UCF U.S. Forecast December 2017

DECEMBER 2017

U.S. FORECAST

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U.S. FORECAST 2017 - 2021

Published quarterly by the Institute for Economic Competitiveness, College of Business Administration, University of Central Florida Copyright Š 2017 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 Maegan Alexis Trinidad, Researcher Coulter Small, Researcher Brandt Dietry, 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.

HIGHLIGHTS Q4 2017

IN THIS U.S. FORECAST • The tax reform fuse is lit. Will it lead to economic fireworks in the New Year or end up a legislative dud like healthcare reform?

• The political consequences of failing to pass tax reform for Republicans are severe enough that congressional self-interest will ultimately lead to passage of the law, driving economic growth above the previously unattainable 3.0% level.

• Average monthly payroll job growth, temporarily shaken by the impact of hurricanes, has been decelerating since 2014. Tax reform will boost job growth, but this late in a recovery, the effects will be short-lived.

• Uncertainty, regulatory burdens, and tepid economic growth have been hindering payroll job growth, which slowed to 1.8% in 2016 and will further slow to 1.5% in 2017, but will pick up in 2018-2019 to 1.6% before easing thereafter.

• The foreign sector will continue to be a drag on U.S. growth. The recent weakening of the dollar will boost exports and depress imports, but faster GDP growth and higher interest rates will send the dollar higher again. As a result, net exports will continue to fall through 2021. Uncertainty over trade deals will continue to cast a shadow over this sector.

• The Federal Reserve raised interest rates again in June of 2017; the next 25 basis point hike will happen this December. Stronger economic growth and higher inflation from Trump administration policies continue a faster pace of hikes over the next three years, with the federal funds rate hitting 3.5% by the end of the first quarter of 2021.

• Real GDP growth, which slowed to 1.5% in 2016, will hit 2.3% in 2017, 3.5% in 2018, and then slip to 3.2% in 2019 before easing to 2.6% in 2020 and 2.5% in 2021, as the Federal Reserve tightens interest rates and shrinks its balance sheet.

• The housing market continues to recover. The housing market will slowly improve through 2021, even with rising interest rates. Housing starts will rise from 1.20 million in 2017 to 1.71 million in 2021.

• The headline unemployment rate (U-3) is expected to decline to 3.8% in early 2019. Job growth will be enough to keep up with labor force growth through the end of the forecast horizon. Underemployment (U-6), a persistent problem in this recovery, stands at 7.9% as of October 2017, but it will also continue to decline through 2021. The spread between U-6 and U-3 unemployment rates is down to 3.8 percentage points, the lowest since December 2007—the month during which the Great Recession began.

• CPI inflation will accelerate in 2018, pushing the Fed to continue raising interest rates and shrink its balance sheet. Core CPI inflation will average 2.4% during 2017-2021.

T H E TA X R E F O R M F U S E I S L I T :

Will it Generate Economic Fireworks or Turn Out to be a Dud? After an ill-timed, ill-advised, and failed attempt to address the Affordable Care Act early in 2017, Congress and the Trump administration pivoted to tax reform. The House has passed a version of the bill, which is currently in the Senate, with an administration goal of signing it into law by Christmas.

While many were, and perhaps still are, skeptical that tax reform would pass, I have maintained that it will eventually become law, and our forecasts over the course of the year have incorporated the impacts that tax reform would have on the economy. The cacophony of outrage “real and manufactured� enveloping Washington, D.C. might make it seem impossible for any significant policy to make it through the legislative process amidst this circus-like atmosphere. But beneath the surface of this three-ring act, its tweeting ringmaster, the congressional clown car, and sideshow barking, one thing remains constant: political self-interest.

Republicans control all three branches of government, and if they do not deliver tax reform, the 2018 mid-term elections would send many of them home from office. It is hard to imagine voters would send all of the Republicans up for election back to D.C. if they failed to deliver on any of the major policy initiatives upon which they campaigned.

Reelection is the motivation that I maintain will eventually lead to the passage of tax reform. There is, of course, still a chance that these efforts will fail in the upcoming weeks, but the consequences

for Republicans during the 2018 midterm elections would be grave.

If Republicans fail on this tax reform high-wire act, there will be no safety net to catch them and many will see their political careers go the way of Barnum & Bailey.

The tax reform fuse is now lit, and if it burns all the way into a law signed by President Trump, it will set off economic fireworks in 2018 and beyond. If the fuse somehow sputters out, then the economic outlook will not be one of bombs bursting in air but an economic dud that will see 2018 as the chute that sends us down to the next recession.

ANXIOUS INDEX Fear of Recession Remains Low

The most recent release (4th quarter of 2017) of the Survey of Professional Forecasters by the Federal Reserve Bank of Philadelphia suggests that the 32 forecasters surveyed for the publication put a 10.44% chance that a decline in real GDP will occur in the 1st quarter of 2018.

One section of the Survey of Professional Forecasters asked panelists 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 Institute for Economic Competitiveness

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in early November of the 4th quarter of 2017, the index stands at 10.44, which means that forecasters believe there is a 10.44% chance that real GDP will decline in the 1st quarter of 2018.

The forecasters also report a 6.29% chance that we are currently (as of the 4th quarter of 2017) experiencing a contraction in real GDP—nearly half a percentage point lower than the probability the forecasters assigned for the 3rd quarter of 2017. According to the panel, the probability that real GDP growth will turn negative is averaging around 13.70% through the end of the 4th quarter of 2018, indicating that the forecasters’ assignment of probability for a contraction in real GDP in the upcoming year is the lowest since the 4th quarter of 2015.

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 more than two and three quarter points lower than the average level during the economic recovery (13.20).

GDP OUTLOOK 3.0%+ Annual Real GDP Growth Hinges on Tax Reform 2017 did not get off to a good start. In the 1st quarter, real GDP growth managed to increase at a weak 1.2% after expanding just 1.8% in the 4th quarter of 2016. It seemed like 2017 would be more of the same historically weak growth that has

Figure 1.

The Anxious Index Probability of Decline in Real GDP in the Following Quarter Quarterly, 1968:Q4 to 2017:Q4 100 90 80

Probability (percent)

70 60 50 40 30 20

0

1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

10

Survey Date

Source: Survey of Professional Forecasters, Philadelphia Federal Reserve Bank

6

U.S. Forecast / December 2017

characterized the eight-year-old recovery. But in the 2nd quarter, growth hit 3.1%; in the 3rd quarter, growth was 3.0%, and we are forecasting growth of 3.7% in the 4th quarter of 2017. If these growth rates persist through upcoming data revisions, and our forecast for the 4th quarter is not wildly erroneous, the U.S. economy will have grown at a rate of 3.0% or higher for three consecutive quarters. This would be the first time that this has occurred in the recovery to date, and the first time since 2005 that the economy has experienced such high growth for three straight quarters.

The promise of tax reform brings with it the possibility that 3.0%-plus growth could extend through 2017 all the way into 2019. Our lackluster recovery is in desperate need of a policy adrenaline boost, and the tax reform legislation should provide just what the doctor ordered.

To date, the boost in real GDP growth has largely been driven by expectations of policies that are friendlier to economic growth. Tweeting and talking about policy cannot sustain economic growth without actual follow through, but if the administration is able to continue the regulatory rollback and move tax reform into legislative action, economic growth will accelerate and the life span of this eight-year-old economic recovery will be prolonged.

We are still incorporating these policies into our forecast. The next few weeks will be a critical period for seeing if tax reform is passed, and if so, what specific details of the final version are included in the legislation.

The average rate of annual real GDP growth from 2010 through 2016 has been just 2.1%. Our forecast for average real GDP growth from 20172021 stands at 2.8%, with a projected acceleration of growth to levels greater than 3.0% in 2018 (3.5%) and 2019 (3.2%).

The probability of a recession taking place before the end of our 2021 forecast horizon is real, no recovery lasts indefinitely, but recoveries also do not come with a preordained termination date.

Proposed economic policies could prolong the life of this recovery but not forever. All expansions give way to the next recession; no election or policy mix has ever prevented that from occurring, but the right policies may be able to delay the inevitable.

In 2017, we are expecting real GDP growth to accelerate to 2.3%. Growth will jump to 3.5% in 2018 before decelerating to 3.2% in 2019, 2.6% in 2020, and 2.5% in 2021. The projected growth rate for 2018 would be the first time the U.S. economy experienced annual growth at 3.5% or higher since 2004.

We expect the central bank to continue to take baby steps as it raises interest rates, and the frequency of these increases should average about three moves per year. As always, economic data will drive both the timing and the size of these interest rate changes, but the general pace on both interest rate hikes and reversing quantitative easing should remain gradual.

After raising rates in June of this year, the Federal Reserve will do so again in December. They will continue with rate hikes in 2018 and 2019 until the anticipated target rate reaches 3.50% in the first quarter of 2021. The path of interest rate hikes will deviate from this projection if growth accelerates faster than projected or if the proposed policies of the Trump administration do not happen and there is a recession triggered by such a failure to implement these policies.

The Fed has also begun the process of shrinking its $4.5 trillion balance sheet, engorged by three rounds of quantitative easing, and like its efforts to raise the federal funds rate, we anticipate this to be a gradual process as well. However, like quantitative easing itself, this is uncharted water for monetary policy, and there is no blueprint on how best to carry this out. The possibility of a misstep in execution cannot be ruled out.

The change in leadership at the Federal Reserve should not have much of an impact on interest rate hikes or balance sheet reductions. However, the Powell-led Fed will take a less hawkish stance on Institute for Economic Competitiveness

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regulation and should free up the financial sector, allowing it to grow faster after seven-plus years of a heavy regulatory yoke.

CONSUMER SPENDING Rising Employment, Household Wealth, and Disposable Incomes, as well as Solid Confidence will Spur Consumers to Spend The U.S. consumer has played the biggest role in supporting the economic expansion, tepid as it has been, over the past three years. In 2014, real consumer spending growth was 2.9%, in 2015 it was 3.6%, and in 2016, spending grew at 2.7%.

In these three years, the contribution to GDP growth was outsized. Consumer spending contributed 81% of economic growth in 2014, 83% in 2015, and in 2016, it contributed 124% to real GDP growth of 1.6%. In other words, if not for consumer spending, the U.S. economy would have contracted in 2016.

Continued gains in employment, more rapidly rising wages, and improving household balance sheets should continue to provide a solid foundation for continued consumer spending growth. Tax cuts pushed by the Trump administration should also boost consumer spending growth by raising disposable income. These improving fundamentals and growth-oriented policies should boost consumption spending going forward from the depressed level seen in the 1st quarter of 2017, when growth was just 1.9% down from the 4th quarter of 2016, during which growth was a more respectable 2.9%.

Consumer confidence surged post-election and then eased back slightly but remains at levels that are the highest since 2000. The Trump administration’s tumultuous and tweet-fueled tenure in office, thus far, has not yet had an overall detrimental effect on consumers’ optimism.

The next four quarters should show a

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U.S. Forecast / December 2017

strengthening of consumer spending growth. In the 4th quarter of 2017, consumption spending growth will accelerate to 3.4%, as consumer confidence helps further open up consumers’ wallets for what will be the strongest holiday shopping season in years. In the 1st and 2nd quarters of 2018, consumer spending growth should ease to 3.1% and 2.5%, respectively, before rising to 2.7% in the 3rd quarter of 2018.

Consumer spending, the largest piece of GDP, is the critical piece supporting real GDP growth if this recovery is going to last, and specifically if growth is to accelerate from the low levels that have characterized it. The other main sectors of the economy have faced headwinds that have also suppressed growth. Business investment, as discussed below, has been weak; government spending is currently doing little to boost GDP growth. However, net exports will provide some lift due to the near-term weakening of the dollar.

Trump’s proposed economic policies could change net exports and business investment in a positive way, but consumers will still need to provide the momentum for this expansion going forward.

While the underpinnings of consumer spending continue to solidify, the labor market continues its recovery, despite the impacts of hurricanes in recent months. Stronger wage and salary growth are showing signs of reappearing as the labor market continues to tighten. Once wage growth does accelerate—accompanied by tax cuts that raise consumers’ disposable income—this will be the catalyst that takes consumer spending growth to a higher level.

The global economy, financial markets, and preU.S. election-related uncertainty began to erode consumer confidence in the second half of 2015 and in 2016, despite positive developments in other areas. As a result, consumer spending growth decelerated to around 2.7% in 2016 from 3.2% in 2015. Proposed tax policy and other economic policies aimed at stimulating economic growth by the Trump administration, as well as faster

wage and salary growth, will help boost consumer spending growth. Consumption spending growth is expected to rise to 2.7% in 2017, to 2.9% in 2018, and accelerate further to 3.3% in 2019 before rising to 3.5% in 2020. Higher interest rates rein in both GDP growth and consumer spending in 2021, as consumer spending growth slows to 3.2%.

INVESTMENT After decelerating from 6.9% growth in 2014 to 2.4% growth in 2015, nonresidential fixed investment spending turned negative in 2016, contracting by 0.6%. The long and peculiar presidential election cycle carried with it a much higher level of uncertainty than is typical for any election and many businesses chose to stay on the sideline when it came to investment spending, unsure of what tax, regulatory, and other economic policies might be put in place in 2017. The contraction in investment spending was very close to what we would expect to see during a recession, though no recession was taking place.

Investment spending in this historically weak economic recovery has generally been soft, and we have discussed the role of uncertainty and the rapid growth in the regulatory burden as probable causes of this weakness in multiple issues of our U.S. Forecast publication. This environment of uncertainty worsened during the presidential political cycle, but with the election now over and the regulatory burden already being rolled back, the environment for investment spending should improve markedly.

