

12095 -3.2 10943 -0.5 10943 -0.4 6.1 1203 22.4

12477 3.2 11238 2.7 11055 1.0 5.6 1470 23.4

13255 6.2 11801 5.0 11331 2.5 6.1 1428 -2.9

13915 5.0 12404 5.1 11688 3.1 7.6 1683 18.1

Incomes 14068 1.1 12396 0.0 11523 -1.4 4.8 1693 0.6

14694 4.4 12914 4.2 11836 2.7 4.8 1694 0.1

Forecast 2016 2017

2.7 3.0 3.0 5.7 3.2 2.5 5.6 6.1 7.3 7.5 6.7 7.7 3.1 1.3 -0.1 5.3 8.2 14.1 1.3 -4.4 12.5 9.5 2.7 5.1 2.5 1.2

2.7 2.7 2.9 7.5 2.3 2.4 4.9 6.0 6.9 4.8 8.1 7.9 1.8 -2.3 -0.1 3.5 11.3 -14.0 -3.5 15.1 8.3 9.1 4.4 6.2 -0.7 1.1

2018

2.6 2.6 2.8 5.7 2.3 2.5 4.4 5.2 6.7 4.2 7.7 6.1 2.8 3.3 2.8 3.6 10.3 -8.4 1.7 2.8 5.5 3.8 5.0 4.7 -1.4 1.2

16345.9 16782.1 17237.6 17689.0 17951.5 18764.7 19668.0 20571.1

Prices & Wages, Percent Change, Annual Rate 2.1 1.8 1.6 1.6 1.0 3.1 2.1 1.5 1.6 0.0 1.7 2.1 1.8 1.7 1.8 6.0 1.9 1.2 1.9 -3.3 2.2 1.9 1.9 2.1 2.1

0.8 -0.3 1.7 -2.6 1.4

U.S. Forecast | December 2015

2015

Composition of Real GDP, Percent Change 1.6 2.2 1.5 2.4 2.4 1.7 2.1 1.4 2.4 2.4 2.3 1.5 1.7 2.7 3.2 6.1 7.4 5.8 5.8 5.9 1.8 0.6 1.9 2.1 2.7 1.8 0.8 1.0 2.4 2.9 7.6 9.1 3.0 6.2 3.3 13.6 10.9 3.2 5.9 3.2 1.6 6.0 3.8 3.8 4.1 -1.8 7.0 4.1 -3.2 0.5 2.0 4.9 9.4 3.0 4.2 21.0 9.4 -2.5 7.3 4.4 37.6 23.5 12.8 13.3 9.1 28.4 7.5 13.0 15.6 22.2 33.0 21.8 4.0 16.0 2.3 2.3 13.3 1.6 8.2 -0.8 -0.3 8.6 3.6 12.9 12.8 -1.6 15.7 4.2 11.1 53.6 -7.6 21.4 -4.4 8.8 -10.1 26.4 12.7 2.4 6.6 -34.1 -9.1 9.5 4.7 4.0 13.6 0.7 13.5 9.6 1.8 8.5 6.9 3.4 2.8 3.4 1.6 5.6 2.2 1.1 3.8 5.2 -2.7 -1.9 -5.7 -2.4 -0.4 -3.3 -1.9 -1.0 0.6 1.5

1.9 3.8 2.3 6.4 2.9

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

20

2008

1.8 1.4 1.8 0.7 2.3

2.0 2.7 2.1 2.8 3.0

1.9 2.4 2.2 1.9 3.1

49.1 0.7 1.3 75.9 75.6 92.4 17.4 1.1 4.7 5.3 2.1 -439 -439

50.8 1.4 1.4 75.6 32.7 90.6 17.7 1.2 4.9 5.1 1.5 -519 -448

60.6 1.4 3.1 75.2 44.5 90.3 18.1 1.4 4.9 5.1 1.2 -478 -516

66.2 1.8 3.0 74.9 49.1 90.4 18.0 1.5 4.8 5.1 1.2 -464 -579

0.1 0.0 0.3 1.5 2.1 2.8 3.8 2069 7.3 1.2 16.2

0.6 0.6 0.7 1.7 2.5 3.2 4.2 2169 4.9 1.2 2.0

1.7 1.6 1.7 2.3 2.8 3.4 4.6 2268 4.5 1.1 -5.2

2.9 2.8 3.0 3.3 3.4 3.8 5.3 2315 2.1 1.1 -4.7

15309 4.2 13374 3.6 12224 3.3 4.9 1820 7.5

15964 4.3 13943 4.3 12592 3.0 5.0 1907 4.8

16778 5.1 14657 5.1 12968 3.0 5.1 1887 -1.0

17652 5.2 15462 5.5 13421 3.5 5.8 1852 -1.8

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

Table 2. Real Gross Domestic Product History 2008

2009

2010

2011

Forecast 2012

2013

2014 #

2015

2016

2017

2018

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

14830.4 14418.8 14783.8 15020.6 15354.6 15583.3 15961.7

16345.9 16782.1 17237.6 17689.0

14865.8 14566.3 14722.2 14979.0 15292.3 15511.4 15881.7

16256.9 16740.5 17184.7 17631.3

10007.2

11219.2 11557.0 11896.2 12231.0

9847.0 10036.3 10263.5 10413.2 10590.4 10875.7

Durables

1083.2

1023.3

1085.7

1151.5

1236.2

1307.6

1384.1

1465.8

1549.6

1665.2

1760.0

Nondurables

2214.7

2175.1

2223.5

2263.2

2277.5

2319.8

2367.8

2431.8

2510.7

2569.2

2629.0

Services

6708.6

6648.5

6727.6

6851.4

6908.1

6977.0

7144.6

7349.8

7534.5

7716.6

7910.5

1934.5

1633.5

1673.8

1802.3

1964.2

2023.8

2148.3

2218.5

2342.1

2456.2

2563.7

836.1

644.3

746.7

847.9

939.2

969.5

1026.2

1058.9

1124.0

1191.2

1252.9

281.0

256.1

281.4

285.9

303.1

314.4

326.4

339.5

364.2

389.2

415.4

Computers & Peripherals

77.1

76.8

84.7

83.0

88.5

92.0

89.0

89.4

96.0

100.6

104.8

Communications Equipment

91.5

79.4

90.2

91.8

96.3

105.2

108.1

112.2

119.7

129.4

139.3

Industrial Equipment

195.5

152.1

151.3

183.3

199.8

194.8

208.9

218.2

235.0

253.6

269.0

Transportation Equipment

146.2

70.6

127.5

173.9

213.1

240.6

272.4

296.8

305.7

311.3

320.0

30.0

17.7

22.1

27.9

29.2

33.0

37.4

44.8

45.3

44.3

45.7

42.6

30.8

36.2

48.1

58.1

60.3

69.8

70.9

70.8

70.7

72.7

540.2

438.2

366.3

374.7

423.1

429.7

464.6

460.9

485.2

501.9

519.8

182.8

126.7

95.2

94.7

102.8

106.4

120.3

135.5

146.5

162.9

179.7

Manufacturing

53.8

56.3

40.8

39.1

44.9

46.8

52.0

79.8

90.4

77.7

71.1

Power & Communication

94.5

95.8

80.4

74.1

89.7

85.6

90.9

79.5

80.4

77.6

78.9

Mining & Petroleum

105.0

75.0

87.8

110.9

123.8

126.7

135.0

88.5

80.3

91.9

94.4

Other

103.4

84.5

62.0

56.2

61.5

64.3

66.9

76.1

85.3

92.4

97.4

497.7

392.3

382.4

384.5

436.5

478.0

486.4

527.6

577.7

630.1

653.8

Exports

1740.8

1587.7

1776.6

1898.3

1963.2

2018.1

2086.4

2118.9

2176.9

2272.5

2385.9

Imports

2298.6

1983.2

2235.4

2357.7

2410.2

2435.6

2528.9

2660.5

2797.4

2970.1

3108.4

Federal Government

1152.3

1217.7

1270.7

1236.4

1213.5

1144.1

1116.3

1111.6

1139.2

1130.9

1114.6

State & Local Government

1842.5

1871.4

1820.8

1761.0

1728.1

1710.2

1720.8

1746.3

1767.0

1785.6

1807.6

Nonresidential Fixed Investment Equipment & Software Information Processing Equipment

Aircraft Other Equipment Structures Commercial & Health

Residential Fixed Investment

Institute for Economic Competitiveness

21

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

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

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

Real GDP Nominal GDP

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

0.6 -0.2 1.8 2.0 0.7 2.1 1.6 2.3 -3.9 -20.6 2.0 -1.5 12.1 34.8 -3.9 -7.4 -4.9 94.8 15.3 -44.5 -14.8 10.1 -6.0 7.1 1.1 -0.8

2015Q2

3.9 3.9 3.6 8.0 4.3 2.7 4.1 0.3 -4.4 27.6 -25.8 22.4 -3.8 5.8 -19.4 6.2 31.1 64.4 41.8 -68.0 60.3 9.4 5.1 3.0 0.0 4.3

2015Q3

1.5 3.0 3.2 6.7 3.5 2.6 2.1 5.3 17.1 4.1 36.4 -4.7 16.0 11.1 9.1 -4.0 -3.2 31.2 1.2 -46.9 12.8 6.1 1.9 1.8 0.3 2.6

