december 2014 u.s. forecast

D e c e m b e r 2 0 1 4

U.S. Forecast

I n s t i t u t e f o r E c o n o m i c C o m p e t i t i v e n e s s

C o l l e g e o f B u s i n e s s A d m i n i s t r a t i o n

U n i v e r s i t y o f C e n t r a l F l o r i d a

A B O U T U N I V E R S I T Y O F C E N T R A L F LO R I DA ( U C F )

A B O U T T H E C O L L E G E O F B U S I N E S S A D M I N I S T R AT I O N

Forecast 2014 - 2017

D e c e m b e r 2 0 1 4 R e p o r t


C o l l e g e o f B u s i n e s s A d m i n i s t r a t i o n

U n i v e r s i t y o f C e n t r a l F l o r i d a

FORECAST FOR THE NATION

Published quarterly by the Institute for Economic Competitiveness, College of Business Administration, University of Central Florida

Copyright © 2014 Institute for Economic Competitiveness. All rights reserved.

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

Publications of the Institute for Economic Competitiveness are made possible by the following staff:

Dr. Sean Snaith, DirectorAngela Ayala, Administrative AssistantJonathan Fagbohungbe, ResearcherAshley Miller, ResearcherTrevi Sellers, Researcher

H I G H L I G H T S O F T H E 4 Q 2 0 14 U . S . F O R E C A S TH

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SIn this Issue of the U.S. Forecast:

• Our low carb recovery: how overreaching laws and regulations are choking off our economic engine.

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

• The Fed will commence a cycle of raising interest rates starting in the 4th quarter of 2015. This action will bring an end to a six-year stretch where gains in the stock market averaged double-digits. The S&P 500 will average just 1.0% growth during 2016-2017. Volatility should rise as interest rate hikes draw nearer.

• Real GDP growth in the 4th quarter of 2014 will be just 1.6%, before rising again in the 1st quarter to 2.1%. Growth will gradually rise to 2.3% in 2015, 2.4% in 2016, and 2.7% in 2017 as the Federal Reserve tightens interest rates.

• Consumption spending growth should slowly improve over the forecast horizon. The 2014 holiday shopping season should be a mild improvement over last year’s disappointing season. Lower gasoline prices will provide a little extra spending cash this season and should make consumers just a little more jolly.

• Real consumer spending is expected to grow an average of 2.6% during 2014-2017, while gradually accelerating over this period to 2.8% growth in 2017. Consumers’ balance sheets continue to heal thanks to the housing market rebound. This and the continued labor market recovery will both support consumption spending growth, particularly if wage growth sticks around beyond November’s uptick.

• The housing market continues to recover. Mortgage credit availability will be critical to the continued recovery. The housing market should steadily improve through 2016 when rising rates take their toll and housing starts level off. Housing starts will rise from 999,137 in 2014 to 1,449,673 in 2017.

• Payroll employment growth remains sluggish. Inhibiting more robust economic growth, policy uncertainty and the implementation of Affordable Care Act mandates will weigh on the private sector. Consequently, payrolls will expand 1.8% in 2014 and 1.6% 2015. Growth in 2016 slips to 1.2% before easing to 1.0% in 2017 as the Affordable Care Act is fully implemented.

• Unemployment rates (U-3) are expected to fall slightly to 5.7% in the next two quarters before drifting up to 5.8% in the 4th quarter of 2017. Underemployment (U-6) remains a serious problem and currently stands at 11.4%.

Institute for Economic Competitiveness 5

U . S . F O R E C A S T

The title of this section may have initially had you thinking about carbohydrates. As I wrote it, carbohydrates were on my mind too, but not in my mouth. After a hectic semester that put a real crimp in my exercise regime, I felt it was necessary to take some drastic measures to address the expansion of my waistline. That expansion put U.S. economic growth to shame and, in fact, outpaced economic growth in China as well.

So I made the difficult decision to go on a low-carb diet just as the holiday eating season was kicking into high gear. Unlike the restrictions of low fat, low calorie diets, I am free to eat meats and cheeses, eggs and bacon, and many more no no’s on other diets, which makes this regime more tolerable than counting calories. I don’t feel as hungry as I might on a traditional diet.

But all diets require sacrifices and it is carbohydrates that I have sworn off. No fruits or fruit juices. No candy, no cookies, no cake. No pasta, no bread, no french fries, no pizza (aside from my invention of plate pizza: mozzarella cheese on a plate with pepperoni on top of it all melted in the microwave), no donuts, no pastries. No fun.

Of course you always want what you can’t have. Phycologists call this phenomena reactance, and carbohydrates have been elevated in my mind as far as desirability is concerned.

Grocery shopping is difficult. Publix always seems to place their bakeries in the front of the store, forcing you to walk through a cavalcade of carbohydrates upon entering. This sends my mind reeling into a fantasy world in which I am diving into a pit of sourdough baguettes, their rough crusts rubbing my skin, their heavenly aroma sending my olfactory nerve into paroxysms, rolling around taking bites of each crunch-chewy loaf that gets near my mouth. I contemplate hiding in the produce section, lying in wait for the next unsuspecting child to pass by so I can snatch the free bakery cookie from their unappreciative little hands.

No, carbohydrates were not what I meant as I wrote that title, but rather carburetion. Carburetion is the process of producing a mixture of air and fuel in the

correct proportion for combustion to occur in an internal combustion engine. Internal combustion engines are the type of engines that power automobiles and trucks, jet planes and jet skis, lawnmowers and leaf blowers. A carburetor is a device on these engines that is responsible for this necessary process taking place (on many engines this device is being replaced by fuel injectors).

If the mix of air and fuel is not appropriate then the engine will not function properly. The symptoms of carburetor problems can include erratic performance of the engine and poor acceleration. Fuel may be getting to the engine, but if there is not enough air being mixed into the fuel then the engine is not going to function properly.

The engine of our economy is not suffering for lack of fuel. The Federal Reserve Bank has made $4 trillion worth of purchases of U.S. Treasury bonds and mortgage-backed bonds, and pursued a policy of a zero interest rate target that has been in place since 2009. The Federal Government implemented a massive stimulus program of $831 billion and has run budget deficits that will total more than $6.7 trillion by the end of 2014. There has been no lack of fuel pumped into our economic engine, yet the economy has failed to accelerate and its performance has been poor. Average real GDP growth from 2010 through 2014 should be just 2.2%.

What, then, is the problem? Well, after your two paragraphs worth of mechanics training you have probably correctly diagnosed that it is a lack of air that is preventing the carburetion from taking place in our economy. Choking off the air flow has caused the economy to sputter its way through the first five and a half years of this recovery.

So what is cutting off the air flow? We have written repeatedly about the deleterious effects of the Affordable Care Act and the Dodd-Frank financial regulatory reform law in these forecasts, and both laws still weigh on the economy, cutting off the critical air-flow to the engine. Dodd-Frank was signed into law on July 21, 2010, about four months after the Affordable Care Act became law. Almost four and a half years later neither of these laws has

The Low Carb RecoveryOverreaching and Oppressive Policies and Regulations

are Choking Our Economic Engine

6 U.S. Forecast | December 2014


been fully implemented, and it will be several more years before either one is completely enacted. The uncertainty surrounding these massive laws has sucked much of the air out of the engine of our economy. But they are not alone in inhibiting our economic carburetion.

In the shadows of these gargantuan laws there have been a large number of smaller regulatory actions taking place. Just because they are smaller in scope doesn’t mean they are economically insignificant. In fact, the Office of Information and Regulatory Affairs analyzes regulations and assesses their economic impact. Regulations are like taxes in that they have an economic cost and when you regulate an activity you likely will have less of that activity taking place. When a regulation has an impact on the economy of over $100 million the OIRA labels the regulation as economically significant. This administration has issued 50% more economically significant regulations

(many associated with the above laws) than the Bush administration did. The Obama administration has issued 406 such regulations thus far, with more on the way. This red tape also chokes off the flow of air into the economy’s engine, and we are strangling growth by implementing so many of these rules.

We have provided plenty of fuel to our economy’s engine but are experiencing a low carb(uretion) recovery by cutting off the air that could rev up our economy.

Anybody know a good mechanic?The staff at the Atlanta Federal Reserve Bank has spun

together 13 labor market indicators into a single chart. The Labor Market Spider Chart allows for a quick assessment of the health of the broader labor market beyond just headline unemployment and payroll job changes. Looking only at these indicators has given a false impression of how U.S. labor market is truly faring.

The spider chart does incorporate these two headline measures alongside 11 others for a wider look at the health of the U.S. labor market. The chart, displayed in Figure 1, is divided into four quadrants, each capturing a different dimension of the labor market. The upper left quadrant shows leading indicators of the labor market and includes initial claims for unemployment, firms unable to fill job openings, and temporary help services. The lower left quadrant displays measures of labor market utilization and includes workers who want to work full-time but can only find part time work, the job finding rate, workers marginally attached to the labor force, and unemployment. The lower right quadrant displays indicators of confidence in the labor market and includes the number of employee quits, job availability, and hiring plans. The upper right quadrant reflects employer behavior and includes data measuring payroll employment, hires, and job openings.

The light grey dashed inner circle represents the values of these indicators at the time of the trough in employment that took place in December 2009 (the labor market’s bottom actually occurred

Figure 1. Labor Marker Spider Chart, October 2014 and August 2014 Levels

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



after the official end of the recession, which was June 2009). The dark grey dashed outer circle represents the values of these indicators in December 2007 which was the prerecession peak in the labor market. The darker solid line is the value of these indicators as of August 2014 and the lighter solid line is the values for October 2014.

Movement along each one of the thirteen strands in the spider chart from the inner circle toward the outer circle represents improvement along each of these dimensions of the labor market’s health. Six of the thirteen measures have already exceeded their prerecession peak levels. However, the remaining seven, including all four measures of utilization and all three confidence measures, remain below prerecession levels.

From August to October there were varying degrees of progress in ten of the indicators and regression in three.

The Federal Reserve Bank has referred on several occasions to ongoing slack in the labor market. This slack is reflected in the weak recovery of the indicators in the utilization quadrant of the Atlanta Fed’s Spider Chart. Two of these indicators, work part-time for economic reasons and marginally attached workers, are also reflected in the persistently high levels of the broadest measure of unemployment, U-6, which still stands at 11.4%.

This slack in the labor market has kept wage growth low, despite November’s faster-than-expected growth, and is part of the reason why consumer spending growth has remained muted in the sixth year of this economic recovery. Many are pointing to the fact that the U.S. has exceeded prerecession levels of payroll employment, or the fact that the US labor market has added an average of 241,000 jobs for the first eleven months of 2014 as evidence that the U.S. is healthy and recovering robustly. This slack still leaves room for the Fed to take their time deliberating when and how quickly to raise interest rates in 2015, which we don’t anticipate until late in 2015 at the earliest.

Anxious Index Economists Still not Worried About RecessionThe most recent release (4th quarter of 2014) of the

Survey of Professional Forecasters by the Federal Reserve Bank of Philadelphia suggests that the 37 forecasters surveyed for the publication are just 10.32% convinced that a decline in real GDP will occur in the 1st quarter of 2015. This quarter’s release reflects a very slight uptick in forecasters’ anxiety, their worries allayed by a rebound of 2nd quarter real GDP growth to 4.6% from a 1st quarter

Figure 2.

Source: Survey of Professional Forecasters, Philadelphia Federal Reserve Bank

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The Anxious Index

Probability of Decline in Real GDP in the Following Quarter

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contraction of 2.1% and an advance reading on GDP growth for the third quarter that came in at 3.5%. The index has dropped significantly from the recession’s peak level of 23.04% in the 4th quarter of 2012 when fears of the so-called fiscal cliff triggering a recession heightened forecasters’ worries.

In one section of the Survey of Professional Forecasters panelists are asked to estimate the probability that real GDP will decline in the quarter in which the survey is taken, as well as the probabilities of a decline in each of the following four quarters. The anxious index (a term coined by The New York Times reporter David Leonhardt) is the probability of a decline in real GDP in the quarter after a survey is taken. In the survey taken in the 4th quarter of 2014 the index stands at 10.32, which means that forecasters believe there is a 10.32% chance that real GDP will decline in the 1st quarter of 2015.

The forecasters also report just an 8.12% chance that we are currently (as of the 4th quarter of 2014) experiencing a contraction in real GDP. According to the panel, the probability that we will fall back into recession is averaging around 11.95% through the end of the 4th quarter of 2015, which implies the forecasters’ assignment of probability for a contraction in real GDP in the upcoming year has increased slightly since last quarter’s survey.

The Figure 2 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 below the average level during the economic recovery (13.96), and is 0.58 points higher than the 3rd quarter.

GDP Outlook Third Quarter Boosters to Real GDP Growth Will Dissipate, or Worse, in the Fourth Quarter

After contracting in the first quarter of 2014 by 2.1%, the U.S. economy strung together two consecutive quarters of robust growth, rebounding from the weather-burdened first three month of the year. This was the second time during the five and a half years since the Great Recession came to an end that the economy was able to manage back-to-back quarters of real GDP growth in excess of 3%. Will the fourth quarter be the third consecutive quarter of 3% or higher economic growth?

I don’t think so.While I may be on the pessimistic side with a forecast of

just 1.6% growth in real GDP for the final three months

of 2014, there were a number of factors that helped drive the third quarter growth in real GDP that will not be present in the fourth quarter.

Federal government spending, particularly on defense, surged in the third quarter. The fiscal year was coming to a close and with it a need to spend through budgets. New spending related to the actions taken against ISIS in Iraq and Syria combined to cause federal defense spending to grow at a 16% rate in the third quarter. This spending grew just 0.9% in the second quarter. This surge in defense spending added nearly seven tenths of a percentage point to GDP growth in the third quarter.