Current proposals to change the corporate tax rate and incentivize the repatriation of profits held

by U.S. corporations overseas, along with proposed changes to allow companies to immediately expense equipment instead of depreciating it, will all help to boost investment spending if they can survive the legislative process, contributing to the possibility of economic fireworks in the next few years.

Spending on equipment and software contracted in four consecutive quarters, beginning in the 4th quarter of 2015. The 4th quarter of 2016 pulled us back from the brink, as spending on equipment and software increased by 1.8%. The outlook going forward should continue to strengthen substantially. Average growth in this type of investment spending is expected to be 5.3% over the 2017-2021 time frame.

Purchases of aircraft again contracted by a significant amount in 2016, declining by 55.3% in the 1st quarter; however, in the 2nd quarter, those purchases soared by 91.6% before contracting again in the 3rd and 4th quarters of 2016 by an average of 28.3%. For the full year, 2016 aircraft spending contracted 24.8%. Over the next four years, spending on aircraft is expected to grow an average of 12.6%, but quarterly volatility in this type of investment spending is the rule, not the exception.

The 2016 contraction in investment spending also reflected the negative impact of the price of oil falling by roughly two-thirds. Consumers enjoyed the low prices at the gasoline pump, but oil producers, shale and otherwise, cut back on investments as oil prices dropped below $40 per barrel early in 2016. The rig count in the U.S. hit a more than seventy-year low of 404 in response to plunging oil prices. Oil prices have recovered from these lows, now hovering around $58 per barrel, and as a result, the U.S. November 2017 rig count was 923, up 330 year over year.

During 2015, investment in mining and petroleum equipment contracted by 27.9% and further contracted in 2016 by 42.0%. In 2017, growth is expected to be 58.7% and average 17.1% per year during 2017-2021. While this isn’t a return to $100-a-barrel-level boom in spending, it is a good recovery for a sector that has taken some hits from both markets and regulators. Approval of new pipelines by the Trump administration have also given a boost to shale oil production in North Dakota.

Aircraft and oil rigs were not the only source Institute for Economic Competitiveness

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of weakness in investment spending in 2015 and 2016. As noted earlier, in 2015 the pace of real private nonresidential fixed investment growth decelerated to 2.4%. The weak start to 2016 and, an environment of uncertainty, resulted in a further deceleration of investment spending growth to -0.6%. Now, with the election a year behind us and an increased likelihood of investment-friendly policies on the way, business nonresidential investment growth will accelerate to 4.5% in 2017 and 5.0% in 2018, rising to 6.3% in 2019, easing to 4.1% in 2020, and reaching 3.3% in 2021.

Interest rates are currently still quite low by historical standards, even as the Fed has begun to push up the federal funds rate at a somewhat faster—but not rapid—pace going forward, as well as continuing the process of shrinking its $4.5 trillion balance sheet. In time, higher interest rates will begin to drag on investment spending, as is the intention of tightening monetary policy. Higher rates are behind the deceleration of investment spending growth rates in the final two years of our forecast horizon.

Business spending on industrial equipment will grow at an annual average rate of 6.8% from 2017 through 2021. Investment spending growth in computers and peripherals will accelerate in 2017 to 12.3%, 3.4% in 2018, and 5.7% in 2019, as investment friendly tax policy kicks in. Spending on communications equipment should expand at an average annual rate of 5.3% during 2017-2021.

Investment growth in nonresidential structures has fluctuated over the past three years. After growth jumped to 10.6% in 2014, it turned negative in 2015, with growth coming in at -1.8%.

This was followed by another year of negative growth in 2016, with spending declining 3.9%.

Investment in nonresidential structures will grow faster in 2017 and then decelerate in 2018 before accelerating again into 2019. During 2017-2021, growth is expected to average 4.3% over those five years.

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U.S. Forecast / December 2017

Residential fixed investment growth improved to 10.2% in 2015, but then eased in 2016 to 5.6%.

Growth will average 5.9% through 2017-2021, accelerating to a peak growth rate of 10.8% in 2018. In the final year of our forecast (2021), real residential fixed investment will be dampened by both higher mortgage rates—which are expected to average 5.6% on a 30-year fixed mortgage that year—and a slowing pace of price appreciation. In 2021, real residential fixed investment will be $779 billion—$94 billion less than its 2005 peak at the height of the housing bubble.

We expect housing starts to continue to gradually accelerate over the next several years, reaching a level slightly above 1.71 million in 2021.

Average levels of annual housing starts from 20172021 will be 1.5 million.

GOVERNMENT SPENDING In 2016, federal government spending growth was just above zero after contracting for five consecutive years. This modest growth in spending will be reversed over the next two years before growth returns in the final three years of our forecast. In 2017, spending should contract by under 0.1%, and in 2018, it will fall again by half that amount. During the 2017 through 2021 period, federal government spending is expected to rise, growing at an annual average pace of 0.2%. Over the same time frame, state and local governments will oversee spending growth at an average rate of 1.1%.

The federal budget deficit jumped in 2016 to nearly $586 billion and will continue to increase in nearly every year over our forecast horizon through 2021. This reversal in course occurred after four years, during which we saw deficits shrinking from nearly $1.3 trillion in 2011 to $439 billion in 2015. In 2017, the deficit will grow to $665.7 billion before easing in 2018, when it will hit $647.1 billion. The deficit grows larger in 2019, as entitlement and military spending coupled with tax

cuts pushes it to $725.5 billion before rising again in 2020 to more than $793 billion. The deficit continues to grow in 2021, when government spending will exceed revenue by more than $897 billion.

The U.S. continues to travel down an unsustainable fiscal path that will ultimately lead to a crisis. The existing structure of our entitlement programs (60% of the federal budget is mandatory spending), coupled with the demographics of an aging Baby Boomer generation, ensures that if no changes are made to these programs and how they are funded, we will eventually face a fiscal crisis. There has been no indication that the Trump administration, like those of its predecessors, will make any of the difficult but necessary changes to avoid this future crisis.

We are projecting deficits through 2021 that are smaller than the $1 trillion-plus deficits that were the norm in 2009-2012. The amount that the projected deficits will add to the national debt over the next five years will be over $3.70 trillion, pushing the national debt total to nearly $24.2 trillion before interest. As interest rates in the economy rise, the burden of servicing this debt will rise as well. Tax cuts implemented by the Trump administration will help push this debt to even higher levels than we are currently projecting if interest rates rise more quickly than anticipated.

Slower-than-projected economic growth would also push projected deficits higher, though the possibility of faster economic growth would help mitigate the growth of these deficits.

Currently, the national debt is over $20.5 trillion and rising. This represents a debt of nearly $170,001 per taxpayer and $62,935 per citizen. The unfunded liabilities of the U.S. are even more staggering.

These include Social Security, Medicare parts A, B and D, Federal debt held by the public, and federal employee and veteran benefits, representing more than $109 trillion in liabilities, boiling down to $902,421 per taxpayer.1 1

NET EXPORTS Net exports have been a drag on real GDP growth in the U.S. over the past three years. In 2014, they cost 0.16 percentage points from growth that year and even more in 2015, when net exports shaved 0.73 percentage points off of real GDP growth. Last year, the drag on GDP eased, but net exports still reduced growth by 0.23 percentage points.

The U.S. dollar appreciated for five straight years against our major trading partners, including an outsized 16.1% appreciation in 2015. In 2016, this trend moderated, and in 2017-2018, the dollar will give back some of these gains. As the Fed raises interest rates and the U.S. economy experiences faster growth, the dollar will appreciate again in 2019 and 2020.

A 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 less expensive to U.S. consumers. This results in a worsening of the trade deficit, which is the difference between the dollar value of exports and the dollar value of imports. The effects of currency changes take time to work on the actual quantity of trade flows, resulting in what is known as the J-curve effect on net exports, wherein an appreciation of the dollar initially decreases the trade deficit before eventually increasing it.

Overall, real export growth continues through the end of our 2021 forecast horizon and is expected to accelerate through 2020 before easing somewhat in 2021. Real import growth is expected to accelerate through 2020 while remaining above export growth through 2021. Real export growth from 2017-2021 will average 4.8%, while real import growth will average 6.1% over the same time frame.

Real net exports will average -$749.2 billion during 2017-2021, with the trade balance worsening in each successive year and coming in at more than -$962.5 billion in 2021. The sizeable

National debt data from: http://www.usdebtclock.org/ Institute for Economic Competitiveness

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U . S . F orecast

appreciation of the dollar during 2012-2015 and anticipated appreciation in 2019-2020, anticipated wage and salary growth, and tax cuts, along with weaker global growth relative to the U.S., will dampen demand for U.S. goods and services abroad and simultaneously stimulate American consumers’ appetite for imported goods and services.

U N E M P LOY M E N T The national headline unemployment rate (U-3) in October dropped from the September reading of 4.2% to 4.1%, the lowest level since December of 2000. The unemployment rate declined, driven by a large decrease in the number of people in the labor force as well as a significant drop in the number of unemployed. A total of 765,000 people left the labor force in October, as the labor force participation rate decreased from 63.1% to 62.7%.

The number of employed people decreased by 484,000 in October. Hurricane Irma is largely behind the movement in the October labor force data, an effect that will prove to be transitory over the upcoming months.

The October jobs report also reflected the impact from the hurricane as growth in payroll jobs showed businesses adding 261,000 jobs after September’s meager 18,000 job gain. The 261,000 increase in payroll employment in October was well above the average growth in monthly payrolls for 2016 of 187,000, as employers rehired workers in the wake of Irma. Average payroll job growth for 2015 came in at 226,000, down from 2014’s average growth of 250,000. Job growth continued to decelerate last year and, depending on the November and December jobs reports, this deceleration could extend into 2017. This late in the economic cycle (the recovery has lasted 100 months and counting), a rapid acceleration in job growth seems unlikely, but an end to the multi-year deceleration is possible, particularly if there is a passage of tax reform.

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U.S. Forecast / December 2017

The October labor force participation rate of 62.7% remains depressed and is at its lowest point since February 1978. Since the end of the recession, the labor force participation rate is down 3.0 percentage points.

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 524,000 workers), as well as those classified as underemployed (currently 4.8 million workers)—working part-time but not by choice—and workers who are marginally attached to the labor force, who have looked for work in the past 12 months but are not currently looking, yet indicate a willingness to work (1.5 million workers).

None of these 6.8 million-plus workers are counted in the headline unemployment rate of 4.1%.

U-6 stands at 7.9% as of October 2017, down 0.4 percentage points from the September 2017 level and down 1.5 percentage points from the July 2016 level. The current level of U-6 is down 9.2 points from its peak of 17.1% in April 2010. U-6 remained in double digits for more than seven years. It has been in single digits for two consecutive years beginning in October 2015 and is at the lowest level since December of 2006.

The spread between U-6 and U-3 measures of unemployment has fallen to 3.8 percentage points, the lowest since December of 2007, and is 3.6 points below the peak spread of 7.4 points that took place in September of 2011.

C harts

30-Year Mortgage Rates and Housing Starts 7.0

(Mortgage rates - Left axis, %)

2.5 2.0

6.0

1.5

5.0

1.0

4.0 3.0

0.5 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 30-Year Fixed Mortgage Rate Housing Starts - Millions

0.0

Automobile and Light Truck Sales 12.0

(Millions Vehicles)

10.0 8.0 6.0 4.0

02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Auto Sales Light Truck Sales

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

(Billions of 2000 Dollars)

02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Change in Real Business Inventories Institute for Economic Competitiveness

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C harts

Corporate Retained Earnings 1500.0

(Billions of Dollars)

1000.0 500.0 0.0 -500.0

02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Corporate Retained Earnings

Consumer Prices (% Change Year Ago)

6.0 4.0 2.0 0.0 -2.0

02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Consumer Price Index Core Consumer Price Index

Federal Budget Surplus 0.0 -200.0 -400.0 -600.0 -800.0 -1000.0 -1200.0 -1400.0 -1600.0

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U.S. Forecast / December 2017

(Billions of Dollars)

02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Federal Budget Surplus

C harts

Federal Funds Rate (%)

6.0 5.0 4.0 3.0 2.0 1.0 0.0 -1.0

02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Fed Funds Rate

Real GDP Growth and Federal Funds Rate 10.0

(%)

5.0 0.0 -5.0 -10.0

02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 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

02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Industrial Production Institute for Economic Competitiveness

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C harts

Private Fixed Nonresidential Investment (Billions of Dollars)

3000.0 2500.0 2000.0 1500.0 1000.0

02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Private Fixed Nonresidential Investment

Manufacturing Employment (Millions)

16.0 15.0 14.0 13.0 12.0 11.0

02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Manufacturing Employment

Money Supply

4000.0

(Annual Growth Rate %)

3500.0 3000.0 2500.0 2000.0 1500.0 1000.0

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U.S. Forecast / December 2017

02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Annual Growth Rate of M1

C harts

Total Nonfarm Payroll Employment 155.0

(Millions)

150.0 145.0 140.0 135.0 130.0 125.0

02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Total Nonfarm Employment

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

140.0

100

120.0

90

100.0 80.0

80

60.0

70

40.0

60

20.0 0.0

02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Price of Oil WTI Consumer Sentiment

50

Real After Tax Profits 3000.0

(Billions of Dollars)

2500.0 2000.0 1500.0 1000.0 500.0 0.0

02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Real After Tax Profits Institute for Economic Competitiveness

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C harts

Real Disposable Income and Consumption (% Change Year Ago)

6.0 4.0 2.0 0.0 -2.0 -4.0

02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Real Disposable Income Consumption

Real Investment Equipment & Software 1400.0

(Billions of Dollars)

1200.0 1000.0 800.0 600.0 400.0

02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Real nonresidential investment-equipment & software

Trade Balance and Real Exchange Rate

-400

1.50

-500

1.40 1.30

-600

1.20

-700

1.10

-800

1.00

-900 -1000

18

U.S. Forecast / December 2017

0.90 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Trade Balance (Billions $) Left axis U.S. Dollar Real Exchange Rate (2000 = 1.0) Right axis

0.80

C harts

Twin Deficits 0.0 -200.0 -400.0 -600.0 -800.0 -1000.0 -1200.0 -1400.0 -1600.0

(Billions of Dollars)

02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 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

02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Unemployment Rate

Yield Curve 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0

(%)

02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 1-Year T-Bill Yield 5 Year Treasury Bond Yield 30 year Treasury Bond Yield Institute for Economic Competitiveness

19

T a b les 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.

