JUNE 2018

U.S. FORECAST

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U.S. FORECAST 2018 - 2021

Published quarterly by the Institute for Economic Competitiveness, College of Business Administration, University of Central Florida Copyright Š 2018 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

Tamara Williams, Researcher

Leigh Durden, Researcher

Aasiyah Alli, Researcher

Maegan Alexis Trinidad, Researcher

Adam Wing, Researcher

Coulter Small, Researcher

Sydney Boughan, Researcher

Brandt Dietry, Researcher

Wesley Giotta, Researcher

Isabella Yerby, 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 Q2 2018

IN THIS U.S. FORECAST • In the midst of raging tweetstorms and the back-and-forth media salvos surrounding the Trump administration, you might think that economic policy uncertainty is as high as it has ever been. You’d be wrong. • Lower policy uncertainty, regulatory rollbacks, and the Tax Cuts and Jobs Act are creating fertile ground in which stronger economic growth will take root. • Payroll job growth slowed to 1.6% in 2017 and will remain at that level in 2018 and 2019 before easing to 1.1% in 2021. For an economic recovery that is nine years old, we cannot expect much stronger growth than this. • The U.S. consumer is in a nearly perfect environment to support faster spending. Rising employment, ultra-low unemployment rates, strong growth in home equity, rising disposable incomes, high level of consumer confidence, and soon-to-be faster wage growth are setting the stage for an acceleration of consumption expenditures. • The Federal Reserve raised interest rates again in March 2017; the next 25 basis point hike will happen in June. Stronger economic growth and higher inflation from the Trump administration policies will prompt a faster pace of hikes over the next three years, with the federal funds rate hitting 4.25% by the end of the fourth quarter of 2021. • Real GDP growth hit 2.3% in 2017 but will accelerate to 3.0% in 2018, and then rise to 3.6% in 2019 before easing to 2.8% in 2020 and 2.5% in 2021 as the Federal Reserve pulls back the reins on the economy. • The housing market continues to recover and will slowly improve through 2021 in the face of the headwind of rising mortgage rates. Housing starts will rise from 1.38 million in 2018 to 1.66 million in 2021. • The headline unemployment rate (U-3) is expected to decline to 3.6% in late 2020. Job growth will be sufficient to keep up with labor force growth through the end of the forecast horizon. The economy is rapidly closing in on full employment and the faster wage growth that comes with it. • Headline CPI inflation will accelerate in 2018, pushing the Fed to continue to raise interest rates and shrink its balance sheet. Headline CPI inflation will average 2.5% and core CPI inflation will average 2.7% during 2018-2021.

In our February 2017 U.S. Forecast, we likened the initial weeks of the Trump administration to the defunct Disney World attraction, Mr. Toad’s Wild Ride. I won’t repeat the analogy in this forecast but you can read it here: https://issuu.com/ucfbusiness/docs/ucf-us-forecast-feb_2017.

The wild ride of the Trump administration has persisted well beyond the initial weeks of the administration, and as we are nearly one and a half years into this administration, the continued twists and turns are enough to make you reach for the Dramamine. The political circus has come to Washington, D.C. and it does not look like the big top will be coming down anytime soon. This, indeed, is the presidential administration that will launch a thousand political science dissertations in the years ahead. But I am an economist, not a political scientist, so my focus is on policy and not politics.

IS ECONOMIC POLICY UNCERTAINTY BACK?

That focus, unfortunately, has not freed me from the topsy-turvy ride that political scientists have been experiencing. The rapid-fire tweets and zigzagging surrounding trade negotiations with China and our partners in the North American Free Trade Agreement (NAFTA), Mexico and Canada, the announced tariffs on aluminum and steel, and the drama surrounding the passage of the Tax Cuts and Jobs Act have all created an air of ambiguity around policy as well. I have asserted that I do not believe a full-on trade war is likely to occur, as I view most of the machinations as posturing and negotiating tactics (albeit unorthodox tactics to say the least) rather than policy pronouncements. All of this does beg the question, however, as to whether or not the Trump administration is causing an increase in the level of economic policy uncertainty.

In previous U.S. forecasts, we presented and discussed the Economic Policy Uncertainty Index which was developed by Scott R. Baker, Nicholas Bloom, and Steven J. Davis in their paper, Measuring Economic Policy Uncertainty.1 In those forecasts, I asserted, and still stand by those assertions, that economic policy uncertainty was a key reason that economic growth in the first seven years of this economic recovery was historically weak.

Generally, during recessions, economic policy uncertainty rises, but as the recovery sets in, policy uncertainty falls from these elevated levels. During the Great Recession, economic policy uncertainty was extremely elevated, as would be expected given the nature of the recession and financial crisis. As the recession ended, policy uncertainty did not abate; instead, it actually increased from the already-elevated levels and continued to remain at these levels. For more than six years after the recession ended, the average level of policy uncertainty was higher than the average during the recession itself. A high level of policy uncertainty weakens investment spending, employment, and output - all of which have characterized this economic recovery.

1

https://academic.oup.com/qje/article/131/4/1593/2468873 Institute for Economic Competitiveness

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Paul Jarley, Dean of the College of Business Administration at the University of Central Florida, has been exposed to many of my rants regarding economic policy uncertainty and its impact on this recovery. Dean Jarley recently asked me, given the wild ride of the Trump administration, “How was this tumultuousness impacting policy uncertainty?” This was a valid question given the environment in D.C. and one that merits a quick revisiting of the economic policy uncertainty index. Figure 1 plots the values of the raw policy uncertainty index along with averages calculated for periods of recession and expansion. The chart reveals levels of policy uncertainty that are currently below the average for the almost nine years of the current economic recovery. However, policy uncertainty remains well above the average level that prevailed in the expansion which preceded the Great Recession.

How did the 2016 election and the Trump administration impact economic policy uncertainty? The outcome of the election was a result that flew in the face of the pundits’ predictions and came as a surprise to most of us. Did the election result in an increase in policy uncertainty? The answer is befitting of any twohanded economist: yes and no.

In November 2016, the economic policy uncertainty index spiked by nearly 84% after President Trump’s shocking victory. In the months that followed the election, however, the index decreased significantly. The uncertainty index has averaged 110 over the 17 months since the election. By way of comparison, the index averaged 143 for the first 17 months after President Obama’s election and 114 for the 17 months following President George W. Bush’s election. It should be noted that both President Bush and President Obama’s first 17 months index averages included recessions, so not exactly an apples-to-apples comparison with President Trump’s first 17 months. The average economic policy uncertainty index for the non-recession portions of President Bush’s term was 92, and for President Obama’s it was just under 132. So, for the non-recession portion of his term, policy uncertainty was significantly higher under President Obama than it has been under President Trump; however, uncertainty now is considerably higher than it was under President Bush. Economic policy uncertainty is still elevated from historical levels, but it is already much lower than during the Obama administration, and that reduction should lead to higher levels of investment, employment, and GDP growth going forward.

Figure 1. Economic Policy Uncertainty

ANXIOUS INDEX

300

250

Recession Expansion

Uncertainty Index

200

Recession Expansion

Recession Expansion

Expansion

150

100 Raw Uncertainty Index

50

Averages

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 2105 2016 2017 2018

0

Source: http://www.policyuncertainty.com/

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U.S. Forecast / June 2018

Fear of Recession the Lowest Since the Second Quarter of 2011 The most recent release (2nd quarter of 2018) of the Survey of Professional Forecasters by the Federal Reserve Bank of Philadelphia suggests that the 30 forecasters surveyed for the publication put an 8.59% chance that a decline in real GDP will occur in the 3rd 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 in early May of the 2nd quarter of 2018, the index stands at 8.59, which means that forecasters believe there is an 8.59% chance that real GDP will decline in the 3rd quarter of 2018.

The forecasters also report a 5.33% chance that we are currently (as of the 2nd quarter of 2018) experiencing a contraction in real GDP—nearly half a percentage point lower than the probability the forecasters assigned for the 1st quarter of 2018. According to the panel, the probability that real GDP growth will turn negative is averaging around 12.43% through the end of the 2nd quarter of 2019, indicating that the forecasters’ assignment of probability for a contraction in real GDP in the upcoming year is the lowest since the 1st quarter of 2015.

confidence and thus faster GDP growth.

The Tax Cut and Jobs Act has given rise to the likelihood that 3.0%-plus growth could finally arrive in 2018 and accelerate into 2019. Our lackluster recovery was in desperate need of a policy boost, and the tax reform law provides just what the recovery needed.

The tax cuts have been coupled with significant regulatory rollbacks, and if an infrastructure spending bill is added to the mix, the strength and lifespan of the recovery will receive yet another boost. The average rate of annual real GDP growth from 2010 through 2017 has been just 2.2%. Our forecast for average real GDP growth from 2018-2021 stands at 3.0%, with a projected acceleration of growth to levels equal to or greater than 3.0% in 2018 (3.0%) and 2019 (3.6%).

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 an expiration date. The economic policies of the Trump administration will extend the length of this recovery, but not indefinitely. All expansions give way to the next recession; no election or policy mix has ever prevented that from occurring, but the right policies can delay the inevitable.

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 nearly four and a half Figure 2. points lower than the average The Anxious Index level during the economic Probability of Decline in Real GDP in the Following Quarter recovery (13.08). Quarterly, 1968:Q4 to 2018:Q2 100

GDP OUTLOOK

80 70 60 50 40 30 20 10 0

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

Because of the Tax Cut and Jobs Act, American workers are seeing something they have not experienced much in this economic recovery: larger paychecks. More takehome pay will lead to higher consumer spending and support already high levels of consumer

Probability (percent)

The Economy’s Engine is Poised to Rev Up

90

Source: Survey of Professional Forecasters, Philadelphia Federal Reserve Bank

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In 2018, we are expecting real GDP growth to accelerate to 3.0%. Growth will jump to 3.6% in 2019 before decelerating to 2.8% in 2020 and 2.5% in 2021. The projected growth rate for 2019 would be the first time the U.S. economy experienced annual growth at 3.5% or higher since 2004.

CONSUMER SPENDING Increasing Employment, Ultra-low Unemployment Rates, Household Wealth, Disposable Incomes, Confidence, and Faster Wage and Salary Growth Will Accelerate Consumer Spending

We expect the central bank to continue to take baby steps as it incrementally raises interest rates, and the frequency of these increases should average four 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 undoing quantitative easing should remain gradual.

The U.S. consumer has been playing 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%; in 2016, spending grew at 2.7%; and in 2017, consumer spending expanded again at 2.8%.

The Fed has also begun the process of gradually shrinking its balance sheet, which was engorged by three rounds of quantitative easing, and like its efforts to raise the federal funds rate, this will continue to be a gradual process as well. These efforts have reduced the size of the balance sheet from over $4.5 trillion to $4.34 trillion to date. However, like quantitative easing itself, this is uncharted water for monetary policy, and there is no previous playbook to follow on how best to carry this out.

Continued solid gains in employment, more rapidly rising wages, and improving household balance sheets via rising home prices should continue to provide a solid underpinning for continued consumer spending growth. The Tax Cut and Jobs Act also boosts consumer spending growth by raising disposable income; many workers began seeing larger paychecks in February when the IRS released new withholding guidelines. These improving fundamentals and growth-oriented policies should boost consumption spending going forward well above the depressed level seen in the 1st quarter of 2018, when growth was just 1.1% (this was following an outsized 4.0% growth rate in the 4th quarter of 2017).