This will not happen in the fourth quarter; in fact we will likely see federal spending becoming a net drag on economic growth. In 2012 we witnessed a similar third quarter surge in defense spending that was followed by two quarters of double-digit contraction. Defense spending in 2012 shot up 11.9% during the third quarter only to contract 20.1% and 10.9% in the following two quarters. As a result, defense spending added six tenths of a percentage point to GDP growth in the third quarter but then subtracted a total of 1.7 percentage points for GDP growth in the two quarters that followed.

What the end of the fiscal year defense spending bursts giveth they also taketh away. Federal government spending will be a large drag on 4th quarter GDP growth this year.

Another drag that will be increasingly and persistently weighing down GDP growth over the next several years is the foreign sector. Exports have grown at a solid pace for much of the recovery, lessening the drag of net exports on GDP growth, while at the same time import growth was occurring at a slower rate. Together these trends led to a significant improvement of U.S. net exports from roughly -$794 billion in 2006 to -$420.5 billion in 2013. The recent strengthening of the dollar beginning in 2012 is predicted to continue through 2015. This will make U.S. exports more expensive to foreigners and at the same time make imports less expensive in the U.S. Both of these effects will work to widen the trade gap.

The widening is exacerbated by a slowing in the economies of many of the U.S. trading partners and the relative strength in the U.S. economy. This will further result in slower export growth and faster growth of imports in the U.S. Consequently, net exports are expected to fall from -$420.5 billion in 2013 to -$594 billion in 2017.



Net Exports added 0.78 percentage points to GDP growth in the third quarter. That boost to GDP growth will turn to a drag in the fourth quarter and continue to weigh down GDP growth through the end of our forecast horizon.

The most recent four quarters of real GDP growth have spanned a range from 4.6% to a negative 2.1%. During the second half of 2013, revised annualized real GDP growth was 4.5% in Q3 and 3.5% in Q4. That was the first time in this recovery when there were back-to-back quarters of real GDP growth in excess of 3.0%. The second time this happened was Q2 and Q3 in 2014.

The next four quarters of GDP growth will be 1.6% in Q4 2014 followed by 2.1% in Q1, 1.90% in Q2, and 2.4% in Q3 of 2015. Average quarterly growth from there through the end of the forecast horizon (2017 Q4) will be 2.5%

In 2015 we are expecting real GDP growth of 2.3%, and 2.4% in 2016 before rising slightly to 2.7% in 2017 as the tightening of monetary policy in 2016 and 2017 begins to restrain growth.

The Affordable Care Act and Dodd Frank financial regulatory reform law continue to be a drag on the economy. More than four years have passed since these two massive bills were signed into law, and neither one has been fully implemented, nor will they be anytime soon. On top of these laws have been scores of economically significant regulations implemented during this recovery. The rules of the game matter; they change the way the players will play the game.

The bottom line is that the pace of this economic recovery has and will remain range-bound through 2017 unless legislative action is taken to resolve policy uncertainty and to provide regulatory relief (which despite the 2014 midterm elections does not look likely before the 2016 presidential election). In absence of any regulatory respite, growth will average 2.4% for the 2014-2017 horizon.

C O N S U M E R S P E N D I N GWill Cheaper Gas Rev Up Consumers?

Personal consumption expenditures have had average growth thus far in 2014 of just 2.0%. The precipitous plunge in the price of gasoline has added a little extra spending cash to consumers’ pocketbooks. The timing of

the decline coincides with the holiday shopping season so perhaps may lead to a little more spending by holiday shoppers.

The average household spends about 4.6% of its disposable income on gasoline for an average of $2,611 a year according to the Bureau of Labor Statistics’ Consumer Expenditure Survey. Gasoline prices are down 17.4% from a year ago, which translates into an annual reduction of spending on gasoline of approximately $455, or about $38 per month.

This is a welcome windfall of domestic hydraulic fracking, but since much of the price decline actually took place in the past three months, the actual boost to consumer’s disposable income this holiday season will be much smaller than the annualized figure of $455.

Consumer spending has averaged a paltry 2.2% growth rate from the 4th quarter of 2010 through the 3rd quarter of 2014. There have been occasional swells in spending growth, but they have been short-lived. There have been three quarters where growth has been in excess of 3.0% since the 4th quarter of 2010: in that quarter, 2013Q1 and 2013Q4. All were followed by a rapid deceleration in spending growth during the quarters that followed. If you exclude those three quarters from the calculation of the average consumption spending growth rates since the recession’s end, the 2.2% average becomes just 1.8%.

In this economic recovery U.S. consumers have exhibited temporary glimpses of the spending prowess that they have displayed in previous recoveries, but afterward they pull back and return to the weak pattern of spending growth that led up to these temporary bursts in spending.

During the entirety of this recovery (through Q3 2014), there have not been consecutive quarters where U.S. consumption spending grew at 3.0% or greater during the entirety of this recovery. The most recent example of this type of a pullback was the 4th quarter of 2013 when 3.7% growth was then followed with just 1.2% growth in the 1st quarter of 2014.

Real consumer spending growth is expected to pick up from the third quarter as growth for the 4th quarter of 2014 is expected to be 2.6%. It should be a slightly improved holiday shopping season this year compared to the disappointment of last year.

The up and down sawtooth pattern of consumer spending growth should give way to a more stable trajectory as the recovery continues. Continued



improvement in the labor market, repairs to household balance sheets, and a greater willingness of banks to lend should prove to be stabilizing forces to consumer spending, putting it on a smoother path over the next several years.

Real consumption spending is forecasted to accelerate through the end of our forecast from 2.2% in 2014, 2.6% in 2015, 2.7% in 2016, and then to 2.8% in 2017, ten years after the start of the Great Recession.

I N V E S T M E N TReal nonresidential fixed investment spending grew

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

Investment growth is expected to be 5.9% in 2014, 4.0% in 2015, and 4.4% in 2016. Rising interest rates do not offset the boost to investment from abating uncertainty and will not weigh too heavily on investment growth in 2017 as it accelerates to 5.9%.

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

In 2014, nonresidential investment spending will grow 5.9% before easing in 2015 to 4.0% and 4.4% in 2016 as the Fed continues along the path of raising interest rates. Investment growth will accelerate in 2017 to around 5.9%.

While interest rates will remain low over the next year, they will be rising over the remainder of our forecast horizon. With Quantitative Easing completed, we think the Fed will begin slowly hiking the federal funds rate in the fourth quarter, but longer run rates will begin to rise earlier as expectations of higher short-term interest rates in the future work their way through the yield curve (expectations of higher short-term rates in the future cause long-term rates to rise in the present). We expect the 10-year Treasury yield to average 2.57% in 2014, 2.96% in

2015, 3.29% in 2016, and 3.80% in 2017. Business spending on equipment and software will grow

at an annual average rate of 5.8% in 2014 through 2017. Investment spending growth in computers and peripherals will resume solid growth after contracting in 2013 and 2014. Spending on communications equipment should expand at an average annual rate of 9.3% during 2014-2017, while industrial equipment purchases average 7.4% growth over the same time frame.

Investment in nonresidential structures experienced a burst of activity in 2012 and expanded at a 13.0% clip. Investment growth plunged year over year and contracted 0.5% in 2013. The roller coaster ride continues in 2014 and 2015 with growth jumping to 7.7% in 2014, then plunging again to 0.6% in 2015. Investment in non-residential structures will bounce back in 2016 and 2017 with growth of 2.4% and 8.1% respectively.

Investment growth in transportation equipment decelerated sharply in 2013 to 7.9%. This type of investment will have an average growth rate of 2.0% during the four-year stretch from 2014 through 2017, and in that final year, growth will be less than 1.0%. In the middle of this span, growth will be negative in 2015 and 2016. Investment in this sector is highly volatile due to purchases of aircraft that cause extreme swings in investment spending growth from quarter to quarter.

Residential fixed investment grew 12.0% in 2013. Growth will average 7.1% through 2014-2017 with a peak growth rate in 2016 of 10.1%. In the final year of our forecast, 2017, real residential fixed investment will be dampened somewhat by both higher mortgage rates (expected to average 5.7% on a 30-year fixed mortgage that year) and a balance between supply and demand in the housing market that will diminish the rate of price appreciation. Nonetheless, growth is expected to be 8.0% in the final year of our forecast. In 2017, real residential fixed investment will be just over $640 billion.

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

Rising home prices and diminishing inventories sent the signal to builders to get back to work. We expect housing starts to continue to gradually accelerate over the next



several years reaching more than 1.44 million in 2017. That level represents an increase of nearly 520,000 starts from 2013. Tight mortgage lending standards could, if not redressed, alter the course of the recovery in the housing sector.

G O V E R N M E N T S P E N D I N GThe unusual surge in federal government spending in

the third quarter of this year is a major outlier from the general path that we expect federal government spending to follow. That 9.9% growth will be the only quarter of rising spending in a five-year span stretching from 2013 through 2017.

The 2014-2015 easing of sequester cuts sharply slowed the rate at which government spending was contracting from -5.7% in 2013 to -2.0% in 2014 and just -1.5% in 2015. Beyond 2015, federal government spending is expected to continue to contract at an increasingly slower rate. During 2014-2017 real federal government spending is expected to contract at an average of 1.2%. Over that same time horizon, state and local governments will oversee spending growing at an average of 1.0%.

The combination of higher revenues from economic growth, new taxes, and an assist from the Federal Reserve are, along with lower government spending, working to shrink the size of the annual budget deficit. The Fed is holding more than $2.4 trillion in U.S. Treasury debt and more than $1.7 trillion in mortgage backed securities. The Fed turns most of the proceeds from holding that debt right back to the U.S. Treasury.

The federal budget deficit fell to $680 billion in 2013. This was the first time in four years that the annual deficit did not exceed $1 trillion. We are forecasting that the deficit will continue to decline in 2014, when it is expected to be $483 billion.

There is no political will in Washington, D.C to implement fiscal discipline or badly needed reform of entitlements programs and the tax system.. Even the relatively small spending cuts in the sequester quickly became unpalatable to congress. As a result, we expect that the budget deficit will only contract slightly in the next couple years. In 2014 the budget deficit is expected to be $483 billion, falling to $459 billion in 2016 before rising again to $511 billion in 2017. However, if military action is ramped up in Iraq and Syria – something President Obama seems reluctant to do – these deficit numbers will

grow larger.Although we are projecting deficits through 2017 that

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

A major risk associated with the persistent deficits and high level of debt is if interest rates rise faster than we are currently forecasting, this will result in a rapidly rising burden of servicing this debt. The persistent low interest rates on U.S. Treasury bonds have ameliorated the pain of the record borrowing needed to finance federal budget deficits in recent years. If the interest rate on our national credit card goes up, the pain of this deficit financing could become more acute, and consequences of our lack of fiscal discipline will manifest themselves.

Currently, the national debt is over $18.0 trillion and rising. This represents a debt of nearly $153,729 per taxpayer and over $56,380 per citizen. Unfunded liabilities of the U.S. are even more frightening. Social Security, Medicare part D, and Medicare represent nearly $116 trillion in liabilities, and that boils down to more than $988,619 per taxpayer.

N E T E X P O R T SNet exports will become an increasing drag on real

GDP growth in the U.S. through the end of the forecast horizon, 4th quarter of 2017. Following a contraction of 9.2% in the first quarter of the year, real exports grew by 10.0% in the second quarter of 2014. This helped to dramatically lessen the impact of net exports on real GDP growth in the second quarter. But imports grew by 11.3%, thus the contribution of net exports to GDP growth decreased growth by 0.34 percentage points.

In the 3rd quarter, net exports became a positive contributor to real GDP growth, adding 0.78 percentage points to overall growth as real import growth swung from 11.1% in the 2nd quarter to -0.7%.

The net exports boost to GDP growth in the 3rd quarter should give way to a persistent drag on GDP growth through the end of the forecast horizon. However, the U.S. dollar has begun a streak of appreciation against our trading partners that we are forecasting to last for the next year.

Over time, a stronger dollar will boost imports and work



to decrease exports leading to a worsening of the trade deficit. This will be exacerbated by stronger growth in U.S. GDP while many of our trading partners are experiencing slower, sometimes much slower, GDP growth. U.S. buyers will thus have income to purchase more foreign goods and services while foreign buyers will have relatively less income to spend on our goods and services.

Overall, export growth continues through the end of our 2017 forecast period. However, it will slow in 2015 before picking up again. Real export growth from 2014-2017 will average just 3.1% while real import growth will average 4.2% over the same time frame.

Real net exports will average -$503.5 billion 2014-2017, with the trade balance worsening in each successive year on the back of that stronger dollar and a weaker global demand for U.S. goods and services.

The four-year period of strengthening of the dollar (2012-2015) is due to the relative strength of the U.S. recovery and the eventual upward movement in U.S. interest rates as the Federal Reserve begins to tighten interest rates in late 2015. The Eurozone continues to battle recession or near recession in many countries. Any growth will remain paltry in the face of persistent fiscal austerity, and the seemingly constant threat of a return to a deflationary environment continues to fuel uncertainty regarding the future of the Eurozone. Meanwhile, the European Central Bank has been forced to be more aggressive in its stance on policy and is teetering on the brink of implementing quantitative easing policies as the Fed did over the past several years.

The current account deficit will improve slightly until the second quarter of 2015, at which point the appreciation of the dollar that began in 2012 will begin to manifest itself in a worsening of the current account in 2016-2017. Current account balances will average -$384.8 billion during 2014-2017, with a worsening of the deficit in 2016-2017. In 2017 the current account deficit will be -$478.6, wiping out nearly four years of improvements.

U N E M P L O Y M E N TFor most of the economic recovery the U.S. headline

unemployment rate (U-3 in the jargon of the Bureau of Labor Statistics) has been a faulty gauge of how the labor market and economy have been performing, so much so that the Fed Reserve has shifted itself away from a heavy focus on this statistic.

The national headline unemployment rate in November held steady at 5.8%.

The November jobs report again showed stronger payroll job growth with 321,000 new workers on business payrolls, the third largest monthly gain in this recovery. Average payroll gains for the first 11 months of 2014 were 241,000. Over the same period last year average gains were 204,000.