Composition of Real GDP, Percent Change 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 Billions of Dollars Real GDP Nominal GDP

2011

2012

2013

2014

2015

2016

2017

2018

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

2.2 2.1 1.5 7.4 0.6 0.8 9.1 10.9 6.0 7.0 4.9 9.4 23.5 7.5 21.8 13.3 8.6 15.7 21.4 12.7 9.5 13.5 3.4 2.2 -1.9 -1.9

1.7 1.5 1.5 6.2 1.7 0.6 3.5 4.6 4.9 0.1 10.5 -1.5 12.8 8.5 5.8 1.4 3.5 4.1 -4.3 1.8 4.3 12.0 3.5 1.1 -5.8 -0.8

2.6 2.7 2.9 6.9 2.5 2.4 6.9 6.7 3.7 2.1 8.7 4.3 13.3 13.8 16.1 10.6 12.9 12.9 17.3 6.5 7.1 3.5 4.3 4.5 -2.4 0.5

2.9 2.6 3.6 7.8 3.1 3.2 2.4 3.6 4.3 -3.5 15.5 1.2 12.3 6.3 10.4 -1.8 10.7 35.7 -2.0 -27.9 10.6 10.2 0.4 5.0 -0.1 2.3

1.5 1.9 2.7 5.5 2.8 2.3 -0.6 -3.4 1.8 -3.5 5.3 2.3 -6.1 -24.8 -22.4 -3.9 14.6 -6.4 4.9 -42.0 7.4 5.6 -0.3 1.3 0.0 1.2

2.3 2.4 2.7 6.2 2.3 2.3 4.5 4.3 7.9 12.3 9.6 7.2 0.0 15.2 0.1 5.4 5.5 -13.5 -5.4 58.7 0.6 0.9 3.3 3.3 -0.1 -0.2

3.5 3.2 2.9 5.8 2.8 2.5 5.0 6.9 4.9 3.4 6.6 8.7 6.7 16.3 4.0 0.6 4.7 2.0 -3.7 -6.7 6.9 10.8 7.9 6.5 -0.1 1.0

15020.6 15354.6 15612.2 16013.3 16471.5 16716.2 17101.6 15517.9 16155.3 16691.5 17427.6 18120.7 18624.5 19388.4

Prices & Wages, Percent Change, Annual Rate GDP Deflator 2.1 Consumer Prices 3.1 Excl. Food & Energy 1.7 Producer Prices, Finished Goods 6.0 Employment Cost Index - Total Comp.

2.2

3.2 3.2 3.3 5.6 2.7 3.0 6.3 7.6 5.9 5.7 3.8 8.3 9.8 21.3 5.2 6.9 12.4 24.0 -2.3 -1.9 4.8 9.9 5.2 7.5 0.2 1.8

2.6 2.7 3.5 7.1 3.1 3.1 4.1 4.6 5.5 4.2 3.9 6.4 2.3 6.8 -0.1 4.1 5.7 -5.3 -2.3 17.4 3.8 5.0 3.9 7.5 0.7 1.4

2021

2.5 2.5 3.2 5.0 2.9 3.0 3.3 2.9 4.3 5.0 2.8 3.6 0.3 3.5 -0.3 4.4 7.6 -8.5 -2.5 17.8 1.8 3.0 3.7 5.9 0.2 1.3

17704.0 18266.1 18745.8 19205.7 20534.9 21728.8 22825.8 23892.6

1.8 2.1 2.1 1.9 1.9

1.6 1.5 1.8 1.2 1.9

1.8 1.6 1.7 1.9 2.1

1.1 0.1 1.8 -3.3 2.1

1.3 1.3 2.2 -1.0 2.1

1.8 2.1 1.9 2.8 2.5

2.3 2.8 2.5 2.0 2.9

2.6 2.9 2.9 2.5 3.3

2.4 2.8 2.5 2.6 3.3

2.2 2.4 2.2 2.3 3.3

95.1 0.1 3.1 73.7 36.6 67.4 12.7 0.6 3.8 8.9 1.2 -1297 -445

94.2 0.9 3.0 74.8 72.7 76.5 14.4 0.8 4.1 8.1 1.7 -1089 -426

97.9 0.3 2.0 74.7 73.0 79.2 15.5 0.9 4.5 7.4 1.6 -680 -350

93.3 1.0 3.1 75.4 74.0 84.1 16.5 1.0 4.3 6.2 1.9 -484 -374

48.7 1.2 -0.7 75.5 102.8 92.9 17.4 1.1 4.6 5.3 2.1 -439 -435

43.2 0.0 -1.2 75.1 34.5 91.8 17.5 1.2 4.8 4.9 1.8 -586 -452

48.5 1.4 1.8 75.7 20.5 96.0 17.0 1.2 4.9 4.4 1.5 -666 -455

44.4 2.4 3.7 77.7 83.0 97.0 17.4 1.5 5.5 3.9 1.6 -647 -369

45.3 1.9 3.0 78.4 79.5 98.4 17.6 1.6 5.7 3.8 1.6 -726 -296

57.0 1.7 2.6 77.8 63.6 98.4 17.8 1.7 5.7 3.9 1.2 -793 -403

62.5 1.7 1.8 76.8 57.1 98.0 17.3 1.7 5.8 4.0 0.9 -897 -523

Financial Markets, NSA 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))

0.10 0.05 0.18 1.52 2.79 3.91 4.46 1269 11.5 0.9 -5.8

0.14 0.09 0.18 0.76 1.80 2.92 3.66 1380 8.9 0.9 3.8

0.11 0.06 0.13 1.17 2.35 3.45 3.98 1643 19.0 1.0 3.2

0.09 0.03 0.12 1.64 2.54 3.34 4.17 1931 17.7 1.0 3.3

0.13 0.05 0.32 1.53 2.14 2.84 3.85 2061 6.9 1.2 16.1

0.40 0.32 0.61 1.34 1.84 2.60 3.65 2092 1.6 1.2 0.8

1.00 0.91 1.18 1.91 2.35 2.93 4.02 2463 17.7 1.2 -2.1

1.63 1.48 2.04 2.65 2.97 3.49 4.51 2705 10.1 1.1 -3.5

2.33 2.12 2.85 3.38 3.64 4.23 5.19 2635 -2.6 1.2 7.7

2.92 2.66 3.38 3.67 3.84 4.48 5.46 2674 1.5 1.2 1.2

3.50 3.17 3.75 3.76 3.87 4.53 5.58 2801 4.7 1.2 -2.1

Incomes Personal Income (Bil. of $) (% change) Disposable Income (Bil. of $) (% change) Real Disposable Income (Bil. Of 2009 $) (% change) Saving Rate (%) After-Tax Profits (Billions of $) (% change)

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

14074 1.2 12396 0.0 11528 -1.4 5.0 1688 0.3

14818 5.3 13033 5.1 11939 3.6 5.7 1744 3.3

15553 5.0 13615 4.5 12436 4.2 6.1 1651 -5.1

15929 2.4 13969 2.6 12609 1.4 4.9 1688 2.8

16431 3.2 14387 3.0 12780 1.4 3.5 1840 9.0

17206 4.7 15016 4.4 13139 2.8 3.5 2403 30.6

18314 6.4 15962 6.3 13745 4.6 4.7 2693 12.2

19371 5.8 16887 5.8 14268 3.8 5.0 2848 5.8

20392 5.3 17781 5.3 14750 3.4 5.2 2919 2.5

Other Measures Oil - WTI ($ per barrel) Productivity (% change) Industrial Production (% change) Factory Operating Rate Nonfarm Inven. Chg. (Bil. of 2009 $) 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

Forecast 2019 2020

U.S. Forecast / December 2017

T a b les Table 2. Real Gross Domestic Product

Table 2. Real Gross Domestic Product History 2011

2012

2013

2014

Forecast 2015

2016

2017

2018

2019

2020

2021

Real GDP Billions 2009 $ Gross Domestic Product Final Sales of Domestic Product Total Consumption

15020.6 15354.6 15612.2 16013.3 16471.5 16716.2 17101.6

17704.0 18266.1 18745.8 19205.7

14979.0 15292.3 15521.1 15932.9 16354.3 16664.1 17059.0

17597.0 18163.0 18660.6 19127.0

10263.5 10413.2 10565.4 10868.4 11264.3 11572.1 11888.6

12233.3 12631.2 13075.1 13492.4

Durables

1151.5

1236.2

1312.7

1403.1

1511.8

1595.1

1694.2

1791.5

1892.1

2026.2

2128.2

Nondurables

2263.2

2277.5

2316.1

2373.0

2446.8

2514.3

2572.7

2644.3

2715.6

2800.1

2882.1

Services

6851.4

6908.1

6951.3

7115.5

7340.1

7507.3

7680.6

7871.3

8111.3

8361.2

8610.6

1802.3

1964.1

2032.9

2172.7

2223.5

2210.4

2310.1

2425.4

2578.4

2682.8

2771.4

847.9

939.2

982.3

1047.4

1084.5

1047.8

1093.2

1168.9

1257.6

1315.7

1354.0

285.9

303.1

317.7

329.6

343.9

350.2

377.8

396.0

419.5

442.4

461.2

Computers & Peripherals

83.0

88.4

88.5

90.2

87.1

84.0

94.3

96.9

102.4

106.7

112.0

Communications Equipment

91.8

96.3

106.2

115.3

133.2

140.2

153.6

163.6

169.8

176.4

181.2

Industrial Equipment

183.3

199.8

196.7

205.0

207.3

212.1

227.4

247.3

267.7

284.8

295.1

Transportation Equipment

173.9

213.1

240.6

272.3

305.6

286.7

286.4

305.7

335.6

343.2

344.3

27.9

29.2

31.7

35.1

37.2

27.9

31.9

37.1

45.0

48.0

49.7

48.1

58.1

61.3

71.1

77.8

60.3

60.0

62.3

65.5

65.4

65.2

374.7

423.1

428.8

474.0

465.4

446.4

470.3

473.1

505.6

526.4

549.4

Commercial & Health

94.7

102.8

106.4

120.2

132.9

152.3

160.2

167.7

188.5

199.2

214.2

Manufacturing

39.1

44.9

46.7

52.8

70.7

66.2

57.3

57.8

71.4

67.6

61.7

Power & Communication

74.1

89.7

85.7

98.5

95.2

99.5

94.0

90.6

88.5

86.5

84.3

110.9

123.8

126.0

134.2

95.9

54.5

85.0

78.1

76.2

89.5

105.3

56.2

61.5

64.1

68.7

75.9

81.5

82.0

87.6

91.8

95.3

97.0

384.5

436.5

488.3

505.2

556.9

587.4

592.7

656.3

720.4

756.3

779.1

Exports

1898.3

1963.2

2031.5

2118.4

2127.1

2120.1

2190.4

2364.1

2487.2

2583.5

2680.1

Imports

2357.7

2410.2

2436.4

2546.1

2672.4

2706.3

2795.0

2976.1

3198.7

3438.8

3642.6

Federal Government

1236.4

1213.5

1142.8

1115.0

1114.1

1114.6

1113.8

1113.2

1115.9

1124.0

1126.2

State & Local Government

1761.0

1728.1

1714.1

1723.0

1762.8

1783.6

1780.8

1798.2

1831.2

1856.7

1881.7

Nonresidential Fixed Investment Equipment & Software Information Processing Equipment

Aircraft Other Equipment Structures

Mining & Petroleum Other Residential Fixed Investment

Institute for Economic Competitiveness

21

T a b les Table 3. Quarterly Summary of the Forecast of the U.S.