2015Q4

2.1 2.6 2.8 2.7 3.1 2.8 5.6 8.5 6.9 13.2 -1.6 10.1 6.9 3.2 -1.7 -0.5 4.0 10.4 -5.7 -26.5 12.0 8.1 2.2 4.6 0.0 0.9

2016Q1

3.1 3.2 2.9 4.5 3.4 2.5 6.4 5.7 5.4 4.7 3.3 7.9 -1.6 -0.9 7.7 9.5 9.0 13.4 6.1 10.2 9.3 12.2 1.1 5.9 10.1 0.4

2016Q2

2017Q1

2017Q2

2017Q3

2017Q4

2.1 2.2 2.6 5.4 2.0 2.3 4.2 5.5 7.2 3.6 9.8 7.5 1.6 1.8 -2.0 2.1 5.8 -11.3 0.6 6.1 6.4 6.1 4.8 4.9 -5.6 1.2

2018Q1

3.0 2.9 3.1 5.2 2.8 2.8 4.5 4.8 6.5 2.7 8.1 6.7 2.4 3.6 3.6 5.3 12.0 -6.5 0.4 10.8 4.8 3.7 5.2 5.0 -0.2 1.0

2018Q2

2.8 2.7 2.7 5.5 2.3 2.5 5.0 5.4 6.7 5.4 7.1 4.8 5.4 4.5 5.9 5.6 14.4 -4.9 2.9 3.3 4.2 0.3 5.1 3.9 -0.2 1.5

2018Q3

2.7 2.7 2.8 5.7 2.4 2.5 4.4 4.7 6.3 4.8 6.1 5.1 2.2 5.4 0.6 4.6 14.5 -0.2 1.8 -7.7 4.8 0.5 5.3 4.0 -0.5 1.2

2018Q4

2.4 2.5 2.8 5.2 2.4 2.5 4.0 4.2 6.1 5.5 5.2 5.1 0.5 2.9 2.6 3.8 10.5 -1.8 3.7 -3.6 2.7 1.0 5.4 3.8 -2.8 1.2

Billions of Dollars 16177.3 16333.6 16394.2 16478.5 16603.3 16721.9 16843.0 16960.2 17076.9 17193.2 17294.1 17386.1 17514.5 17633.9 17750.1 17857.7 17649.3 17913.7 18034.8 18208.2 18422.1 18646.6 18879.2 19111.0 19331.5 19569.4 19788.1 19983.1 20229.0 20459.2 20689.2 20907.0 Prices & Wages, Percent Change, Annual Rate 2.0 2.1 2.1 1.9 2.2 2.2 3.9 3.0 1.5 3.1 1.8 2.1 2.1 2.0 2.1 3.5 4.4 3.4 0.6 3.3 2.6 2.9 2.9 3.0 3.2

2.1 3.0 2.5 3.7 0.0

1.2 1.6 1.7 0.7 2.6

1.7 -1.0 1.4 -6.5 2.0

1.7 0.3 1.8 0.9 2.3

48.7 -1.1 -0.3 75.9 106.8 95.5 16.673 0.978 4.410 5.6 2.2 -579 -473

58.0 3.5 -2.4 75.9 111.0 94.2 17.096 1.158 4.673 5.4 1.7 -594 -439

46.4 1.6 1.9 76.1 52.4 90.7 17.754 1.163 4.853 5.2 1.7 -630 -466

43.5 0.6 -2.1 75.6 32.3 89.2 17.906 1.159 4.786 5.1 1.3 -599 -378

41.6 1.6 1.6 75.6 28.6 90.1 17.593 1.177 4.827 5.2 1.5 -619 -407

45.6 1.3 3.4 75.6 26.7 90.4 17.557 1.222 4.886 5.1 1.5 -612 -430

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

0.11 0.03 0.22 1.45 1.97 2.55 3.73 2063 10.6 1.151 37.2

0.12 0.02 0.25 1.52 2.17 2.88 3.83 2102 7.7 1.158 2.4

0.14 0.04 0.35 1.55 2.22 2.96 3.95 2026 -13.7 1.181 8.3

0.12 0.06 0.31 1.49 2.16 2.96 3.88 2086 12.3 1.199 6.4

0.20 0.18 0.34 1.54 2.29 3.07 4.06 2128 8.4 1.217 5.8

0.54 0.48 0.57 1.69 2.44 3.16 4.18 2168 7.7 1.201 -5.0

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)

15080 3.4 13180 1.9 12115 3.9 5.2 1735 8.2

15219 3.8 13292 3.4 12151 1.2 4.6 1845 27.9

15391 4.6 13448 4.8 12256 3.5 4.7 1828 -3.6

15545 4.1 13576 3.9 12374 3.9 5.0 1874 10.5

15708 4.2 13715 4.2 12489 3.8 5.2 1863 -2.3

15861 4.0 13848 3.9 12553 2.1 5.0 1904 9.0

22

2016Q4

Composition of Real GDP, Percent Change, Annual Rate 2.9 2.9 2.8 2.8 2.8 2.4 3.0 2.8 2.5 2.7 2.7 2.4 2.9 3.1 3.0 3.1 2.9 2.7 6.4 8.4 7.8 8.3 6.7 7.1 2.7 3.5 2.7 1.9 2.2 1.8 2.5 2.1 2.4 2.6 2.5 2.2 7.0 6.1 5.3 4.7 4.2 3.7 6.9 6.6 5.5 6.2 5.9 5.7 8.6 7.2 6.0 7.0 6.4 7.4 4.9 4.5 3.6 5.6 5.6 4.4 12.8 10.2 7.5 7.6 5.6 8.8 8.0 8.8 9.2 8.9 5.9 6.4 1.1 2.6 0.1 0.9 4.2 2.4 -1.2 -3.0 -3.1 -4.2 -5.6 6.0 -3.4 -1.8 -7.7 1.3 5.5 5.2 10.1 7.1 6.3 2.2 1.2 -0.7 6.3 12.5 17.8 13.4 10.3 3.2 8.5 6.5 -14.7 -21.7 -20.0 -17.8 1.0 -8.6 -8.5 -6.6 2.9 2.1 40.9 19.8 31.7 17.9 0.4 -2.6 7.6 6.9 10.7 8.2 8.0 8.2 10.8 7.5 10.1 10.1 8.7 8.1 4.3 4.5 3.4 4.5 4.6 4.4 5.9 6.7 7.2 6.7 5.1 5.6 0.8 0.1 -2.3 0.2 -0.2 -0.2 0.8 0.8 1.0 0.9 1.3 1.3

0.1 -3.1 1.7 -11.2 3.0

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

2016Q3

U.S. Forecast | December 2015

2.1 3.2 2.2 4.5 3.2

1.8 1.9 2.2 0.8 3.2

2.0 2.3 2.2 1.4 3.0

1.8 2.2 2.1 1.5 3.2

1.9 2.3 2.1 2.4 3.1

1.8 2.3 2.1 1.6 3.1

Other Key Measures 56.4 59.5 55.5 59.3 1.1 1.0 1.6 1.6 4.0 2.5 3.3 2.9 75.7 75.5 75.4 75.2 32.2 43.5 45.5 46.1 90.5 91.2 90.5 89.8 17.690 17.802 17.972 18.053 1.270 1.310 1.352 1.392 4.894 4.880 4.853 4.852 5.1 5.1 5.1 5.1 1.3 1.3 1.3 1.1 -601 -598 -623 -603 -471 -483 -495 -502

65.0 1.4 3.0 75.2 43.2 90.2 18.107 1.411 4.851 5.1 1.2 -595 -536

62.8 1.3 2.9 75.0 43.1 90.7 18.133 1.432 4.859 5.1 1.1 -605 -533

64.0 2.1 3.4 75.0 49.1 90.4 18.082 1.457 4.864 5.1 1.3 -661 -551

65.2 1.9 3.0 75.0 50.7 90.7 18.044 1.452 4.829 5.1 1.2 -687 -568

66.8 1.8 2.7 74.8 49.8 90.5 17.977 1.476 4.777 5.1 1.2 -701 -593

68.7 1.7 2.5 74.6 46.8 90.1 17.832 1.494 4.797 5.1 1.0 -710 -606

Financial Markets, NSA 0.78 1.04 1.29 1.54 0.72 0.96 1.21 1.43 0.79 0.99 1.24 1.46 1.76 1.87 2.01 2.14 2.52 2.58 2.64 2.70 3.21 3.23 3.27 3.33 4.31 4.41 4.49 4.56 2185 2196 2225 2263 3.2 2.0 5.4 6.9 1.186 1.178 1.158 1.141 -4.9 -2.6 -6.8 -5.7

1.78 1.70 1.71 2.25 2.76 3.38 4.63 2287 4.3 1.125 -5.6

2.21 2.12 2.33 2.72 2.93 3.52 4.76 2298 1.9 1.109 -5.5

2.71 2.60 2.90 3.16 3.19 3.68 5.02 2294 -0.6 1.093 -5.6

3.00 2.87 3.16 3.39 3.36 3.79 5.26 2290 -0.7 1.083 -3.5

3.00 2.88 3.11 3.40 3.46 3.91 5.45 2313 4.0 1.075 -3.0

3.00 2.82 2.98 3.35 3.52 3.98 5.52 2364 9.2 1.066 -3.5

Incomes 16239 16467 4.9 5.7 14190 14388 5.0 5.7 12705 12839 2.6 4.3 4.8 5.1 1939 1868 3.7 -13.9