The Federal Reserve raised the federal funds rate in March 2018 and will likely follow with another hike in June. They will continue with rate hikes in 2018 and 2019 until the anticipated target rate reaches 4.50% in the third quarter of 2021. The path of interest rate hikes will deviate from this projection if growth deviates from our projected path, or if there is a recession during the next four years, which is an increasing possibility in the final two years of our forecast.

The change in leadership at the Federal Reserve is not having much of an impact on the pace and magnitude of interest rate hikes or those balance sheet reductions. However, the Powell-led Fed is taking a less hawkish stance on regulation (the primary reason it is a Powellled Fed), and coupled with recent congressional action to roll back some of the massive Dodd-Frank law, this will free up the financial sector to an extent, allowing it to grow faster after seven-plus years of a heavy regulatory yoke.

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U.S. Forecast / June 2018

In these four 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%. If not for consumer spending, the U.S. economy would have contracted in 2016 as business investment tumbled. In 2017, consumers again provided the bulk of growth accounting for 82% of the 2.3% growth last year.

The next three years should show a steady acceleration of consumer spending growth. Consumer spending, the largest component of GDP, is going to be critical in supporting real GDP growth and extending the life of this economic recovery. The Trump administration’s economic policies will boost business investment in a significant way, but consumers will still need to provide the momentum for this expansion going forward.

While other pillars that support consumer spending continue to strengthen, the labor market also continues its recovery as we zero in on full employment. Stronger wage and salary growth have shown hints of reappearing as the labor market continues to tighten. The economy may not quite be at full employment yet, but we are getting closer with each passing month. Once wage growth accelerates—accompanied by tax cuts that raise consumers’ disposable income—it will be the catalyst that takes consumer spending growth to a higher level. In 2016, consumer spending growth decelerated to 2.7% from 3.6% in 2015 and then ticked up in 2017 to 2.8%. The tax law and other economic policies aimed at stimulating economic growth by the Trump administration, as well as faster wage and salary growth, will help increase consumer spending growth going forward. Consumption spending growth is expected to be 2.5% in 2018, 3.2% in 2019, accelerating further to 3.8% in 2020, before easing to 3.5% in 2021.

INVESTMENT Nonresidential fixed investment spending turned negative in 2016, contracting by 0.6%. The lengthy and atypical presidential election cycle carried with it a much higher level of uncertainty than a usual 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, I was worried we might be heading into one. Investment spending in this historically weak economic recovery has generally been undersized. 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 is improving, and as we noted above, the

Economic Policy Uncertainty Index has fallen postelection.

The Tax Cut and Jobs Act significantly reduces the corporate tax rate and incentivizes the repatriation of profits held by U.S. corporations overseas. Shortly after the law was signed, Apple announced it would repatriate some $250 billion in profits it had been holding overseas. Coupled with proposed changes to allow smaller companies to immediately expense equipment instead of depreciating it, these provisions will help to boost investment spending, contributing to stronger economic growth in the next few years. Spending on equipment and software contracted for the full year in 2016 by 3.4%. In 2017, we saw an 8.2 percentage point swing in investment of this type, as the full year rebounded to 4.8% growth. The outlook going forward should continue to strengthen substantially. Average growth in this type of investment spending is expected to be 7.5% over the 2018-2021 time frame, peaking at 9.7% in 2019.

Purchases of aircraft again contracted by 24.8% in 2016, but recovered partially by 13.6% in 2017. Over the next four years, spending on aircraft is expected to grow an average of 12.7%, but quarter-to-quarter and even year-over-year volatility in this type of investment spending is the rule, not the exception. A single order from an airline can move this figure by tens of billions of dollars. The 2016 contraction in investment spending also reflected the negative impact of the oil prices falling by nearly 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 and are now hovering around $67 per barrel. As a result, the U.S. May 2018 rig count was 1,059, up 151 year-over-year. During 2015 and 2016, investment in mining and petroleum equipment contracted by 27.9% and 42.0%, respectively. In 2017, growth hit 60.9% and 29.7% in

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2018 and will average 7.7% per year during 2018-2021. While this isn’t a return to the boom in spending, it is a solid recovery for a sector that has taken some hits from both markets and regulators. The approval of new pipelines by the Trump administration has also given a boost to shale oil production in North Dakota. More rigs and more investment in petroleum inevitably means a higher supply that will dampen prices and future investment. The near-term gusher in spending will slow to a trickle as a result. The weak start to 2016 and an environment of political uncertainty resulted in a further deceleration of investment spending growth to -0.6%. Now, with the election a year and a half behind us and an increased likelihood of investment-friendly policies on the way, business nonresidential investment growth hit 4.7% in 2017 and will accelerate to 6.2% in 2018, rising to 7.1% in 2019, easing to 5.5% in 2020, and slowing to 3.8% in 2021.

Interest rates are still quite low by historical standards, even as the Fed has begun to push up the federal funds rate and continues the process of shrinking its $4.3 trillion balance sheet. In time, higher interest rates will begin to drag on investment spending, as is the intention of tightening monetary policy. Higher forecasted rates are driving 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 8.9% from 2018 through 2021. Investment spending growth in computers and peripherals will average 4.8% during 2018-2021. Spending on communications equipment should expand at an average annual rate of 3.8% during the same four year span. Investment growth in nonresidential structures has fluctuated over the past three years. Growth turned negative in 2015 followed by another year of negative growth in 2016, with spending declining 1.8% and 3.9% in those two years. Investment in nonresidential structures grew faster in 2017 at 5.7% and will again accelerate in 2018 before decelerating again in 2019,

10

U.S. Forecast / June 2018

2020, and 2021. During 2018-2021, growth is expected to average 4.9% over those four years. Residential fixed investment growth hit 10.2% in 2015 but then eased in 2016 to 5.6%, before slipping further to 1.8% in 2017. Growth will average 4.8% through 2018-2021, accelerating to a peak growth rate of 6.9% in 2019. 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 6.6% on a 30-year fixed mortgage that year— and a slower pace of price appreciation. In 2021, real residential fixed investment will be $722 billion—$151 billion less than its 2005 peak. We expect housing starts to continue to gradually accelerate over the next several years, reaching a level slightly below 1.66 million in 2021. Average levels of annual housing starts from 2018-2021 will be 1.54 million.

GOVERNMENT SPENDING In 2016, federal government spending growth was just above zero after contracting for five consecutive years and was just 0.2% in 2017. This modest growth in spending will be significantly stronger over the next two years before growth peters out in the final two years of our forecast. In 2018, spending should expand by less than 2.8%, and in 2019, it will rise again by 2.4%. During the period 2018 through 2021, federal government spending is expected to rise, growing at an annual average pace of 1.7%. Over the same time frame, state and local governments will oversee spending growth at an average rate of 1.4%. The federal budget deficit jumped in 2017 to over $665 billion and will continue to increase every year over our forecast horizon through 2021. This reversal of course, after four years during which we saw deficits shrinking from nearly $1.3 trillion in 2011 to $439 billion in 2015, shows that the recently passed Tax Cut and Jobs Act will grow not only the economy but also federal budget deficits. In 2017, the deficit grew by $78.4 billion and will surge even higher in 2018, when it hits $818.7 billion. The deficit will grow larger in 2019, as

entitlement and military spending—coupled with tax cuts—push it to $871.7 billion before rising again in 2020 to nearly $919 billion. The deficit will continue to grow in 2021, when government spending will exceed revenue by $965.5 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 (62% 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/or 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 once again will push the $1 trillion level, the type of deficits that were the norm in 2009-2012. The amount that the projected deficits will add to the national debt over the next four years will be over $3.50 trillion, pushing the national debt total to $24.6 trillion. 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 were to rise more quickly than anticipated. Slower-thanprojected 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 $21.1 trillion and rising. This represents a debt of nearly $174,386 per taxpayer and $64,625 per citizen. The unfunded liabilities of the U.S. are even more striking. 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 $113 trillion in liabilities, boiling down to $933,277 per taxpayer.2

2

National debt data from: http://www.usdebtclock.org/

NET EXPORTS Net exports have been a drag on real GDP growth in the U.S. over the past three years. In 2015, net exports shaved 0.73 percentage points off of real GDP growth. In 2016, the drag continued but lessened; net exports still reduced growth by 0.23 percentage points. Again, in 2017, net exports lowered real GDP growth by 0.18 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 is giving back some of these gains. However, as the Fed raises interest rates and the U.S. economy experiences faster growth, we expect that 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. However, 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. Because of this effect, an appreciation of the dollar initially decreases the trade deficit before eventually increasing it. Why? Importers and exporters do not enter into contracts based on the total dollar value of the transaction, but rather the actual quantity of goods to be shipped (automobiles, flat screen televisions, etc.) so as the exchange rate varies in the short run the values of these shipments and thus net exports vary as well. Over time, however, the quantities do adjust in response to the exchange rate fluctuations and this is what gives rise to the J-curve effect. Overall, real export growth continues through the end of our 2021 forecast horizon and is expected to accelerate in 2018 and 2019 before easing through the end of 2021. Real import growth is expected to accelerate through 2020 all the while remaining above

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U . S . F orecast

export growth through 2021. Real export growth from 2018-2021 will average 6.7%, while real import growth will average 8.9% over the same time frame.

Real net exports will average -$861.8 billion during 2018-2021, with the trade balance worsening in each successive year and coming in at more than -$1.11 trillion in 2021. The sizeable appreciation of the dollar during 2012-2015 and anticipated appreciation in 20192020, 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 April 2018 declined from the March 2017 reading of 4.1% to 3.9%, the lowest level since December of 2000. The unemployment rate continued to decline as there was both a decrease in the number of unemployed people and a decline in the size of the overall labor force. The labor force participation rate remained dipped from 62.9% in March to 62.8% in April.

The April jobs report fell short of expectations as growth in payroll jobs showed businesses adding 164,000 jobs after March’s 135,000 job gain. The 164,000 increase in payroll employment in April was below the average growth in monthly payrolls thus far for 2018 of 200,000, which is up from 2017’s average of 182,000 and higher than 2016’s average monthly growth of 195,000. Average payroll job growth for 2015 came in at 226,000, down from 2014’s average growth of 250,000. This late in the economic cycle (the recovery has lasted nine years and counting), a rapid acceleration in job growth is unlikely, but the recent uptick in growth may very well be a result of the Tax Cut and Jobs Act. The April labor force participation rate of 62.8% remains depressed and is at its lowest point since March 1978. Since the end of the recession, the labor force participation rate is down 2.9 percentage points.

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U.S. Forecast / June 2018

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 408,000 workers), as well as those classified as underemployed (currently just under 5.0 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 (1.4 million workers). None of these 6.8 million workers are counted in the headline unemployment rate of 4.1%. U-6 stands at 7.8% as of April 2018, down 0.2 percentage points from the March 2018 level and down 0.4 percentage points from the start of the year. The current level of U-6 is down 9.3 points from its peak of 17.1% in April 2010. U-6 was stuck in double digits for more than seven years. It has now been in single digits for thirty consecutive months beginning in October 2015 and stands at the lowest level since July of 2001.