Table 3. Quarterly Summary of the Forecast of the U.S. 2017Q3

2017Q4

Composition of Real GDP, Percent Change, Annual Rate Gross Domestic Product 3.0 3.7 Final Sales of Domestic Product 2.3 3.4 Total Consumption 2.4 3.4 Durables 8.3 6.9 Nondurables 2.1 3.7 Services 1.5 2.7 Nonresidential Fixed Investment 3.9 5.4 Equipment & Software 8.6 8.3 Information Processing Equipment 13.0 9.7 Computers & Peripherals 35.9 5.3 Communications Equipment -9.2 27.5 Industrial Equipment 5.5 10.1 Transportation Equipment 5.7 6.7 Aircraft 54.3 -9.7 Other Equipment 33.7 3.3 Structures -5.2 -1.7 Commercial & Health Care -8.8 2.0 Manufacturing -33.5 -10.7 Power & Communication -3.4 -8.4 Mining & Petroleum 21.7 -1.2 Other -3.5 5.1 Residential Fixed Investment -6.0 0.9 Exports 2.3 5.8 Imports -0.8 3.2 Federal Government 1.1 -0.3 State & Local Government -0.9 1.4 Billions of Dollars Real GDP Nominal GDP

2018Q1

3.6 3.2 3.1 6.3 3.2 2.6 5.3 6.1 3.1 -2.3 6.4 10.8 3.5 22.5 2.6 1.3 8.5 5.1 -0.3 -21.5 15.8 19.0 13.1 13.4 -0.8 1.0

2018Q2

3.5 3.2 2.5 2.6 1.9 2.7 3.0 3.8 -3.8 -20.2 3.5 6.1 8.3 9.6 -13.0 -0.9 6.7 15.2 -3.1 -26.9 8.4 21.4 9.7 7.0 -0.3 1.6

2018Q3

3.7 3.5 2.7 4.7 1.9 2.7 5.9 7.5 3.9 3.4 2.9 9.1 9.4 26.0 -10.4 4.5 10.5 40.6 -2.3 -19.7 6.8 21.1 7.0 7.1 0.0 1.9

2018Q4

3.7 3.6 2.9 5.3 2.4 2.7 7.4 9.3 5.6 5.1 4.4 7.4 17.5 26.6 35.0 7.5 14.9 22.9 2.2 -10.1 7.0 13.4 6.8 6.6 0.0 2.0

2019Q1

3.1 3.3 3.5 6.5 2.6 3.3 7.6 8.9 8.6 13.6 4.3 10.4 10.1 26.0 2.9 10.0 14.2 40.4 -5.4 5.9 4.6 6.2 4.5 8.1 0.7 2.0

2019Q2

2.9 3.0 3.6 6.1 3.3 3.3 6.8 7.4 6.4 6.1 3.0 7.9 9.3 25.8 4.5 9.8 18.7 25.0 -3.8 6.5 1.2 4.4 3.9 8.2 0.3 1.5

2019Q3

2.6 2.8 3.4 5.5 3.1 3.2 4.6 6.0 7.1 7.4 4.0 7.3 4.0 7.1 0.4 3.7 5.3 0.0 -1.2 10.2 3.4 7.0 3.4 7.3 0.2 1.9

2019Q4

2.7 2.8 3.6 6.6 3.3 3.2 4.0 5.0 6.6 6.4 3.9 6.0 2.7 6.6 1.0 3.0 4.6 -6.2 0.0 10.1 4.3 5.0 3.4 7.0 0.2 1.6

2020Q1

2.6 2.8 3.6 9.0 3.0 3.0 3.9 3.8 3.7 -3.4 4.2 6.8 0.4 4.7 -2.0 5.2 3.5 0.5 -2.1 23.3 5.0 4.9 4.0 8.0 1.1 1.3

2020Q2

2.6 2.7 3.4 7.0 3.0 3.0 3.5 4.3 6.5 10.5 4.1 7.0 0.1 5.6 -1.6 2.7 3.4 -16.0 -2.3 23.2 4.7 4.5 4.0 7.5 3.4 1.0

2020Q3

2.6 2.6 3.5 6.7 3.3 3.1 3.5 4.2 4.5 3.7 3.5 4.6 4.0 5.5 0.5 3.1 6.8 -14.2 -4.6 19.7 2.8 4.5 4.3 7.3 -1.9 1.4

2020Q4

2.6 2.6 3.4 6.3 2.8 3.1 3.7 3.5 3.9 3.2 2.5 4.4 1.5 3.9 1.3 4.9 11.2 -11.0 -5.7 21.1 0.7 4.3 4.3 7.4 -0.4 1.3

2021Q1

2.4 2.4 3.0 4.1 2.9 2.9 3.5 2.8 4.0 5.1 2.4 4.5 -1.0 3.2 -0.9 5.3 8.4 -9.7 -1.5 21.5 1.3 1.7 3.7 5.8 0.7 1.4

2021Q2

2.4 2.5 3.1 3.7 3.0 3.0 3.2 2.3 4.1 5.2 2.2 2.2 -0.7 2.2 -0.3 5.2 8.9 -8.0 0.9 14.7 1.6 2.0 3.3 4.8 0.4 1.4

17156.9 17315.0 17470.0 17621.1 17781.7 17943.2 18079.5 18208.8 18327.4 18448.7 18567.7 18685.1 18803.8 18926.5 19037.7 19150.7 19495.5 19750.4 20056.1 20364.7 20693.5 21025.3 21316.6 21599.7 21858.9 22140.2 22426.9 22689.7 22955.0 23231.8 23504.9 23763.4

Prices & Wages, Percent Change, Annual Rate GDP Deflator 2.2 Consumer Prices 2.0 Excl. Food & Energy 1.7 Producer Prices, Finished Goods 0.6 Employment Cost Index - Total Comp.

3.1

1.5 2.6 2.4 -0.4 3.2

2.6 4.1 2.7 3.1 2.4

2.7 2.7 2.8 3.3 3.0

2.8 2.9 3.0 2.8 3.3

2.8 3.2 3.2 2.9 3.2

2.5 2.5 2.9 2.2 3.2

2.5 3.2 2.8 2.3 3.3

2.2 2.5 2.6 1.7 3.5

2.5 3.2 2.6 3.5 3.5

2.6 2.8 2.3 2.6 3.2

2.2 2.6 2.3 2.3 3.3

2.1 2.6 2.4 2.6 3.3

2.2 2.5 2.3 3.0 3.2

48.2 3.0 -1.5 75.2 31.7 95.1 17.064 1.165 4.790 4.3 1.3 -608 -416

45.6 2.5 6.8 76.4 47.8 95.2 17.242 1.200 4.917 4.1 1.5 -618 -457

45.2 1.8 4.0 76.8 68.3 96.6 17.299 1.342 5.199 3.9 1.7 -807 -451

44.4 2.6 3.0 77.3 80.0 96.9 17.305 1.440 5.409 4.0 1.6 -800 -391

43.4 2.7 3.8 78.0 89.2 97.0 17.406 1.497 5.550 4.0 1.6 -794 -346

44.8 2.2 3.9 78.7 94.4 97.3 17.496 1.552 5.704 3.9 1.9 -786 -286

43.1 1.6 2.3 78.7 87.2 98.2 17.6 1.6 5.7 3.8 1.7 -818.0 -279.1

45.4 1.7 2.8 78.6 82.3 98.4 17.7 1.6 5.7 3.8 1.4 -813.6 -288.1

44.3 1.6 2.6 78.3 75.7 98.4 17.6 1.6 5.7 3.8 1.3 -821.0 -295.8

48.4 1.7 2.9 78.2 73.0 98.4 17.7 1.6 5.7 3.9 1.2 -830.3 -321.8

52.8 1.7 2.7 78.0 67.7 98.3 17.8 1.7 5.7 3.9 1.2 -886.2 -349.7

56.3 1.8 2.4 77.8 60.4 98.4 17.8 1.7 5.7 4.0 1.8 -918.2 -383.9

58.8 1.6 2.2 77.7 61.5 98.5 17.9 1.7 5.7 3.9 0.5 -922.2 -415.1

60.2 1.7 2.1 77.6 64.8 98.4 17.8 1.7 5.8 4.0 0.8 -930.5 -465.1

Financial Markets, NSA 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))

1.15 1.04 1.24 1.82 2.24 2.82 3.89 2468 12.5 1.137 -18.6

1.21 1.14 1.45 2.08 2.45 2.96 4.05 2663 35.7 1.069 -21.7

1.42 1.29 1.68 2.27 2.62 3.10 4.18 2716 8.2 1.083 5.1

1.47 1.32 1.90 2.54 2.85 3.37 4.40 2730 2.0 1.105 8.6

1.68 1.52 2.14 2.78 3.09 3.63 4.61 2700 -4.2 1.115 3.6

1.95 1.78 2.42 3.02 3.32 3.87 4.83 2672 -4.1 1.137 8.1

2.2 2.0 2.6 3.2 3.5 4.0 5.0 2654 -2.7 1.2 8.4

2.2 2.0 2.8 3.4 3.6 4.2 5.2 2637 -2.5 1.2 9.2

2.4 2.2 2.9 3.5 3.7 4.3 5.3 2624 -2.0 1.2 8.1

2.5 2.2 3.0 3.5 3.7 4.4 5.3 2627 0.6 1.2 5.3

2.7 2.4 3.2 3.6 3.8 4.4 5.4 2638 1.6 1.2 2.2

2.7 2.5 3.2 3.6 3.8 4.4 5.4 2664 4.1 1.2 -7.1

3.0 2.7 3.4 3.7 3.8 4.5 5.5 2686 3.3 1.2 -2.9

3.3 3.0 3.7 3.8 4.0 4.6 5.6 2709 3.5 1.2 -1.9

3.5 3.2 3.8 3.8 3.9 4.6 5.6 2749 6.1 1.2 -1.6

3.5 3.2 3.7 3.8 3.9 4.5 5.6 2783 5.0 1.2 -1.3

Incomes Personal Income (Bil. of $) (% change) Disposable Income (Bil. of $) (% change) Real Disposable Income (Bil. of 2009 $) (% change) Saving Rate (%) After-Tax Profits (Billions of $) (% change)

16478 2.8 14425 2.1 12801 0.6 3.4 1855 19.3

16637 3.9 14545 3.4 12856 1.7 3.1 1919 14.6

16849 5.2 14722 5.0 12957 3.2 3.1 2242 86.3

17070 5.4 14905 5.1 13072 3.6 3.3 2353 21.3

17317 5.9 15109 5.6 13198 3.9 3.6 2449 17.3

17587 6.4 15328 5.9 13330 4.1 3.8 2570 21.4

17911 7.6 15616 7.7 13536 6.3 4.5 2624 8.6

18186 6.3 15849 6.1 13678 4.3 4.6 2663 6.0

18447 5.9 16076 5.9 13821 4.3 4.8 2706 6.7

18711 5.8 16307 5.9 13948 3.7 4.9 2780 11.4

18996 6.2 16558 6.3 14092 4.2 5.0 2801 3.1

19247 5.4 16781 5.5 14213 3.5 5.1 2830 4.2

19497 5.3 16996 5.2 14326 3.2 5.0 2870 5.8

19743 5.1 17214 5.2 14440 3.2 4.9 2891 2.9

20034 6.0 17467 6.0 14586 4.1 5.2 2879 -1.5

20277 4.9 17684 5.1 14704 3.3 5.2 2899 2.7

Other Key Measures Oil - WTI ($ per barrel) Productivity (% change) Industrial Production (% change) Factory Operating Rate Nonfarm Inven. Chg. (Bil. of 2009 $) Consumer Sentiment Index Light Vehicle Sales (Million units) Housing Starts (Million units) Existing House Sales (Million units) Unemployment Rate (%) Payroll Employment (% change) Federal Surplus (NIPA Bil. $) Current Account Balance (Bil. $)

22

U.S. Forecast / December 2017

2.4 2.4 2.2 2.1 3.1

2.0 2.2 2.1 1.6 3.3

61.1 62.0 1.6 1.7 1.9 1.4 77.3 77.0 63.5 60.5 98.1 97.6 17.6 17.3 1.7 1.7 5.8 5.8 4.0 4.0 0.8 0.8 -978.9 -1003.6 -494.7 -513.0

T a b les

Table 4. Quarterly Gross Domestic Product

Table 4. Quarterly Gross Domestic Product

2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2

Real GDP Billions 2009 $ Gross Domestic Product Final Sales of Domestic Product Total Consumption

17156.9 17315.0 17470.0 17621.1 17781.7 17943.2 18079.5 18208.8 18327.4 18448.7 18567.7 18685.1 18803.8 18926.5 19037.7 19150.7 17101.7 17244.0 17378.7 17516.9 17667.9 17824.4 17968.1 18102.6 18228.4 18353.0 18478.0 18603.0 18720.9 18840.5 18952.9 19068.7 11922.1 12021.1 12113.1 12188.8 12271.6 12359.8 12466.5 12578.5 12683.9 12795.8 12909.6 13018.6 13130.8 13241.6 13341.0 13441.8

Durables

1711.5 1740.2 1766.8 1778.2 1798.8 1822.3 1851.0 1878.7 1904.0 1934.6 1976.7 2010.4 2043.2 2074.7 2095.8 2114.8

Nondurables

2580.1 2603.9 2624.6 2637.1 2649.7 2665.7 2683.1 2705.2 2725.8 2748.2 2768.3 2789.0 2811.7 2831.3 2851.5 2872.4

Services

7692.9 7744.2 7793.2 7845.3 7897.4 7949.4 8014.0 8080.3 8143.3 8207.4 8267.7 8328.6 8391.5 8456.8 8517.7 8580.7

Nonresidential Fixed Investment Equipment & Software Information Processing Equipment

2322.7 2353.3 2383.7 2401.6 2436.2 2480.2 2526.2 2567.8 2597.1 2622.4 2647.9 2670.6 2693.9 2718.6 2742.2 2763.6 1104.5 1126.9 1143.7 1154.3 1175.5 1202.1 1227.9 1250.1 1268.4 1283.9 1295.9 1309.5 1323.0 1334.4 1343.5 1351.0 383.7