The household survey in the jobs report (from which unemployment rates are calculated) showed a different picture than did the payroll survey of establishments. According to the household survey, the number of employed people increased by only 4,000 while the number of unemployed jumped by 115,000.

The mixed message in recent jobs and labor market reports again reinforces the need to look at more than a single metric of how the labor market is performing and why the Federal Reserve Bank of Atlanta’s Labor Market Spider Chart is one such approach of accomplishing this.

Given the complex and frustrating nature of this recovery, the U.S. labor market simply cannot be sufficiently assessed by a single metric such as the headline unemployment rate (U-3) during this recovery. This is particularly true because as of November 2014, the labor force participation rate remains at its lowest point since January 1978.

Recent estimates by the Economic Policy Institute of the number of “missing workers ”—potential workers who, as a result of a weak labor market are neither working nor looking for work—is just under 5.8 million in the U.S. If these workers were actively still looking for work, the current headline unemployment rate (U-3) would be 9.2%.

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

U-6 remains distressingly high at 11.4% in November, down just 1.7 points from the November 2013 level of 13.1%, and down 5.8 points from its peak of 17.2% in April 2010. U-6 has been in double-digits for 78 straight months.

U . S . F O R E C A S T C H A R T S


171615141312111009080706050403020100

9.0

8.0

7.0

6.0

5.0

4.0

3.0

2.5

2.0

1.5

1.0

0.5

0.0

30-Year Mortgage Rates and Housing Starts(Mortgage rates - Left axis, %)

30-Year Fixed Mortgage RateHousing Starts - Millions

171615141312111009080706050403020100

11.010.09.08.07.06.05.04.0

Automobile and Light Truck Sales(Millions Vehicles)

Auto SalesLight Truck Sales

171615141312111009080706050403020100

150.0100.050.00.0

-50.0-100.0-150.0-200.0-250.0

Change in Real Business Inventories(Billions of 2000 Dollars)

Change in Real Business Inventories



171615141312111009080706050403020100

6.0

4.0

2.0

0.0

-2.0

Consumer Prices(% Change Year Ago)

Consumer Price IndexCore Consumer Price Index

171615141312111009080706050403020100

500.0

0.0

-500.0

-1000.0

-1500.0

Federal Budget Surplus(Billions of Dollars)

Federal Budget Surplus

171615141312111009080706050403020100

7.06.05.04.03.02.01.00.0

-1.0

Federal Funds Rate(%)

Fed Funds Rate



171615141312111009080706050403020100

10.0

5.0

0.0

-5.0

-10.0

Real GDP Growth and Federal Funds Rate(%)

Quarterly Growth Rate Real GDP Fed Funds Rate

171615141312111009080706050403020100

115.0

110.0

105.0

100.0

95.0

90.0

85.0

80.0

Industrial Production(2002=100)

Industrial Production

171615141312111009080706050403020100

2800.02600.02400.02200.02000.01800.01600.01400.01200.0

Private Fixed Nonresidential Investment(Billions of Dollars)

Private Fixed Nonresidential Investment



171615141312111009080706050403020100

18.0

17.0

16.0

15.0

14.0

13.0

12.0

11.0

Manufacturing Employment(Millions)

Manufacturing Employment

171615141312111009080706050403020100

3000.0

2500.0

2000.0

1500.0

1000.0

500.0

Money Supply(Annual Growth Rate %)

Annual Growth Rate of M1

171615141312111009080706050403020100

145.0

140.0

135.0

130.0

125.0

Total Nonfarm Payroll Employment(Millions)

Total Nonfarm Employment



171615141312111009080706050403020100

140.0

120.0

100.0

80.0

60.0

40.0

20.0

0.0

120

110

100

90

80

70

60

50

Oil and Consumer ConfidenceOil ($ Per Barrel) - Left Axis

Price of Oil WTI Consumer Sentiment

171615141312111009080706050403020100

6.0

4.0

2.0

0.0

-2.0

-4.0

Real Disposable Income and Consumption(% Change Year Ago)

Real Disposable Income Consumption

171615141312111009080706050403020100

-800

-700

-600

-500

-400 1.50

1.40

1.30

1.20

1.10

1.00

0.90

0.80

Trade Balance and Real Exchange Rate

Trade Balance (Billions $) Left axisU.S. Dollar Real Exchange Rate (2000 = 1.0) Right axis



171615141312111009080706050403020100

500.0

0.0

-500.0

-1000.0

-1500.0

Twin Deficits(Billions of Dollars)

U.S. Federal Budget SurplusCurrent Account

171615141312111009080706050403020100

10.0

9.0

8.0

7.0

6.0

5.0

4.0

3.0

Civilian Unemployment Rate(%)

Unemployment Rate

171615141312111009080706050403020100

7.06.05.04.03.02.01.00.0

Yield Curve(%)

1-Year T-Bill Yield5 Year Treasury Bond Yield30 year Treasury Bond Yield

U . S . F O R E C A S T TA B L E S


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

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Gross Domestic Product 1.8 -0.3 -2.8 2.5 1.6 2.3 2.2 2.2 2.3 2.4 2.7 Final Sales of Domestic Product 2.0 0.2 -2.0 1.1 1.7 2.2 2.2 2.1 2.5 2.4 2.7Total Consumption 2.2 -0.3 -1.6 1.9 2.3 1.8 2.4 2.2 2.6 2.7 2.8 Durables 4.6 -5.1 -5.3 6.1 6.1 7.3 6.8 6.2 4.9 6.3 6.3 Nondurables 1.7 -1.1 -1.8 2.2 1.8 0.7 1.9 1.6 2.8 2.7 2.4 Services 2.0 0.8 -0.9 1.2 1.8 1.3 1.9 1.8 2.2 2.2 2.4Nonresidential Fixed Investment 5.9 -0.6 -15.5 2.6 7.6 7.3 3.0 5.9 4.0 4.4 5.9 Equipment & Software 3.2 -6.9 -22.5 15.9 13.6 6.9 4.6 6.3 5.4 5.4 6.0 Information Processing Equipment 11.5 0.7 -8.3 10.0 1.6 3.2 3.1 2.5 12.2 12.1 7.5 Computers & Peripherals 13.2 6.3 0.7 11.2 -1.8 5.0 -0.1 -1.4 10.7 8.9 8.1 Communications Equipment 13.1 -4.5 -12.7 13.6 2.0 11.4 8.3 -1.2 13.3 15.1 8.4 Industrial Equipment 3.1 -4.7 -22.2 -0.2 21.0 4.2 3.9 14.3 6.7 2.5 6.1 Transportation Equipment -2.8 -22.9 -49.0 80.2 37.6 22.7 7.9 11.3 -1.3 -2.9 1.0 Aircraft 28.3 -0.8 -40.0 26.9 28.4 14.2 -0.8 11.2 -4.1 4.7 4.9 Other Equipment -15.6 -11.0 -27.4 17.4 33.0 14.6 -5.0 11.9 -16.6 -8.4 1.4 Structures 12.7 6.4 -18.9 -15.7 2.3 13.5 -0.5 7.7 0.6 2.4 8.1 Commercial & Health Care 10.0 -3.6 -30.9 -24.1 -0.3 8.6 3.4 5.8 8.4 15.4 12.2 Manufacturing 18.1 25.9 5.2 -27.7 -1.6 15.7 -1.2 12.6 8.6 -6.5 2.8 Power & Communication 39.0 11.8 1.6 -15.9 -7.6 21.4 -7.5 14.8 -3.5 -10.2 4.2 Mining & Petroleum -1.6 7.3 -27.7 21.7 26.4 13.2 0.6 7.3 -7.2 -1.5 7.8 Other 15.0 13.2 -18.3 -26.3 -9.1 9.5 3.1 -0.6 5.3 13.4 10.0Residential Fixed Investment -18.9 -24.0 -20.7 -2.4 0.7 13.5 12.0 1.3 9.0 10.1 8.0Exports 9.3 5.9 -8.7 11.9 6.9 3.3 3.0 3.3 2.3 2.8 4.1Imports 2.5 -2.6 -13.6 12.8 5.6 2.3 1.1 3.3 2.6 5.2 5.7Federal Government 1.7 6.8 5.7 4.4 -2.7 -1.8 -5.7 -2.0 -1.4 -0.9 -0.5State & Local Government 1.5 0.3 1.6 -2.7 -3.3 -1.2 0.5 1.0 1.1 0.9 1.1

Real GDP 14873.8 14830.4 14418.8 14783.8 15020.6 15369.2 15710.3 16052.1 16425.8 16821.5 17274.4Nominal GDP 14477.6 14718.6 14418.7 14964.4 15517.9 16163.2 16768.1 17402.4 18140.3 18894.7 19731.3

GDP Deflator 2.7 1.9 0.8 1.2 2.1 1.8 1.5 1.6 1.8 1.7 1.7Consumer Prices 2.9 3.8 -0.3 1.6 3.1 2.1 1.5 1.7 0.9 1.5 2.0 Excl. Food & Energy 2.3 2.3 1.7 1.0 1.7 2.1 1.8 1.8 1.9 1.8 1.8Producer Prices, Finished Goods 3.9 6.4 -2.6 4.2 6.0 2.0 1.2 1.9 -0.1 0.9 2.1Employment Cost Index - Total Comp. 3.1 2.9 1.4 1.9 2.1 2.0 1.9 2.2 2.7 2.8 2.9

Oil - WTI ($ per barrel) 72.3 99.6 61.7 79.4 95.1 94.2 98.0 94.7 77.9 78.3 86.5Productivity (% change) 1.6 0.8 3.2 3.3 0.1 1.0 0.9 0.7 1.4 2.0 2.1Industrial Production (% change) 2.5 -3.4 -11.2 5.7 3.3 3.8 2.9 4.0 2.3 3.2 2.9Factory Operating Rate 78.7 74.6 65.6 71.1 73.9 75.5 76.1 77.0 76.9 77.1 76.9Nonfarm Inven. Chg. (Bil. of 2005 $) 36.5 -35.0 -146.0 65.9 36.6 65.9 55.2 57.5 35.5 44.9 41.8Consumer Sentiment Index 85.6 63.8 66.3 71.8 67.4 76.5 79.2 82.4 85.5 85.1 83.8Light Vehicle Sales (Million units) 16.089 13.195 10.402 11.555 12.735 14.4 15.5 16.3 16.4 16.7 17.0Housing Starts (Million units) 1.342 0.900 0.554 0.586 0.612 0.8 0.9 1.0 1.2 1.3 1.4Existing House Sales (Million units) 4.418 3.655 3.868 3.705 3.792 4.1 4.5 4.4 4.8 5.0 4.9Unemployment Rate (%) 4.6 5.8 9.3 9.6 8.9 8.1 7.4 6.2 5.8 5.8 5.8Payroll Employment (% change) 1.1 -0.6 -4.3 -0.7 1.2 1.7 1.7 1.8 1.7 1.2 1.0Federal Surplus (Unified, FY, bil. $) -162 -455 -1416 -1294 -1297 -1089.2 -680.2 -483.4 -500.3 -459.7 -510.8Current Account Balance (Bil. $) -719 -687 -381 -444 -459 -460.8 -400.3 -381.1 -312.7 -366.8 -478.6

Federal Funds Rate (%) 5.02 1.93 0.16 0.18 0.10 0.1 0.1 0.1 0.2 0.9 2.463-Month Treasury Bill Rate (%) 4.35 1.37 0.15 0.14 0.05 0.1 0.1 0.0 0.2 1.0 2.391-Year Treasury Note Yield (%) 4.52 1.82 0.47 0.32 0.18 0.2 0.1 0.1 0.4 1.3 2.675-Year Treasury Note Yield (%) 4.43 2.80 2.19 1.93 1.52 0.8 1.2 1.6 1.9 2.5 3.4410-Year Treasury Note Yield (%) 4.63 3.67 3.26 3.21 2.79 1.8 2.4 2.6 3.0 3.3 3.8030-Year Treasury Note Yield (%) 4.84 4.28 4.07 4.25 3.91 2.9 3.4 3.4 3.7 3.9 4.2130-Year Fixed Mortgage Rate (%) 6.34 6.04 5.04 4.69 4.46 3.7 4.0 4.2 4.7 5.2 5.69S&P 500 Stock Index 1477 1221 947 1139 1269 1379.6 1642.5 1926.8 2068.8 2094.6 2110.87 (% change) 12.8 -17.2 -18.9 21.6 11.5 8.9 19.0 17.5 7.5 1.3 0.78Exchange Rate, Major Trading Partners 1.004 0.959 1.000 0.970 0.912 0.9 1.0 1.0 1.1 1.1 1.03 (% change (negative = depreciation)) -5.6 -4.1 4.8 -2.8 -5.8 3.8 3.4 3.0 6.5 -1.9 -2.51

Personal Income (Bil. of $) 11995 12430 12087 12429 13202 13888 14167 14765 15372 16054 16844 (% change) 5.3 3.6 -2.8 2.8 6.2 5.2 2.0 4.2 4.1 4.4 4.92Disposable Income (Bil. of $) 10507 10994 10943 11238 11801 12384.0 12505.2 13023.0 13495.2 14078.5 14790.6 (% change) 4.7 4.6 -0.5 2.7 5.0 4.9 1.0 4.1 3.6 4.3 5.06Real Disposable Income (Bil. Of 2005 $) 10821 10987 10943 11055 11331 11675.9 11650.8 11969.2 12272.2 12634.8 13064.3 (% change) 2.1 1.5 -0.4 1.0 2.5 3.0 -0.2 2.7 2.5 3.0 3.40Saving Rate (%) 3.0 5.0 6.2 5.6 6.0 7.2 4.9 5.4 5.2 5.5 6.01After-Tax Profits (Billions of $) 1303 1073 1203 1470 1428 1681.3 1761.1 1829.7 1897.4 1866.4 1804.04 (% change) -5.4 -17.5 22.4 23.4 -2.9 17.9 4.7 3.9 3.8 -1.6 -3.3