16880 4.9 14745 5.0 13002 2.5 5.1 1900 0.2

17087 5.0 14928 5.0 13108 3.3 5.2 1882 -3.7

17335 5.9 15167 6.6 13257 4.6 5.6 1850 -6.6

17553 5.1 15371 5.5 13374 3.6 5.8 1854 0.9

17760 4.8 15564 5.1 13479 3.2 5.9 1853 -0.2

17962 4.6 15747 4.8 13574 2.9 5.9 1852 -0.2

16046 4.8 14018 5.0 12622 2.2 4.8 1921 3.7

16678 5.2 14567 5.1 12922 2.6 5.1 1899 6.8

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

Table 4. Quarterly Gross Domestic Product 2015Q2

2015Q3

2015Q4

2016Q1

2016Q2

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

2017Q4

2018Q1

2018Q2

2018Q3

2018Q4

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

16177.3 16333.6 16394.2 16478.5 16603.3 16721.9 16843.0 16960.2 17076.9 17193.2 17294.1 17386.1 17514.5 17633.9 17750.1 17857.7 16053.8 16209.7 16329.0 16435.1 16564.6 16686.3 16802.5 16908.6 17023.2 17138.8 17242.5 17334.4 17456.8 17574.7 17691.6 17802.0 11081.2 11178.9 11268.6 11347.9 11429.4 11512.3 11600.0 11686.5 11775.0 11859.2 11937.0 12013.4 12105.4 12187.7 12273.1 12357.6

Durables

1430.4 1458.3 1482.2 1492.2 1508.9 1532.5 1563.7 1593.3 1625.3 1652.1 1680.5 1703.0 1724.8 1748.0 1772.3 1794.8

Nondurables

2397.8 2423.0 2443.7 2462.5 2483.3 2499.8 2521.4 2538.1 2550.0 2563.7 2575.2 2587.9 2606.1 2621.0 2636.6 2652.2

Services

7277.4 7325.3 7373.0 7423.7 7469.3 7514.9 7554.7 7599.2 7648.5 7696.1 7738.5 7783.1 7837.8 7885.4 7934.6 7984.3

Nonresidential Fixed Investment Equipment & Software Information Processing Equipment

2188.6 2210.6 2222.1 2252.8 2287.8 2326.9 2361.4 2392.1 2419.8 2444.9 2467.5 2492.7 2520.6 2551.3 2578.7 2604.3 1046.0 1046.9 1060.4 1082.3 1097.5 1115.9

1133.7 1149.0 1166.2 1183.1 1199.7 1215.8 1230.2 1246.5 1261.0 1274.1

334.2

330.5

343.8

349.6

354.2

361.5

367.8

373.2

379.6

385.5

392.5

399.3

405.7

412.3

418.6

424.9

84.3

89.6

90.5

93.4

94.4

95.6

96.6

97.5

98.8

100.2

101.3

102.2

102.8

104.2

105.4

106.8

114.2

106.0

114.6

114.1

115.0

118.5

121.4

123.7

125.9

127.7

130.4

133.5

136.1

138.4

140.5

142.3

Industrial Equipment

210.0

220.9

218.3

223.6

227.9

232.4

237.3

242.6

247.8

251.4

255.3

260.0

264.2

267.3

270.6

274.0

Transportation Equipment

292.2

289.4

300.3

305.4

304.1

304.9

306.9

307.0

307.7

310.9

312.7

314.0

315.9

320.1

321.8

322.3

43.7

44.3

45.5

45.8

45.7

45.6

45.2

44.9

44.4

43.8

44.4

44.6

45.0

45.5

46.1

46.4

73.1

69.2

70.8

70.5

71.8

71.2

70.8

69.4

69.7

70.6

71.5

71.1

71.8

72.8

72.9

73.4

458.2

465.2

460.5

459.9

470.5

482.0

490.3

497.9

500.6

502.1

501.1

503.8

510.4

517.4

523.3

528.2

128.9

137.9

136.8

138.2

141.2

143.3

147.6

153.8

158.7

162.7

164.0

166.3

171.1

176.9

183.0

187.7

69.6

78.8

84.3

86.4

89.2

91.0

92.5

88.9

83.6

79.0

75.3

73.0

71.8

70.9

70.9

70.6

Computers & Peripherals Communications Equipment

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

74.6

81.4

81.6

80.4

81.6

81.8

80.0

78.2

76.9

77.5

77.9

78.0

78.1

78.6

79.0

79.7

118.4

89.1

76.0

70.4

72.1

78.6

82.2

88.1

91.8

91.9

91.3

92.6

95.0

95.8

93.9

93.0

68.0

76.5

78.8

81.1

82.9

84.4

85.8

88.0

89.8

91.5

93.4

94.8

95.9

96.9

98.1

98.7

512.4

524.0

531.8

542.2

558.1

572.6

583.1

597.2

611.8

624.7

637.1

646.6

652.5

653.0

653.9

655.6

Exports

2091.4 2117.5 2127.5 2139.2 2145.3 2163.4 2187.1 2211.8 2235.7 2259.2 2284.1 2310.9 2340.5 2369.8 2400.8 2432.6

Imports

2632.5 2652.1 2663.7 2693.7 2732.9 2772.2 2817.4 2867.0 2913.5 2949.9 2990.7 3026.4 3063.3 3093.1 3123.9 3153.5

Federal Government

1111.3

State & Local Government

1725.9 1744.1 1755.5 1759.6 1761.5 1765.0 1768.5 1773.0 1777.1 1782.9 1788.7 1793.9 1798.5 1805.2 1810.6 1816.0

1111.3

1112.0

1111.9

1139.0 1141.3 1141.7 1135.0 1135.6 1135.1 1134.5 1118.3

1117.6

1117.1

1115.7

Institute for Economic Competitiveness

1107.8

23

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

Table 5. Annual Employment History 2008

2009

2010

2011

Forecast 2012

2013

2014 #

2015

2016

2017

2018

Millions Total Nonfarm Employment

137.169 131.220 130.269 131.843 134.098 136.394 139.023

141.89 143.958 145.753

147.49

Private Nonfarm

114.666 108.668 107.779 109.751 112.181 114.545 117.166

119.91 121.846 123.507

125.02

Mining

0.709

0.643

0.655

0.739

0.797

0.811

0.843

0.78

0.708

0.731

0.75

Construction

7.162

6.017

5.518

5.531

5.645

5.857

6.138

6.38

6.609

6.948

7.20

Manufacturing

13.403

11.848

11.529

11.725

11.926

12.018

12.188

12.32

12.310

12.475

12.58

Trade, Transportation and Utilities

26.294

24.905

24.641

25.067

25.471

25.856

26.376

26.91

27.212

27.395

27.56

Transportation & Warehousing

4.508

4.237

4.192

4.303

4.415

4.497

4.635

4.77

4.866

5.004

5.13

Financial Activities

8.204

7.838

7.695

7.697

7.783

7.886

7.978

8.13

8.165

8.057

7.94

Education & Health

19.157

19.548

19.888

20.231

20.697

21.096

21.473

22.04

22.572

22.833

23.13

Professional & Business Services

17.741

16.574

16.723

17.328

17.934

18.522

19.095

19.73

20.329

21.054

21.55

2.983

2.804

2.707

2.673

2.675

2.706

2.740

2.79

2.818

2.826

2.86

Leisure & Hospitality

13.441

13.074

13.042

13.351

13.773

14.259

14.709

15.15

15.453

15.595

15.86

Government

22.503

22.553

22.490

22.092

21.918

21.849

21.857

21.98

22.111

22.246

22.47

2.761

2.831

2.976

2.860

2.822

2.770

2.727

2.73

2.719

2.679

2.64

19.742

19.722

19.513

19.233

19.096

19.079

19.130

19.24

19.392

19.567

19.83

Information

Federal State & Local

Growth Rates Total Nonfarm Employment

-0.55

-4.34

-0.71

1.21

1.71

1.71

1.93

2.06

1.46

1.25

1.19

Private Nonfarm

-0.91

-5.23

-0.80

1.83

2.22

2.11

2.29

2.35

1.61

1.36

1.23

6.77

-14.61

11.68

13.57

2.32

3.07

5.09

-14.90

-1.94

3.67

2.77

Construction

-9.21

-16.57

-3.35

1.88

1.75

4.30

5.05

2.90

5.32

4.44

3.26

Manufacturing

-5.37

-11.38

0.65

1.75

1.45

0.95

1.72

0.23

0.86

0.96

0.75

Trade, Transportation and Utilities

-3.31

-4.83

0.76

1.95

1.48

1.85

2.02

1.65

0.95

0.52

0.64

Transportation & Warehousing

-2.70

-6.16

2.14

2.38

2.66

1.93

3.55

2.20

2.26

2.80

2.09

Financial Activities

-2.28

-4.32

-0.90

0.50

1.25

1.22

1.56

1.61

-0.43

-1.48

-1.29

Education & Health

2.72

1.83

1.70

1.85

2.35

1.68

2.12

2.72

1.90

1.06

1.39

Professional & Business Services

-3.60

-5.15

2.96

3.56

3.32

3.23

3.45

2.88

3.76

2.86

2.04

Information

-3.14

-6.02

-2.35

-0.37

-0.19

1.95

1.34

1.19

0.43

1.72

0.81

Leisure & Hospitality

-1.66

-2.46

1.26

2.79

3.14

3.65

3.20

2.76

1.11

1.30

1.95

Government

0.98

-0.18

-0.94

-1.39

-0.39

-0.25

0.27

0.85

0.23

0.93

0.95

Federal

1.11

2.46

4.80

-0.84

-1.03

-2.52

-0.57

0.30

-1.18

-1.48

-1.40

State & Local

0.97

-0.53

-1.31

-1.47

-0.29

0.09

0.39

0.93

0.43

1.26

1.27

Mining

24

U.S. Forecast | December 2015

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

Table 6. Quarterly Employment

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

Employment (Millions) Total Nonfarm Employment

141.0 141.6 142.2 142.7 143.2 143.7 144.2 144.7 145.1 145.5 146.0 146.4 146.9 147.3 147.7 148.1