The spread between U-6 and U-3 measures of unemployment has ticked down to 3.9 percentage points, the lowest since December of 2007, and is 3.5 points below the peak spread of 7.4 points that took place in September of 2011.

C h arts

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 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 30-Year Fixed Mortgage Rate Housing Starts - Millions

0.0

Automobile and Light Truck Sales 14.0

(Millions Vehicles)

12.0 10.0 8.0 6.0 4.0

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 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 2009 Dollars)

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Change in Real Business Inventories Institute for Economic Competitiveness

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Corporate Retained Earnings 1000.0

(Billions of Dollars)

800.0 600.0 400.0 200.0 0.0 -200.0

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Corporate Retained Earnings

Consumer Prices (% Change Year Ago)

6.0 4.0 2.0 0.0 -2.0

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 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 / June 2018

(Billions of Dollars)

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Federal Budget Surplus

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Federal Funds Rate (%)

6.0 5.0 4.0 3.0 2.0 1.0 0.0 -1.0

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Fed Funds Rate

Real GDP Growth and Federal Funds Rate 10.0

(%)

5.0 0.0 -5.0 -10.0

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 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

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Industrial Production Institute for Economic Competitiveness

15

C h arts

Private Fixed Nonresidential Investment 3500.0

(Billions of Dollars)

3000.0 2500.0 2000.0 1500.0 1000.0

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Private Fixed Nonresidential Investment

Manufacturing Employment 15.0

(Millions)

14.0 13.0 12.0 11.0

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Manufacturing Employment

Money Supply

4500.0

(Annual Growth Rate %)

4000.0 3500.0 3000.0 2500.0 2000.0 1500.0 1000.0

16

U.S. Forecast / June 2018

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Annual Growth Rate of M1

C h arts

Total Nonfarm Payroll Employment (Millions)

160.0 155.0 150.0 145.0 140.0 135.0 130.0 125.0

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Total Nonfarm Employment

Oil and Consumer Confidence 140.0

Oil ($ Per Barrel) - Left Axis

100

120.0

90

100.0

80

80.0

70

60.0

60

40.0 20.0

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Price of Oil WTI Consumer Sentiment

50

Real After Tax Profits 2000.0

(Billions of Dollars)

1800.0 1600.0 1400.0 1200.0 1000.0 800.0 600.0

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Real After Tax Profits Institute for Economic Competitiveness

17

C h arts

Real Disposable Income and Consumption (% Change Year Ago)

6.0 4.0 2.0 0.0 -2.0 -4.0

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Real Disposable Income Consumption

Real Investment Equipment & Software 1600.0

(Billions of Dollars)

1400.0 1200.0 1000.0 800.0 600.0 400.0

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Real Nonresidential Investment-Equipment & Software

Trade Balance and Real Exchange Rate

-400 -500 -600 -700 -800 -900 -1000 -1100

1.40 1.30 1.20 1.10 1.00 0.90

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Trade Balance (Billions $) Left axis U.S. Dollar Real Exchange Rate (2000 = 1.0) Right axis

18

U.S. Forecast / June 2018

0.80

C h arts

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

(Billions of Dollars)

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 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

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Unemployment Rate

Yield Curve 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0

(%)

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 1-Year T-Bill Yield 5 Year Treasury Bond Yield 30 year Treasury Bond Yield Institute for Economic Competitiveness

19

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

Table 1. Summary of the Long-Term Forecast of the U.S. 2011

2012

2013

2014

2015

2016

2017

2018

2019

Forecast 2020

2021

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 2.8 6.7 2.4 2.2 4.7 4.8 7.5 8.7 9.8 7.1 1.3 13.6 2.7 5.7 4.6 -12.7 -5.7 60.9 2.2 1.8 3.4 3.9 0.2 0.1

3.0 2.8 2.5 4.8 2.3 2.1 6.2 7.6 9.6 11.4 6.6 6.7 5.6 6.6 6.6 6.0 -0.6 -0.6 -2.0 29.7 8.8 4.1 6.7 5.8 2.8 0.9

3.6 3.3 3.2 6.7 2.5 2.9 7.1 9.7 7.0 4.3 2.2 12.4 10.5 31.2 3.9 5.8 7.1 28.8 1.1 -2.1 4.9 6.9 9.0 10.4 2.4 1.6

2.8 2.9 3.8 8.2 2.7 3.5 5.5 7.6 4.5 2.9 2.6 12.0 2.4 9.3 0.5 4.8 13.1 6.2 -2.5 0.0 3.4 4.3 6.6 11.5 1.5 1.6

2.5 2.6 3.5 6.0 2.7 3.4 3.8 4.9 3.7 0.7 3.8 4.3 -2.1 3.9 0.7 3.2 11.6 -7.2 -3.5 3.0 3.1 4.1 4.6 8.1 0.0 1.5

15020.6 15354.6 15612.2 16013.3 16471.5 16716.2 17096.2 15517.9 16155.3 16691.5 17427.6 18120.7 18624.5 19390.6

17615.1 20377.8

18240.7 21648.4

18753.7 22840.5

19220.8 23969.2

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

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 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. $) 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)) 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)

20

U.S. Forecast / June 2018

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 1.8 3.2 2.5

2.0 2.9 2.6 2.9 3.2

2.6 2.4 3.0 0.9 3.4

2.6 2.6 2.7 2.2 3.4

2.4 2.1 2.5 2.0 3.3

95.1 0.1 3.1 73.6 36.6 67.4 12.7 0.6 3.8 8.9 1.2 -1296.8 -444.6

94.2 0.9 3.0 74.9 72.7 76.5 14.4 0.8 4.1 8.1 1.7 -1089.2 -426.2

97.9 0.3 2.0 75.0 73.0 79.2 15.5 0.9 4.5 7.4 1.6 -680.2 -349.5

93.3 1.0 3.1 75.8 74.0 84.1 16.5 1.0 4.3 6.2 1.9 -483.6 -373.8

48.7 1.3 -1.0 75.8 102.8 92.9 17.4 1.1 4.6 5.3 2.1 -439.1 -434.6

43.2 0.0 -1.9 74.6 34.5 91.8 17.5 1.2 4.8 4.9 1.8 -587.4 -451.7

51.0 1.3 1.6 74.8 12.3 96.8 17.2 1.2 4.9 4.4 1.6 -665.8 -466.2

61.5 1.5 4.2 76.2 42.8 89.1 17.0 1.4 5.1 4.0 1.6 -818.7 -579.1

53.0 2.1 3.8 77.8 96.8 84.2 17.2 1.5 5.2 3.8 1.6 -871.7 -576.3

57.9 1.6 2.6 77.5 90.9 85.7 17.9 1.6 5.5 3.7 1.4 -918.8 -701.1

56.4 1.5 2.3 76.5 76.0 87.8 17.9 1.7 5.7 3.6 1.1 -965.5 -853.1

0.10 0.05 0.18 1.52 2.79 3.91 4.46 1268.9 11.5 0.913 -5.8

0.14 0.09 0.18 0.76 1.80 2.92 3.66 1379.6 8.9 0.947 3.8

0.11 0.06 0.13 1.17 2.35 3.45 3.98 1642.5 19.0 0.977 3.2

0.09 0.03 0.12 1.64 2.54 3.34 4.17 1930.7 17.7 1.009 3.3

0.13 0.05 0.32 1.53 2.14 2.84 3.85 2061.2 6.9 1.171 16.1

0.40 0.32 0.61 1.34 1.84 2.60 3.65 2092.4 1.6 1.179 0.7

1.00 0.93 1.20 1.91 2.33 2.89 3.99 2448.2 17.0 1.173 -0.5

1.83 2.01 2.41 3.13 3.36 3.51 4.90 2811.1 15.0 1.086 -7.4

2.84 2.75 3.33 4.08 4.33 4.53 5.92 2653.7 -5.5 1.172 8.0

3.48 3.27 3.82 4.43 4.70 5.00 6.29 2639.6 -0.5 1.181 0.8

4.07 3.77 4.36 4.76 4.96 5.30 6.58 2756.7 4.4 1.150 -2.6

13254.5 13915.1 14073.7 14818.2 15553.0 15928.7 16427.3 17122.1 6.2 5.0 1.2 5.3 5.0 2.4 3.1 4.2 11801.4 12403.7 12395.8 13032.6 13615.0 13968.6 14379.0 14993.9 5.0 5.1 0.0 5.1 4.5 2.6 2.9 4.3 11331.3 11687.8 11527.6 11939.2 12436.0 12608.7 12764.0 13034.8 2.5 3.1 -1.4 3.6 4.2 1.4 1.2 2.1 6.1 7.6 5.0 5.7 6.1 4.9 3.4 3.0 1427.7 1683.2 1688.4 1743.8 1651.1 1687.9 1781.0 1781.7 -2.9 18.1 0.3 3.3 -5.1 2.8 5.8 0.3

18084.9 5.6 15826.2 5.5 13530.7 3.8 3.6 2019.2 13.4

19146.7 20179.2 5.9 5.4 16759.3 17650.9 5.9 5.3 14052.3 14526.6 3.9 3.4 3.5 3.3 2155.2 2198.2 6.8 2.0

T ables 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 17096.2 17615.1

18240.7 18753.7 19220.8

14979.0 15292.3 15521.1 15932.9 16354.3 16664.1 17062.0 17547.4

18118.8 18639.3 19121.4

10263.5 10413.2 10565.4 10868.4 11264.3 11572.1 11890.7 12182.2

12571.9 13052.2 13514.1

Durables

1151.5

1236.2

1312.7

1403.1

1511.8

1595.1

1701.6

1782.7

1902.8

2059.2

2182.5

Nondurables

2263.2

2277.5

2316.1

2373.0

2446.8

2514.3

2575.0

2635.2

2701.1

2772.8

2848.3

Services

6851.4

6908.1

6951.3

7115.5

7340.1

7507.3

7675.2

7837.6

8061.8

8342.8

8625.8

1802.3

1964.1

2032.9

2172.7

2223.5

2210.4

2314.2

2457.1

2632.7

2776.2

2880.8

847.9

939.2

982.3

1047.4

1084.5

1047.8

1098.1

1181.7

1296.7

1395.5

1463.5

285.9

303.1

317.7

329.6

343.9

350.2

376.7

412.9

441.9

461.7

478.6

Computers & Peripherals

83.0

88.4

88.5

90.2

87.1

84.0

91.3

101.5

105.9

109.0

109.8

Communications Equipment

91.8

96.3

106.2

115.3

133.2

140.2

153.8

163.9

167.5

171.8

178.3

Industrial Equipment

183.3

199.8

196.7

205.0

207.3

212.1

227.2

242.6

272.8

305.4

318.3

Transportation Equipment

173.9

213.1

240.6

272.3

305.6

286.7

290.3

306.5

338.5

346.5

339.3

27.9

29.2

31.7

35.1

37.2

27.9

31.5

33.5

43.9

47.9

49.7

48.1

58.1

61.3

71.1

77.8

60.3

61.5

65.1

67.4

67.8

68.3

374.7

423.1

428.8

474.0

465.4

446.4

471.5

499.8

528.9

554.0

571.6

Commercial & Health

94.7

102.8

106.4

120.2

132.9

152.3

158.7

157.7

168.9

191.1

213.0

Manufacturing

39.1

44.9

46.7

52.8

70.7

66.2

57.7

57.0

73.5

77.4

71.7

Power & Communication

74.1

89.7

85.7

98.5

95.2

99.5

93.7

91.8

92.8

90.4

87.2

110.9

123.8

126.0

134.2

95.9

54.5

86.2

110.9

108.4

108.3

111.6

56.2

61.5

64.1

68.7

75.9

81.5

83.2

90.6

95.0

98.2

101.2

384.5

436.5

488.3

505.2

556.9

587.4

597.9

622.3

664.8

693.7

721.8

Exports

1898.3

1963.2

2031.5

2118.4

2127.1

2120.1

2191.4

2337.8

2547.0

2715.7

2841.8

Imports

2357.7

2410.2

2436.4

2546.1

2672.4

2706.3

2813.2

2976.8

3287.0

3665.1

3958.9

Federal Government

1236.4

1213.5

1142.8

1115.0

1114.1

1114.6

1116.4

1148.1

1176.0

1193.9

1193.7

State & Local Government

1761.0

1728.1

1714.1

1723.0

1762.8

1783.6

1785.0

1801.0

1829.2

1858.2

1885.7

Nonresidential Fixed Investment Equipment & Software Information Processing Equipment