Forecast



Table 2. Real Gross Domestic ProductTable 2. Real Gross Domestic Product

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Gross Domestic Product 14873.8 14830.4 14418.8 14783.8 15020.6 15369.2 15710.3 16052.1 16425.8 16821.5 17274.4

Final Sales of Domestic Product 14836.2 14865.8 14566.3 14722.2 14979.0 15304.3 15636.7 15971.0 16370.7 16758.8 17214.4

Total Consumption 10041.6 10007.2 9847.0 10036.3 10263.5 10449.7 10699.7 10937.3 11222.8 11529.8 11852.8

Durables 1141.7 1083.2 1023.3 1085.7 1151.5 1235.7 1319.0 1400.7 1469.5 1562.2 1661.2

Nondurables 2239.3 2214.7 2175.1 2223.5 2263.2 2280.1 2322.6 2358.7 2424.7 2489.5 2550.2

Services 6656.4 6708.6 6648.5 6727.6 6851.4 6942.4 7073.1 7201.4 7358.4 7519.1 7696.0

Nonresidential Fixed Investment 1948.4 1934.5 1633.5 1673.8 1802.3 1931.8 1990.6 2107.6 2190.6 2286.5 2421.6

Equipment & Software 898.3 836.1 644.3 746.7 847.9 905.6 947.2 1007.2 1061.2 1118.6 1185.8

Information Processing Equipment 279.9 281.0 256.1 281.4 285.9 295.0 304.0 311.5 349.5 391.5 420.8

Computers & Peripherals 72.8 77.1 76.8 84.7 83.0 86.8 86.7 85.5 94.6 103.0 111.3

Communications Equipment 96.2 91.5 79.4 90.2 91.8 102.3 110.4 108.9 123.1 141.7 153.5

Industrial Equipment 205.3 195.5 152.1 151.3 183.3 190.3 197.7 226.0 240.6 246.7 261.8

Transportation Equipment 188.8 146.2 70.6 127.5 173.9 211.4 228.2 253.6 250.1 242.9 245.2

Aircraft 30.2 30.0 17.7 22.1 27.9 31.0 30.7 32.9 30.9 32.4 33.9

Other Equipment 48.1 42.6 30.8 36.2 48.1 54.5 51.6 57.8 48.0 43.9 44.5

Structures 509.0 540.2 438.2 366.3 374.7 423.8 421.7 454.0 456.6 467.4 505.3

Commercial & Health 189.9 182.8 126.7 95.2 94.7 102.8 106.3 112.4 121.8 140.6 157.5

Manufacturing 43.1 53.8 56.3 40.8 39.1 44.9 44.3 49.9 54.0 50.4 51.9

Power & Communication 85.9 94.5 95.8 80.4 74.1 89.6 82.8 94.2 90.8 81.5 84.9

Mining & Petroleum 97.9 105.0 75.0 87.8 110.9 124.5 125.2 134.3 124.3 122.2 131.8

Other 91.8 103.4 84.5 62.0 56.2 61.5 63.4 63.0 66.4 75.2 82.8

Residential Fixed Investment 654.8 497.7 392.3 382.4 384.5 436.5 488.4 494.7 539.3 593.6 640.8

Exports 1646.4 1740.8 1587.7 1776.6 1898.3 1960.1 2019.8 2085.4 2132.1 2191.9 2282.0

Imports 2359.0 2298.6 1983.2 2235.4 2357.7 2412.6 2440.3 2521.6 2586.0 2721.4 2876.3

Federal Government 1078.7 1152.3 1217.7 1270.7 1236.4 1214.4 1145.3 1122.3 1106.9 1097.1 1092.0

State & Local Government 1836.2 1842.5 1871.4 1820.8 1761.0 1739.5 1748.5 1765.4 1785.2 1801.2 1821.3

Forecast

Real GDP Billions 2005 $

History



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

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

Gross Domestic Product -2.1 4.6 3.5 1.6 2.1 1.9 2.4 1.9 2.1 2.9 3.0 3.0 2.5 2.5 2.5 2.4 Final Sales of Domestic Product -1.0 3.2 4.2 1.4 2.5 2.4 2.6 1.9 2.0 2.7 2.8 2.9 2.6 2.7 2.6 2.4Total Consumption 1.2 2.5 1.8 2.6 2.7 2.9 2.9 2.6 2.5 2.8 3.0 3.0 2.7 2.8 2.8 2.6 Durables 3.2 14.1 7.2 -0.7 4.4 5.7 6.4 5.6 6.9 6.3 6.4 6.2 5.9 7.1 6.8 5.0 Nondurables 0.0 2.2 1.1 2.7 3.3 3.3 3.3 2.8 2.2 2.5 2.8 2.5 2.4 2.3 2.3 2.2 Services 1.3 0.9 1.1 3.1 2.2 2.4 2.2 2.0 1.9 2.4 2.4 2.6 2.2 2.3 2.3 2.4Nonresidential Fixed Investment 1.6 9.7 5.5 4.6 2.8 2.0 4.4 2.9 3.6 5.8 6.0 6.6 5.9 5.8 5.6 4.7 Equipment & Software -1.0 11.2 7.2 6.3 2.9 4.0 6.6 5.3 3.0 7.0 6.9 6.9 6.4 5.2 4.9 3.9 Information Processing Equipment -7.7 26.6 -11.6 26.3 11.1 12.4 13.6 13.4 13.0 11.6 9.4 7.9 7.6 6.6 5.4 5.2 Computers & Peripherals -39.0 26.9 6.8 24.5 3.7 6.8 9.0 9.0 9.0 9.6 9.3 7.7 8.3 9.0 6.3 5.4 Communications Equipment 1.7 41.6 -41.7 49.5 15.0 16.6 17.0 16.7 15.9 14.4 12.6 9.9 9.0 5.8 4.1 4.1 Industrial Equipment 14.1 27.2 24.9 6.4 2.2 2.5 -1.2 1.5 1.9 3.0 5.3 8.4 7.7 5.4 4.5 3.2 Transportation Equipment 0.2 4.0 34.0 -16.5 -5.3 -2.2 1.0 -3.3 -11.6 3.8 0.5 0.3 0.6 0.5 2.7 0.1 Aircraft -34.4 -69.7 285.7 -61.6 8.3 2.2 5.2 5.0 2.9 7.1 4.5 5.6 3.8 3.4 8.6 2.3 Other Equipment 8.1 32.2 48.1 -42.8 -33.6 -18.2 -1.1 -8.2 -26.5 8.5 7.5 -7.9 -13.0 19.3 13.3 2.1 Structures 2.9 12.6 3.8 0.1 1.5 -4.4 0.7 -4.1 3.5 6.0 6.6 9.1 6.7 9.9 9.4 7.8 Commercial & Health Care -8.8 16.5 -3.0 10.0 11.7 7.2 10.3 6.6 20.7 20.7 16.9 21.4 5.8 11.3 7.7 5.5 Manufacturing 2.9 32.4 38.2 4.1 5.0 3.9 5.8 -16.6 -9.9 -11.2 4.7 0.3 3.4 4.9 5.5 7.9 Power & Communication 19.8 -16.5 -2.0 -8.9 5.0 2.0 2.6 -31.6 -14.7 -0.6 -0.8 0.5 6.6 7.8 5.9 6.8 Mining & Petroleum 11.5 26.7 8.1 -4.9 -10.4 -23.3 -12.0 0.8 3.6 2.2 -0.7 4.9 7.2 13.0 15.7 10.7 Other -17.3 19.4 -7.2 6.8 4.0 3.3 3.2 31.5 12.2 10.3 12.1 11.1 10.1 8.5 9.3 8.4Residential Fixed Investment -5.3 8.8 1.9 1.8 12.4 12.6 14.6 10.8 8.0 9.0 9.0 10.2 11.2 6.2 3.1 1.0Exports -9.2 11.1 7.8 -1.3 0.2 2.0 2.6 1.9 2.9 2.9 3.7 4.1 4.2 4.5 4.1 4.5Imports 2.2 11.3 -1.7 1.7 0.8 3.3 4.8 5.8 5.5 4.5 5.8 6.2 6.5 5.4 4.7 4.9Federal Government -0.1 -0.9 9.9 -9.0 -1.1 -1.4 -1.4 -0.3 -1.2 -0.8 -0.6 -0.5 -0.3 -0.4 -0.4 -0.4State & Local Government -1.2 3.4 1.3 1.2 0.9 0.8 0.6 1.0 0.7 1.1 1.1 1.0 1.1 1.2 1.2 1.1

Real GDP 15831.7 16010.4 16150.6 16215.6 16299.4 16376.5 16475.2 16552.2 16638.6 16756.5 16881.7 17009 17114.8 17222.7 17329.1 17430.9Nominal GDP 17044 17328.2 17535.4 17702.1 17876.3 18048.2 18241.6 18395.1 18571.8 18781.1 19002.9 19222.9 19428.1 19635.6 19833.3 20028.3

GDP Deflator 1.3 2.1 1.3 2.1 1.9 2.0 1.9 1.5 1.8 1.7 1.7 1.6 1.8 1.7 1.6 1.6Consumer Prices 1.9 3.0 1.1 -0.3 0.2 1.6 1.9 1.1 1.2 1.4 2.0 1.8 1.8 2.6 2.0 2.0 Excl. Food & Energy 1.6 2.5 1.3 1.8 2.0 1.9 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.7 1.7Producer Prices, Finished Goods 4.0 3.8 0.9 -5.1 0.6 0.8 1.8 0.4 0.5 0.7 1.8 1.6 1.8 3.4 2.4 2.1Employment Cost Index - Total Comp. 1.0 3.4 2.7 3.0 2.5 2.7 2.7 2.8 2.7 2.9 2.9 2.8 2.9 2.8 2.9 2.8

Oil - WTI ($ per barrel) 98.7 103.0 97.1 79.9 77.3 75.8 81.2 77.5 71.9 77.8 82.8 80.9 80.7 86.7 88.4 90.0Productivity (% change) -4.5 2.9 2.0 0.2 1.3 1.4 2.0 1.6 1.8 2.4 2.4 2.3 1.9 2.1 2.1 2.0Industrial Production (% change) 3.9 5.5 3.2 3.4 1.1 1.3 1.9 2.2 4.2 4.1 3.7 3.4 2.4 2.4 2.4 2.2Factory Operating Rate 76.2 77.1 77.3 77.3 77.1 76.8 76.8 76.7 76.8 77.0 77.2 77.3 77.2 77.0 76.8 76.6Nonfarm Inven. Chg. (Bil. of 2005 $) 33.3 80.7 53.1 62.7 49.2 33.2 30.7 29.0 34.7 39.6 49.4 55.8 50.7 42.6 36.7 37.1Consumer Sentiment Index 80.9 82.8 83.0 83.0 84.2 85.5 86.2 86.2 85.7 84.9 84.6 85.0 84.1 83.7 83.7 83.8Light Vehicle Sales (Million units) 15.650 16.495 16.724 16.395 16.261 16.289 16.385 16.472 16.574 16.675 16.723 16.763 16.859 16.950 17.036 16.959Housing Starts (Million units) 0.925 0.985 1.024 1.062 1.081 1.139 1.180 1.214 1.253 1.272 1.308 1.393 1.431 1.441 1.464 1.462Existing House Sales (Million units) 4.043 4.273 4.523 4.589 4.656 4.736 4.871 4.988 5.078 5.115 5.010 4.970 4.986 4.920 4.774 4.739Unemployment Rate (%) 6.7 6.2 6.1 5.8 5.8 5.7 5.7 5.8 5.8 5.8 5.8 5.8 5.8 5.8 5.8 5.8Payroll Employment (% change) 1.5 2.2 2.0 1.8 1.9 1.5 1.4 0.9 1.1 1.2 1.2 1.3 0.9 0.9 0.7 0.7Federal Surplus (NIPA Bil. $) -560 -584 -627 -610 -628 -606 -579 -561 -594 -594 -591 -611 -612 -636 -659 -692Current Account Balance (Bil. $) -408 -394 -386 -335 -306 -302 -308 -335 -341 -340 -375 -412 -443 -481 -499 -491

Federal Funds Rate (%) 0.07 0.09 0.09 0.09 0.09 0.09 0.14 0.28 0.54 0.79 1.03 1.28 1.71 2.21 2.71 3.203-Month Treasury Bill Rate (%) 0.05 0.03 0.03 0.02 0.07 0.12 0.21 0.33 0.58 0.87 1.14 1.38 1.77 2.22 2.57 2.981-Year Treasury Note Yield (%) 0.12 0.10 0.11 0.11 0.16 0.28 0.43 0.60 0.88 1.22 1.51 1.72 2.11 2.55 2.80 3.235-Year Treasury Note Yield (%) 1.60 1.66 1.70 1.62 1.80 1.91 1.98 2.04 2.19 2.42 2.59 2.73 3.02 3.31 3.53 3.9110-Year Treasury Note Yield (%) 2.76 2.62 2.50 2.38 2.71 2.98 3.04 3.09 3.19 3.29 3.32 3.35 3.49 3.68 3.85 4.1730-Year Treasury Note Yield (%) 3.68 3.44 3.26 3.09 3.45 3.74 3.75 3.77 3.87 3.95 3.93 3.89 4.01 4.16 4.23 4.4530-Year Fixed Mortgage Rate (%) 4.36 4.23 4.14 4.05 4.34 4.69 4.78 4.87 4.97 5.15 5.28 5.31 5.41 5.61 5.75 5.98S&P 500 Stock Index 1834 1900 1976 1997 2046 2060 2075 2094 2102 2095 2086 2095 2113 2118 2114 2099 (% change) 15.2 15.2 16.9 4.3 10.2 2.8 2.9 3.8 1.5 -1.4 -1.7 1.8 3.4 1.0 -0.8 -2.8Exchange Rate, Major Trading Partners 0.992 0.985 1.004 1.052 1.065 1.072 1.079 1.078 1.066 1.055 1.047 1.043 1.036 1.027 1.023 1.020 (%change (negative = depreciation)) 6.1 -2.8 7.9 20.3 5.1 2.8 2.7 -0.7 -4.1 -4.2 -2.9 -1.8 -2.7 -3.1 -1.9 -1.1