Private Nonfarm

119.1 119.7 120.2 120.6 121.1 121.6 122.1 122.5 123.0 123.3 123.7 124.0 124.5 124.8 125.2 125.5

Mining

0.8

0.8

0.8

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.8

0.8

0.8

Construction

6.3

6.4

6.4

6.4

6.5

6.6

6.7

6.8

6.8

6.9

7.0

7.1

7.1

7.2

7.2

7.3

Manufacturing

12.3

12.3

12.3

12.3

12.3

12.3

12.3

12.4

12.4

12.5

12.5

12.5

12.5

12.6

12.6

12.6

Trade, Transportation and Utilities

26.7

26.9

27.0

27.0

27.1

27.2

27.2

27.3

27.3

27.4

27.4

27.4

27.5

27.6

27.6

27.6

Transportation & Warehousing

4.7

4.8

4.8

4.8

4.8

4.8

4.9

4.9

5.0

5.0

5.0

5.1

5.1

5.1

5.1

5.2

Financial Activities

8.1

8.1

8.2

8.2

8.2

8.2

8.1

8.1

8.1

8.1

8.0

8.0

8.0

8.0

7.9

7.9

Education & Health

21.8

22.0

22.1

22.3

22.4

22.6

22.6

22.7

22.7

22.8

22.9

22.9

23.0

23.1

23.2

23.2

Professional & Business Services

19.5

19.7

19.8

19.9

20.0

20.2

20.4

20.7

20.9

21.0

21.1

21.3

21.4

21.5

21.6

21.7

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.9

2.9

2.9

2.9

2.9

Leisure & Hospitality

15.0

15.1

15.2

15.3

15.4

15.4

15.5

15.5

15.5

15.6

15.6

15.7

15.7

15.8

15.9

16.0

Government

21.9

21.9

22.0

22.1

22.1

22.1

22.1

22.1

22.2

22.2

22.3

22.3

22.4

22.4

22.5

22.5

2.7

2.7

2.7

2.7

2.7

2.7

2.7

2.7

2.7

2.7

2.7

2.7

2.7

2.6

2.6

2.6

19.2

19.2

19.3

19.3

19.4

19.4

19.4

19.4

19.5

19.5

19.6

19.7

19.7

19.8

19.9

19.9

Information

Federal State & Local

Growth Rates Total Nonfarm Employment

2.22

1.73

1.73

1.30

1.46

1.48

1.27

1.33

1.28

1.06

1.21

1.14

1.28

1.20

1.15

1.02

Private Nonfarm

2.59

2.00

1.77

1.28

1.66

1.72

1.49

1.50

1.42

1.08

1.21

1.16

1.36

1.22

1.19

1.05

-9.92 -20.53 -14.02 -19.08 -11.25

-4.21

2.16

4.91

3.52

3.20

4.37

3.38

2.83

2.91

2.95

2.29

Mining Construction

6.22

2.57

0.98

1.64

2.83

5.71

6.93

5.36

4.46

4.86

4.45

3.68

3.34

3.28

3.48

2.78

Manufacturing

1.59

0.30

-0.04

-0.94

-0.96

-0.19

1.05

3.48

0.99

0.57

1.06

1.21

0.62

0.40

0.86

1.10

Trade, Transportation and Utilities

2.20

1.73

1.78

0.86

1.14

1.04

0.88

0.73

0.71

0.47

0.58

0.31

0.93

0.71

0.51

0.39

Transportation & Warehousing

2.41

2.47

2.73

1.18

1.19

2.07

2.89

2.88

3.09

2.73

2.83

2.56

2.87

2.98

1.36

1.13

Financial Activities

2.17

1.58

1.99

0.68

1.50

-0.22

-1.96

-1.05

-1.11

-1.62

-1.49

-1.70

-0.84

-1.66

-1.57

-1.10

Education & Health

2.79

2.98

2.62

2.51

2.92

2.77

0.96

0.96

1.21

1.21

0.69

1.11

1.83

1.25

1.07

1.43

Professional & Business Services

3.04

3.67

2.80

1.99

1.84

4.16

4.55

4.48

3.69

2.59

2.82

2.33

2.55

2.32

2.02

1.28

Information

2.39

1.64

0.91

-0.20

0.62

4.82

1.47

-5.20

3.45

-2.07

0.03

5.47

1.49

-0.39

0.73

1.41

Leisure & Hospitality

3.21

2.04

2.58

3.23

3.28

0.08

0.81

0.27

0.84

1.35

1.81

1.20

1.02

2.49

2.42

1.87

Government

0.23

0.28

1.48

1.42

0.37

0.16

0.03

0.38

0.52

0.98

1.17

1.04

0.84

1.10

0.99

0.88

Federal

0.54

0.59

0.05

0.02

-0.38

-0.84

-1.66

-1.86

-1.34

-1.38

-1.55

-1.65

-1.42

-1.47

-1.30

-1.40

State & Local

0.19

0.24

1.69

1.62

0.47

0.30

0.26

0.70

0.78

1.31

1.55

1.41

1.15

1.45

1.30

1.19

Institute for Economic Competitiveness

25

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

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

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

GDP

109.1 109.7 110.0 110.5 111.0 111.5 112.1 112.7 113.2 113.8 114.4 114.9 115.5 116.0 116.6 117.1

Consumption

108.8 109.4 109.7 109.7 109.8 110.3 111.1 111.7 112.1 112.7 113.4 113.9 114.4 114.9 115.5 116.0

Durables Motor Vehicles Furniture

91.0

90.9

90.4

90.4

89.9

89.5

89.2

88.9

88.5

88.1

87.8

87.5

87.3

87.0

86.7

86.4

110.8 111.3 111.2 111.2 111.4 111.7 112.1 112.2 112.3 112.4 112.6 112.8 113.0 113.3 113.5 113.6 87.5

86.6

86.6

86.5

86.2

86.0

85.7

85.4

Other Durables

100.9 100.1

99.7

99.2

99.2

99.1

99.3

99.6

99.8 100.0 100.2 100.4 100.6 100.8 101.0 101.2

Nondurables

108.4 109.4 109.7 108.1 107.5 108.2 109.8 110.9 111.0 112.1 113.2 113.4 114.0 114.5 115.0 115.6

Food

110.9 110.6 111.2 111.6 111.9 112.5 113.1 113.8 114.5 115.2 115.9 116.5 117.0 117.4 117.9 118.2

Clothing & Shoes

104.9 104.7 104.8 104.6 104.2 104.2 104.2 104.3 104.3 104.3 104.3 104.3 104.3 104.3 104.2 104.2

Gasoline & Oil

102.1 111.6 111.9

96.2

88.9

92.4 103.5 109.2 106.0 112.3 118.0 115.6 117.1 118.4 120.0 121.9

Fuel

116.7 112.5 102.0

92.3

91.1

95.5 101.1 105.5 104.3 107.7 112.1 111.4 112.8 114.2 115.8 117.6

Services

112.1 112.6 113.2 113.7 114.2 114.8 115.4 116.1 116.7 117.4 118.2 118.9 119.6 120.3 121.0 121.7

Housing

110.9 111.8 112.8 113.8 114.6 115.3 115.9 116.6 117.3 118.0 118.7 119.5 120.2 120.9 121.6 122.3

Electricity

109.7 108.2 107.5 107.3 105.9 105.8 106.4 107.3 107.9 108.7 110.0 111.4 112.2 112.7 113.5 114.4

Natural Gas Water & Sewer Telephone

87.2

88.7

84.3

83.9

83.5

80.7

80.8

83.9

84.0

82.4

85.0

82.2

84.8

84.9

84.6

85.6

84.3

84.6

84.1

83.7

83.9

85.2

83.7

85.2

131.6 132.9 134.4 136.3 137.4 138.5 139.6 140.7 141.8 142.9 144.1 145.3 146.6 147.9 149.2 150.6 94.2