Aircraft Other Equipment Structures

Mining & Petroleum Other Residential Fixed Investment

Institute for Economic Competitiveness

21

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

Table 3. Quarterly Summary of the Forecast of the U.S. 2018Q1

2018Q2

2018Q3

2018Q4

2019Q1

2019Q2

2019Q3

2019Q4

2020Q1

2020Q2

2020Q3

2020Q4

2021Q1

2021Q2

2021Q3

2021Q4

Composition of Real GDP, Percent Change, Annual Rate Gross Domestic Product 2.3 3.2 Final Sales of Domestic Product 1.9 3.1 Total Consumption 1.1 2.2 Durables -3.3 1.5 Nondurables 0.1 2.1 Services 2.1 2.3 Nonresidential Fixed Investment 6.1 6.0 Equipment & Software 4.7 3.8 Information Processing Equipment 9.6 9.5 Computers & Peripherals 34.2 13.7 Communications Equipment 0.1 6.4 Industrial Equipment 4.2 7.4 Transportation Equipment 3.9 -8.0 Aircraft -8.8 39.6 Other Equipment -2.4 -4.5 Structures 12.3 8.6 Commercial & Health Care 6.0 2.5 Manufacturing 9.1 -9.0 Power & Communication 3.1 1.4 Mining & Petroleum 37.7 40.5 Other 10.2 5.6 Residential Fixed Investment 0.0 5.2 Exports 4.8 8.3 Imports 2.6 5.0 Federal Government 1.7 5.4 State & Local Government 0.8 0.2

3.7 3.5 3.0 8.2 2.7 2.3 6.3 7.9 10.7 9.3 3.8 8.9 4.4 36.4 -34.6 4.0 -5.7 19.0 -3.6 6.9 17.9 11.0 10.8 8.6 2.6 0.5

4.1 3.6 2.7 5.7 2.3 2.4 7.4 11.4 8.1 2.1 3.8 11.0 25.3 19.8 33.2 3.5 -1.8 36.4 -1.8 0.0 4.4 9.0 12.4 9.5 3.1 1.7

3.9 3.4 3.3 6.3 2.7 3.0 8.1 11.3 7.4 0.0 2.4 14.2 10.7 30.0 6.2 6.7 15.0 38.9 0.9 -7.7 0.6 7.6 8.7 10.6 1.2 2.0

3.4 3.0 3.7 8.9 2.4 3.2 7.2 10.2 5.0 5.4 0.0 12.5 14.9 69.9 9.0 6.2 15.2 25.2 3.6 -10.7 4.3 6.3 6.2 12.1 3.0 1.8

2.8 2.8 3.4 6.7 2.5 3.2 6.8 9.3 4.3 5.7 0.0 16.3 4.2 7.1 5.9 6.7 8.3 38.1 5.3 -7.5 2.4 2.2 7.7 12.4 2.3 1.7

2.7 2.8 3.6 7.8 2.4 3.4 6.1 7.8 4.6 4.6 1.3 14.0 0.4 6.4 0.6 7.2 10.2 23.3 3.3 -2.3 5.3 2.2 8.3 12.4 1.1 1.5

2.7 2.8 3.9 8.9 2.6 3.5 5.1 7.3 4.9 2.7 3.2 14.2 3.0 4.8 -4.1 4.2 9.4 5.4 -6.5 6.7 2.9 3.2 6.6 11.8 1.5 1.6

3.0 3.1 4.0 8.7 2.8 3.7 4.7 6.8 4.5 1.9 3.9 11.2 0.8 6.5 -0.6 3.2 19.4 -12.7 -5.7 0.9 2.8 5.5 5.7 10.7 3.6 1.5

2.8 2.8 4.0 8.4 3.0 3.6 5.0 7.4 3.9 -0.1 4.4 5.5 0.5 6.3 1.2 2.9 17.8 -15.2 -5.6 0.8 3.8 7.4 5.6 10.8 -1.2 1.5

2.7 2.8 3.8 7.1 2.8 3.6 4.3 5.8 3.4 -0.1 3.7 4.6 -0.7 4.6 2.3 2.9 16.6 -11.1 -9.1 3.6 1.7 7.9 4.9 9.7 -0.6 1.5

2.3 2.4 3.3 4.8 2.6 3.2 3.7 4.7 3.5 0.6 3.8 4.0 -1.1 3.7 0.3 3.3 11.1 -10.3 -0.7 3.8 2.4 3.1 4.3 7.8 0.4 1.5

2.2 2.4 3.3 4.3 2.8 3.3 3.1 3.6 3.6 0.7 3.5 2.7 -5.0 2.3 0.0 3.4 6.7 0.1 0.4 1.8 3.7 1.0 4.1 6.5 -0.1 1.5

2.3 2.6 3.4 5.5 2.7 3.2 2.9 3.1 3.9 1.8 3.5 2.7 -4.6 2.7 0.9 3.6 7.6 1.3 -3.0 3.5 4.0 1.7 4.4 5.8 -0.2 1.4

2.4 2.6 3.4 5.9 2.4 3.2 2.9 3.3 3.8 2.2 3.4 2.8 -4.1 2.7 0.4 2.9 2.5 1.8 -2.7 7.1 5.6 2.4 4.5 5.5 -0.6 1.4

Billions of Dollars Real GDP Nominal GDP

17385.8 19965.3

17524.9 20204.2

17686.0 20502.6

17863.4 20838.9

18034.1 21180.8

18183.8 21507.3

18310.9 21805.0

18433.9 22100.4

18555.6 22396.0

18691.6 22696.0

18819.9 22987.5

18947.7 23282.3

19058.0 23566.5

19162.9 23832.6

19273.3 24102.4

19389.0 24375.4

Prices & Wages, Percent Change, Annual Rate GDP Deflator 2.0 Consumer Prices 3.5 Excl. Food & Energy 3.0 Producer Prices, Finished Goods 3.6 Employment Cost Index - Total Comp. 4.0

1.5 2.7 3.1 1.2 3.6

2.2 3.8 3.2 3.2 3.2

2.5 2.1 3.3 0.8 3.5

2.7 1.1 3.0 -1.5 3.5

2.9 2.7 2.9 1.1 3.5

2.7 2.9 2.8 2.0 3.5

2.7 3.3 2.8 3.0 3.4

2.7 2.2 2.6 2.0 3.2

2.4 2.4 2.6 2.1 3.4

2.4 2.4 2.6 2.1 3.4

2.4 2.2 2.5 2.1 3.3

2.6 2.0 2.4 1.9 3.3

2.3 2.1 2.4 1.9 3.4

2.2 2.1 2.4 1.9 3.3

2.1 2.1 2.3 2.0 3.3

62.9 0.7 4.5 75.6 30.2 98.9 17.153 1.318 4.903 4.1 1.7 -860 -554

60.7 2.1 4.5 75.8 34.9 85.7 16.795 1.335 5.069 4.0 1.4 -870 -581

64.5 2.6 3.2 76.3 44.2 86.3 17.038 1.399 5.108 3.9 1.8 -850 -604

58.0 2.6 4.7 77.1 62.1 85.3 17.092 1.472 5.213 3.8 1.7 -851 -578

50.0 2.3 4.2 77.6 84.4 83.8 17.1 1.5 5.2 3.8 1.7 -902.1 -551.0

50.8 1.8 3.5 77.9 99.4 84.1 17.3 1.5 5.2 3.7 1.5 -907.0 -563.4

53.2 1.6 3.1 77.9 103.2 84.4 17.2 1.5 5.2 3.8 1.2 -916.7 -580.4

58.0 1.5 2.7 77.9 100.2 84.6 17.3 1.5 5.2 3.8 1.3 -922.1 -610.3

57.6 1.5 2.6 77.8 94.9 84.6 17.6 1.6 5.3 3.8 1.4 -954.6 -636.5

57.9 1.7 2.5 77.6 90.2 85.3 17.9 1.6 5.4 3.7 2.0 -969.1 -672.7

58.2 1.6 2.2 77.5 88.8 86.1 18.1 1.7 5.5 3.7 0.9 -963.4 -719.8

57.9 1.5 2.5 77.3 89.6 86.9 18.1 1.7 5.6 3.6 1.1 -962.6 -775.3

57.2 1.3 2.8 77.0 88.5 87.4 18.0 1.7 5.6 3.6 1.3 -986.4 -806.7

56.5 56.1 1.5 1.7 2.0 1.9 76.7 76.3 82.1 71.2 87.2 87.9 17.9 17.8 1.7 1.7 5.7 5.7 3.6 3.6 1.1 1.0 -997.0 -1006.3 -841.3 -872.4

55.9 1.9 1.7 76.1 62.1 88.6 17.9 1.7 5.7 3.6 0.9 -1018.4 -892.1

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))

1.45 1.56 1.94 2.54 2.76 3.03 4.27 2733 21.1 1.109 -11.9

1.73 1.97 2.31 3.02 3.24 3.38 4.77 2871 21.9 1.063 -15.5

1.94 2.18 2.57 3.34 3.58 3.66 5.14 2850 -2.9 1.072 3.4

2.21 2.31 2.83 3.62 3.85 3.98 5.41 2790 -8.2 1.100 11.1

2.5 2.5 3.0 3.8 4.1 4.3 5.7 2718.2 -9.9 1.1 12.8

2.7 2.7 3.3 4.0 4.3 4.5 5.9 2665.8 -7.5 1.2 12.4

3.0 2.8 3.4 4.2 4.4 4.6 6.0 2623.7 -6.2 1.2 7.6

3.2 3.0 3.6 4.3 4.5 4.8 6.1 2607.0 -2.5 1.2 3.6

3.2 3.1 3.6 4.3 4.6 4.9 6.2 2620.4 2.1 1.2 1.9

3.5 3.3 3.7 4.4 4.6 4.9 6.3 2627.5 1.1 1.2 -7.7

3.5 3.3 3.8 4.4 4.7 5.0 6.3 2645.2 2.7 1.2 -3.0

3.7 3.5 4.1 4.6 4.8 5.1 6.4 2665.4 3.1 1.2 -2.2

3.8 3.5 4.1 4.6 4.9 5.2 6.5 2704.6 6.0 1.2 -2.7

4.0 3.7 4.3 4.8 5.0 5.3 6.6 2738.1 5.1 1.2 -1.8

4.3 3.9 4.5 4.8 5.0 5.3 6.6 2776.5 5.7 1.1 -1.6

4.3 3.9 4.5 4.8 5.0 5.3 6.6 2807.7 4.6 1.1 -1.7

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)