Personal Income (Bil. of $) 14485 14708 14861 15005 15165 15297 15437 15589 15787 15958 16139 16332 16553 16749 16940 17133 (% change) 4.9 6.3 4.2 4.0 4.3 3.5 3.7 4.0 5.2 4.4 4.6 4.9 5.5 4.8 4.6 4.6Disposable Income (Bil. of $) 12773 12985 13111 13223 13332 13429 13548 13671 13832 13987 14158 14337 14509 14695 14884 15074 (% change) 4.8 6.8 4.0 3.5 3.3 2.9 3.6 3.7 4.8 4.6 5.0 5.1 4.9 5.2 5.2 5.2Real Disposable Income (Bil. of 2005 $) 11810 11937 12016 12114 12192 12236 12293 12368 12480 12580 12683 12796 12901 13003 13118 13234 (% change) 3.4 4.4 2.7 3.3 2.6 1.4 1.9 2.5 3.7 3.2 3.3 3.6 3.3 3.2 3.6 3.6Saving Rate (%) 4.9 5.4 5.5 5.6 5.6 5.3 5.1 5.0 5.3 5.4 5.5 5.7 5.8 5.9 6.1 6.3After-Tax Profits (Billions of $) 1735 1842 1846 1895 1874 1895 1920 1900 1840 1871 1878 1876 1813 1808 1789 1806 (% change) -11.0 27.1 0.9 11.0 -4.4 4.6 5.4 -4.1 -12.0 6.9 1.3 -0.3 -12.8 -1.2 -4.1 3.9

Financial Markets, NSA

Incomes

Composition of Real GDP, Percent Change, Annual Rate

Billions of Dollars

Prices & Wages, Percent Change, Annual Rate

Other Key Measures



Table 4. Quarterly Gross Domestic ProductTable 4. Quarterly Gross Domestic Product


Gross Domestic Product 15831.7 16010.4 16150.6 16215.6 16299.4 16376.5 16475.2 16552.2 16638.6 16756.5 16881.7 17009.0 17114.8 17222.7 17329.1 17430.9

Final Sales of Domestic Product 15782.6 15905.9 16069.2 16126.3 16226.9 16323.2 16426.8 16506.1 16586.5 16699.3 16814.5 16935.1 17045.9 17161.9 17274.3 17375.5

Total Consumption 10844.3 10912.6 10960.9 11031.6 11105.2 11185.5 11264.6 11336.0 11406.3 11486.7 11570.7 11655.5 11732.3 11813.3 11894.1 11971.6

Durables 1355.0 1400.4 1424.9 1422.6 1437.9 1458.0 1480.8 1501.1 1526.3 1550.0 1574.3 1598.0 1621.2 1649.4 1676.9 1697.3

Nondurables 2341.9 2354.6 2361.3 2376.8 2396.1 2415.6 2435.1 2452.0 2465.6 2480.7 2498.1 2513.8 2528.7 2542.9 2557.7 2571.8

Services 7165.4 7181.4 7201.6 7257.3 7297.6 7340.2 7379.5 7416.1 7451.0 7495.4 7540.8 7589.1 7631.0 7673.9 7716.7 7762.3

Nonresidential Fixed Investment 2051.5 2099.6 2127.7 2151.7 2166.8 2177.5 2201.2 2217.1 2236.6 2268.6 2301.8 2338.9 2372.6 2406.5 2439.6 2467.8

Equipment & Software 974.8 1001.1 1018.7 1034.3 1041.6 1051.9 1068.7 1082.6 1090.7 1109.3 1127.8 1146.8 1164.8 1179.6 1193.8 1205.2

Information Processing Equipment 298.1 316.2 306.6 325.0 333.7 343.6 354.7 366.0 377.4 387.8 396.6 404.2 411.7 418.4 423.9 429.3

Computers & Peripherals 79.9 84.8 86.2 91.1 91.9 93.4 95.4 97.5 99.6 102.0 104.3 106.2 108.4 110.7 112.4 113.9

Communications Equipment 106.3 116.0 101.4 112.1 116.0 120.6 125.4 130.3 135.2 139.9 144.1 147.5 150.7 152.9 154.4 156.0

Industrial Equipment 209.0 222.0 234.7 238.4 239.7 241.1 240.4 241.3 242.5 244.3 247.5 252.5 257.2 260.6 263.5 265.6

Transportation Equipment 245.3 247.8 266.6 254.8 251.4 250.0 250.6 248.5 241.0 243.3 243.6 243.7 244.1 244.4 246.1 246.2

Aircraft 36.5 27.1 38.0 29.9 30.5 30.7 31.1 31.4 31.7 32.2 32.6 33.0 33.3 33.6 34.3 34.5

Other Equipment 54.0 57.9 63.8 55.5 50.1 47.7 47.5 46.5 43.1 44.0 44.8 43.8 42.3 44.3 45.7 45.9

Structures 441.9 455.2 459.4 459.5 461.3 456.1 456.9 452.1 456.0 462.8 470.2 480.5 488.4 500.1 511.5 521.2

Commercial & Health 109.0 113.2 112.3 115.0 118.3 120.3 123.3 125.3 131.3 137.7 143.1 150.2 152.4 156.5 159.5 161.6

Manufacturing 45.2 48.5 52.6 53.1 53.8 54.3 55.1 52.6 51.3 49.8 50.3 50.4 50.8 51.4 52.1 53.1

Power & Communication 98.2 93.9 93.4 91.2 92.3 92.8 93.4 84.9 81.6 81.5 81.3 81.4 82.7 84.3 85.5 86.9

Mining & Petroleum 127.6 135.4 138.0 136.3 132.6 124.1 120.2 120.4 121.5 122.1 121.9 123.4 125.6 129.5 134.3 137.7

Other 61.3 64.0 62.9 63.9 64.5 65.1 65.6 70.2 72.3 74.1 76.2 78.3 80.2 81.8 83.7 85.4

Residential Fixed Investment 485.3 495.6 497.9 500.1 514.9 530.4 548.9 563.2 574.1 586.6 599.4 614.2 630.8 640.3 645.2 646.7

Exports 2026.9 2080.7 2120.3 2113.6 2114.5 2125.2 2139.1 2149.4 2164.9 2180.4 2200.2 2222.2 2245.3 2270.3 2293.4 2318.9

Imports 2474.1 2541.1 2530.2 2541.1 2546.0 2566.8 2597.4 2634.0 2669.7 2699.5 2737.6 2778.8 2822.8 2860.3 2893.6 2928.7

Federal Government 1117.4 1114.9 1141.6 1115.1 1112.1 1108.1 1104.1 1103.3 1100.0 1097.8 1096.0 1094.5 1093.6 1092.5 1091.4 1090.4

State & Local Government 1750.2 1764.7 1770.6 1775.9 1780.0 1783.6 1786.5 1790.8 1793.8 1798.7 1803.8 1808.3 1813.4 1818.7 1823.9 1829.0

Real GDP Billions 2005 $



Table 5. Annual EmploymentTable 5. Annual Employment

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Total Nonfarm Employment 137.93 137.17 131.22 130.27 131.85 134.10 136.36 138.83 141.22 142.90 144.30

Private Nonfarm 115.72 114.67 108.67 107.78 109.76 112.18 114.50 116.94 119.26 120.85 122.08

Mining 0.66 0.71 0.64 0.65 0.74 0.80 0.82 0.86 0.87 0.88 0.91

Construction 7.63 7.16 6.02 5.52 5.53 5.65 5.83 6.03 6.31 6.69 7.13

Manufacturing 13.88 13.40 11.85 11.53 11.73 11.93 12.00 12.13 12.23 12.21 12.18

Trade, Transportation and Utilities 26.63 26.29 24.90 24.64 25.07 25.47 25.86 26.38 26.72 26.93 27.06

Transportation & Warehousing 4.54 4.51 4.24 4.19 4.30 4.42 4.49 4.62 4.74 4.89 5.04

Financial Activities 8.35 8.20 7.84 7.70 7.70 7.78 7.88 7.96 8.02 7.98 7.91

Education & Health 18.61 19.16 19.55 19.89 20.23 20.70 21.10 21.48 21.93 22.23 22.43

Professional & Business Services 17.95 17.74 16.57 16.72 17.33 17.93 18.57 19.24 19.91 20.50 20.89

Information 3.03 2.98 2.80 2.71 2.67 2.68 2.68 2.68 2.72 2.75 2.77

Leisure & Hospitality 13.43 13.44 13.07 13.04 13.35 13.77 14.24 14.63 14.97 15.08 15.21

Government 22.22 22.50 22.55 22.49 22.09 21.92 21.86 21.89 21.96 22.05 22.21

Federal 2.74 2.76 2.83 2.98 2.86 2.82 2.77 2.71 2.69 2.65 2.62

State & Local 19.48 19.74 19.72 19.51 19.23 19.10 19.09 19.18 19.27 19.39 19.60

Total Nonfarm Employment 1.12 -0.55 -4.34 -0.71 1.21 1.71 1.69 1.81 1.72 1.19 0.98

Private Nonfarm 1.13 -0.90 -5.23 -0.80 1.83 2.21 2.07 2.13 1.99 1.33 1.02

Mining 5.74 6.77 -14.61 11.75 13.58 2.26 4.26 5.99 -1.30 2.79 3.54

Construction -1.95 -9.21 -16.57 -3.40 1.87 1.79 3.32 3.84 5.70 6.24 6.37

Manufacturing -2.05 -5.36 -11.37 0.60 1.76 1.48 0.69 1.18 0.74 -0.70 -0.17

Trade, Transportation and Utilities 1.17 -3.31 -4.83 0.75 1.97 1.46 1.91 1.68 1.10 0.75 0.25

Transportation & Warehousing 0.89 -2.70 -6.16 1.98 2.44 2.74 1.71 2.78 2.85 3.35 2.59

Financial Activities -1.16 -2.28 -4.32 -0.88 0.51 1.25 1.06 1.39 -0.17 -0.26 -1.62

Education & Health 2.96 2.72 1.83 1.71 1.86 2.37 1.70 2.00 1.60 1.60 0.61

Professional & Business Services 1.64 -3.60 -5.15 2.98 3.57 3.28 3.76 3.72 3.21 3.08 0.94

Information -0.04 -3.14 -6.02 -2.28 -0.38 -0.12 0.30 1.38 -0.95 3.12 -0.67

Leisure & Hospitality 2.15 -1.66 -2.46 1.27 2.81 3.14 3.45 2.39 2.04 0.18 1.53

Government 1.16 0.98 -0.18 -0.94 -1.39 -0.37 -0.17 0.33 0.29 0.47 0.91

Federal 0.54 1.11 2.46 4.81 -0.82 -0.93 -2.88 -1.03 -1.00 -1.52 -1.42

State & Local 1.25 0.97 -0.53 -1.32 -1.47 -0.28 0.23 0.52 0.47 0.75 1.22

Millions

Growth Rates

ForecastHistory



Table 6. Quarterly EmploymentTable 6. Quarterly Employment


Total Nonfarm Employment 137.8 138.5 139.2 139.8 140.5 141.0 141.5 141.8 142.2 142.7 143.1 143.6 143.9 144.2 144.4 144.7

Private Nonfarm 115.9 116.6 117.3 117.9 118.5 119.1 119.6 119.9 120.2 120.7 121.0 121.5 121.7 122.0 122.2 122.4

Mining 0.8 0.8 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9

Construction 5.9 6.0 6.1 6.1 6.2 6.3 6.4 6.5 6.5 6.6 6.7 6.9 7.0 7.1 7.2 7.3

Manufacturing 12.1 12.1 12.2 12.2 12.2 12.2 12.2 12.3 12.3 12.2 12.2 12.2 12.2 12.2 12.2 12.2

Trade, Transportation and Utilities 26.2 26.3 26.5 26.5 26.6 26.7 26.8 26.8 26.9 26.9 27.0 27.0 27.0 27.1 27.1 27.1

Transportation & Warehousing 4.6 4.6 4.6 4.7 4.7 4.7 4.8 4.8 4.8 4.9 4.9 5.0 5.0 5.0 5.1 5.1

Financial Activities 7.9 7.9 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 7.9 7.9 7.8

Education & Health 21.3 21.4 21.5 21.7 21.8 22.0 22.0 22.0 22.1 22.2 22.3 22.4 22.4 22.4 22.4 22.5

Professional & Business Services 19.0 19.2 19.3 19.5 19.7 19.8 20.0 20.1 20.3 20.4 20.6 20.8 20.8 20.9 20.9 20.9

Information 2.7 2.7 2.7 2.7 2.8 2.7 2.7 2.7 2.7 2.8 2.8 2.8 2.8 2.8 2.8 2.8

Leisure & Hospitality 14.5 14.6 14.7 14.8 14.9 14.9 15.0 15.1 15.1 15.1 15.1 15.1 15.1 15.2 15.2 15.3

Government 21.8 21.9 21.9 21.9 21.9 21.9 22.0 22.0 22.0 22.0 22.1 22.1 22.1 22.2 22.2 22.3

Federal 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 2.6 2.6 2.6

State & Local 19.1 19.2 19.2 19.2 19.2 19.3 19.3 19.3 19.3 19.4 19.4 19.5 19.5 19.6 19.6 19.7

Total Nonfarm Employment 1.48 2.19 2.02 1.80 1.86 1.52 1.42 0.91 1.12 1.22 1.21 1.26 0.87 0.86 0.73 0.66