392.6

395.7

391.8

395.6

401.0

409.4

415.8

423.0

429.7

433.7

440.6

445.5

449.7

454.2

458.8

99.7

100.9

100.4

94.8

95.6

96.8

100.0

101.4

103.3

104.9

104.0

106.6

107.6

108.4

109.8

111.2

149.7

159.1

161.5

162.9

164.1

165.9

167.7

168.9

170.6

172.2

174.0

175.8

177.3

178.4

179.5

180.4

Industrial Equipment

229.1

234.7

240.8

244.4

249.7

254.2

260.6

265.6

270.3

274.3

278.9

283.6

286.8

289.9

293.2

294.8

Transportation Equipment

287.5

292.2

294.7

300.6

307.5

320.1

327.9

335.3

338.6

340.8

341.2

341.2

344.6

345.9

345.0

344.4

34.0

33.2

34.9

35.7

37.8

40.1

42.5

45.0

45.8

46.5

47.1

47.7

48.4

48.8

49.2

49.5

62.7

63.2

63.6

61.4

59.7

64.4

64.8

65.6

65.6

65.8

65.5

65.2

65.3

65.5

65.3

65.3

469.7

467.7

469.1

468.1

473.3

481.9

493.5

505.2

509.9

513.7

520.2

523.7

527.7

534.1

541.0

547.9

158.1

158.9

162.1

164.8

169.0

174.9

180.8

188.7

191.2

193.3

195.0

196.7

199.9

205.3

209.5

214.0

Manufacturing

54.0

52.5

53.1

55.0

59.9

63.1

68.7

72.7

72.7

71.5

71.6

68.6

66.0

64.1

62.5

61.2

Power & Communication

93.3

91.3

91.2

90.5

90.0

90.5

89.2

88.4

88.1

88.1

87.7

87.2

86.1

84.9

84.6

84.7

Mining & Petroleum

91.1

90.8

85.5

79.1

74.8

72.9

73.9

75.1

76.9

78.8

83.0

87.5

91.5

96.0

100.8

104.3

Other

81.1

82.2

85.2

87.0

88.4

89.9

90.9

91.2

92.0

92.9

94.1

95.2

95.8

96.0

96.3

96.7

585.0

586.3

612.3

642.7

674.3

695.8

706.4

713.9

726.2

735.0

743.9

752.2

760.5

768.5

771.8

775.6

Computers & Peripherals Communications Equipment

Aircraft Other Equipment Structures Commercial & Health

Residential Fixed Investment Exports

2193.7 2224.6 2294.0 2347.6 2387.6 2427.3 2454.1 2477.5 2498.3 2519.0 2544.0 2569.4 2596.5 2624.3 2648.2 2669.7

Imports

2789.2 2811.4 2901.3 2951.1 3001.9 3050.0 3110.3 3172.3 3228.7 3283.5 3347.4 3408.1 3468.4 3531.2 3581.5 3623.8

Federal Government

1116.9

State & Local Government

1775.7 1781.8 1786.2 1793.4 1802.1 1811.0 1819.8 1826.8 1835.4 1842.5 1848.6 1853.3 1859.6 1865.5 1871.9 1878.7

1116.1

1113.7

1113.0

1113.1

1113.0

1114.9

1115.8

1116.3

1116.8

1119.9

1129.3 1124.0 1122.8 1124.8 1125.9

Institute for Economic Competitiveness

23

T a b les Table 5. Annual Employment

Table 5. Annual Employment History

Forecast

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Total Nonfarm Employment

131.94

134.17

136.38

138.94

141.81

144.31

146.45

148.77

151.10

152.94

154.24

Private Nonfarm

109.85

112.25

114.53

117.06

119.79

122.08

124.12

126.27

128.32

129.83

131.07

Mining

0.74

0.80

0.81

0.84

0.76

0.63

0.65

0.66

0.68

0.70

0.72

Construction

5.53

5.65

5.86

6.15

6.46

6.71

6.90

7.11

7.63

8.09

8.37

Manufacturing

11.73

11.93

12.02

12.19

12.34

12.35

12.46

12.80

13.01

13.10

13.11

Trade, Transportation and Utilities

25.07

25.47

25.86

26.38

26.88

27.24

27.39

27.43

27.44

27.44

27.39

Transportation & Warehousing

4.30

4.42

4.50

4.66

4.87

4.99

5.08

5.20

5.26

5.29

5.32

Financial Activities

7.70

7.78

7.89

7.98

8.12

8.28

8.45

8.66

8.77

8.85

8.91

Education & Health

20.32

20.77

21.09

21.44

22.02

22.62

23.11

23.37

23.40

23.53

23.74

Professional & Business Services

17.33

17.93

18.52

19.06

19.63

20.13

20.73

21.85

23.06

23.70

24.21

2.67

2.67

2.71

2.73

2.75

2.77

2.72

2.66

2.69

2.74

2.79

Leisure & Hospitality

13.35

13.77

14.26

14.69

15.15

15.61

15.90

15.95

15.90

15.96

16.12

Government

22.09

21.92

21.85

21.88

22.02

22.23

22.33

22.49

22.78

23.11

23.17

2.86

2.82

2.77

2.73

2.76

2.80

2.81

2.81

2.81

2.93

2.81

19.23

19.10

19.08

19.14

19.27

19.43

19.52

19.69

19.98

20.18

20.36

Total Nonfarm Employment

1.22

1.69

1.65

1.87

2.07

1.76

1.49

1.58

1.57

1.22

0.85

Private Nonfarm

1.84

2.19

2.03

2.21

2.33

1.91

1.67

1.74

1.62

1.18

0.95

13.57

2.08

2.94

3.82

-16.66

-12.25

8.49

0.42

2.47

3.26

2.11

Construction

1.93

1.74

4.31

5.58

5.00

2.78

2.71

4.40

8.11

4.69

3.22

Manufacturing

1.76

1.47

0.96

1.67

0.65

-0.17

2.29

2.09

1.46

0.48

-0.05

Trade, Transportation and Utilities

1.97

1.46

1.86

2.06

1.52

1.24

0.23

0.07

-0.04

0.12

-0.27

Transportation & Warehousing

2.33

2.61

1.91

4.67

3.91

1.96

1.93

2.02

0.74

0.60

0.30

Financial Activities

0.47

1.29

1.22

1.48

1.83

2.07

1.79

2.79

0.84

0.79

0.52

Education & Health

1.92

1.97

1.38

2.08

2.97

2.51

1.96

0.55

0.25

0.65

0.85

Professional & Business Services

3.56

3.27

3.21

3.09

2.87

2.76

2.88

7.11

3.88

2.61

1.71

-0.41

-0.13

1.96

0.33

1.03

0.30

-2.40

-2.51

2.36

2.40

1.65

2.80

3.11

3.63

2.97

3.46

2.31

1.46

-0.23

-0.19

0.87

1.00

Government

-1.38

-0.38

-0.26

0.45

0.67

1.00

0.26

1.11

1.29

0.66

0.98

Federal

-0.85

-1.04

-2.53

-0.05

0.96

1.79

-0.20

-0.18

0.00

3.88

0.00

State & Local

-1.46

-0.28

0.07

0.53

0.63

0.89

0.33

1.29

1.47

0.68

1.11

Millions

Information

Federal State & Local

Growth Rates

Mining

Information Leisure & Hospitality

24

U.S. Forecast / December 2017

T a b les

Table 6. Quarterly Employment

Table 6. Quarterly Employment

2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2

Employment (Millions) Total Nonfarm Employment

146.7 147.2 147.9 148.5 149.0 149.7 150.4 150.9 151.4 151.8 152.3 152.9 153.1 153.4 153.8 154.1

Private Nonfarm

124.3 124.9 125.5 126.0 126.5 127.1 127.7 128.1 128.5 128.9 129.3 129.6 130.0 130.4 130.7 130.9

Mining

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

Construction

6.9

6.9

7.0

7.1

7.1

7.3

7.4

7.6

7.7

7.8

8.0

8.0

8.1

8.2

8.3

8.3

Manufacturing

12.4

12.6

12.7

12.8

12.8

12.9

13.0

13.0

13.0

13.1

13.1

13.1

13.1

13.1

13.1

13.1

Trade, Transportation and Utilities

27.4

27.4

27.5

27.4

27.4

27.4

27.5

27.4

27.4

27.4

27.4

27.4

27.5

27.5

27.4

27.4

Transportation & Warehousing

5.1

5.1

5.2

5.2

5.2

5.2

5.2

5.3

5.3

5.3

5.3

5.3

5.3

5.3

5.3

5.3

Financial Activities

8.5

8.5

8.6

8.6

8.7

8.7

8.8

8.8

8.8

8.8

8.8

8.8

8.9

8.9

8.9

8.9

Education & Health

23.2

23.3

23.3

23.4

23.4

23.4

23.3

23.4

23.4

23.5

23.5

23.5

23.6

23.6

23.7

23.7

Professional & Business Services

20.8

21.0

21.3

21.6

22.0

22.5

22.8

23.0

23.2

23.3

23.5

23.6

23.8

23.9

24.1

24.2

2.7

2.7

2.7

2.7

2.6

2.6

2.7

2.7

2.7

2.7

2.7

2.7

2.8

2.8

2.8

2.8

Leisure & Hospitality

15.9

16.0

16.0

16.0

15.9

15.9

15.9

15.9

15.9

15.9

15.9

15.9

16.0

16.0

16.0

16.1

Government

22.3

22.4

22.4

22.5

22.5

22.6

22.7

22.7

22.8

22.9

23.0

23.3

23.1

23.0

23.1

23.1

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.8

2.9

3.2

2.9

2.8

2.8

2.8

19.5

19.5

19.6

19.6

19.7

19.8

19.9

19.9

20.0

20.1

20.1

20.2

20.2

20.2

20.3

20.3

Total Nonfarm Employment

1.29

1.54

1.70

1.61

1.56

1.89

1.66

1.39

1.29

1.16

1.19

1.78

0.51

0.81

0.83

0.83

Private Nonfarm

1.45

1.76

1.92

1.68

1.57

2.00

1.74

1.41

1.28

1.13

1.11

1.12

1.26

1.13

0.84

0.79

Mining

6.87

-1.89

-1.35

1.73

0.23

1.06

1.92

0.92

2.73

4.19

3.94

2.91

3.01

3.01

2.70

2.02

Construction

1.34

2.60

2.70

3.18

5.06

6.33

8.07

8.44

7.98

7.00

5.79

4.74

4.06

3.84

3.20

3.12

Manufacturing

1.11

5.54

2.33

3.74

1.04

1.14

2.60

1.55

0.60

1.05

0.58

0.48

0.67

0.18

-0.16

-0.35

Trade, Transportation and Utilities

0.44

0.22

1.03

-1.06

-0.29

0.61

0.52

-0.50

-0.02

-0.17

0.06

0.22

0.35

-0.17

-0.47

-0.31

Transportation & Warehousing

2.29

2.80

3.51

2.08

1.02

1.47

1.00

0.45

0.83

0.69

0.65

0.74

0.57

0.45

0.76

0.31

Financial Activities

1.69

1.35

3.32

3.89

2.01

1.92

1.03

0.18

1.15

0.99

0.58

0.86

0.94

0.78

0.71

0.75

Education & Health

2.24

1.60

0.95

0.61

0.19

0.43

-0.92

0.40

0.69

0.83

0.10

0.46

1.08

0.97

0.96

0.86

Professional & Business Services

2.49

3.40

5.85

7.29

7.58

7.69

5.72

3.82

3.36

2.64

2.78

2.36

2.36

2.92

2.26

1.50

-0.93

-2.29

-1.72

-3.43

-4.71

-0.16

3.67

5.26

1.28

-0.76

2.66

3.47

2.34

1.14

1.91

1.59

Leisure & Hospitality

1.17

0.27

0.56

-0.62

-0.36

-0.52

-0.19

0.13

-0.54

-0.15

0.55

0.73

1.15

1.05

0.53

1.37

Government

0.38

0.29

0.48

1.18

1.52

1.26

1.19

1.29

1.36

1.32

1.67

5.62

-3.66

-1.00

0.77

1.06

-0.09

0.24

-0.71

0.00

0.00

0.00

0.00

0.00

0.00

0.00

7.77 49.07 -29.08 -12.23

0.00

0.00

0.45

0.30

0.65

1.35

1.74

1.44

1.36

1.47

1.55

1.50

0.84

0.88

1.21

Information

Federal State & Local

Growth Rates

Information

Federal State & Local

0.33

0.87

0.69

Institute for Economic Competitiveness

25

T a b les Table 7. Quarterly Implicit Price Deflators (2009=100)

Table 7. Quarterly Implicit Price Deflators (2009=100)

2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2

GDP

113.6 114.1 114.8 115.6 116.4 117.2 117.9 118.6 119.3 120.0 120.8 121.4 122.1 122.7 123.5 124.1

Consumption

112.7 113.1 113.6 114.0 114.5 115.0 115.4 115.9 116.3 116.9 117.5 118.1 118.6 119.2 119.7 120.3

Durables Motor Vehicles Furniture

86.2

86.1

85.9

85.7

85.5

85.2

84.8

84.4

84.0

83.7

83.3

83.0

82.7

82.4

82.1

81.8

107.9 108.4 108.9 109.4 109.8 110.1 110.3 110.5 110.6 110.8 111.0 111.1 111.3 111.5 111.6 111.7 81.7

80.9

80.8

80.7

80.6

80.4

80.3

80.0

79.7

79.5

79.2

78.9

78.6

78.4

78.1

77.9

Other Durables

100.5 101.1 101.1 101.2 101.3 101.3 101.3 101.2 101.1 101.2 101.3 101.5 101.7 101.9 102.1 102.3