16837 4.4 14769 6.2 12931 3.4 3.1 1705 5.9

17029 4.6 14917 4.1 13007 2.4 3.2 1723 4.3

17195 3.9 15046 3.5 13042 1.1 2.8 1819 24.2

17427 5.5 15243 5.4 13160 3.7 3.0 1880 14.3

17707 6.6 15494 6.7 13342 5.7 3.5 1930 11.0

17955 5.7 15713 5.8 13472 4.0 3.6 2001 15.5

18209 5.8 15935 5.8 13596 3.7 3.6 2052 10.6

18468 5.8 16163 5.8 13713 3.5 3.6 2094 8.5

18746 6.1 16408 6.2 13860 4.3 3.7 2117 4.4

19020 6.0 16648 6.0 13995 4.0 3.6 2146 5.6

19278 5.6 16876 5.6 14116 3.5 3.5 2174 5.3

19543 5.6 17106 5.6 14239 3.5 3.4 2185 2.1

19811 5.6 17331 5.4 14363 3.5 3.4 2193 1.5

20057 5.1 17545 5.0 14473 3.1 3.4 2194 0.1

20303 5.0 17758 5.0 14582 3.0 3.3 2193 0.0

20546 4.9 17969 4.8 14689 3.0 3.2 2213 3.6

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 / June 2018

T ables

Table 4. Quarterly Gross Domestic Product 2018Q1

Table 4. Quarterly Gross Domestic Product 2018Q2

2018Q3

2018Q4

2019Q1

2019Q2

2019Q3

2019Q4

2020Q1

2020Q2

2020Q3

2020Q4

2021Q1

2021Q2

2021Q3

2021Q4

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

17385.8 17524.9 17686.0 17863.4 18034.1 18183.8 18310.9 18433.9 18555.6 18691.6 18819.9 18947.7 19058.0 19162.9 19273.3 19389.0 17332.3 17464.5 17617.2 17775.7 17924.0 18059.1 18182.9 18309.3 18436.7 18577.7 18707.7 18835.0 18946.5 19057.6 19178.6 19302.9 12066.8 12132.4 12223.4 12306.1 12406.3 12518.2 12624.7 12738.3 12861.2 12989.2 13117.2 13241.0 13348.8 13457.2 13569.0 13681.4 1754.0

1760.7

1795.6

1820.5

1848.5

1888.1

1919.1

1955.5

1997.7

2039.9

2081.4

2117.5

2142.8

2165.6

2194.9

2226.6

Nondurables

2612.5

2625.9

2643.6

2658.9

2676.4

2692.5

2709.5

2725.9

2743.7

2762.6

2782.8

2801.8

2820.0

2839.4

2858.2

2875.5

Services

7769.5

7814.4

7859.8

7906.5

7965.7

8029.1

8092.7

8160.0

8230.8

8305.7

8380.0

8454.9

8522.7

8591.5

8660.0

8728.8

Nonresidential Fixed Investment Equipment & Software Information Processing Equipment Computers & Peripherals Communications Equipment

2400.8

2436.2

2473.4

2518.0

2567.4

2612.5

2655.7

2695.1

2728.7

2759.9

2793.6

2822.8

2848.7

2870.8

2891.5

2912.1

1154.1

1165.1

1187.5

1220.1

1253.1

1283.8

1312.5

1337.3

1361.0

1383.6

1408.7

1428.6

1445.1

1458.1

1469.4

1481.4

398.8

407.9

418.4

426.6

434.3

439.6

444.3

449.3

454.7

459.8

464.2

468.1

472.1

476.3

480.8

485.4

97.9

101.0

103.3

103.9

103.8

105.2

106.7

107.9

108.6

109.1

109.1

109.1

109.2

109.4

109.9

110.5

160.8

163.4

164.9

166.4

167.4

167.4

167.4

167.9

169.3

170.9

172.7

174.3

176.0

177.5

179.0

180.5

Industrial Equipment

235.2

239.4

244.6

251.1

259.6

267.3

277.6

286.8

296.5

304.4

308.5

312.1

315.2

317.3

319.4

321.6

Transportation Equipment

305.3

298.9

302.2

319.7

328.0

339.5

343.0

343.4

345.9

346.6

347.0

346.4

345.5

341.1

337.1

333.6

29.9

32.5

35.1

36.7

39.2

44.8

45.5

46.3

46.8

47.5

48.3

48.8

49.3

49.5

49.9

50.2

Aircraft Other Equipment Structures Commercial & Health

67.9

67.2

60.4

64.9

65.8

67.3

68.3

68.4

67.7

67.5

67.7

68.1

68.2

68.2

68.3

68.4

488.6

498.8

503.7

508.1

516.4

524.2

532.8

542.2

547.7

552.1

556.0

560.1

564.6

569.3

574.3

578.4

158.3

159.2

156.9

156.2

161.8

167.6

171.0

175.2

179.2

187.3

195.1

202.8

208.1

211.6

215.5

216.8

Manufacturing

55.6

54.4

56.8

61.3

66.6

70.5

76.4

80.5

81.6

78.8

75.7

73.5

71.5

71.5

71.7

72.1

Power & Communication

92.1

92.4

91.6

91.2

91.4

92.2

93.4

94.2

92.6

91.3

90.0

87.8

87.7

87.8

87.1

86.5

103.1

112.3

114.2

114.2

111.9

108.8

106.7

106.1

107.8

108.0

108.3

109.2

110.2

110.7

111.7

113.6

87.5

88.7

92.5

93.5

93.6

94.6

95.2

96.4

97.1

97.8

98.7

99.1

99.7

100.6

101.6

103.0

605.0

612.7

628.9

642.6

654.5

664.7

668.2

671.9

677.3

686.5

698.9

712.3

717.8

719.7

722.7

727.0

Exports

2256.3

2301.8

2361.4

2431.5

2482.5

2519.9

2567.0

2618.7

2661.1

2698.2

2735.3

2768.1

2797.1

2825.5

2856.4

2888.3

Imports

2902.2

2938.1

2999.2

3067.8

3146.1

3236.9

3333.2

3431.9

3528.7

3619.2

3713.0

3799.6

3871.5

3933.0

3988.8

4042.4

Federal Government

1131.0

1145.9

1153.3

1162.0

1165.5

1174.1

1180.6

1183.9

1188.3

1198.9

1195.1

1193.2

1194.5

1194.3

1193.8

1192.1

State & Local Government

1797.2

1798.1

1800.5

1808.2

1817.4

1825.5

1833.4

1840.4

1848.0

1854.8

1861.6

1868.4

1875.3

1882.4

1889.1

1895.8

Mining & Petroleum Other Residential Fixed Investment

Institute for Economic Competitiveness

23

T ables 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

136.37

138.94

141.82

144.35

146.62

148.94

151.26

153.37

155.13

Private Nonfarm

109.85

112.25

114.52

117.06

119.79

122.12

124.30

126.60

128.73

130.47

132.11

Mining

0.74

0.80

0.81

0.84

0.76

0.62

0.63

0.69

0.71

0.72

0.73

Construction

5.53

5.65

5.86

6.15

6.46

6.73

6.95

7.23

7.63

8.10

8.48

Manufacturing

11.73

11.93

12.02

12.18

12.34

12.35

12.44

12.72

12.82

12.90

12.89

Trade, Transportation and Utilities

25.07

25.47

25.85

26.38

26.89

27.26

27.49

27.73

27.83

27.87

27.88

Transportation & Warehousing

4.30

4.42

4.50

4.66

4.87

5.01

5.17

5.31

5.40

5.44

5.47

Financial Activities

7.70

7.78

7.89

7.98

8.12

8.29

8.45

8.60

8.71

8.85

8.97

Education & Health

20.32

20.77

21.08

21.44

22.02

22.64

23.19

23.58

23.68

23.78

24.05

Professional & Business Services

17.33

17.93

18.52

19.06

19.63

20.05

20.47

21.09

22.39

23.31

23.94

2.67

2.67

2.70

2.73

2.75

2.79

2.79

2.76

2.73

2.72

2.76

Leisure & Hospitality

13.35

13.77

14.26

14.69

15.15

15.66

16.06

16.31

16.37

16.41

16.62

Government

22.09

21.92

21.85

21.88

22.03

22.23

22.32

22.33

22.53

22.90

23.02

2.86

2.82

2.77

2.73

2.76

2.79

2.81

2.79

2.79

2.92

2.79

19.23

19.10

19.08

19.14

19.27

19.44

19.52

19.54

19.73

19.98

20.23

Total Nonfarm Employment

1.22

1.69

1.64

1.88

2.08

1.78

1.58

1.58

1.56

1.39

1.15

Private Nonfarm

1.84

2.19

2.02

2.22

2.34

1.94

1.79

1.85

1.68

1.35

1.26

13.57

2.08

3.06

3.81

-16.56

-15.18

8.70

10.00

0.88

1.01

2.45

Construction

1.93

1.74

4.36

5.58

5.03

3.32

3.30

4.26

6.65

5.78

3.93

Manufacturing

1.76

1.47

0.97

1.69

0.66

-0.12

1.46

2.12

0.71

0.13

-0.16

Trade, Transportation and Utilities

1.95

1.48

1.84

2.08

1.50

1.39

0.71

0.80

0.13

0.19

-0.03

Transportation & Warehousing

2.33

2.61

1.91

4.54

3.85

3.07

2.94

2.43

1.21

0.73

0.33

Financial Activities

0.47

1.29

1.22

1.52

1.83

2.08

1.84

1.99

0.73

2.18

0.57

Education & Health

1.92

1.99

1.35

2.09

2.96

2.72

2.08

1.42

0.17

0.63

1.18

Professional & Business Services

3.58

3.27

3.16

3.16

2.88

1.83

2.22

4.31

5.72

3.73

1.99

-0.41

-0.18

1.91

0.39

1.01

1.96

-1.25

-1.42

-1.44

0.91

1.92

2.80

3.11

3.62

2.95

3.46

2.93

2.30

1.10

0.09

0.69

1.40

Government

-1.38

-0.38

-0.27

0.47

0.67

1.00

0.13

0.15

1.20

1.07

1.14

Federal

-0.85

-1.04

-2.52

-0.06

0.95

1.46

-0.18

-0.27

0.00

3.91

0.00

State & Local

-1.46

-0.28

0.06

0.55

0.63

0.93

0.18

0.21

1.37

1.14

1.30

Millions

Information

Federal State & Local

Growth Rates

Mining

Information Leisure & Hospitality

24

U.S. Forecast / June 2018

T ables

Table 6. Quarterly Employment

Table 6. Quarterly Employment

2018Q1 2018Q2 2018Q3 2018Q4

2019Q1 2019Q2 2019Q3 2019Q4 2020Q1

2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 2021Q4

Employment (Millions) Total Nonfarm Employment

148.06 148.58 149.23 149.87 150.48 151.06 151.51 152.00 152.51 153.28 153.62 154.05 154.54 154.94 155.33 155.70