Private Nonfarm 1.78 2.47 2.34 2.06 2.15 1.79 1.65 0.97 1.28 1.36 1.31 1.40 0.88 0.87 0.67 0.60

Mining 4.91 5.70 7.64 5.15 0.86 -3.81 -2.48 0.16 1.27 2.71 3.74 3.31 4.14 2.61 3.45 3.75

Construction 4.67 4.13 3.62 2.70 4.13 6.01 7.00 5.16 4.97 6.12 6.50 6.81 6.62 6.68 6.16 5.44

Manufacturing 1.30 1.17 1.38 0.85 0.41 1.12 0.65 0.76 -0.28 -1.46 -0.54 -0.54 0.02 0.16 -0.19 -0.69

Trade, Transportation and Utilities 1.53 2.30 1.86 0.99 1.06 1.12 1.63 0.58 0.60 0.67 0.80 0.94 0.23 0.32 0.31 0.13

Transportation & Warehousing 2.73 3.12 3.69 1.59 2.19 2.79 3.41 3.02 2.93 3.33 3.39 3.76 3.12 2.56 2.52 2.17

Financial Activities 0.29 1.22 2.15 1.90 1.57 -1.22 -0.39 -0.65 -0.04 -0.26 -0.74 0.00 -0.49 -1.19 -2.13 -2.68

Education & Health 1.18 2.36 2.40 2.04 2.12 3.41 0.98 -0.10 1.60 2.37 0.92 1.51 0.46 0.88 0.35 0.74

Professional & Business Services 3.32 4.11 3.91 3.52 3.54 3.24 3.42 2.64 2.77 2.74 3.33 3.46 1.59 0.75 0.68 0.75

Information -3.00 -0.55 3.45 5.61 6.20 -6.16 -2.76 -1.09 -0.16 10.14 5.56 -3.07 0.53 -0.42 -1.45 -1.32

Leisure & Hospitality 2.32 2.83 1.75 2.68 3.16 2.04 1.74 1.23 1.06 -0.64 0.02 0.28 0.76 1.57 1.88 1.92

Government -0.14 0.70 0.30 0.46 0.27 0.10 0.19 0.59 0.29 0.44 0.68 0.49 0.79 0.80 1.06 0.98

Federal -2.65 -0.59 -0.15 -0.72 -0.90 -0.78 -0.97 -1.37 -1.34 -1.86 -1.40 -1.48 -1.11 -1.22 -1.63 -1.72

State & Local 0.22 0.88 0.36 0.63 0.43 0.22 0.36 0.87 0.51 0.77 0.96 0.76 1.05 1.07 1.43 1.35

Employment (Millions)

Growth Rates



Table 7. Quarterly Implicit Price Deflators (2005=100)Table 7. Quarterly Implicit Price Deflators (2000=100)


GDP 107.7 108.3 108.6 109.2 109.7 110.2 110.7 111.1 111.6 112.1 112.6 113.0 113.5 114.0 114.5 114.9

Consumption 108.2 108.8 109.1 109.2 109.4 109.8 110.2 110.5 110.8 111.2 111.6 112.0 112.5 113.0 113.5 113.9

Durables 93.1 92.7 92.3 92.0 91.8 91.6 91.4 91.1 90.7 90.4 90.0 89.7 89.3 89.0 88.7 88.3

Motor Vehicles 110.7 110.7 110.8 110.9 111.4 111.9 112.3 112.6 112.8 112.9 113.1 113.2 113.4 113.5 113.7 113.8

Furniture 90.0 89.0 88.5 88.5 88.5 88.5 88.4 88.3 88.0 87.8 87.5 87.2 86.9 86.6 86.3 86.1

Other Durables 102.6 102.2 102.7 102.7 102.9 103.1 103.3 103.5 103.6 103.8 103.9 104.1 104.3 104.5 104.6 104.8

Nondurables 112.2 113.2 113.6 112.3 111.5 111.7 112.3 112.3 112.3 112.4 112.9 113.3 113.6 114.6 115.1 115.5

Food 108.3 109.5 110.3 110.9 111.1 111.1 111.0 111.0 111.1 111.4 111.7 112.0 112.3 112.6 112.9 113.2

Clothing & Shoes 105.8 106.4 106.8 106.7 106.7 106.6 106.5 106.5 106.4 106.4 106.3 106.3 106.2 106.2 106.1 105.9

Gasoline & Oil 147.4 150.6 149.1 134.3 125.0 125.8 129.6 128.0 126.1 124.7 126.3 126.8 127.0 133.0 134.5 136.3

Fuel 161.2 152.0 147.1 137.3 137.0 139.2 142.2 141.8 141.2 141.4 143.0 144.2 145.2 150.1 152.0 153.9

Services 109.4 110.1 110.6 111.1 111.7 112.3 112.8 113.4 113.9 114.5 115.1 115.7 116.3 116.9 117.5 118.1

Housing 107.9 108.6 109.4 110.2 110.8 111.2 111.7 112.2 112.7 113.2 113.8 114.3 114.8 115.4 115.9 116.4

Electricity 107.6 107.3 107.7 109.8 109.7 109.7 109.6 109.3 109.1 109.2 109.7 110.2 110.7 111.5 112.7 113.8

Natural Gas 96.3 100.2 96.1 95.8 91.8 88.8 87.0 87.3 87.4 88.3 89.4 89.8 90.9 91.4 92.9 94.0

Water & Sewer 125.9 126.9 128.2 129.5 130.7 132.0 133.2 134.4 135.6 136.7 137.9 139.0 140.0 141.0 142.1 143.1

Telephone 97.1 97.0 96.9 96.8 96.6 96.4 96.2 95.9 95.8 95.6 95.5 95.3 95.1 94.9 94.7 94.5

Transportation 108.9 109.3 109.6 109.4 109.8 110.2 110.7 111.1 111.5 111.9 112.4 112.9 113.4 113.9 114.4 114.9

Other Services 113.0 113.8 114.1 114.4 115.1 116.0 116.7 117.4 118.1 118.9 119.6 120.4 121.2 121.9 122.7 123.5



Table 8. Percent Change in Implicit Price DeflatorsTable 8. Percent Change in Implicit Price Deflators


GDP 1.3 2.1 1.3 2.1 1.9 2.0 1.9 1.5 1.8 1.7 1.7 1.6 1.8 1.7 1.6 1.6

Consumption 1.4 2.3 1.2 0.2 0.7 1.5 1.7 1.2 1.1 1.3 1.6 1.5 1.5 2.0 1.6 1.6

Durables -2.8 -1.9 -1.9 -1.0 -0.9 -1.0 -1.1 -1.3 -1.5 -1.6 -1.5 -1.5 -1.5 -1.5 -1.5 -1.5

Motor Vehicles -1.5 0.2 0.2 0.5 1.7 1.7 1.5 1.2 0.5 0.5 0.6 0.6 0.5 0.5 0.5 0.5

Furniture -2.6 -4.5 -2.4 0.1 0.2 -0.1 -0.4 -0.7 -1.0 -1.2 -1.3 -1.3 -1.3 -1.3 -1.3 -1.3

Other Durables -2.9 -1.5 2.1 0.2 0.6 0.7 0.8 0.7 0.6 0.6 0.7 0.7 0.7 0.7 0.6 0.5

Nondurables 0.6 3.6 1.3 -4.5 -2.9 1.0 2.1 0.0 0.0 0.4 1.7 1.3 1.3 3.4 1.6 1.6

Food 1.4 4.5 3.1 1.9 0.9 -0.1 -0.2 0.1 0.4 0.8 1.1 1.1 1.2 1.1 1.0 0.9

Clothing & Shoes 0.2 2.5 1.3 -0.4 -0.1 -0.2 -0.3 -0.1 -0.3 -0.1 -0.2 -0.2 -0.2 -0.2 -0.4 -0.5

Gasoline & Oil -4.7 8.9 -4.0 -34.1 -25.1 2.7 12.6 -4.8 -5.9 -4.2 5.2 1.5 0.7 20.3 4.7 5.2

Fuel 35.1 -21.0 -12.2 -24.2 -0.7 6.4 9.2 -1.2 -1.6 0.6 4.6 3.3 2.7 14.3 5.2 5.2

Services 2.3 2.6 1.7 2.0 2.2 2.0 2.0 2.0 1.9 2.0 2.1 2.0 2.1 2.1 2.1 2.1

Housing 2.7 2.8 2.9 2.9 2.0 1.7 1.6 1.7 1.9 1.9 1.9 1.9 1.9 1.8 1.8 1.8

Electricity 10.4 -1.3 1.5 8.0 -0.4 0.1 -0.4 -1.1 -0.8 0.6 1.7 1.8 1.8 3.1 4.4 3.9

Natural Gas 35.1 17.3 -15.4 -1.3 -15.8 -12.2 -8.2 1.6 0.6 3.8 5.5 1.7 5.0 2.3 6.8 4.5

Water & Sewer 3.0 3.3 4.3 3.9 3.9 3.8 3.7 3.7 3.6 3.4 3.4 3.3 3.0 2.9 3.0 3.0

Telephone 0.0 -0.8 -0.4 -0.4 -0.7 -0.6 -0.9 -1.2 -0.6 -0.6 -0.8 -0.6 -0.8 -0.8 -0.9 -0.9

Transportation 0.3 1.6 0.9 -0.5 1.4 1.6 1.7 1.4 1.4 1.6 1.8 1.7 1.8 1.9 1.7 1.7

Other Services 2.7 2.7 1.3 1.1 2.5 2.9 2.5 2.5 2.5 2.6 2.5 2.6 2.6 2.5 2.6 2.5



Table 9. Annual Implicit Price Deflators (2005=100)Table 9. Annual Implicit Price Deflators (2000=100)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

GDP 97.3 99.2 100.0 101.2 103.3 105.2 106.7 108.4 110.4 112.3 114.2Consumption 97.1 100.1 100.0 101.7 104.1 106.1 107.3 108.8 110.0 111.4 113.2Durables 103.8 101.8 100.0 98.6 97.7 96.5 94.7 92.5 91.5 90.2 88.8Motor Vehicles 102.0 99.7 100.0 105.7 108.9 110.4 111.1 110.8 112.1 113.0 113.6Furniture 101.1 100.4 100.0 95.8 94.2 94.0 92.1 89.0 88.4 87.6 86.5Other Durables 95.7 98.9 100.0 100.4 103.6 104.1 103.9 102.5 103.2 103.9 104.5Nondurables 97.2 102.7 100.0 103.1 109.2 111.8 112.0 112.8 112.0 112.7 114.7Food 93.2 98.9 100.0 100.3 104.3 106.6 107.8 109.7 111.1 111.5 112.8Clothing & Shoes 99.9 99.1 100.0 99.3 101.1 104.7 105.7 106.4 106.6 106.4 106.1Gasoline & Oil 117.1 136.6 100.0 118.2 149.3 154.6 150.4 145.4 127.1 126.0 132.7Fuel 107.7 146.0 100.0 117.0 148.8 150.7 149.0 149.4 140.1 142.5 150.3Services 96.0 98.9 100.0 101.7 103.5 105.7 107.9 110.3 112.6 114.8 117.2Housing 95.7 98.3 100.0 100.1 101.4 103.7 106.1 109.0 111.5 113.5 115.6Electricity 91.2 97.1 100.0 100.2 101.8 101.8 103.9 108.1 109.6 109.5 112.2Natural Gas 112.7 128.2 100.1 98.1 95.1 85.9 89.9 97.1 88.7 88.7 92.3Water & Sewer 89.0 94.2 100.0 106.3 111.8 117.9 123.3 127.6 132.6 137.3 141.6Telephone 97.2 98.7 100.0 99.3 97.5 97.7 97.2 96.9 96.3 95.6 94.8Transportation 92.1 97.0 100.0 102.0 104.8 106.8 108.1 109.3 110.5 112.2 114.2Other Services 93.0 97.3 100.0 103.0 105.6 108.3 111.3 113.8 116.3 119.3 122.3

ForecastHistory



Table 10. Percent Change in Implicit Price Deflators

Table 11. Personal Income and its Components

Table 10. Percent Change in Implicit Price Deflators

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

GDP 2.5 1.9 0.4 1.8 1.9 1.8 1.4 1.7 1.8 1.7 1.7Consumption 3.3 1.6 1.2 1.3 2.7 1.6 1.0 1.3 1.3 1.4 1.7Durables -2.0 -2.1 -0.9 -2.1 -0.5 -1.6 -2.0 -1.9 -1.1 -1.5 -1.5Motor Vehicles 0.1 -4.1 5.6 2.9 3.3 0.8 0.5 -0.1 1.5 0.5 0.5Furniture -1.6 0.3 -2.0 -4.4 -0.2 -0.5 -3.0 -2.4 -0.2 -1.2 -1.3Other Durables 2.2 3.2 1.3 0.6 3.2 -0.6 -0.6 -0.5 0.7 0.6 0.6Nondurables 6.3 1.2 2.8 2.2 5.9 1.9 -0.4 0.2 0.0 0.8 2.0Food 4.9 6.9 -1.8 1.3 5.1 1.2 0.8 2.7 0.2 0.8 1.1Clothing & Shoes -1.2 -0.9 1.5 -1.4 4.4 2.5 0.2 0.9 -0.2 -0.2 -0.3Gasoline & Oil 30.9 4.8 26.8 13.4 20.4 4.6 -5.0 -8.5 -3.7 -0.9 7.7Fuel 27.7 22.4 -0.8 15.7 26.2 3.1 -1.2 -5.6 3.4 1.7 6.8Services 3.4 2.5 1.1 1.5 2.1 2.1 2.1 2.2 2.1 2.0 2.1Housing 3.1 2.5 0.9 0.3 1.9 2.3 2.5 2.8 1.8 1.9 1.8Electricity 5.0 8.2 -0.4 0.5 2.4 -0.8 3.1 4.6 -0.4 0.8 3.3Natural Gas 3.4 19.1 -18.3 -1.2 -1.6 -4.3 2.5 8.9 -8.6 2.9 4.6Water & Sewer 5.2 6.8 6.0 5.7 4.9 6.0 3.8 3.7 3.8 3.4 3.0Telephone 1.3 2.0 0.6 -1.1 -1.5 0.1 -0.4 -0.4 -0.9 -0.6 -0.8Transportation 3.3 5.9 2.2 1.5 3.1 1.3 1.6 0.6 1.5 1.6 1.8Other Services 3.2 4.7 2.4 2.7 2.8 2.2 2.9 1.9 2.6 2.5 2.6