93.5

94.2

94.9

94.6

94.4

94.0

93.9

93.8

93.7

93.5

93.5

93.5

93.4

93.2

93.1

Transportation

109.6 110.0 109.9 109.9 110.3 110.9 111.7 112.4 112.9 113.6 114.3 114.9 115.5 116.1 116.6 117.2

Other Services

115.0 115.3 115.5 116.0 116.9 117.6 118.1 118.8 119.6 120.4 121.2 122.0 122.9 123.8 124.6 125.5

26

U.S. Forecast | December 2015

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

Table 8. Percent Change in Implicit Price Deflators

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

GDP

0.1

2.1

1.2

1.7

1.7

2.0

2.1

2.1

1.9

2.2

2.1

1.8

2.0

1.8

1.9

1.8

Consumption

-1.9

2.2

1.2

0.0

0.4

1.8

2.7

2.3

1.4

2.4

2.4

1.7

1.9

1.8

1.9

1.9

Durables

-2.4

-0.2

-2.2

-0.2

-2.0

-1.7

-1.3

-1.6

-1.7

-1.6

-1.4

-1.3

-1.3

-1.2

-1.2

-1.4

0.2

1.8

-0.5

0.2

0.8

1.0

1.3

0.6

0.2

0.4

0.6

0.7

0.8

0.9

0.9

0.5

Furniture

-2.9

1.3

-4.3

0.3

-0.8

-1.0

-1.1

-1.4

-1.6

-1.6

-1.1

-1.0

-1.1

-1.0

-1.0

-1.1

Other Durables

-2.3

-2.8

-1.6

-2.1

-0.1

-0.2

0.7

1.0

0.8

0.8

0.8

0.8

0.9

0.8

0.7

0.8

-11.6

3.8

0.8

-5.7

-2.3

2.6

6.2

4.0

0.3

4.3

3.9

0.6

2.0

1.8

1.9

2.0

Food

-0.2

-1.1

2.2

1.6

1.1

2.2

2.1

2.4

2.5

2.4

2.4

2.1

1.6

1.6

1.5

1.3

Clothing & Shoes

-0.7

-0.8

0.5

-1.0

-1.4

0.0

0.1

0.4

0.0

0.0

-0.1

-0.1

0.2

0.0

-0.3

-0.2

Gasoline & Oil

-64.4

42.6

1.2

-45.3

-27.0

16.3

57.5

24.1

-11.3

26.2

21.5

-7.7

5.2

4.4

5.6

6.6

Fuel

-41.9

-13.9

-32.3

-33.0

-4.9

20.6

25.7

18.4

-4.6

13.9

17.4

-2.7

5.3

4.9

5.8

6.6

Services

1.6

2.1

1.9

1.9

1.6

2.1

2.3

2.3

2.2

2.4

2.6

2.5

2.3

2.3

2.4

2.4

Housing

2.8

3.4

3.6

3.6

2.8

2.4

2.4

2.3

2.4

2.4

2.5

2.5

2.5

2.4

2.4

2.4

Electricity

4.6

-5.5

-2.6

-0.9

-5.0

-0.4

2.3

3.3

2.4

2.9

5.0

5.1

2.8

1.7

2.8

3.5

-18.6

-18.5

-1.9

-2.0

-12.7

0.5

16.4

0.3

-7.4

-0.9

14.0

3.1

-4.6

-4.0

7.3

0.1

4.1

4.0

4.6

5.6

3.4

3.2

3.3

3.2

3.1

3.1

3.3

3.6

3.5

3.6

3.7

3.7

Telephone

-3.0

-3.0

2.9

3.0

-1.3

-0.6

-2.0

-0.2

-0.4

-0.4

-0.8

-0.1

-0.1

-0.5

-0.8

-0.5

Transportation

-1.0

1.2

-0.2

-0.1

1.4

2.4

2.7

2.5

2.0

2.4

2.4

2.2

2.0

2.1

2.0

1.9

Other Services

1.9

0.9

0.9

1.7

3.0

2.5

1.9

2.3

2.6

2.6

2.7

2.8

2.9

2.9

2.7

2.8

Motor Vehicles

Nondurables

Natural Gas Water & Sewer

Institute for Economic Competitiveness

27

U . S . F orecast T ables

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

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

2008 GDP

2009

History 2010 2011 2012

2013

2014

2015

Forecast 2016 2017

2018

99.2 100.0 101.2 103.3 105.2 106.9 108.7

109.8 111.8 114.1 116.3

Consumption

100.1 100.0 101.7 104.1 106.1 107.6 109.1

109.4 110.7 113.0 115.2

Durables

101.8 100.0

Motor Vehicles Furniture Other Durables Nondurables

98.6

97.7

96.4

94.7

92.5

99.7 100.0 105.7 108.9 110.2 110.9 111.0 100.4 100.0

95.8

94.2

94.0

92.1

90.7

89.4

88.0

86.8

111.1 111.9 112.5 113.4

88.9

87.0

98.9 100.0 100.4 103.6 104.2 104.0 102.4

100.0

86.1

84.9

84.0

99.3 100.1 100.9

102.7 100.0 103.1 109.2 111.8 112.0 112.7

108.9 109.1 112.4 114.8

Food

98.9 100.0 100.3 104.3 106.7 107.8 109.8

111.1 112.9 115.5 117.6

Clothing & Shoes

99.1 100.0

104.8 104.3 104.3 104.3

99.3 101.1 104.6 105.5 105.9

Gasoline & Oil

136.6 100.0 118.2 149.3 154.7 150.4 144.7

105.4

98.5 113.0 119.3

Fuel

146.0 100.0 117.0 148.8 150.7 149.0 148.9

105.9

98.3 108.9 115.1

Services

98.9 100.0 101.7 103.5 105.8 108.3 110.8

112.9 115.1 117.8 120.7

Housing

98.3 100.0 100.1 101.4 103.5 106.1 109.0

112.3 115.6 118.4 121.3

Electricity

97.1 100.0 100.2 101.8 101.8 103.9 107.7

108.2 106.4 109.5 113.2

Natural Gas

128.2 100.1

98.1

95.1

85.7

89.7

96.1

85.1

82.4

83.8

84.7

Water & Sewer

94.2 100.0 106.3 111.8 118.0 123.3 127.8

Telephone

98.7 100.0

Transportation

97.0 100.0 102.0 104.8 106.8 108.1 109.5

109.9 111.3 113.9 116.3

Other Services

97.3 100.0 103.0 105.6 108.3 111.1 113.6

115.5 117.9 120.8 124.2

28

U.S. Forecast | December 2015

99.3

97.5

97.7

97.2

96.4

133.8 139.1 143.5 148.6 94.2

94.2

93.6

93.3

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

Table 10. Percent Change in Implicit Price Deflators

GDP

2008

2009

1.9

0.4

History 2010 2011 2012

1.8

1.9

2013

2014

2015

1.6

1.4

1.3

1.9

Forecast 2016 2017

2.0

2.0

2018

1.9

1.6

1.2

1.3

2.7

1.8

1.2

1.1

0.4

1.8

2.0

1.9

Durables

-2.1

-0.9

-2.1

-0.5

-1.6

-2.0

-2.4

-1.3

-1.7

-1.5

-1.3

Motor Vehicles

-4.1

5.6

2.9

3.3

0.7

0.5

-0.3

0.4

0.9

0.5

0.8

Furniture

0.3

-2.0

-4.4

-0.2

-0.4

-3.0

-3.1

-1.4

-1.0

-1.3

-1.1

Other Durables

3.2

1.3

0.6

3.2

-0.5

-0.6

-1.9

-2.2

0.3

0.8

0.8

Nondurables

1.2

2.8

2.2

5.9

1.9

-0.4

-0.2

-3.2

2.6

2.3

2.0

Food

6.9

-1.8

1.3

5.1

1.2

0.8

2.8

0.6

2.0

2.3

1.5

0.2

Consumption

-0.9

1.5

-1.4

4.4

2.3

-0.4

-0.5

-0.2

-0.1

-0.1

4.8

26.8

13.4

20.4

4.9

-4.8 -10.1

-16.5

17.7

7.2

5.4

22.4

-0.8

15.7

26.2

3.1

-1.1

-7.5

-30.3

15.0

6.0

5.6

Services

2.5

1.1

1.5

2.1

2.3

2.4

2.2

1.9

2.1

2.4

2.3

Housing

2.5

0.9

0.3

1.9

2.2

2.6

2.8

3.3

2.5

2.4

2.4

Electricity

8.2

-0.4

0.5

2.4

-0.6

3.1

3.1

-1.1

0.1

3.9

2.7

19.1 -18.3

-1.2

-1.6

-4.1

2.6

5.8

-10.2

1.1

2.2

-0.3

Clothing & Shoes Gasoline & Oil Fuel

Natural Gas Water & Sewer

6.8

6.0

5.7

4.9

6.0

3.7

4.4

4.6

3.3

3.3

3.6

Telephone

2.0

0.6

-1.1

-1.5

0.1

-0.5

-2.1

0.0

-1.0

-0.4

-0.5