Private Nonfarm

125.74 126.26 126.91 127.50 128.06 128.57 128.94 129.37 129.77 130.17 130.73 131.20 131.62 131.96 132.28 132.58

Mining

0.66

0.69

0.70

0.71

0.71

0.71

0.71

0.72

0.72

0.72

0.72

0.72

0.73

0.73

0.74

0.74

Construction

7.14

7.19

7.24

7.33

7.45

7.57

7.69

7.82

7.93

8.05

8.16

8.27

8.36

8.44

8.52

8.59

Manufacturing

12.61 12.71 12.76 12.79 12.80 12.80 12.83 12.88 12.90 12.90 12.90 12.89 12.90 12.89 12.89 12.87

Trade, Transportation and Utilities

27.68 27.68 27.76 27.80 27.83 27.84 27.83 27.84 27.84 27.85 27.90 27.89 27.89 27.88 27.88 27.88

Transportation & Warehousing

5.27

5.29

5.33

5.35

5.37

5.39

5.41

5.42

5.42

5.43

5.45

5.46

5.47

5.48

5.48

5.48

Financial Activities

8.53

8.57

8.63

8.67

8.69

8.70

8.72

8.73

8.78

8.82

8.88

8.92

8.95

8.97

8.98

8.98

Education & Health

23.46 23.54 23.66 23.68 23.65 23.68 23.68 23.72 23.72 23.74 23.80 23.87 23.95 24.01 24.08 24.15

Professional & Business Services

20.77 20.91 21.14 21.54 21.96 22.30 22.54 22.77 22.99 23.21 23.42 23.62 23.79 23.89 23.98 24.09

Information

2.76

2.77

2.76

2.74

2.73

2.75

2.72

2.70

2.71

2.71

2.72

2.72

2.74

2.76

2.77

2.78

Leisure & Hospitality

16.24 16.29 16.35 16.36 16.37 16.36 16.37 16.37 16.37 16.36 16.41 16.48 16.52 16.59 16.65 16.72

Government

22.32 22.32 22.33 22.36 22.43 22.49 22.56 22.63 22.75 23.10 22.90 22.86 22.92 22.99 23.05 23.12

Federal State & Local

2.79

2.79

2.79

2.79

2.79

2.79

2.79

2.79

2.85

3.15

2.89

2.79

2.79

2.79

2.79

2.79

19.53 19.53 19.53 19.57 19.63 19.70 19.77 19.84 19.90 19.95 20.01 20.06 20.13 20.19 20.26 20.32

Growth Rates Total Nonfarm Employment

1.70

1.39

1.77

1.70

1.64

1.52

1.19

1.30

1.36

2.00

0.90

1.13

1.25

1.05

1.00

0.94

Private Nonfarm

2.03

1.64

2.06

1.88

1.73

1.59

1.18

1.31

1.24

1.25

1.70

1.44

1.28

1.03

0.97

0.91

10.40 14.36

9.90

3.71

0.04

0.92

0.61

1.94

1.09

1.47

1.45

0.01

1.45

3.48

2.45

2.33

Mining Construction

6.33

2.77

2.92

4.69

6.74

6.51

6.38

6.32

5.76

5.95

5.53

5.41

4.54

3.82

3.61

3.52

Manufacturing

2.68

3.44

1.29

1.00

0.24

0.06

1.01

1.49

0.75

-0.03

0.00

-0.18

0.02

-0.16

0.07

-0.56

Trade, Transportation and Utilities

1.46

0.01

1.05

0.66

0.44

0.06

-0.10

0.12

0.03

0.10

0.79

-0.17

-0.07

-0.05

-0.05

0.04

Transportation & Warehousing

3.27

1.78

2.64

2.02

1.56

1.31

1.10

0.88

0.41

0.39

1.22

0.91

0.99

0.29

0.00

0.04

Financial Activities

1.51

1.84

2.74

1.84

0.74

0.57

0.82

0.76

1.90

2.01

2.64

2.17

1.31

0.66

0.41

-0.09

Education & Health

1.93

1.38

2.00

0.38

-0.55

0.62

-0.01

0.62

0.03

0.28

1.08

1.13

1.32

1.14

1.12

1.13

Professional & Business Services

2.30

2.69

4.48

7.78

8.03

6.38

4.47

4.01

3.94

4.00

3.64

3.33

2.90

1.71

1.63

1.74

-2.66

1.33

-1.56

-2.77

-1.10

2.11

-3.70

-3.08

1.68

0.47

0.85

0.63

2.44

2.51

1.84

0.87

1.57

1.07

1.70

0.08

0.27

-0.10

0.21

-0.01

-0.15

-0.06

1.23

1.73

0.92

1.64

1.53

1.51

Government

-0.17

0.00

0.10

0.66

1.14

1.14

1.30

1.22

2.03

6.40

-3.51

-0.66

1.09

1.16

1.15

1.16

Federal

-1.09

0.00

0.00

0.00

0.00

0.00

0.00

0.00

7.81 49.29 -29.17 -12.28

0.00

0.00

0.00

0.00

State & Local

-0.04

0.00

0.12

0.75

1.30

1.30

1.48

1.40

1.24

1.24

1.32

1.31

1.32

Information Leisure & Hospitality

1.13

1.10

1.10

Institute for Economic Competitiveness

25

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

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

2018Q1 2018Q2 2018Q3 2018Q4

2019Q1 2019Q2 2019Q3 2019Q4 2020Q1

2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 2021Q4

GDP

114.8 115.3 115.9 116.7 117.4 118.3 119.1 119.9 120.7 121.4 122.1 122.9 123.7 124.4 125.1 125.7

Consumption

114.2 114.7 115.4 115.8 116.1 116.6 117.2 117.9 118.4 119.0 119.6 120.1 120.7 121.2 121.8 122.3

Durables Motor Vehicles Furniture

85.4

85.1

84.9

84.6

84.2

83.8

83.5

83.2

83.0

82.9

82.8

82.7

82.7

82.6

82.6

82.5

107.6 107.5 107.6 107.6 107.4 107.2 107.2 107.4 107.4 107.6 107.9 108.3 108.7 109.2 109.6 110.1 80.9

80.7

80.5

80.2

80.0

79.8

79.6

79.4

79.2

79.1

79.0

78.9

78.8

78.7

78.6

78.5

Other Durables

101.1 101.6 101.7 101.8 101.7 101.6 101.6 101.7 101.8 102.1 102.3 102.6 102.8 103.0 103.1 103.3

Nondurables

111.5 110.9 111.4 111.1 110.4 110.6 111.2 112.0 112.3 112.8 113.4 113.8 114.2 114.7 115.1 115.6

Food

110.1 110.4 110.5 110.9 111.2 111.5 111.7 112.0 112.3 112.7 113.2 113.7 114.2 114.6 115.0 115.4

Clothing & Shoes

104.4 104.8 103.9 103.2 102.6 102.0 101.6 101.3 101.2 101.1 101.1 101.1 101.1 101.1 101.1 101.1

Gasoline & Oil

120.6 113.1 116.7 111.5 101.2 100.8 102.7 107.2 106.7 106.9 107.1 106.6 105.7 104.8 104.2 103.9

Fuel

116.9 112.2 111.2 101.6 106.0 106.2 108.3 112.7 113.0 113.8 114.6 114.8 114.5 114.3 114.3 114.6

Services

120.6 121.6 122.5 123.4 124.2 125.0 125.8 126.6 127.4 128.2 128.9 129.7 130.4 131.2 131.9 132.6

Housing

122.4 123.4 124.5 125.6 126.6 127.7 128.7 129.6 130.5 131.4 132.2 133.0 133.9 134.7 135.5 136.3

Electricity

111.0 111.6 112.3 113.0 113.0 113.4 114.0 114.6 114.7 115.3 116.0 116.6 116.8 117.5 118.1 118.7

Natural Gas Water & Sewer Telephone

90.2

91.7

93.0

94.0

92.7

93.4

94.2

94.7

93.5

94.0

95.2

95.7

94.3

95.3

96.4

97.2

146.1 147.3 148.1 148.8 149.6 150.5 151.5 152.5 153.5 154.5 155.6 156.8 158.1 159.5 160.9 162.3 85.1

85.1

85.5

85.6

85.7

85.8

85.9

85.9

86.0

86.1

86.2

86.2

86.3

86.4

86.5

86.5

Transportation

113.8 115.2 116.2 116.7 117.0 117.5 118.0 118.5 118.9 119.4 119.9 120.4 120.8 121.3 121.8 122.3

Other Services

122.0 122.6 123.6 124.6 125.4 126.1 126.9 127.6 128.5 129.4 130.3 131.2 132.0 132.8 133.6 134.5