ForecastHistory

Table 11. Personal Income and its Components

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Personal Income 11994.9 12429.6 12087.5 12429.4 13202.0 13887.7 14166.9 14764.6 15371.9 16054.2 16843.7

Wages & Salaries 7898.3 8078.2 7787.0 7961.5 8269.0 8606.5 8844.8 9252.8 9649.8 10067.6 10526.9

Other Labor Income 1041.4 1075.1 1077.5 1114.6 1142.0 1160.5 1193.9 1226.1 1255.4 1300.6 1355.5

Nonfarm Income 941.1 979.5 937.6 986.7 1068.1 1187.9 1253.5 1317.6 1390.2 1451.4 1500.4

Farm Income 38.1 47.0 35.5 46.0 75.6 72.3 83.2 65.3 71.6 79.8 82.3

Rental Income 189.4 262.1 333.7 402.8 485.3 533.0 595.8 641.2 648.6 639.5 642.3

Dividends 816.6 805.5 553.8 544.6 682.3 832.7 824.6 855.3 892.4 947.5 951.3

Interest Income 1350.1 1361.6 1264.3 1195.1 1231.6 1255.9 1255.2 1267.1 1281.4 1377.8 1596.6

Transfer Payments 1722.8 1884.0 2140.2 2276.9 2307.9 2350.7 2414.6 2531.5 2663.7 2779.8 2906.2

Personal Social Insurance Tax 499.7 516.9 506.3 514.7 423.9 437.3 578.4 614.5 647.9 683.8 722.7

Personal Income 5.3 3.6 -2.8 2.8 6.2 5.2 2.0 4.2 4.1 4.4 4.9

Wages & Salaries 5.3 2.3 -3.6 2.2 3.9 4.1 2.8 4.6 4.3 4.3 4.6

Other Labor Income 4.4 3.2 0.2 3.4 2.5 1.6 2.9 2.7 2.4 3.6 4.2

Nonfarm Income -7.5 4.1 -4.2 5.3 8.2 11.2 5.5 5.1 5.5 4.4 3.4

Farm Income 5.9 24.9 -21.8 30.4 66.2 -4.2 15.1 -20.4 10.3 11.8 3.2

Rental Income 5.3 52.4 18.4 20.1 20.8 7.9 11.2 7.4 -2.5 -0.4 0.5

Dividends 10.0 -11.0 -33.4 23.8 23.5 48.6 -9.9 4.3 6.3 4.1 -1.1

Interest Income 9.9 -2.2 -9.2 -1.8 3.3 1.7 0.5 0.7 2.1 11.6 16.7

Transfer Payments 8.1 10.3 14.8 5.5 0.2 2.7 2.6 6.3 4.0 4.5 4.9Personal Social Insurance Tax 4.9 2.6 -1.8 2.4 -13.5 5.0 45.0 6.7 5.3 5.6 5.6

Percent Change, Annual Rate

Personal Income Billions Current Dollars

ForecastHistory



Table 12. Personal Consumption Expenditures (Current Dollars)Table 12. Personal Consumption Expenditures (Current Dollars)


Consumer spending on…

all goods & services 11728.5 11870.7 11959.8 12041.9 12143.7 12276.4 12415.1 12530.5 12642.5 12771.7 12916.1 13058.5 13194.2 13350.4 13495.3 13636.0

durable goods 1262.3 1298.4 1314.9 1309.4 1320.5 1335.7 1352.8 1367.0 1384.7 1400.6 1417.1 1433.1 1448.3 1468.0 1486.7 1499.0

furniture and appliances 281.7 287.0 287.8 291.8 293.4 296.5 298.0 299.9 302.9 306.8 309.6 312.7 315.8 318.7 321.0 322.9

information processing equipment 101.2 103.2 104.5 105.1 106.5 107.5 108.6 109.5 110.2 111.1 112.1 113.2 114.1 115.1 116.2 117.3

motor vehicles and parts 426.9 446.2 457.1 445.3 447.8 454.4 464.5 473.4 484.5 491.8 499.4 505.2 510.9 520.5 529.9 533.1

other durable goods 139.4 140.4 139.9 139.8 140.5 141.5 142.5 143.2 143.6 144.2 145.1 146.1 146.9 147.9 148.8 149.8

nondurables 2628.4 2666.1 2682.1 2668.7 2670.9 2699.1 2734.8 2753.9 2769.0 2789.0 2820.4 2847.1 2873.3 2913.9 2942.6 2970.8

clothing & shoes 357.8 365.0 367.0 368.5 370.5 373.9 377.4 380.0 382.6 384.8 388.7 391.0 393.8 396.6 400.9 403.3

fuel oil & coal 32.8 27.0 25.7 24.2 25.0 25.4 26.0 25.9 26.0 26.0 26.3 26.5 26.7 27.5 27.8 28.1

gasoline & motor oil 374.3 383.1 377.3 341.2 320.0 323.5 333.6 330.4 327.1 325.1 330.3 332.0 332.8 348.2 352.0 356.6

food 879.4 886.0 890.3 896.6 907.3 918.1 928.8 938.6 945.1 952.6 962.0 970.8 979.7 989.1 997.4 1005.5

other nondurable goods 984.0 1005.0 1021.8 1038.2 1048.0 1058.2 1069.0 1079.0 1088.2 1100.5 1113.1 1126.8 1140.3 1152.4 1164.5 1177.4



durable goods 1355.0 1400.4 1424.9 1422.6 1437.9 1458.0 1480.8 1501.1 1526.3 1550.0 1574.3 1598.0 1621.2 1649.4 1676.9 1697.3



motor vehicles and parts 385.7 402.9 412.5 401.4 401.9 406.1 413.6 420.3 429.6 435.5 441.7 446.1 450.6 458.5 466.2 468.4

other durable goods 135.2 137.4 135.8 135.7 136.3 137.0 137.7 138.1 138.3 138.7 139.4 140.3 140.9 141.7 142.6 143.4

nondurables 2341.9 2354.6 2361.3 2376.8 2396.1 2415.6 2435.1 2452.0 2465.6 2480.7 2498.1 2513.8 2528.7 2542.9 2557.7 2571.8

clothing & shoes 338.3 342.9 343.7 345.4 347.4 350.7 354.3 356.8 359.6 361.7 365.5 367.9 370.7 373.6 378.0 380.7

fuel oil & coal 20.4 17.8 17.5 17.6 18.3 18.3 18.3 18.3 18.4 18.4 18.4 18.4 18.4 18.3 18.3 18.2

gasoline & motor oil 253.9 254.4 253.1 254.0 256.1 257.2 257.4 258.2 259.5 260.7 261.5 261.9 262.1 261.9 261.7 261.7

food 811.9 809.2 806.9 808.8 816.7 826.5 836.6 845.2 850.3 855.3 861.4 866.9 872.2 878.1 883.4 888.5




durable goods 3.1 13.4 7.0 -0.7 4.3 5.6 6.3 5.5 6.7 6.2 6.3 6.0 5.8 7.0 6.7 4.9



motor vehicles and parts 5.4 17.8 9.6 -10.8 0.5 4.1 7.4 6.5 8.9 5.5 5.7 4.0 4.0 7.0 6.7 1.9

other durable goods 2.6 6.6 -4.7 -0.2 1.8 2.0 2.0 1.2 0.7 1.1 2.1 2.4 1.7 2.4 2.4 2.5

nondurables 0.0 2.2 1.1 2.6 3.2 3.2 3.2 2.8 2.2 2.5 2.8 2.5 2.4 2.2 2.3 2.2

clothing & shoes -3.7 5.5 0.9 2.0 2.2 3.8 4.1 2.8 3.1 2.4 4.2 2.6 3.1 3.1 4.7 2.9

fuel oil & coal 24.5 -51.5 -6.7 3.1 15.4 -0.2 0.1 0.4 1.8 0.7 0.4 -0.3 -0.5 -1.3 -1.0 -1.1

gasoline & motor oil 0.4 0.8 -2.1 1.5 3.2 1.7 0.4 1.1 2.0 2.0 1.2 0.6 0.3 -0.4 -0.3 0.1

food -1.0 -1.4 -1.1 0.9 3.9 4.9 5.0 4.2 2.4 2.4 2.9 2.5 2.5 2.7 2.4 2.3


Real Consumer Expenditures Annual Growth Rate

Consumer Expenditures by Type Billions 2005 Dollars

Consumer Expenditures by Type Billions Current Dollars



Table 13. Personal Consumption Expenditures (2005 Dollars)Table 13. Personal Consumption Expenditures (2000 Dollars)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017


all goods & services 9750.5 10013.6 9847.0 10202.2 10689.3 11083.1 11484.3 11900.2 12341.4 12847.2 13419.0

durable goods 1184.6 1102.3 1023.3 1070.7 1125.3 1192.1 1249.3 1296.3 1344.0 1408.9 1475.5

furniture and appliances 283.5 268.7 244.3 250.4 260.7 271.1 280.9 287.1 297.0 308.0 319.6

information processing equipment 84.8 83.4 81.2 90.3 91.9 96.0 100.2 103.5 108.0 111.6 115.7

motor vehicles and parts 400.6 339.6 317.1 342.0 363.5 395.1 417.7 443.9 460.0 495.2 523.6

other durable goods 113.2 112.1 105.5 110.0 121.4 129.4 138.8 139.9 141.9 144.8 148.3

nondurables 2176.9 2273.4 2175.1 2292.1 2471.1 2549.8 2601.9 2661.3 2714.7 2806.4 2925.2

clothing & shoes 323.7 319.5 306.5 320.6 338.9 353.7 360.7 364.6 375.4 386.8 398.7

fuel oil & coal 25.6 30.8 24.3 26.2 29.2 26.8 26.6 27.4 25.6 26.2 27.5

gasoline & motor oil 319.9 358.3 260.2 307.3 380.4 388.6 381.8 369.0 326.9 328.6 347.4

food 737.3 772.9 770.0 788.9 829.1 854.9 872.2 888.1 923.2 957.6 992.9

other nondurable goods 770.4 791.9 814.2 849.2 893.5 925.7 960.7 1012.3 1063.6 1107.2 1158.7


all goods & services 10041.6 10007.2 9847.0 10036.3 10263.5 10449.7 10699.7 10937.3 11222.8 11529.8 11852.8

durable goods 1141.7 1083.2 1023.3 1085.7 1151.5 1235.7 1319.0 1400.7 1469.5 1562.2 1661.2

furniture and appliances 280.4 267.7 244.3 261.5 276.6 288.4 305.1 322.5 335.8 351.6 369.6


motor vehicles and parts 392.8 340.8 317.1 323.4 333.8 357.9 376.0 400.6 410.5 438.2 460.9

other durable goods 119.5 113.4 105.5 108.9 115.1 122.4 132.0 136.0 137.3 139.2 142.1

nondurables 2239.3 2214.7 2175.1 2223.5 2263.2 2280.1 2322.6 2358.7 2424.7 2489.5 2550.2

clothing & shoes 323.9 322.3 306.5 322.7 335.3 337.7 341.2 342.6 352.3 363.7 375.8

fuel oil & coal 23.8 21.1 24.3 22.4 19.6 17.8 17.8 18.3 18.3 18.4 18.3

gasoline & motor oil 273.2 262.4 260.2 259.9 254.7 251.3 253.8 253.8 257.2 260.9 261.8

food 791.3 781.9 770.0 786.5 795.1 801.6 809.4 809.2 831.2 858.5 880.5

other nondurable goods 825.2 828.3 814.2 833.0 863.2 879.7 909.9 946.2 978.8 1002.2 1029.4


all goods & services 1.4 -1.9 -0.2 3.1 1.5 2.0 2.8 2.0 2.8 2.8 2.7

durable goods 4.1 -12.4 3.0 9.3 4.9 7.5 5.9 5.9 5.5 6.5 6.2

furniture and appliances 0.9 -9.1 -2.0 8.3 5.8 3.0 7.1 5.8 3.0 5.6 4.6


motor vehicles and parts 0.9 -23.0 7.9 11.0 1.5 7.7 3.1 6.0 4.7 6.2 5.0

other durable goods 3.3 -12.3 0.6 5.5 3.2 10.8 5.4 1.1 1.8 1.6 2.3

nondurables 0.1 -2.6 0.2 3.3 0.4 1.0 2.5 1.5 3.2 2.5 2.3

clothing & shoes 1.0 -3.2 -1.0 7.6 1.1 0.6 1.4 1.2 3.3 3.1 3.5

fuel oil & coal -5.3 7.9 7.5 -7.6 -12.6 3.1 11.9 -4.7 4.1 0.6 -1.0

gasoline & motor oil -3.3 -3.9 -1.1 2.2 -3.1 -1.4 2.0 0.2 1.6 1.4 -0.1

food 0.2 -3.7 2.1 2.1 -0.4 1.6 1.2 -0.6 4.5 2.6 2.5

other nondurable goods 1.2 -0.6 -0.6 3.6 2.8 1.9 4.2 4.4 2.4 2.6 2.5

Real Consumer Expenditures Annual Growth Rate

Consumer Expenditures by Type Billions 2005 Dollars

Consumer Expenditures by Type Billions Current Dollars

ForecastHistory



Table 14. Business Fixed InvestmentTable 14. Business Fixed Investment

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Business Fixed Investment 1920.6 1941.0 1633.4 1658.2 1812.1 1972.0 2054.0 2203.2 2317.1 2445.0 2618.4