Nondurables

109.4 109.2 109.6 109.5 109.6 110.1 110.0 110.5 110.7 111.4 112.1 112.8 113.5 114.1 114.7 115.2

Food

110.0 110.3 110.7 111.0 111.3 111.7 112.0 112.3 112.7 113.1 113.6 114.1 114.6 115.1 115.7 116.1

Clothing & Shoes

103.4 103.4 103.3 103.2 103.0 102.8 102.5 102.3 102.1 102.1 102.0 102.1 102.1 102.2 102.2 102.2

Gasoline & Oil

104.2 101.6 102.4

Fuel

96.3

98.0

96.9

97.6

96.1

97.5

94.3

96.8

95.8 100.1 103.5 106.7 109.2 111.0 112.5 113.9

98.0

98.2

99.8

99.1 101.6 101.5 105.5 108.7 111.8 114.2 116.2 117.9 119.5

Services

118.8 119.6 120.2 120.9 121.6 122.3 123.0 123.7 124.5 125.3 126.0 126.7 127.5 128.2 129.0 129.7

Housing

120.3 121.3 122.1 123.0 123.8 124.6 125.3 126.0 126.7 127.4 128.1 128.8 129.6 130.3 131.0 131.7

Electricity

109.7 110.1 110.9 111.9 113.2 114.6 115.9 116.9 117.7 118.7 119.7 120.4 120.9 121.8 122.9 123.8

Natural Gas Water & Sewer Telephone

88.9

88.6

89.5

89.5

89.7

91.0

93.8

94.5

96.5

98.1

98.8

97.7

97.8

99.4

99.7

98.6

143.7 144.7 146.0 147.3 148.7 150.2 151.6 153.2 154.6 156.1 157.6 159.0 160.5 162.0 163.5 165.0 84.7

85.0

85.1

85.1

84.9

84.8

84.8

84.7

84.7

84.7

84.8

84.8

85.0

85.0

85.1

85.2

Transportation

113.0 114.1 114.6 115.3 116.0 116.7 117.4 118.0 118.7 119.4 120.0 120.7 121.4 122.1 122.7 123.4

Other Services

120.6 121.0 121.8 122.6 123.3 124.1 125.0 125.9 126.8 127.7 128.7 129.7 130.6 131.6 132.6 133.5

26

U.S. Forecast / December 2017

T a b les Table 8. Percent Change in Implicit Price Deflators

Table 8. Percent Change in Implicit Price Deflators

2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2

GDP

2.2

1.5

2.6

2.7

2.8

2.8

2.5

2.5

2.2

2.5

2.6

2.2

2.1

2.2

2.4

2.0

Consumption

1.5

1.6

1.7

1.4

1.6

1.8

1.3

1.8

1.5

2.1

2.0

2.0

2.0

1.9

1.8

1.7

Durables

-2.6

-0.6

-0.9

-0.8

-1.1

-1.5

-1.7

-1.9

-1.9

-1.7

-1.7

-1.5

-1.5

-1.4

-1.5

-1.6

Motor Vehicles

-2.3

1.6

1.9

1.9

1.7

1.0

0.7

0.6

0.5

0.7

0.5

0.7

0.6

0.6

0.3

0.3

Furniture

-4.5

-3.8

-0.3

-0.3

-0.7

-0.8

-0.9

-1.2

-1.3

-1.4

-1.4

-1.4

-1.4

-1.3

-1.2

-1.2

Other Durables

-3.9

2.1

0.3

0.4

0.3

0.1

0.0

-0.5

-0.3

0.1

0.5

0.7

0.8

0.9

0.8

0.6

Nondurables

2.4

-0.7

1.6

-0.6

0.7

1.6

-0.3

1.9

0.5

2.8

2.5

2.6

2.4

2.2

2.0

2.0

Food

0.2

1.2

1.6

0.9

1.3

1.1

1.2

1.2

1.3

1.5

1.6

1.7

1.9

1.8

1.8

1.6

Clothing & Shoes

0.5

-0.1

-0.3

-0.3

-0.8

-0.9

-0.9

-0.9

-0.7

-0.3

0.0

0.2

0.2

0.2

-0.1

0.1

Gasoline & Oil

18.1

-9.7

2.9 -17.4

-5.9

5.9 -12.6

11.2

-4.0

19.4

14.0

13.2

9.6

6.8

5.3

5.2

Fuel

-2.8

7.2

-4.7

4.7

1.1

6.7

-3.0

10.6

-0.5

16.8

12.7

11.9

9.1

7.1

5.8

5.7

Services

1.9

2.7

2.2

2.4

2.3

2.4

2.3

2.3

2.4

2.5

2.4

2.3

2.4

2.4

2.3

2.2

Housing

3.5

3.1

2.9

2.8

2.7

2.5

2.4

2.3

2.2

2.3

2.2

2.2

2.3

2.3

2.3

2.2

Electricity

0.8

1.3

3.0

3.6

4.7

5.0

4.5

3.5

3.1

3.5

3.4

2.2

1.7

3.0

3.8

2.8

-9.3

-1.6

4.3

-0.1

0.8

6.3

12.9

2.7

9.1

6.6

2.8

-4.4

0.5

6.8

1.2

-4.6

1.7

2.8

3.7

3.8

3.9

3.9

4.0

4.1

3.9

3.8

3.9

3.8

3.8

3.8

3.8

3.7

-2.0

1.5

0.2

0.4

-1.1

-0.3

-0.3

-0.3

0.0

0.1

0.2

0.3

0.5

0.2

0.4

0.4

Transportation

0.1

4.0

1.7

2.4

2.5

2.5

2.1

2.3

2.2

2.5

2.2

2.2

2.3

2.3

2.2

2.2

Other Services

2.3

1.3

2.7

2.9

2.2

2.6

2.8

2.9

2.8

3.0

3.1

3.1

3.0

3.0

3.0

2.9

Natural Gas Water & Sewer Telephone

Institute for Economic Competitiveness

27

T a b les

Table 9. Annual Implicit Price Deflators (2009=100)

Table 9. Annual Implicit Price Deflators (2009=100)

2011

2012

History 2013 2014 2015

2016

2017

2018

Forecast 2019 2020

2021

GDP

103.3 105.2 106.9 108.8 110.0 111.4 113.4

116.0 119.0 121.8 124.4

Consumption

104.1 106.1 107.5 109.2 109.5 110.8 112.6

114.3 116.1 118.4 120.5

Durables Motor Vehicles Furniture

97.7

96.4

94.6

92.4

90.4

88.5

86.7

108.9 110.2 110.8 110.8 110.8 109.7 108.6 94.2

94.0

92.1

88.8

86.8

84.5

82.2

85.6

84.2

82.8

81.6

109.6 110.6 111.2 111.7 80.6

79.9

78.8

77.8

Other Durables

103.6 104.2 104.0 102.2

99.6 100.8 101.2

101.2 101.2 101.6 102.4

Nondurables

109.2 111.8 111.9 112.7 109.0 107.8 109.3

109.7 110.6 113.1 115.5

Food

104.3 106.7 107.8 109.8 111.0 109.9 109.9

111.2 112.5 114.4 116.4

Clothing & Shoes

101.1 104.6 105.4 105.6 104.3 103.9 103.7

103.1 102.3 102.1 102.2

Gasoline & Oil

149.3 154.7 149.7 145.5 107.0

95.3 103.8

98.4

Fuel

148.8 150.7 148.9 148.2 105.3

87.7

98.0

98.2 101.9 112.7 120.4

Services

103.5 105.8 108.3 110.9 113.1 115.9 118.5

121.3 124.1 127.1 130.0

Housing

101.4 103.5 106.0 108.8 112.1 115.9 119.8

123.4 126.4 129.2 132.1

Electricity

101.8 101.8 104.0 107.9 108.5 107.3 109.5

112.6 117.3 120.7 124.0

Natural Gas Water & Sewer Telephone

95.1

85.7

90.1

96.2

84.8

82.7

89.2

111.8 118.0 123.3 127.9 133.7 138.6 143.3 97.5

97.7

97.1

96.3

94.1

93.7

86.2

89.9

96.7 107.6 114.7

95.7

98.4

99.9

148.1 153.9 159.8 165.8 85.0

84.7

84.9

85.2

Transportation

104.8 106.8 108.3 109.5 109.9 111.2 113.1

115.7 118.4 121.1 123.8

Other Services

105.6 108.3 111.2 113.8 115.9 118.0 120.2

123.0 126.3 130.1 134.0

28

U.S. Forecast / December 2017

T a b les Table 10. Percent Change in Implicit Price Deflators

Table 10. Percent Change in Implicit Price Deflators

GDP Consumption

2011

2012

1.9

1.9

History 2013 2014 2015 1.6

1.6

2016

2017

2018

1.5

1.7

2.7

1.1

Forecast 2019 2020 2.4

2021

2.3

2.1

2.7

1.8

1.2

1.2

0.4

1.6

1.4

1.6

1.7

2.0

1.8

-0.5

-1.6

-2.1

-2.4

-1.9

-2.7

-1.4

-1.1

-1.8

-1.5

-1.5

3.3

0.7

0.4

-0.2

-0.1

-1.4

-0.6

1.6

0.6

0.6

0.3

-0.2

-0.4

-3.0

-3.0

-2.3

-2.9

-3.0

-0.5

-1.2

-1.4

-1.1

Other Durables

3.2

-0.5

-0.6

-1.9

-2.7

2.3

0.2

0.3

-0.2

0.7

0.8

Nondurables

5.9

1.9

-0.5

-0.3

-3.0

0.5

0.4

0.8

1.2

2.4

2.1

Food

5.1

1.2

0.7

2.7

0.3

-1.7

1.0

1.2

1.3

1.8

1.7

Durables Motor Vehicles Furniture

Clothing & Shoes

4.4

2.3

0.1

-0.4

-1.3

-0.1

-0.1

-0.6

-0.7

0.1

0.0

Gasoline & Oil

20.4

4.9

-4.5

-10.3

-17.5

7.7

0.8

-3.6

3.5

10.9

5.4

Fuel

26.2

3.1

-1.2

-7.9

-29.6

6.9

4.8

1.9

6.0

10.2

5.9

Services

2.1

2.3

2.3

2.3

1.9

2.7

2.2

2.3

2.4

2.4

2.2

Housing

1.9

2.2

2.4

2.7

3.2

3.6

3.2

2.7

2.3

2.3

2.1

Electricity

2.4

-0.6

3.2

3.1

-0.6

0.4

1.8

4.1

3.6

2.6

2.8

-1.6

-4.1

2.4

6.1

-12.4

6.4

3.4

2.8

7.8

1.4

2.3

4.9

6.0

3.8

4.4

4.1

3.5

3.1

3.8

3.9

3.8

3.7

Natural Gas Water & Sewer Telephone

-1.5

0.1

-0.5

-2.1

0.2

-2.8

-7.6

-0.2

-0.1

0.3

0.4

Transportation

3.1

1.3

1.7

1.0

0.1

1.2

2.4

2.3

2.3

2.3

2.3

Other Services

2.8

2.2

2.9

2.2

1.6

1.9

1.8

2.6

2.9

3.1

2.9

Table 11. Personal Income and its Components

Table 11. Personal Income and its Components History 2011

2012

2013

2014

Forecast 2015

2016

2017

2018

2019

2020

2021

Personal Income Billions Current Dollars Personal Income

13254.5 13915.1 14073.7 14818.2 15553.0 15928.7 16431.1

17205.6 18313.8 19370.7 20392.1

Wages & Salaries

8269.0

8609.9

8842.4

9256.5

9708.3

9978.6 10323.2

Other Labor Income

1142.0

1165.3

1199.0

1231.7

1278.0

1309.8

1345.8

1375.4

1411.7

1461.6

1507.4

Nonfarm Income

1068.1

1179.8

1197.0

1247.7

1265.1

1298.7

1349.7

1430.0

1518.4

1584.7

1651.2

75.5

61.6

87.8

68.1

53.7

43.2

36.1

32.0

29.7

29.1

29.8

485.3

525.3

567.1

611.7

662.5

707.3

743.3

759.0

761.6

759.2

756.3

Farm Income Rental Income Dividends

10797.3 11380.4 11947.4 12514.3

682.2

834.9

794.4

941.9

1019.8

962.5

966.5

1056.4

1262.9

1439.1

1533.5

Interest Income

1231.6

1288.8

1261.6

1303.3

1367.3

1415.3

1469.4

1528.1

1648.5

1772.6

1959.8

Transfer Payments

2360.5

2366.3

2428.0

2544.4

2684.4

2768.4

2847.3

2961.4

3141.6

3337.1

3517.2

423.9

437.2

577.8

607.3

636.6

661.7

693.1

721.8

759.3

796.1

834.0

Personal Social Insurance Tax Percent Change, Annual Rate Personal Income

6.2

5.0

1.2

5.3

5.0

2.4

3.2

4.7

6.4

5.8

5.3

Wages & Salaries

3.9

4.1

2.7

4.7

4.9

2.8

3.5

4.6

5.4

5.0

4.7

Other Labor Income

2.5

2.0

2.9

2.7

3.8

2.5

2.8

2.2

2.6

3.5

3.1

Nonfarm Income

8.2

10.5

1.5

4.2

1.4

2.7

3.9

5.9

6.2

4.4

4.2

Farm Income

66.2

-18.5

43.1

-21.4

-20.8

-19.3

-16.4

-10.7

-6.9

-2.1

2.2

Rental Income

20.8

4.4

8.9

8.0

8.5

5.5

5.2

0.8

-0.3

-0.1

-0.7

Dividends

23.5

46.3

-8.2

21.9

0.5

-4.7

2.8

14.9

20.7

9.4

5.7

Interest Income

3.3

5.1

-2.7

4.7

5.0

4.4

2.7

6.8

7.2

8.6

10.2

Transfer Payments

0.4

1.2

2.5

6.0

4.4

3.1

2.6

5.1

6.1

6.1

5.2

-13.5

5.2

43.9

5.7

5.1

2.5

6.0

4.1

5.2

4.8

4.7

Personal Social Insurance Tax

Institute for Economic Competitiveness

29

T a b les

Table 12. Personal Consumption Expenditures (Current Dollars)