26

U.S. Forecast / June 2018

T ables Table 8. Percent Change in Implicit Price Deflators

Table 8. Percent Change in Implicit Price Deflators

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

GDP

2.0

1.5

2.2

2.5

2.7

2.9

2.7

2.7

2.7

2.4

2.4

2.4

2.6

2.3

2.2

2.1

Consumption

2.7

1.6

2.4

1.6

1.0

1.8

2.0

2.3

1.8

2.0

2.0

2.0

1.8

1.8

1.8

1.8

Durables

-1.6

-1.4

-1.0

-1.5

-1.9

-1.9

-1.5

-1.1

-1.1

-0.7

-0.4

-0.2

-0.3

-0.3

-0.2

-0.3

Motor Vehicles

-1.2

-0.5

0.7

-0.1

-0.8

-0.7

0.2

0.5

0.3

0.7

1.0

1.4

1.5

1.8

1.7

1.6

Furniture

0.0

-1.3

-1.0

-1.4

-1.0

-0.9

-1.1

-0.8

-0.8

-0.7

-0.7

-0.6

-0.3

-0.6

-0.5

-0.6

Other Durables

1.3

1.9

0.5

0.1

-0.3

-0.4

-0.1

0.5

0.6

0.9

1.0

1.0

0.9

0.7

0.6

0.5

Nondurables

3.9

-2.0

1.7

-1.0

-2.6

0.9

1.9

3.0

1.2

1.8

1.9

1.7

1.5

1.5

1.5

1.6

Food

0.2

1.2

0.3

1.5

1.2

0.9

0.8

1.0

1.1

1.5

1.7

1.8

1.8

1.5

1.4

1.3

Clothing & Shoes

8.9

1.2

-3.3

-2.4

-2.6

-2.3

-1.4

-1.1

-0.7

-0.1

0.0

0.0

-0.2

0.2

0.1

0.1

-1.4

7.9

18.3

-1.8

0.8

0.8

-1.6

-3.5

-3.2

-2.3

-1.3

18.5

0.8

8.1

17.2

1.2

2.8

2.7

0.8

-1.0

-0.8

0.1

0.9

Gasoline & Oil

19.9 -22.6

13.6 -16.8 -32.2

Fuel

39.2 -15.1

-3.5 -30.3

Services

3.1

3.3

3.2

2.9

2.6

2.6

2.6

2.6

2.4

2.4

2.4

2.4

2.2

2.3

2.3

2.2

Housing

3.3

3.5

3.7

3.4

3.4

3.3

3.2

3.0

2.8

2.7

2.6

2.5

2.5

2.5

2.4

2.4

Electricity

1.5

2.3

2.6

2.3

0.0

1.7

2.0

1.9

0.7

2.0

2.5

2.0

0.6

2.4

2.3

2.1

Natural Gas

3.8

6.9

5.7

4.6

-5.6

3.0

3.4

2.3

-5.0

2.2

5.3

2.2

-5.8

4.3

4.4

3.5

Water & Sewer

3.2

3.4

2.0

2.1

2.2

2.4

2.5

2.7

2.7

2.8

2.9

3.1

3.2

3.6

3.6

3.5

Telephone

-1.4

0.1

1.8

0.4

0.8

0.4

0.2

0.2

0.5

0.3

0.4

0.1

0.4

0.5

0.4

0.3

Transportation

-0.2

4.8

3.5

1.7

1.3

1.8

1.7

1.6

1.3

1.5

1.7

1.7

1.6

1.7

1.7

1.6

Other Services

3.4

1.8

3.4

3.3

2.4

2.4

2.4

2.5

2.7

2.8

2.8

2.9

2.6

2.4

2.4

2.5

Institute for Economic Competitiveness

27

T ables

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

2018

Forecast 2019 2020 2021

GDP

103.3 105.2 106.9 108.8 110.0 111.4 113.4 115.7

118.7 121.8 124.7

Consumption

104.1 106.1 107.5 109.2 109.5 110.8 112.7 115.0

117.0 119.3 121.5

2011

Durables Motor Vehicles Furniture

97.7

2012

96.4

History 2013 2014 2015

94.6

92.4

90.4

2016

88.5

2017

86.6

85.0

108.9 110.2 110.8 110.8 110.8 109.7 108.5 107.6 94.2

94.0

92.1

88.8

86.8

84.5

82.2

80.6

83.7

82.8

82.6

107.3 107.8 109.4 79.7

79.1

78.6

Other Durables

103.6 104.2 104.0 102.2

99.6 100.8 101.2 101.6

101.6 102.2 103.0

Nondurables

109.2 111.8 111.9 112.7 109.0 107.8 109.6 111.2

111.0 113.1 114.9

Food

104.3 106.7 107.8 109.8 111.0 109.9 109.8 110.5

111.6 113.0 114.8

Clothing & Shoes

101.1 104.6 105.4 105.6 104.3 103.9 103.4 104.1

101.9 101.1 101.1

Gasoline & Oil

149.3 154.7 149.7 145.5 107.0

95.3 107.2 115.5

103.0 106.8 104.7

Fuel

148.8 150.7 148.9 148.2 105.3

87.7 100.4 110.5

108.3 114.1 114.4

Services

103.5 105.8 108.3 110.9 113.1 115.9 118.6 122.1

125.4 128.5 131.5

Housing

101.4 103.5 106.0 108.8 112.1 115.9 119.9 124.0

128.1 131.8 135.1

Electricity

101.8 101.8 104.0 107.9 108.5 107.3 109.6 112.0

113.7 115.7 117.8

Natural Gas Water & Sewer Telephone

95.1

85.7

90.1

96.2

84.8

82.7

89.3

92.2

111.8 118.0 123.3 127.9 133.7 138.6 143.4 147.6 97.5

97.7

97.1

96.3

94.1

93.7

86.3

85.3

93.7

94.6

95.8

151.0 155.1 160.2 85.8

86.1

86.4

Transportation

104.8 106.8 108.3 109.5 109.9 111.2 113.1 115.5

117.8 119.6 121.6

Other Services

105.6 108.3 111.2 113.8 115.9 118.0 120.2 123.2

126.5 129.8 133.2

28

U.S. Forecast / June 2018

T ables Table 10. Percent Change in Implicit Price Deflators

Table 10. Percent Change in Implicit Price Deflators History 2014 2015

2011

2012

2013

GDP

1.9

1.9

1.6

1.6

Consumption

2.7

1.8

1.2

-0.5

-1.6

Durables Motor Vehicles

Forecast 2019 2020 2021

2016

2017

2018

1.1

1.5

1.9

2.1

2.8

2.5

2.3

1.2

0.4

1.6

1.7

2.1

1.8

1.9

1.8

-2.1

-2.4

-1.9

-2.7

-1.8

-1.4

-1.6

-0.6

-0.3

3.3

0.7

0.4

-0.2

-0.1

-1.4

-1.0

-0.3

-0.2

0.9

1.6

-0.2

-0.4

-3.0

-3.0

-2.3

-2.9

-2.9

-0.9

-1.0

-0.7

-0.5

Other Durables

3.2

-0.5

-0.6

-1.9

-2.7

2.3

0.0

0.9

-0.1

0.9

0.7

Nondurables

5.9

1.9

-0.5

-0.3

-3.0

0.5

1.5

0.7

0.8

1.7

1.5

Food

5.1

1.2

0.7

2.7

0.3

-1.7

0.7

0.8

1.0

1.5

1.5

Furniture

Clothing & Shoes

4.4

2.3

0.1

-0.4

-1.3

-0.1

-1.2

1.1

-1.8

-0.2

0.0

Gasoline & Oil

20.4

4.9

-4.5

-10.3

-17.5

7.7

15.5

-1.5

-1.8

-0.5

-2.6

Fuel

26.2

3.1

-1.2

-7.9

-29.6

6.9

16.8

-2.4

11.2

1.9

-0.2

Services

2.1

2.3

2.3

2.3

1.9

2.7

2.3

3.1

2.6

2.4

2.3

Housing

1.9

2.2

2.4

2.7

3.2

3.6

3.3

3.5

3.2

2.6

2.4

Electricity

2.4

-0.6

3.2

3.1

-0.6

0.4

2.3

2.2

1.4

1.8

1.8

-1.6

-4.1

2.4

6.1

-12.4

6.4

4.3

5.2

0.8

1.2

1.6

4.9

6.0

3.8

4.4

4.1

3.5

3.3

2.7

2.4

2.9

3.5

-1.5

0.1

-0.5

-2.1

0.2

-2.8

-7.1

0.2

0.4

0.3

0.4

Transportation

3.1

1.3

1.7

1.0

0.1

1.2

2.2

2.4

1.6

1.6

1.6

Other Services

2.8

2.2

2.9

2.2

1.6

1.9

1.8

3.0

2.4

2.8

2.5

Natural Gas Water & Sewer Telephone

Table 11. Personal Income and its Components

Table 11. Personal Income and its Components 2011

2012

2013

History 2014

2015

2016

2017

2018

2019

Forecast 2020

2021

Personal Income Billions Current Dollars Personal Income

13254.5 13915.1 14073.7 14818.2 15553.0 15928.7 16427.3 17122.1

18084.9 19146.7 20179.2

Wages & Salaries

8269.0

8609.9

8842.4

9256.5

9708.3

9978.6 10307.2 10753.6

Other Labor Income

1142.0

1165.3

1199.0

1231.7

1278.0

1309.8

1345.8

1378.4

1439.4

1515.6

1593.2

Nonfarm Income

1068.1

1179.8

1197.0

1247.7

1265.1

1298.7

1350.9

1421.3

1540.2

1612.7

1654.9

75.5

61.6

87.8

68.1

53.7

43.2

35.1

28.6

44.7

69.3

68.9

485.3

525.3

567.1

611.7

662.5

707.3

743.9

772.9

796.3

796.8

792.1

Farm Income Rental Income Dividends

11292.9 11904.7 12524.2

682.2

834.9

794.4

941.9

1019.8

962.5

965.3

1000.6

1055.3

1151.4

1218.6

Interest Income

1231.6

1288.8

1261.6

1303.3

1367.3

1415.3

1477.1

1560.6

1672.4

1854.1

2094.6

Transfer Payments

2360.5

2366.3

2428.0

2544.4

2684.4

2768.4

2850.1

2940.8

3095.8

3242.5

3384.8

423.9

437.2

577.8

607.3

636.6

661.7

692.1

722.3

750.9

789.1

828.7

Personal Income

6.2

5.0

1.2

5.3

5.0

2.4

3.1

4.2

5.6

5.9

5.4

Wages & Salaries

3.9

4.1

2.7

4.7

4.9

2.8

3.3

4.3

5.0

5.4

5.2

Other Labor Income

2.5

2.0

2.9

2.7

3.8

2.5

2.7

2.4

4.4

5.3

5.1

Nonfarm Income

8.2

10.5

1.5

4.2

1.4

2.7

4.0

5.2

8.4

4.7

2.6

Farm Income

66.2

-18.5

43.1

-21.4

-20.8

-19.3

-19.0

-16.9

55.8

58.7

0.0

Rental Income

20.8

4.4

8.9

8.0

8.5

5.5

5.4

3.6

1.9

-0.5

-0.5

Dividends

23.5

46.3

-8.2

21.9

0.5

-4.7

2.5

4.5

7.1

8.7

4.0

3.3

5.1

-2.7

4.7

5.0

4.4

4.9

5.9

8.5

12.0

13.3

0.4

1.2

2.5

6.0

4.4

3.1

2.8

3.6

5.7

4.7

4.3

-13.5

5.2

43.9

5.7

5.1

2.5

5.8

3.8

4.8

5.2

4.9

Personal Social Insurance Tax Percent Change, Annual Rate

Interest Income Transfer Payments Personal Social Insurance Tax

Institute for Economic Competitiveness

29

T ables

Table 12. Personal Consumption Expenditures (Current Dollars)

Table 12. Personal Consumption Expenditures (Current Dollars)

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

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

13782.3 13914.2 14101.9 14254.6 14407.2 14600.6 14797.1 15013.6 15225.7 15452.0 15682.0 15906.9 16108.1 16313.3 16524.4 16736.8

durable goods

1499.2 1499.2 1525.1 1540.3 1556.6 1582.3 1602.0 1627.9 1658.3 1690.4 1723.0 1752.0 1771.6 1789.3 1812.4 1837.1

furniture and appliances

347.2

350.6

356.2

362.3

367.6

372.2

376.7

381.8

387.4

393.8

401.3

409.0

416.3

422.8

428.6

433.8

information processing equipment

129.4

129.5

132.1

134.2

136.7

139.6

142.1

144.4

146.5

148.5

150.6

152.9

154.9

156.6

158.1

159.8

motor vehicles and parts

497.5

493.1

504.4

505.7

510.3

522.4

528.5

539.5

555.5

572.2

588.2

599.9

603.9

607.7

617.0

628.6

other durable goods

165.7

163.5

167.8

172.2

175.3

178.7

181.8

185.1

188.0

191.1

194.4

197.6

200.1

202.3

204.4

206.3

nondurables

2912.3 2912.7 2944.7 2954.6 2954.4 2978.9 3011.8

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

3052.6 3082.1 3117.1

3154.5 3189.4 3221.7 3255.7 3289.7 3322.7

404.6

407.1

408.5

411.4

412.9

414.1

416.5

419.0

422.5

426.8

431.0

435.0

438.7

443.0

447.2

22.4

22.3

22.1

20.1

20.9

21.0

21.3

22.1

22.2

22.4

22.5

22.5

22.4

22.4

22.4

450.8 22.4

318.2

297.4

308.6

297.7

273.6

274.0

279.7

291.2

291.1

292.9

294.5

294.5

293.1

291.9

291.2

291.3

956.7

961.9

965.8

972.6

978.5

984.3

990.4

997.1 1004.0 1011.8

1020.0 1028.4 1036.4 1043.7 1050.6 1057.2

1210.4 1224.1 1239.7 1252.8 1268.6 1285.5 1303.8 1323.1 1342.2 1363.1 1386.5 1409.0 1431.1 1454.6 1478.4 1501.0