Producers Dur. Equipment 885.8 825.1 644.3 731.8 838.2 904.1 949.7 1016.0 1077.0 1140.5 1216.3

Nonresidential Structures 496.9 552.4 438.2 362.0 381.6 446.9 457.2 504.7 520.4 545.2 602.0

Non-Farm Buildings 293.9 317.5 249.1 173.7 170.2 191.6 201.7 221.5 245.4 277.2 313.1

Commercial 150.7 148.9 95.4 64.7 66.8 75.6 83.4 94.5 104.9 120.5 137.6

Industrial 40.2 52.8 56.3 39.8 39.0 45.8 46.3 54.0 61.2 60.1 64.6

Other Buildings 103.0 115.8 97.4 69.2 64.5 70.2 72.0 73.1 79.4 96.7 110.9

Utilities 89.6 104.6 104.3 93.3 90.7 112.2 105.6 121.0 121.2 113.2 120.9

Mines & Wells 102.2 117.0 75.0 86.2 112.3 133.1 139.7 152.7 143.2 142.8 154.5

Business Fixed Investment 1948.4 1934.5 1633.5 1673.8 1802.3 1931.8 1990.6 2107.6 2190.6 2286.5 2421.6

Producers Dur. Equipment 898.3 836.1 644.3 746.7 847.9 905.6 947.2 1007.2 1061.2 1118.6 1185.8

Nonresidential Structures 509.0 540.2 438.2 366.3 374.7 423.8 421.7 454.0 456.6 467.4 505.3

Non-Farm Buildings 305.2 317.9 249.1 179.3 172.3 188.8 194.0 206.1 222.5 245.2 269.8

Commercial 159.9 151.7 95.4 66.6 67.3 73.9 79.8 88.0 96.0 108.5 121.3

Industrial 43.1 53.8 56.3 40.8 39.1 44.9 44.3 49.9 54.0 50.4 51.9

Other Buildings 102.6 112.8 97.4 71.9 65.9 70.0 69.8 68.1 72.5 86.7 97.3

Utilities 94.3 103.6 104.3 89.8 82.8 99.1 92.2 103.9 100.9 91.8 95.5

Mines & Wells 97.9 105.0 75.0 87.8 110.9 124.5 125.2 134.3 124.3 122.2 131.8

Business Fixed Investment 8.3 -5.6 -14.2 8.6 10.9 5.1 6.1 6.7 4.2 6.6 6.7

Producers Dur. Equipment 3.1 -15.9 -11.4 20.2 14.4 4.5 6.3 6.9 5.1 6.5 5.8

Nonresidential Structures 21.8 4.7 -32.2 -0.6 15.3 8.1 8.6 7.0 1.1 8.5 10.9

Non-Farm Buildings 22.5 -0.4 -34.0 -21.1 14.7 7.3 9.1 9.4 9.6 15.9 10.8

Commercial 17.3 -11.8 -44.7 -16.8 14.7 9.9 17.4 8.4 10.3 19.4 11.0

Industrial 48.0 22.5 -11.9 -28.8 37.4 8.1 1.2 23.1 4.9 0.5 10.1

Other Buildings 22.6 6.7 -29.7 -19.5 3.6 4.5 5.7 2.6 13.1 22.6 11.0

Utilities 51.4 2.5 -4.1 19.0 2.4 18.4 15.3 0.8 -1.7 -0.8 9.2

Mines & Wells 1.8 24.4 -42.8 53.6 36.6 2.7 8.2 10.9 -9.2 3.0 12.4

Billions Current Dollars

Billions 2005 Dollars

ForecastHistory

Annual Growth Rate



Table 15. Government Receipts and ExpendituresTable 15. Government Receipts and Expenditures

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Receipts 2660.8 2503.7 2227.8 2391.8 2519.5 2684.1 3113.0 3299.0 3450.7 3583.0 3685.2

Personal Tax and Nontax Receipts 1164.4 1101.7 857.2 893.8 1076.6 1149.0 1286.8 1373.6 1489.9 1570.8 1627.7

Corp. Profits Tax Accruals 362.8 233.6 200.4 298.7 299.4 369.5 384.9 490.3 492.4 480.0 432.5

Indirect Business Tax and Nontax Accruals 94.6 94.0 91.4 96.8 108.6 115.0 120.9 132.9 135.7 146.1 161.3

Contributions for Social Insurance 947.3 974.4 950.8 970.9 904.0 938.1 1092.3 1154.1 1213.4 1276.4 1349.0

Expenditures 2926.4 3137.7 3476.6 3720.5 3763.7 3763.2 3762.1 3894.4 4044.2 4180.5 4335.0

Purchases Goods & Services 1049.8 1155.6 1217.7 1303.9 1303.5 1291.4 1231.5 1219.1 1219.1 1223.8 1234.2

National Defense 678.7 754.1 788.3 832.8 837.0 818.0 769.9 761.8 758.3 759.7 766.1

Other 371.1 401.5 429.4 471.1 466.5 473.4 461.6 457.4 460.7 464.0 468.2


To Persons 1258.9 1391.9 1608.9 1710.1 1727.3 1767.0 1806.8 1862.6 1938.9 2025.3 2116.4

To Foreigners 41.3 41.9 49.4 49.7 55.6 48.8 46.4 36.7 53.0 53.8 55.0

Grants in Aid to State & Local Gov't 359.0 371.0 458.1 505.3 472.5 444.4 450.0 502.6 541.4 576.0 601.2

Net Interest 386.1 368.4 330.8 351.0 398.0 401.5 393.0 422.8 440.4 444.7 467.6

Subsidies less Surplus of Gov't Entities 45.4 48.7 56.2 57.4 66.7 66.7 75.0 77.0 78.3 76.8 74.7

Surplus (+) or Deficit (-) -265.6 -634.0 -1248.8 -1328.7 -1244.2 -1079.1 -649.1 -595.3 -593.5 -597.5 -649.9

Receipts 1900.6 1909.1 1919.2 1998.5 2030.5 2061.3 2125.6 2204.0 2306.2 2422.2 2535.6

Personal Tax/Nontax Receipts 1321.3 1328.9 1268.1 1305.7 1368.3 1424.8 1471.8 1490.7 1542.4 1609.0 1681.9

Corporate Profits 323.5 333.5 287.8 297.6 324.1 354.7 375.0 368.0 386.7 404.9 425.3

Indirect Business Tax and Nontax Accruals 57.9 47.4 45.6 47.7 50.2 53.2 55.3 56.8 58.4 57.6 56.0

Contributions for Social Insurance 18.9 18.7 18.6 18.2 18.2 17.7 17.7 17.7 18.3 19.1 20.0

Federal Grants-In-Aid 359.0 371.0 458.1 505.3 472.5 444.4 450.0 502.6 541.4 576.0 601.2

Expenditures 1973.33 2074.15 2191.15 2235.85 2246.40 2293.78 2350.75 2442.43 2536.93 2614.21 2711.5

Purchases Goods & Services 1752.2 1847.6 1871.4 1870.2 1865.3 1877.8 1912.4 1958.3 2020.5 2085.0 2162.0


Interest Received 17.3 36.0 114.3 123.0 125.9 143.7 137.0 131.8 128.3 124.9 124.0

Net Subsidies 25.6 25.0 22.8 21.4 17.9 16.6 14.8 14.9 14.4 13.6 12.8

Dividends Received 2.2 2.6 2.2 2.3 2.7 3.4 3.7 4.1 4.2 4.3 4.3Surplus (+) or Deficit (-) -72.7 -165.1 -271.9 -237.3 -215.9 -232.6 -225.2 -238.4 -230.7 -192.0 -175.9

State and Local Government Receipts and Expenditures

Federal Government Receipts and Expenditures

ForecastHistory



Table 16. U.S. Exports and Imports of Goods and ServicesTable 16. U.S. Exports and Imports of Goods and Services

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Net Exports Goods & Services -718.6 -723.1 -395.5 -512.7 -580.0 -568.3 -508.2 -508.2 -426.1 -461.7 -530.5

Current Account -718.6 -686.6 -380.8 -443.9 -459.3 -460.8 -400.3 -381.1 -312.7 -366.8 -478.6

Exports -Goods & Services 1664.6 1841.9 1587.7 1852.3 2106.4 2194.2 2262.2 2346.2 2407.1 2502.9 2639.4

Merchandise Balance -821.2 -832.5 -509.7 -648.7 -740.6 -742.1 -701.7 -714.4 -651.6 -683.6 -750.6

Food, Feed & Beverage 84.26 108.35 93.91 107.72 126.25 132.90 136.18 140.13 135.26 137.07 143.0

Industrial Supplies Excl Petroleum 316.3 386.9 293.5 388.6 485.3 482.4 492.1 511.3 529.5 576.7 621.5

Motor Vehicles & Parts 121.3 121.5 81.7 112.0 133.0 146.1 152.6 160.8 170.4 182.1 196.5

Capital Goods, Excl. MVP 433.0 457.7 391.5 447.8 494.2 527.5 534.6 548.9 546.9 547.1 568.6

Computer Equipment 45.5 43.9 37.7 43.8 48.5 49.3 48.1 49.2 49.2 53.7 60.6

Other 314.5 339.8 279.0 332.1 365.4 383.9 381.5 388.6 386.1 381.2 398.4

Consumer Goods, Excl. MVP 145.9 161.2 149.3 164.9 174.7 181.0 188.4 199.8 204.9 200.3 199.8

Other Consumer 65.7 63.3 55.2 58.6 53.4 57.2 59.1 62.6 61.6 61.9 64.4

Services 498.2 543.1 522.6 572.7 639.5 667.0 699.4 722.6 758.5 797.8 845.5

Imports -Goods & Services 2383.2 2565.0 1983.2 2365.0 2686.4 2762.5 2770.4 2854.4 2833.2 2964.5 3169.9

Merchandise 2003.8 2149.4 1590.3 1949.8 2244.7 2306.0 2302.3 2365.7 2323.5 2412.2 2567.9

Food, Feed & Beverage 83.0 90.4 82.9 92.5 108.3 111.1 116.0 125.3 123.3 126.7 130.9

Petroleum & Products 346.7 476.1 267.7 353.6 462.1 434.3 387.6 350.8 292.9 275.9 274.5

Industrial Supplies Excl Petroleum 297.9 318.7 196.6 249.4 292.7 288.9 291.2 310.3 309.9 332.3 352.7

Motor Vehicles & Parts 258.5 233.2 159.2 225.6 255.2 298.5 309.6 326.2 316.1 323.1 345.0

Capital Goods, Excl. MVP 449.1 458.7 374.1 450.4 513.4 551.8 557.8 594.0 606.6 642.7 696.2

Computer Equipment 105.5 101.2 94.2 117.3 119.7 122.3 121.2 119.3 121.8 125.7 130.9

Other 309.2 322.0 249.2 301.9 358.2 389.4 389.7 421.1 434.9 467.7 516.3

Consumer Goods, Excl. MVP 479.8 485.7 429.9 485.1 515.9 518.8 533.9 551.4 562.9 582.0 621.0

Other Consumer 88.8 86.5 80.0 93.1 97.1 102.6 106.1 107.7 111.8 129.5 147.5

Services 379.4 415.6 392.9 415.2 441.6 456.4 468.1 488.7 509.7 552.3 602.0

Net Exports Goods & Services -712.6 -557.8 -395.4 -458.8 -459.4 -452.5 -420.5 -436.2 -454.0 -529.5 -594.4

Exports G & S 1646.4 1740.8 1587.7 1776.6 1898.3 1960.1 2019.8 2085.4 2132.1 2191.9 2282.0

Imports G & S 2359.0 2298.6 1983.2 2235.4 2357.7 2412.6 2440.3 2521.6 2586.0 2721.4 2876.3

Exports G & S 14.4 0.0 4.1 15.3 8.7 3.6 4.9 2.3 2.8 4.6 5.7

Imports G & S 8.9 -1.8 0.9 15.0 10.9 0.3 1.5 1.5 2.2 5.2 7.2

Real Exports G & S 9.9 -2.0 3.0 10.1 4.2 2.4 5.1 2.1 1.7 3.4 4.4

Real Imports G & S 0.9 -5.7 -3.6 12.2 3.5 0.4 2.5 3.4 3.7 5.5 5.4

Forecast

Billions of Dollars

Billions 2005 Dollars

Exports & Imports % Change

History

Billions of Dollars

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

Founded in 1992, Real Property Specialists, Inc., is a full-service brokerage company that has built a reputation of providing highly personalized service while being respon-sive and flexible to its clients' individual needs. They offer a range of commercial real estate services in the Central Florida area including brokerage, appraisal, development, property management and tenant representation.Real Property Specialists, Inc., has set a new standard of excellence in client service by providing these key advan-tages over the competition:Responsiveness. You work directly with a decision maker who has the flexibility to immediately attend to your needs.Consistency. We are a unified firm employing team-

members who are committed to the success of our clients. We pride ourselves on our ability to maintain a dedicated, professional staff that is able to build long-term, comfort-able and prosperous relationships with our clients.Accountability. At Real Property Specialists, our cli-ent is the real "Boss." We are accountable to no one other than the client. No company policy interferes with our ability to serve the individual needs of each client.Experience. The staff at Real Property Specialists is highly qualified, with most associates having more than a decade of experience in the industry. Our personal port-folio of shopping centers gives us first-hand knowledge of what is important when leasing, managing or selling a property.

AppreciationIn

Appraisers Brokers Consultants6700 Conroy-Windermere Road, Suite 230 | Orlando, FL 32835

407.291.9000 | www.realpropertyspecialists.com

S E A N M . S N A I T H , P H . D .

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

Competitiveness:

U N I V E R S I T Y O F C E N T R A L F L O R I D AC o l l e g e o f B u s i n e s s A d m i n i s t r a t i o n


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

december 2014 u.s. forecast

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