Table 12. Personal Consumption Expenditures (Current Dollars)

2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2

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

13434.7 13600.2 13763.5 13898.1 14048.5 14211.9 14382.4 14574.9 14753.0 14960.7 15168.2 15370.6 15578.5 15785.5 15975.8 16166.0

durable goods

1476.3 1498.4 1518.0 1524.6 1538.2 1552.5 1570.3 1586.2 1600.0 1618.6 1646.7 1668.3 1689.3 1709.4 1720.4 1729.0

furniture and appliances

338.1

342.6

347.2

350.1

354.6

359.4

363.7

368.2

372.6

377.8

383.1

388.3

393.7

398.8

403.7

408.2

information processing equipment

125.0

126.3

128.0

129.5

130.7

132.3

134.2

136.1

137.6

139.4

140.8

142.2

143.6

145.4

147.0

148.4

motor vehicles and parts

500.3

509.9

517.2

520.4

526.4

531.9

539.7

545.0

548.8

555.6

568.8

576.1

582.3

587.6

585.2

581.2

other durable goods

159.2

159.4

161.2

161.9

162.9

163.9

165.2

166.7

167.9

169.6

171.3

173.2

175.0

176.6

177.7

178.7

nondurables clothing & shoes fuel oil & coal gasoline & motor oil food

2822.1 2843.1 2877.2 2886.3 2904.8 2934.2 2951.3 2989.5 3016.2 3062.1 3103.6 3146.7 3191.1 3230.5 3270.1 3310.2 399.6

404.7

407.6

408.4

408.4

410.3

414.7

418.1

421.2

425.5

429.5

433.8

438.0

441.8

445.2

18.7

18.1

20.1

20.2

20.2

20.5

20.3

20.9

20.8

21.6

22.2

22.7

23.0

23.3

23.5

23.6

275.5

270.6

274.5

263.2

260.7

265.9

257.8

268.2

268.5

282.6

292.6

302.1

308.9

313.8

318.1

322.3

948.8

955.2

960.2

965.6

971.4

978.2

985.0

991.9

998.8 1005.6 1013.1 1020.9 1028.5 1036.3 1043.7

938.9

other nondurable goods

1189.5

449.1

1201.0 1219.9 1234.3 1249.9 1266.1 1280.3 1297.3 1313.8 1333.6 1353.8 1375.1 1400.2 1423.1 1447.1 1471.5

Consumer Expenditures by Type Billions 2009 Dollars Consumer spending on… all goods & services

11922.1 12021.1 12113.1 12188.8 12271.6 12359.8 12466.5 12578.5 12683.9 12795.8 12909.6 13018.6 13130.8 13241.6 13341.0 13441.8

durable goods

1711.5

1740.2 1766.8 1778.2 1798.8 1822.3 1851.0 1878.7 1904.0 1934.6 1976.7 2010.4 2043.2 2074.7 2095.8 2114.8

furniture and appliances

413.9

423.6

429.7

433.7

440.0

446.8

453.2

460.2

467.3

475.5

483.9

492.1

500.7

508.9

516.5

523.9

information processing equipment

213.7

218.8

224.4

230.2

236.3

243.8

252.6

261.7

270.6

280.1

288.9

297.7

305.9

315.0

323.8

332.9

motor vehicles and parts

463.5

470.5

475.1

475.7

479.2

483.0

489.2

493.3

496.1

501.3

512.6

518.3

523.1

527.0

524.5

520.5

other durable goods

159.5

158.9

160.9

161.5

162.7

163.9

165.3

167.3

168.8

170.7

172.3

174.1

175.6

177.0

177.9

178.8

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

2580.1 2603.9 2624.6 2637.1 2649.7 2665.7 2683.1 2705.2 2725.8 2748.2 2768.3 2789.0 2811.7

2831.3 2851.5 2872.4

386.5

391.5

394.6

395.7

396.5

399.3

404.4

408.7

412.4

416.9

420.9

424.9

428.8

432.3

435.7

19.3

18.4

20.7

20.6

20.5

20.5

20.5

20.5

20.5

20.5

20.4

20.3

20.2

20.0

19.9

439.5 19.8

264.1

266.3

268.1

269.7

271.3

272.7

273.5

277.1

280.3

282.2

282.8

283.0

282.8

282.6

282.8

283.0

853.7

860.2

862.8

865.3

867.2

870.0

873.5

876.9

880.1

882.9

885.3

888.1

890.7

893.4

896.0

898.8

1067.0 1078.0 1089.2 1096.6 1104.8

1113.9

1122.0

1133.2

1143.9

1157.2

1170.3

1184.1

1200.5 1214.2 1228.2 1242.5

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

2.3

3.3

3.1

2.5

2.7

2.9

3.5

3.6

3.4

3.5

3.6

3.4

3.4

3.4

3.0

3.0

durable goods

8.0

6.7

6.1

2.6

4.6

5.2

6.3

6.0

5.4

6.4

8.7

6.8

6.5

6.2

4.1

3.6

furniture and appliances

7.2

9.3

5.7

3.7

5.8

6.2

5.7

6.2

6.2

7.0

7.1

6.8

7.0

6.5

6.0

5.7

information processing equipment

-1.5

9.7

10.3

10.3

10.6

12.7

14.4

14.5

13.5

14.0

12.7

12.1

11.1

11.8

11.3

11.1

motor vehicles and parts

13.9

6.1

3.9

0.6

2.9

3.2

5.2

3.3

2.2

4.3

9.0

4.4

3.7

3.0

-1.9

-3.0

other durable goods

12.9

-1.7

5.2

1.5

2.8

3.0

3.5

4.6

3.7

4.4

3.9

4.2

3.5

3.1

2.1

1.9

2.1

3.7

3.2

1.9

1.9

2.4

2.6

3.3

3.0

3.3

2.9

3.0

3.3

2.8

2.9

2.9

nondurables clothing & shoes

-0.5

5.2

3.1

1.2

0.8

2.8

5.2

4.2

3.7

4.3

3.9

3.8

3.7

3.2

3.2

3.5

fuel oil & coal

-6.3

-18.8

49.7

-1.9

-1.4

-0.5

0.3

-0.1

-0.4

-0.8

-1.7

-2.1

-2.2

-2.4

-2.6

-2.4

gasoline & motor oil

-4.8

3.3

2.8

2.3

2.3

2.1

1.2

5.2

4.6

2.7

0.8

0.3

-0.2

-0.3

0.3

0.2

food

3.2

3.1

1.2

1.2

0.9

1.3

1.6

1.6

1.5

1.3

1.1

1.3

1.2

1.2

1.2

1.2

other nondurable goods

3.9

4.2

4.2

2.7

3.0

3.3

2.9

4.0

3.8

4.7

4.6

4.8

5.6

4.6

4.7

4.7

30

U.S. Forecast / December 2017

T a b les Table 13. Personal Consumption Expenditures

Table 13. Personal Consumption Expenditures (2009 Dollars) History 2011

2012

2013

2014

Forecast 2015

2016

2017

2018

2019

2020

2021

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

10689.3 11050.6 11361.2 11863.7 12332.3 12820.7 13383.4

13980.5 14667.7 15475.7 16264.7

1125.3

1191.9

1241.7

1296.4

1367.1

1411.0

1468.6

1533.3

1593.8

1678.4

1736.9

260.7

271.4

281.6

294.3

311.5

325.2

337.4

352.8

370.6

391.0

410.4

91.9

98.6

101.7

105.8

110.8

116.3

124.2

130.1

136.8

143.0

149.1

363.5

395.8

416.1

441.9

472.2

480.8

496.4

524.0

547.3

578.7

582.1

121.4

127.3

133.1

137.8

143.4

148.6

156.5

162.5

167.3

174.0

179.3

2471.1

2547.2

2592.8

2674.1

2666.0

2710.4

2810.8

2900.6

3004.8

3168.0

3330.3

338.9

354.3

363.6

376.0

385.5

393.7

399.9

408.7

419.9

435.8

450.5

29.2

26.4

26.6

28.0

21.2

18.5

18.5

20.2

20.9

22.8

23.7

gasoline & motor oil

380.4

390.5

385.6

369.8

283.9

255.2

275.4

266.1

269.3

304.3

324.6

food

829.1

848.8

857.5

884.4

899.0

915.1

936.1

963.1

988.5

1017.0

1047.4

other nondurable goods

893.5

927.3

959.5

1015.9

1076.5

1128.0

1180.9

1242.5

1306.3

1388.0

1484.0

nondurables clothing & shoes fuel oil & coal

Consumer Expenditures by Type Billions 2009 Dollars Consumer spending on… all goods & services durable goods