Transportation

5.9

2.2

1.5

3.1

1.3

1.6

1.0

0.0

2.2

2.2

2.0

Other Services

4.7

2.4

2.7

2.8

2.2

2.8

2.1

1.3

2.4

2.7

2.8

Table 11. Personal Income and its Components

Table 11. Personal Income and its Components 2008

2009

2010

History 2011

2012

2013

2014

2015

Forecast 2016 2017

2018

Personal Income Billions Current Dollars Personal Income

12502.2 12094.8 12477.1 13254.5 13915.1 14068.4 14694.2

15308.9 15963.6 16778.2 17652.5

Wages & Salaries

8078.2

7787.0

7961.5

8269.0

8609.9

8839.7

9249.0

9605.9 10029.9 10534.0 11041.7

Other Labor Income

1075.1

1077.5

1114.6

1142.0

1165.3

1197.8

1224.0

1264.7

1311.8

1368.8

1422.6

979.5

937.6

986.7

1068.1

1179.8

1196.3

1268.5

1327.4

1405.6

1479.5

1537.8

47.0

35.5

46.0

75.6

61.6

88.8

78.1

62.4

60.0

58.7

59.7

Rental Income

262.1

333.7

402.8

485.3

525.3

563.4

610.8

656.8

689.2

715.3

731.3

Dividends

805.5

553.8

544.6

682.3

835.0

789.1

815.5

868.5

881.5

920.9

953.4

Interest Income

1361.6

1264.3

1195.1

1231.6

1288.8

1271.4

1302.0

1319.8

1361.8

1467.4

1657.7

Transfer Payments

1956.6

2147.5

2324.7

2360.5

2366.4

2426.7

2529.2

2664.4

2784.9

2918.3

3056.9

516.9

506.3

514.7

423.9

437.2

579.4

611.8

632.9

661.2

696.3

733.5

Nonfarm Income Farm Income

Personal Social Insurance Tax

Percent Change, Annual Rate Personal Income

4.2

-3.2

3.2

6.2

5.0

1.1

4.4

4.2

4.3

5.1

5.2

Wages & Salaries

2.3

-3.6

2.2

3.9

4.1

2.7

4.6

3.9

4.4

5.0

4.8

Other Labor Income

3.2

0.2

3.4

2.5

2.0

2.8

2.2

3.3

3.7

4.3

3.9

Nonfarm Income

4.1

-4.2

5.3

8.2

10.5

1.4

6.0

4.7

5.9

5.3

3.9

24.9

-21.8

30.4

66.2

-18.5

44.7

-11.5

-19.3

-3.2

-1.9

1.7 1.7

Farm Income Rental Income

52.4

18.4

20.1

20.8

4.4

8.5

8.5

7.0

4.1

3.3

-11.0

-33.4

23.8

23.5

46.4

-13.7

7.2

4.5

1.2

5.5

2.7

Interest Income

-2.2

-9.2

-1.8

3.3

5.1

-1.4

0.9

4.7

2.7

10.4

13.1

Transfer Payments

18.7

14.4

7.5

0.4

1.2

2.4

5.1

5.2

4.5

4.6

4.6

2.6

-1.8

2.4

-13.5

5.2

44.4

5.7

2.9

5.4

5.0

5.3

Dividends

Personal Social Insurance Tax

Institute for Economic Competitiveness

29

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

Table 12. Personal Consumption Expenditures (Current Dollars)

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

Consumer Expenditures by Type Billions Current Dollars

Consumer spending on… all goods & services

12055.5 12228.4 12364.1 12450.1 12551.4 12699.7 12882.9 13052.0 13195.8 13368.4 13537.6 13681.1 13849.2 14006.9 14171.6 14335.4

durable goods

1301.8 1326.4 1340.6 1348.6 1356.7 1372.1 1395.3 1416.2 1438.3 1456.2 1476.2 1490.9 1505.1 1520.6 1536.9 1550.9

furniture and appliances

293.8

298.0

300.1

302.1

304.8

309.0

312.5

315.7

318.2

321.1

323.9

326.3

329.0

331.8

334.7

337.5

information processing equipment

104.1

105.1

107.0

107.9

109.1

109.9

111.1

112.2

113.3

114.2

115.2

116.2

117.2

118.4

119.5

120.4

motor vehicles and parts

447.8

460.4

465.6

468.9

471.9

477.2

488.0

498.6

512.2

520.6

530.8

537.5

543.2

548.1

553.5

556.6

other durable goods

132.6

135.7

137.5

138.7

139.0

140.2

141.6

143.0

144.0

145.2

146.4

147.2

147.9

148.9

149.8

150.8

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

2599.7 2651.8 2680.0 2661.3 2668.5 2703.7 2768.2 2814.1 2829.7 2874.8 2915.6 2934.1 2969.7 3000.4 3032.6 3066.0 372.3

377.5

380.1

382.8

384.2

387.0

389.4

394.6

395.8

397.2

398.4

400.1

406.4

410.1

412.4

24.3

21.6

20.2

18.4

18.0

19.2

20.6

21.7

21.5

22.2

23.0

22.7

22.8

22.9

23.1

414.2 23.4

269.4

296.0

298.5

258.4

245.9

257.4

288.0

302.7

293.6

311.1

325.5

319.3

324.9

331.0

337.7

345.4

891.5

895.1

899.9

907.2

914.8

925.5

935.8

945.4

954.0

963.5

971.2

978.0

984.6

992.0

999.3 1006.4

1042.2 1061.6 1081.4 1094.5 1105.6

1114.6

1134.4

1149.7

1164.8

1180.9

1197.5

1214.0 1231.1 1244.5 1260.1 1276.6

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

11081.2 11178.9 11268.6 11347.9 11429.4 11512.3 11600.0 11686.5 11775.0 11859.2 11937.0 12013.4 12105.4 12187.7 12273.1 12357.6

durable goods

1430.4 1458.3 1482.2 1492.2 1508.9 1532.5 1563.7 1593.3 1625.3 1652.1 1680.5 1703.0 1724.8 1748.0 1772.3 1794.8

furniture and appliances

336.7

340.5

346.6

348.8

352.5

358.3

363.3

368.3

372.7

377.6

382.0

385.8

390.1

394.4

398.9

403.3

information processing equipment

158.2

160.2

165.0

166.4

171.2

175.6

180.8

186.0

191.2

196.3

201.7

207.2

212.9

219.1

225.2

231.2

motor vehicles and parts

404.1

413.6

418.8

421.6

423.5

427.1

435.4

444.2

456.1

463.1

471.4

476.5

480.6

483.9

487.6

489.8

other durable goods

131.9

136.7

139.1

141.6

141.9

142.9

144.2

145.3

146.0

147.0

148.0

148.7

149.2

150.0

150.9

151.8

nondurables clothing & shoes

2397.8 2423.0 2443.7 2462.5 2483.3 2499.8 2521.4 2538.1 2550.0 2563.7 2575.2 2587.9 2606.1 2621.0 2636.6 2652.2 354.8

360.5

362.5

366.0

368.7

371.3

373.6

378.2

379.3

380.7

382.0

383.7

389.5

393.0

395.6

20.9

19.2

19.9

20.0

19.8

20.1

20.4

20.5

20.6

20.6

20.5

20.4

20.2

20.1

20.0

19.9

gasoline & motor oil

263.7

265.2

266.6

268.5

276.4

278.7

278.4

277.1

277.0

276.9

276.0

276.1

277.4

279.6

281.5

283.3

food

804.1

809.5

809.3

812.7

817.3

822.3

827.2

830.7

833.2

836.3

838.1

839.6

841.9

844.7

847.9

851.1

other nondurable goods

964.1

978.6

995.7 1005.8 1012.5 1019.0 1033.4 1043.1 1051.5 1060.8 1070.5 1080.1 1089.6 1096.3 1104.5