10263.5 10413.2 10565.4 10868.4 11264.3 11572.1 11888.6

12233.3 12631.2 13075.1 13492.4

1151.5

1236.2

1312.7

1403.1

1511.8

1595.1

1694.2

1791.5

1892.1

2026.2

2128.2

furniture and appliances

276.6

288.7

305.8

331.3

359.0

384.7

410.5

437.5

464.0

496.4

527.4

information processing equipment

108.0

125.2

139.4

153.8

169.7

191.7

213.5

233.7

266.2

301.9

337.6

motor vehicles and parts

333.8

359.1

375.7

398.7

426.0

438.5

457.2

478.3

495.0

520.3

521.1

other durable goods

115.1

120.2

126.4

134.8

145.4

148.3

155.6

162.3

168.0

174.8

179.3

2263.2

2277.5

2316.1

2373.0

2446.8

2514.3

2572.7

2644.3

2715.6

2800.1

2882.1

335.3

338.9

344.9

356.1

369.7

378.7

385.8

396.5

410.6

426.7

440.8

19.6

17.5

17.8

18.9

20.1

21.1

18.9

20.6

20.5

20.2

19.7

gasoline & motor oil

254.7

252.5

257.6

254.2

265.4

267.9

265.2

270.4

278.3

282.8

283.0

food

795.1

795.7

795.2

805.8

810.2

832.4

851.9

866.3

878.4

889.4

900.2

other nondurable goods

863.2

880.7

908.2

949.5

993.0

1025.9

1061.6

1101.2

1139.1

1192.3

1249.4

nondurables clothing & shoes fuel oil & coal

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

1.5

1.3

2.0

3.6

3.0

2.8

2.7

2.8

3.5

3.5

3.0

durable goods

4.9

7.3

5.3

8.7

6.4

7.0

5.7

4.7

6.2

7.2

4.3

furniture and appliances

5.8

3.1

7.5

9.5

7.9

6.3

7.7

5.5

6.4

7.0

5.7

13.9

16.7

7.3

13.6

7.7

15.7

8.7

11.4

14.9

12.5

11.6

motor vehicles and parts

1.5

7.4

2.5

8.7

4.1

8.0

3.0

2.7

3.8

5.2

-1.3

other durable goods

3.2

8.1

3.6

7.7

7.3

1.2

5.9

3.2

4.1

3.7

2.1

nondurables

0.4

0.8

2.6

2.8

2.8

2.5

2.8

2.4

3.1

3.0

2.8

clothing & shoes

1.1

0.9

2.5

5.7

2.0

2.3

2.7

2.0

4.4

3.7

3.1

information processing equipment

fuel oil & coal

-12.6

5.5

14.0

1.2

9.4

6.5

-5.8

14.0

-0.3

-2.1

-2.5

gasoline & motor oil

-3.1

-0.9

3.3

-0.2

4.4

-1.2

0.5

2.4

3.5

0.2

0.2

food

-0.4

0.6

0.6

0.7

0.6

4.0

1.9

1.1

1.5

1.2

1.2

2.8

1.9

4.1

5.1

4.4

2.2

4.4

3.3

3.9

4.9

4.6

other nondurable goods

Institute for Economic Competitiveness

31

T a b les Table 14. Business Fixed Investment

Table 14. Business Fixed Investment History

2011

2012

2013

2014

Forecast 2015

2016

2017

2018

2019

2020

2021

Billions Current Dollars Business Fixed Investment

1812.1 2007.7 2094.4 2268.3 2336.2 2316.3 2446.8

2610.7 2793.3 2930.6 3066.1

Producers Dur. Equipment

838.2

937.9

982.8 1046.5 1081.9 1043.9 1094.5

Nonresidential Structures

381.6

448.0

463.6

537.5

537.5

516.2

559.5

583.8

640.8

682.4

728.1

Non-Farm Buildings

170.2

191.6

203.8

234.4

280.8

311.5

321.3

346.0

398.8

421.4

447.6

Commercial

66.8

75.6

84.2

102.9

116.8

141.0

154.0

166.6

193.7

210.7

233.6

Industrial

39.0

45.8

48.8

57.0

77.7

73.1

65.0

68.1

86.0

84.0

79.3

Other Buildings

64.5

70.2

70.7

74.6

86.3

97.4

102.3

111.2

119.1

126.7

134.7

Utilities

90.7

112.2

108.9

126.3

125.5

129.6

126.6

128.7

132.0

133.5

134.4

112.3

134.1

139.4

163.1

118.4

63.4

100.4

96.6

96.8

111.9

130.5

Mines & Wells

1183.4 1266.5 1324.7 1370.1

Billions 2009 Dollars Business Fixed Investment

1802.3 1964.1 2032.9 2172.7 2223.5 2210.4 2310.1

2425.4 2578.4 2682.8 2771.4

Producers Dur. Equipment

847.9

939.2

982.3 1047.4 1084.5 1047.8 1093.2

Nonresidential Structures

374.7

423.1

428.8

474.0

465.4

446.4

470.3

473.1

505.6

526.4

549.4

Non-Farm Buildings

172.3

188.8

196.0

218.2

256.3

279.0

278.4

289.3

325.7

334.3

345.2

Commercial

67.3

73.9

80.5

95.9

106.7

126.7

134.9

141.4

160.5

169.6

183.0

Industrial

39.1

44.9

46.7

52.8

70.7

66.2

57.3

57.8

71.4

67.6

61.7

Other Buildings

65.9

70.0

68.6

69.4

78.7

85.8

85.9

89.7

93.8

97.0

100.3

Utilities

82.8

99.1

95.1

108.8

106.4

109.4

103.4

101.1

100.0

98.1

96.1

110.9

123.8

126.0

134.2

95.9

54.5

85.0

78.1

76.2

89.5

105.3

Business Fixed Investment

10.9

6.9

5.8

7.7

0.4

0.7

7.4

7.0

6.2

4.9

4.2

Producers Dur. Equipment

14.4

8.4

5.8

5.0

3.2

-3.4

8.5

7.4

6.1

4.4

2.6

Nonresidential Structures

15.3

7.8

9.5

15.0

-8.6

4.4

7.7

6.6

9.1

6.4

6.3

Non-Farm Buildings

14.7

7.3

9.8

20.8

11.2

14.0

-0.3

14.1

12.3

5.0

6.1

Commercial

14.7

9.9

18.7

20.3

9.8

27.1

1.8

13.7

14.4

9.5

8.8

Industrial

37.4

8.1

9.1

37.8

15.0

-7.4

-11.1

23.3

17.8

-7.1

-0.6

Other Buildings

3.6

4.5

1.7

12.0

12.2

14.9

4.2

9.7

6.1

6.5

6.0

Utilities

2.4

18.4

17.5

-1.7

16.3

11.2

-5.6

5.1

1.4

-0.2

1.4

36.6

1.9

8.0

28.9

-47.8

-29.3

111.8

-14.7

7.9

20.1

13.6

Mines & Wells

1168.9 1257.6 1315.7 1354.0

Annual Growth Rate

Mines & Wells

32

U.S. Forecast / December 2017

T a b les Table 15. Government Receipts and Expenditures

Table 15. Government Receipts and Expenditures History 2011

Forecast

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Federal Government Receipts and Expenditures Receipts

2574.1

2699.1

3138.4

3291.2

3441.4

3452.1

3613.2

3622.9

3846.6

4030.3

4199.7

Personal Tax and Nontax Receipts

1129.1

1164.7

1302.0

1403.0

1528.5

1540.5

1603.6

1716.0

1848.2

1952.6

2049.6

Corp. Profits Tax Accruals

299.4

363.1

378.1

436.6

437.1

401.2

417.4

266.6

273.8

270.8

259.5

Indirect Business Tax and Nontax Accruals

108.6

115.1

124.8

135.4

140.2

137.0

131.5

138.2

144.3

151.5

158.0

Contributions for Social Insurance

904.0

938.1

1091.3

1140.9

1193.4

1230.2

1289.4

1343.1

1412.8

1481.2

1551.8

Expenditures

3818.3

3789.1

3782.2

3901.4

4028.0

4149.4

4241.3

4419.8

4667.3

4944.6

5204.8

Purchases Goods & Services

1303.5

1292.5

1229.5

1218.1

1224.0

1231.5

1257.2

1279.2

1308.6

1343.5

1372.7

836.9

817.8

767.0

745.6

731.6

728.9

741.0

743.1

753.4

771.4

787.1

National Defense Other

466.5

474.7

462.5

472.5

492.4

502.6

516.2

536.1

555.2

572.0

585.6

Transfer Payments

2327.0

2300.8

2346.2

2448.7

2572.8

2648.4

2713.9

2838.6

3006.6

3193.3

3362.1

To Persons

1779.9

1783.6

1823.5

1881.9

1967.2

2018.4

2075.6

2172.6

2319.6

2480.7

2628.8

To Foreigners

57.6

55.3

53.8

52.8

53.3

53.6

53.0

53.5

53.7

54.0

54.0

Grants in Aid to State & Local Gov't

472.5

444.0

450.0

494.8

532.1

555.5

563.5

589.9

609.7

634.1

653.8

Net Interest

398.0

401.6

393.4

416.8

412.1

447.8

457.8

495.5

556.4

620.1

689.8

66.7

66.5

69.9

65.6

61.5

64.8

64.0

63.7

63.8

62.4

61.6

-1244.1

-1090.1

-643.8

-610.2

-586.7

-697.3

-628.1

-796.9

-820.7

-914.3 -1005.1

Subsidies less Surplus of Gov't Entities Surplus (+) or Deficit (-)

State and Local Government Receipts and Expenditures Receipts

2030.5

2057.2

2136.8

2236.7

2350.7

2416.3

2492.2

2628.0

2755.8

2890.0

3020.0

Personal Tax/Nontax Receipts

1368.3

1416.1

1481.4

1526.7

1584.1

1628.7

1695.5

1795.2

1891.2

1988.2

2085.3

324.1

346.7

375.9

382.6

409.4

419.6

440.4

473.7

503.7

530.7

561.6

Indirect Business Tax and Nontax Accruals

50.2

52.5

55.5

57.8

59.2

58.1

57.0

72.6

82.8

89.1

92.5

Contributions for Social Insurance

18.2

18.0

18.5

19.6

19.8

20.3

20.5

21.3

22.5

23.6

24.7

472.5

444.0

450.0

494.8

532.1

555.5

563.5

589.9

609.7

634.1

653.8

Expenditures

2246.4

2277.9

2327.3

2405.6

2497.0

2583.7

2664.0

2746.9

2870.6

3002.0

3133.2

Purchases Goods & Services

Corporate Profits

Federal Grants-In-Aid

1865.3

1866.1

1886.6

1938.9

1994.9

2036.3

2086.8

2161.1

2266.0

2374.5

2487.5

Transfer Payments

582.1

558.0

571.3

625.0

680.0

695.6

703.4

734.0

759.9

790.7

817.1

Interest Received

125.9

141.4

141.8

121.3

122.3

136.6

137.5

140.1

143.5

150.4

156.0

17.9

10.8

10.3

10.4

10.1

7.1

7.2

5.0

3.3

1.3

-0.6

2.6

3.3

3.6

3.8

4.2

4.6

4.7

5.0

5.2

5.4

5.6

-215.9

-220.8

-190.5

-168.9

-146.4

-167.4

-171.8

-118.8

-114.8

-112.0

-113.2

Net Subsidies Dividends Received Surplus (+) or Deficit (-)

Institute for Economic Competitiveness

33

T a b les Table 16. U.S. Exports and Imports of Goods and Services

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

Forecast

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

-580.0

-565.7

-492.0

-509.5

-524.0

-521.2

-553.5

-453.6

-370.4

-416.8

-468.8

Billions of Dollars Net Exports Goods & Services Current Account

-444.6

-426.2

-349.5

-373.8

-434.6

-451.7

-454.9

-368.5

-296.2

-403.5

-523.2

Exports -Goods & Services

2106.4

2198.2

2276.6

2373.6

2264.9

2214.6

2338.8

2573.5

2740.9

2908.9

3082.0

Merchandise Balance

-740.6

-741.2

-702.2

-751.5

-761.9

-752.5

-791.8

-738.7

-693.7

-766.4

-856.0

Food, Feed & Beverage

126.25

133.05

136.16

143.72

127.74

130.56

141.79

148.73

156.0

162.5

171.6

Industrial Supplies Excl Petroleum

485.3

483.2

492.4

500.7

417.4

386.8

447.5

485.2

500.9

538.7

574.9

Motor Vehicles & Parts

133.0

146.2

152.7

159.8

151.9

150.3

154.9

179.6

195.4

200.5

210.9

Capital Goods, Excl. MVP

494.2

527.5

534.8

551.8

539.8

519.8

530.4

591.3

633.0

662.2

673.5

Computer Equipment

48.5

49.2

48.1

48.8

46.8

45.1

45.6

52.3

47.5

45.8

45.6

Other

365.4

383.9

381.7

389.8

373.4

353.8

364.0

404.9

442.4

472.6

484.6

Consumer Goods, Excl. MVP

174.7

181.0

188.1

198.4

197.4

193.4

197.2

219.7

239.0

255.4

270.2

Other Consumer

53.4

55.1

58.6

63.6

62.9

65.1

65.4

72.7

78.4

85.0

91.9

639.5

672.2

713.9

755.7

767.7

768.5

801.5

876.3

938.1

1004.6

1089.0

Imports -Goods & Services

2686.4

2763.8

2768.6

2883.2

2789.0

2735.8

2892.3

3027.1

3111.3

3325.6

3550.8

Merchandise

Services Billions of Dollars

2244.7

2305.8

2301.5

2396.1

2290.5

2224.2

2355.7

2457.3

2517.9

2691.2

2868.7

Food, Feed & Beverage

108.3

111.1

116.0

126.8

128.8

131.0

138.1

128.8

123.0

130.0

136.5

Petroleum & Products

462.1

434.3

387.8

353.6

197.2

159.6

192.6

164.6

153.3

172.4

189.5

Industrial Supplies Excl Petroleum

292.7

288.8

291.3

316.2

290.5

277.2

304.6

353.1

355.1

375.0

395.2

Motor Vehicles & Parts

255.2

298.5

309.6

329.5

350.0

351.0

360.1

365.2

366.3

376.1

390.3

Capital Goods, Excl. MVP

513.4

551.8

559.0

598.8

606.8

593.9

641.1

699.9

721.1

751.4

781.1

Computer Equipment

119.7

122.3

121.2

122.0

120.3

114.5

128.0

128.4

126.8

127.3

129.4

Other

358.2

389.4

390.8

423.5

431.3

429.4

462.0

517.7

536.0

564.6

592.2

Consumer Goods, Excl. MVP

515.9

518.8

532.9

558.7

596.6

585.4

597.3

608.1

614.0

661.9

721.7

97.1

102.4

105.0

112.4

120.7

126.1

121.9

137.6

185.0

224.3

254.3

441.6

458.0

467.1

487.1

498.5

511.6

536.6

569.8

593.4

634.5

682.2

Net Exports Goods & Services

-459.4

-447.1

-404.9

-427.7

-545.3

-586.2

-604.6

-612.0

-711.5

-855.2

-962.6

Exports G & S

1898.3

1963.2

2031.5

2118.4

2127.1

2120.1

2190.4

2364.1

2487.2

2583.5

2680.1

Imports G & S

2357.7

2410.2

2436.4

2546.1

2672.4

2706.3

2795.0

2976.1

3198.7

3438.8

3642.6

Exports G & S

8.7

3.4

5.6

1.7

-6.7

1.6

7.0

11.0

5.0

6.8

5.3

Imports G & S

Other Consumer Services Billions 2009 Dollars

Exports & Imports % Change 10.9

0.3

1.2

4.3

-5.6

2.9

4.5

4.0

4.0

8.4

5.5

Real Exports G & S

4.2

2.2

6.0

3.1

-1.8

0.7

4.7

9.1

3.8

4.2

3.3

Real Imports G & S

3.5

0.3

2.5

6.3

2.9

2.7

2.0

8.5

7.7

7.5

4.8

34

U.S. Forecast / December 2017

Sean Snaith, Ph.D., is the director of the University of Central Florida’s Institute for Economic Competitiveness and a nationally recognized economist in the field of business and economic forecasting.

Snaith is the recipient of multiple awards for the accuracy of his forecasts, his research and his teaching. He has served as a consultant for local governments and multinational corporations such as Compaq, Dell and IBM. Before joining UCF’s College of Business, he held teaching positions at Pennsylvania State University, American University in Cairo, the University of North Dakota and the University of the Pacific.

Snaith is frequently interviewed in international, national and regional media. He has been quoted in The Wall Street Journal, USA Today, The New York Times, The Economist and The Guardian and has appeared on CNBC, Fox Business Network, The Nightly News with Brian Williams, Al Jazeera, the BBC and CBC, China Central TV, Sky News, Nippon TV and the Business News Network, based in Toronto.

Snaith is a sought-after speaker known for his engaging and humorous presentations. He has built a national reputation for his unique ability to explain complex subject matter in a digestible manner. He earned praise from one business editor for having “an uncanny knack of making economics not only understandable but interesting.”

Snaith is a member of several economic organizations and national economic forecasting panels, including The Wall Street Journal’s Economic Forecasting Survey, the Associated Press’ Economy Survey, CNNMoney.com’s Survey of Leading Economists, USA Today’s Survey of Top Economists, Federal Reserve Bank of Philadelphia’s Survey of Professional Forecasters, Bloomberg and Reuters.

Snaith holds a B.S. in Economics from Allegheny College and an M.A. and Ph.D. in Economics from Pennsylvania State University.

Sean M. Snaith, PhD Director, Institute for Economic Competitiveness P 407.823.1451 E ssnaith@ucf.edu

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