1113.3

fuel oil & coal

397.5

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

1.7

3.5

3.2

2.8

2.9

2.9

3.0

3.0

3.0

2.9

2.6

2.6

3.1

2.7

2.8

2.8

durable goods

2.0

7.8

6.6

2.7

4.5

6.3

8.1

7.6

8.0

6.6

6.9

5.3

5.1

5.4

5.6

5.1

furniture and appliances

5.1

4.5

7.2

2.5

4.2

6.5

5.6

5.4

4.8

5.2

4.7

4.1

4.4

4.4

4.5

4.5

information processing equipment

8.4

5.2

12.0

3.3

11.7

10.1

11.9

11.5

11.3

10.6

11.0

10.9

11.0

11.7

11.2

10.7

motor vehicles and parts other durable goods nondurables

-3.5

9.4

5.0

2.6

1.8

3.5

7.8

8.1

10.7

6.1

7.2

4.3

3.5

2.7

3.1

1.8

0.6

14.5

7.1

6.9

0.9

3.1

3.4

3.1

2.0

2.8

2.7

1.9

1.3

2.0

2.4

2.4 2.4

0.7

4.2

3.4

3.1

3.4

2.7

3.5

2.6

1.9

2.1

1.8

2.0

2.8

2.3

2.4

clothing & shoes

-1.1

6.4

2.2

3.9

2.9

2.9

2.4

5.0

1.1

1.5

1.4

1.8

6.1

3.6

2.6

1.9

fuel oil & coal

46.7

-32.2

13.2

1.9

-4.0

7.0

5.2

3.3

1.5

0.6

-1.9

-3.4

-3.2

-2.4

-1.9

-1.6 2.6

gasoline & motor oil food other nondurable goods

30

2.6

2.2

2.2

2.8

11.8

3.3

-0.5

-1.8

-0.1

-0.2

-1.4

0.2

1.9

3.2

2.7

-0.8

2.7

-0.1

1.7

2.3

2.5

2.4

1.7

1.2

1.5

0.8

0.8

1.1

1.4

1.5

1.5

1.0

6.2

7.2

4.1

2.7

2.6

5.8

3.8

3.3

3.6

3.7

3.6

3.6

2.5

3.0

3.2

U.S. Forecast | December 2015

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

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

2009

2010

2011

Forecast 2012

2013

2014 #

2015

2016

2017

2018

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

10013.6

9847.0 10202.2 10689.3 11050.6 11392.3 11865.9

12274.5 12796.5 13445.7 14090.8

1102.3

1023.3

1070.7

1125.3

1191.9

1237.8

1280.2

1329.4

1385.1

1465.4

1528.4

268.7

244.3

250.4

260.7

271.4

280.2

287.9

298.5

310.5

322.4

333.2

83.4

81.2

90.3

91.9

98.6

101.2

102.6

106.0

110.6

114.7

118.9

339.6

317.1

342.0

363.5

395.8

416.7

440.2

460.7

483.9

525.3

550.4

112.1

105.5

110.0

121.4

127.3

131.5

132.9

136.1

141.0

145.7

149.4

2273.4

2175.1

2292.1

2471.1

2547.2

2598.9

2668.2

2648.2

2738.6

2888.6

3017.2

319.5

306.5

320.6

338.9

354.3

362.5

368.9

378.2

388.8

397.9

410.8

30.8

24.3

26.2

29.2

26.4

27.4

28.4

21.1

19.9

22.3

23.1

gasoline & motor oil

358.3

260.2

307.3

380.4

390.5

385.6

372.8

280.6

273.5

312.4

334.8

food

772.9

770.0

788.9

829.1

848.8

866.0

886.5

898.4

930.4

966.7

995.6

other nondurable goods

791.9

814.2

849.2

893.5

927.3

957.5

1011.7

1069.9

1126.1

1189.3

1253.1

nondurables clothing & shoes fuel oil & coal

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

10007.2

9847.0 10036.3 10263.5 10413.2 10590.4 10875.7

11219.2 11557.0 11896.2 12231.0

1083.2

1023.3

1085.7

1151.5

1236.2

1307.6

1384.1

1465.8

1549.6

1665.2

1760.0

267.7

244.3

261.5

276.6

288.7

304.3

323.9

343.2

360.6

379.5

396.7

76.9

81.2

97.2

108.0

125.2

138.8

149.4

162.4

178.4

199.1

222.1

340.8

317.1

323.4

333.8

359.1

375.8

396.7

414.5

432.6

466.8

485.5

113.4

105.5

108.9

115.1

120.2

124.9

129.7

137.3

143.6

147.4

150.4

2214.7

2175.1

2223.5

2263.2

2277.5

2319.8

2367.8

2431.8

2510.7

2569.2

2629.0

322.3

306.5

322.7

335.3

338.9

343.5

348.4

361.0

373.0

381.4

393.9

21.1

24.3

22.4

19.6

17.5

18.4

19.1

20.0

20.2

20.5

20.0

gasoline & motor oil

262.4

260.2

259.9

254.7

252.5

256.3

257.7

266.0

277.7

276.5

280.5

food

781.9

770.0

786.5

795.1

795.7

803.4

807.5

808.9

824.4

836.8

846.4

other nondurable goods

828.3

814.2

833.0

863.2

880.7

906.3

945.0

986.1

1027.0

1065.7

1100.9

2.8

2.9

nondurables clothing & shoes fuel oil & coal

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

-1.9

-0.2

3.1

1.5

1.3

2.3

3.2

2.9

3.0

-12.4

3.0

9.3

4.9

7.3

4.6

7.5

4.9

6.8

6.9

5.4

-9.1

-2.0

8.3

5.8

3.1

6.7

6.9

4.9

5.6

4.8

4.5

0.4

12.9

16.8

13.9

16.7

6.3

9.6

7.4

11.8

11.4

11.6

motor vehicles and parts

-23.0

7.9

11.0

1.5

7.4

2.3

8.5

3.5

5.4

7.3

2.8

other durable goods

-12.3

0.6

5.5

3.2

8.1

1.9

4.0

7.6

2.6

2.4

2.0

nondurables

-2.6

0.2

3.3

0.4

0.8

2.6

2.4

2.9

3.1

2.0

2.5

clothing & shoes

-3.2

-1.0

7.6

1.1

0.9

1.8

3.6

2.9

3.3

1.4

3.6

7.9

7.5

-7.6

-12.6

5.5

16.4

-3.3

10.7

3.0

-0.8

-2.3

gasoline & motor oil

-3.9

-1.1

2.2

-3.1

-0.9

2.7

2.2

2.5

3.4

-0.4

2.6

food

-3.7

2.1

2.1

-0.4

0.6

1.4

-0.3

0.9

2.2

1.1

1.4

other nondurable goods

-0.6

-0.6

3.6

2.8

1.9

3.8

4.7

4.6

3.7

3.5

3.1

fuel oil & coal

Institute for Economic Competitiveness

31

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

Table 14. Business Fixed Investment History

2008

2009

2010

2011

Forecast 2012

2013

2014 #

2015

2016

2017

2018

Billions Current Dollars Business Fixed Investment

1941.0 1633.4 1658.2 1812.1 2007.7 2084.3 2233.7

2310.7 2443.0 2598.0 2757.8

Producers Dur. Equipment

825.1

644.3

731.8

838.2

937.9

972.3 1036.7

Nonresidential Structures

552.4

438.2

362.0

381.6

448.0

462.1

507.0

501.0

533.8

570.3

613.0

Non-Farm Buildings

317.5

249.1

173.7

170.2

191.6

203.8

232.5

293.4

333.2

354.2

384.7

Commercial

148.9

95.4

64.7

66.8

75.6

84.2

103.1

117.3

128.6

146.4

166.7

Industrial

1076.3 1135.8 1214.0 1291.9

52.8

56.3

39.8

39.0

45.8

48.8

56.1

87.9

104.4

94.9

91.0

Other Buildings

115.8

97.4

69.2

64.5

70.2

70.7

73.3

88.2

100.2

112.9

127.1

Utilities

104.6

104.3

93.3

90.7

112.2

108.9

117.1

106.2

110.9

112.4

118.2

Mines & Wells

117.0

75.0

86.2

112.3

134.1

137.7

144.4

88.4

75.9

87.0

93.0

Billions 2005 Dollars Business Fixed Investment

1934.5 1633.5 1673.8 1802.3 1964.2 2023.8 2148.3

2218.5 2342.1 2456.2 2563.7

Producers Dur. Equipment

836.1

644.3

746.7

847.9

939.2

969.5 1026.2

Nonresidential Structures

540.2

438.2

366.3

374.7

423.1

429.7

464.6

460.9

485.2

501.9

519.8

Non-Farm Buildings

317.9

249.1

179.3

172.3

188.8

196.1

216.5

268.1

297.8

306.1

321.2

Commercial

151.7

95.4

66.6

67.3

73.9

80.6

96.1

107.3

116.4

129.4

142.8

53.8

56.3

40.8

39.1

44.9

46.8

52.0

79.8

90.4

77.7

71.1

Other Buildings

112.8

97.4

71.9

65.9

70.0

68.6

68.2

80.7

90.8

99.8

109.0

Utilities

103.6

104.3

89.8

82.8

99.1

95.1

101.0

90.7

92.4

89.1

89.9

Mines & Wells

105.0

75.0

87.8

110.9

123.8

126.7

135.0

88.5

80.3

91.9

94.4

Industrial

1058.9 1124.0 1191.2 1252.9

Annual Growth Rate Business Fixed Investment

-5.6

-14.2

8.6

10.9

6.9

5.1

6.6

3.3

6.6

6.0

6.2

Producers Dur. Equipment

-15.9

-11.4

20.2

14.4

8.4

4.2

6.5

4.1

5.9

7.1

5.9

4.7

-32.2

-0.6

15.3

7.8

9.0

6.6

-2.2

10.6

4.9

8.7

-0.4

-34.0

-21.1

14.7

7.3

9.8

19.9

22.9

11.3

4.0

11.4

-11.8

-44.7

-16.8

14.7

9.9

18.7

24.4

6.2

14.3

10.3

17.3

22.5

-11.9

-28.8

37.4

8.1

9.1

27.6

54.3

9.4

-13.3

1.1

Other Buildings

6.7

-29.7

-19.5

3.6

4.5

1.7

9.3

24.6

10.1

13.3

11.9

Utilities

2.5

-4.1

19.0

2.4

18.4

17.8

-12.2

12.4

2.3

4.0

5.4

24.4

-42.8

53.6

36.6

1.9

5.9

9.4

-50.6

21.2

7.9

4.7

Nonresidential Structures Non-Farm Buildings Commercial Industrial

Mines & Wells

32

U.S. Forecast | December 2015

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

Table 15. Government Receipts and Expenditures History 2008

2009

2010

2011

Forecast 2012

2013

2014 #

2015

2016

2017

2018

Federal Government Receipts and Expenditures Receipts

2579.5

2238.4

2443.3

2574.1

2699.1

3141.3

3265.2

3422.4

3561.9

3726.6

3850.3

Personal Tax and Nontax Receipts

1174.3

864.5

941.6

1129.1

1164.7

1300.6

1396.9

1525.9

1590.3

1669.4

1718.2

233.6

200.4

298.7

299.4

363.1

379.3

417.9

437.1

455.0

445.8

430.6

94.0

91.4

96.8

108.6

115.1

125.8

137.8

141.6

146.8

163.8

174.7

974.4

950.8

970.9

904.0

938.2

1093.4

1145.2

1182.6

1235.7

1301.4

1371.0

Expenditures

3213.5

3487.2

3772.0

3818.2

3789.1

3782.2

3896.7

4022.9

4169.4

4333.0

4540.2

Purchases Goods & Services

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

1155.6

1217.7

1303.9

1303.5

1292.5

1230.7

1219.9

1222.2

1265.4

1278.4

1283.4

National Defense

754.1

788.3

832.8

837.0

817.8

767.7

748.2

738.9

754.5

766.5

773.7

Other

401.5

429.4

471.1

466.5

474.7

463.0

471.6

483.3

510.9

511.9

509.6

Transfer Payments

1896.1

2142.9

2333.2

2327.0

2300.8

2346.0

2444.0

2566.8

2677.1

2803.4

2936.1

To Persons

1464.6

1616.2

1757.9

1779.9

1783.6

1823.2

1877.3

1961.4

2046.5

2144.4

2254.6

45.1

52.7

53.5

57.6

55.3

53.9

52.3

53.2

52.7

53.9

54.9

Grants in Aid to State & Local Gov't

To Foreigners

371.0

458.1

505.3

472.5

444.0

450.1

494.8

531.8

556.5

582.8

603.4

Net Interest

368.4

330.8

351.0

398.0

401.6

393.3

416.6

413.4

423.2

438.9

498.1

48.7

56.2

57.4

66.7

66.5

70.2

67.1

66.4

71.8

70.3

70.3

Surplus (+) or Deficit (-)

Subsidies less Surplus of Gov't Entities

-634.0 -1248.8

-1328.7

-1244.2

-1090.1

-641.0

-631.5

-600.5

-607.4

-606.5

-689.8

Receipts

1909.1

1919.2

1998.5

2030.5

2057.2

2136.5

2225.0

2311.6

2409.7

2527.5

2635.2

Personal Tax/Nontax Receipts

1328.9

1268.1

1305.7

1368.3

1416.1

1479.8

1517.5

1566.2

1631.4

1713.3

1790.3

333.5

287.8

297.6

324.1

346.7

372.2

383.3

409.1

430.5

451.9

472.1

State and Local Government Receipts and Expenditures

Corporate Profits Indirect Business Tax and Nontax Accruals

47.4

45.6

47.7

50.2

52.5

55.5

58.3

61.9

66.5

64.7

62.6

Contributions for Social Insurance

18.7

18.6

18.2

18.2

18.1

18.6

18.9

18.8

19.1

20.1

21.2

371.0

458.1

505.3

472.5

444.0

450.1

494.8

531.8

556.5

582.8

603.4

Federal Grants-In-Aid Expenditures Purchases Goods & Services

2074.15 2191.15 2235.85 2246.40 2277.93 2323.60 2392.73

2464.09 2545.88 2636.02 2732.26

1847.6

1871.4

1870.2

1865.3

1866.0

1883.6

1932.3

1964.3

2025.1

2097.8

2179.6

477.8

566.1

612.0

582.2

558.0

571.2

621.5

656.6

684.9

714.7

738.9

Interest Received

36.0

114.3

123.0

125.9

141.4

142.1

122.6

127.8

122.8

115.0

114.0

Net Subsidies

25.0

22.8

21.4

17.9

10.8

7.9

9.1

8.5

6.7

4.7

2.7

2.6

2.2

2.3

2.7

3.3

3.7

3.8

4.3

4.2

4.2

4.3

-165.1

-271.9

-237.3

-215.9

-220.8

-187.1

-167.7

-152.5

-136.2

-108.5

-97.1

Transfer Payments

Dividends Received Surplus (+) or Deficit (-)

Institute for Economic Competitiveness

33

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

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

2009

2010

2011

Forecast 2012

2013

2014 #

2015

2016

2017

2018

Billions of Dollars Net Exports Goods & Services

-723.1

-395.5

-512.7

-580.0

-565.7

-508.4

-530.0

-517.3

-480.8

-563.7

-615.8

Current Account

-690.8

-384.0

-442.0

-460.4

-449.7

-376.8

-389.5

-438.8

-447.7

-516.5

-579.5

Exports -Goods & Services

1841.9

1587.7

1852.3

2106.4

2198.2

2263.3

2341.9

2265.7

2326.0

2479.2

2640.0

Merchandise Balance

-832.5

-509.7

-648.7

-740.6

-741.2

-702.6

-741.5

-748.6

-725.0

-815.2

-887.0

Food, Feed & Beverage

108.35

93.91

107.72

126.25

133.05

136.16

143.75

128.09

130.25

137.13

141.56

Industrial Supplies Excl Petroleum

386.9

293.5

388.6

485.3

483.2

492.3

500.0

428.4

453.7

510.5

555.4

Motor Vehicles & Parts

121.5

81.7

112.0

133.0

146.2

152.7

159.7

153.7

169.6

186.3

204.3

Capital Goods, Excl. MVP

457.7

391.5

447.8

494.2

527.5

534.5

551.3

539.6

524.7

540.8

566.4

43.9

37.7

43.8

48.5

49.2

48.1

48.8

46.6

44.7

47.5

51.2

Other

Computer Equipment

339.8

279.0

332.1

365.4

383.9

381.4

389.5

375.6

364.7

375.6

392.5

Consumer Goods, Excl. MVP

161.2

149.3

164.9

174.7

181.0

188.4

198.3

196.8

190.1

188.4

186.1

63.3

55.2

58.6

53.4

55.1

56.9

64.9

70.3

69.2

68.5

71.2

543.1

522.6

572.7

639.5

672.2

702.3

723.9

748.8

788.4

847.6

915.0

Other Consumer Services

Billions of Dollars Imports -Goods & Services

2565.0

1983.2

2365.0

2686.4

2763.8

2771.7

2871.9

2783.0

2806.8

3042.9

3255.7

Merchandise

2149.4

1590.3

1949.8

2244.7

2305.8

2301.9

2388.5

2280.5

2274.5

2455.8

2618.3

90.4

82.9

92.5

108.3

111.1

116.0

126.7

128.9

121.0

126.1

133.3

Petroleum & Products

476.1

267.7

353.6

462.1

434.3

387.8

350.9

190.8

182.3

228.1

237.9

Industrial Supplies Excl Petroleum

318.7

196.6

249.4

292.7

288.8

291.2

316.0

293.0

295.6

315.1

332.5

Motor Vehicles & Parts

233.2

159.2

225.6

255.2

298.5

309.6

328.5

346.2

342.2

366.3

395.7

Capital Goods, Excl. MVP

458.7

374.1

450.4

513.4

551.8

557.9

595.7

606.6

617.1

659.7

706.5

Computer Equipment

101.2

94.2

117.3

119.7

122.3

121.2

121.7

121.4

118.7

121.6

125.6

Other

322.0

249.2

301.9

358.2

389.4

389.7

420.9

430.3

443.0

482.6

523.7

Consumer Goods, Excl. MVP

485.7

429.9

485.1

515.9

518.8

534.0

559.4

598.8

589.7

615.4

656.5

Food, Feed & Beverage

Other Consumer Services

86.5

80.0

93.1

97.1

102.4

105.5

111.3

116.2

126.6

145.0

155.9

415.6

392.9

415.2

441.6

458.0

469.8

483.4

502.5

532.3

587.1

637.5

-557.8

-395.4

-458.8

-459.4

-447.1

-541.6

-620.4

-697.7

-722.5

Billions 2005 Dollars Net Exports Goods & Services

-417.5

-442.5

Exports G & S

1740.8

1587.7

1776.6

1898.3

1963.2

2018.1

2086.4

2118.9

2176.9

2272.5

2385.9

Imports G & S

2298.6

1983.2

2235.4

2357.7

2410.2

2435.6

2528.9

2660.5

2797.4

2970.1

3108.4

Exports G & S

0.0

4.1

15.3

8.7

1.2

-3.5

5.6

6.3

6.6

Exports & Imports % Change 3.4

5.1

Imports G & S

-1.8

0.9

15.0

10.9

0.3

1.6

3.9

-5.4

6.3

7.8

6.4

Real Exports G & S

-2.0

3.0

10.1

4.2

2.2

5.3

2.6

0.8

3.4

4.5

5.3

Real Imports G & S

-5.7

-3.6

12.2

3.5

0.3

2.4

5.5

4.1

6.4

5.6

4.2

34

U.S. Forecast | December 2015

SEAN M. SNAITH, PH.D.

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

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