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

12066.8 12132.4 12223.4 12306.1 12406.3 12518.2 12624.7 12738.3 12861.2 12989.2 13117.2 13241.0 13348.8 13457.2 13569.0 13681.4

durable goods

1754.0 1760.7 1795.6 1820.5 1848.5 1888.1 1919.1 1955.5 1997.7 2039.9 2081.4 2117.5

2142.8 2165.6 2194.9 2226.6

furniture and appliances

428.9

434.6

442.7

451.8

459.7

466.5

473.4

480.7

488.8

497.8

508.1

518.6

528.3

537.2

545.4

552.7

information processing equipment

226.8

231.8

239.3

246.9

255.8

266.4

276.5

285.8

294.3

302.5

309.8

317.6

325.0

332.1

339.0

346.6

motor vehicles and parts

462.3

458.9

468.6

469.9

475.2

487.4

492.8

502.5

517.1

531.7

545.1

554.0

555.6

556.7

562.8

571.2

other durable goods

165.3

161.5

165.7

170.0

173.4

177.1

180.4

183.7

186.7

189.7

192.8

195.9

198.4

200.7

202.8

204.7

nondurables

2612.5 2625.9 2643.6 2658.9 2676.4 2692.5 2709.5 2725.9 2743.7 2762.6 2782.8 2801.8 2820.0 2839.4 2858.2 2875.5

clothing & shoes

387.3

388.5

393.2

398.4

402.6

406.1

409.9

413.4

417.7

422.1

426.2

430.3

434.1

438.2

442.3

19.2

19.8

19.9

19.8

19.7

19.8

19.7

19.6

19.7

19.7

19.7

19.6

19.6

19.6

19.6

19.6

263.8

263.0

264.4

267.0

270.4

271.8

272.3

271.8

272.9

274.0

275.0

276.2

277.3

278.4

279.4

280.3

869.0

871.3

874.2

877.1

879.7

882.8

886.6

890.4

894.0

897.6

901.1

904.5

907.6

910.5

913.3

916.1

1083.9 1094.0 1102.8

1107.7

1115.3

1123.5

1132.5

1142.1

1151.0

1160.9

1172.6

1183.0

1193.1

fuel oil & coal gasoline & motor oil food other nondurable goods

445.8

1204.5 1215.3 1225.4

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

1.1

2.2

3.0

2.7

3.3

3.6

3.4

3.6

3.9

4.0

3.9

3.8

3.3

3.2

3.3

3.3

-3.3

1.5

7.9

5.5

6.1

8.6

6.6

7.6

8.6

8.4

8.1

6.9

4.8

4.3

5.4

5.8

furniture and appliances

0.5

5.4

7.4

8.3

6.9

5.9

5.9

6.2

6.7

7.4

8.3

8.2

7.5

6.8

6.1

5.4

information processing equipment

5.7

8.9

12.9

12.7

14.4

16.5

15.3

13.4

11.9

11.1

9.7

10.0

9.3

8.8

8.3

8.9

-16.0

-3.0

8.5

1.1

4.5

10.2

4.5

7.9

11.6

11.3

10.1

6.5

1.2

0.8

4.4

5.9

other durable goods

3.6

-9.1

10.3

10.5

7.9

8.6

7.4

7.4

6.5

6.3

6.6

6.4

5.1

4.6

4.2

3.8

nondurables

0.1

2.1

2.7

2.3

2.6

2.4

2.5

2.4

2.6

2.8

2.9

2.7

2.6

2.8

2.6

2.4 3.2

durable goods

motor vehicles and parts

clothing & shoes

-9.3

1.2

4.8

5.3

4.1

3.5

3.7

3.4

4.1

4.2

3.9

3.8

3.6

3.8

3.7

-28.0

14.0

0.5

-1.6

-1.2

1.7

-2.2

-1.1

0.2

0.0

-0.1

-0.5

-0.5

-0.3

-0.1

0.3

-1.6

-1.1

2.1

4.0

5.1

2.0

0.7

-0.7

1.7

1.6

1.4

1.7

1.6

1.6

1.4

1.3

food

0.4

1.0

1.3

1.3

1.2

1.4

1.7

1.7

1.7

1.6

1.5

1.5

1.4

1.3

1.2

1.2

other nondurable goods

4.1

3.8

3.3

1.8

2.8

3.0

3.3

3.4

3.2

3.5

4.1

3.6

3.5

3.8

3.7

3.3

fuel oil & coal gasoline & motor oil

30

U.S. Forecast / June 2018

T ables 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

10689.3 11050.6 11361.2 11863.7 12332.3 12820.7 13395.5 14013.3

14704.6 15566.6 16420.6

1125.3

1191.9

1241.7

1296.4

1367.1

1411.0

1473.8

1515.9

1592.2

1705.9

1802.6

260.7

271.4

281.6

294.3

311.5

325.2

338.7

354.1

374.6

397.9

425.4

91.9

98.6

101.7

105.8

110.8

116.3

125.1

131.3

140.7

149.6

157.4

motor vehicles and parts

363.5

395.8

416.1

441.9

472.2

480.8

498.2

500.2

525.2

578.9

614.3

other durable goods

121.4

127.3

133.1

137.8

143.4

148.6

158.0

167.3

180.2

192.8

203.3

2471.1

2547.2

2592.8

2674.1

2666.0

2710.4

2821.5

2931.0

2999.4

3135.8

3272.4

338.9

354.3

363.6

376.0

385.5

393.7

400.2

407.9

415.6

428.9

444.9

furniture and appliances information processing equipment

nondurables clothing & shoes fuel oil & coal

29.2

26.4

26.6

28.0

21.2

18.5

19.6

21.7

21.4

22.4

22.4

gasoline & motor oil

380.4

390.5

385.6

369.8

283.9

255.2

284.4

305.5

279.6

293.3

291.9

food

829.1

848.8

857.5

884.4

899.0

915.1

937.7

964.2

987.6

1016.1

1047.0

other nondurable goods

893.5

927.3

959.5

1015.9

1076.5

1128.0

1179.5

1231.8

1295.2

1375.2

1466.3

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 11890.7 12182.2

12571.9 13052.2 13514.1

1151.5

1236.2

1312.7

1403.1

1511.8

1595.1

1701.6

1782.7

1902.8

2059.2

2182.5

furniture and appliances

276.6

288.7

305.8

331.3

359.0

384.7

412.0

439.5

470.1

503.3

540.9

information processing equipment

108.0

125.2

139.4

153.8

169.7

191.7

215.0

236.2

271.1

306.1

335.7

motor vehicles and parts

333.8

359.1

375.7

398.7

426.0

438.5

459.3

464.9

489.5

537.0

561.6

other durable goods

115.1

120.2

126.4

134.8

145.4

148.3

157.2

165.6

178.6

191.3

201.6

2263.2

2277.5

2316.1

2373.0

2446.8

2514.3

2575.0

2635.2

2701.1

2772.8

2848.3

335.3

338.9

344.9

356.1

369.7

378.7

387.1

391.9

408.0

424.0

440.1

nondurables clothing & shoes fuel oil & coal

19.6

17.5

17.8

18.9

20.1

21.1

19.5

19.7

19.7

19.6

19.6

gasoline & motor oil

254.7

252.5

257.6

254.2

265.4

267.9

265.2

264.5

271.6

274.5

278.8

food

795.1

795.7

795.2

805.8

810.2

832.4

853.9

872.9

884.9

899.3

911.9

other nondurable goods

863.2

880.7

908.2

949.5

993.0

1025.9

1060.2

1097.1

1128.3

1166.9

1209.6

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

1.5

1.3

2.0

3.6

3.0

2.8

2.9

2.3

3.5

3.9

3.3

durable goods

4.9

7.3

5.3

8.7

6.4

7.0

7.4

3.0

7.4

8.3

5.2

furniture and appliances

5.8

3.1

7.5

9.5

7.9

6.3

8.9

5.5

6.4

7.9

6.6

13.9

16.7

7.3

13.6

7.7

15.7

11.0

10.5

15.8

11.1

9.1

motor vehicles and parts

1.5

7.4

2.5

8.7

4.1

8.0

5.6

-2.0

7.0

10.3

3.1

other durable goods

3.2

8.1

3.6

7.7

7.3

1.2

9.2

4.1

8.1

6.6

4.5

nondurables

0.4

0.8

2.6

2.8

2.8

2.5

3.1

1.8

2.5

2.8

2.6

information processing equipment

clothing & shoes

1.1

0.9

2.5

5.7

2.0

2.3

4.1

0.6

3.8

4.1

3.6

-12.6

5.5

14.0

1.2

9.4

6.5

5.4

-2.9

-0.7

-0.1

-0.2

gasoline & motor oil

-3.1

-0.9

3.3

-0.2

4.4

-1.2

-0.1

0.9

1.8

1.6

1.5

food

-0.4

0.6

0.6

0.7

0.6

4.0

2.9

1.0

1.5

1.6

1.3

2.8

1.9

4.1

5.1

4.4

2.2

3.9

3.2

3.1

3.6

3.6

fuel oil & coal

other nondurable goods

Institute for Economic Competitiveness

31

T ables 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 2449.6 2636.4

2829.6 3003.3 3166.9

Producers Dur. Equipment

838.2

937.9

982.8 1046.5 1081.9 1043.9 1098.4 1191.4

Nonresidential Structures

381.6

448.0

463.6

537.5

537.5

516.2

560.2

612.3

662.2

712.6

756.6

Non-Farm Buildings

170.2

191.6

203.8

234.4

280.8

311.5

321.0

338.2

380.0

423.8

461.7

Commercial

66.8

75.6

84.2

102.9

116.8

141.0

152.0

155.1

167.7

196.2

227.4

Industrial

39.0

45.8

48.8

57.0

77.7

73.1

65.4

67.2

88.9

96.6

92.4

Other Buildings

64.5

70.2

70.7

74.6

86.3

97.4

103.6

115.9

123.4

131.0

141.9

Utilities

90.7

112.2

108.9

126.3

125.5

129.6

126.1

127.6

132.0

137.8

144.1

112.3

134.1

139.4

163.1

118.4

63.4

101.7

134.3

137.1

136.8

137.6

Mines & Wells

1288.1 1376.9 1455.7

Billions 2009 Dollars Business Fixed Investment

1802.3 1964.1 2032.9 2172.7 2223.5 2210.4 2314.2 2457.1

2632.7 2776.2 2880.8

Producers Dur. Equipment

847.9

939.2

982.3 1047.4 1084.5 1047.8 1098.1 1181.7

Nonresidential Structures

374.7

423.1

428.8

474.0

465.4

446.4

471.5

499.8

528.9

554.0

571.6

Non-Farm Buildings

172.3

188.8

196.0

218.2

256.3

279.0

278.1

280.4

310.2

337.8

357.1

Commercial

67.3

73.9

80.5

95.9

106.7

126.7

133.4

131.7

140.7

161.1

181.3

Industrial

39.1

44.9

46.7

52.8

70.7

66.2

57.7

57.0

73.5

77.4

71.7

Other Buildings

65.9

70.0

68.6

69.4

78.7

85.8

86.6

91.0

95.7

99.4

104.5

Utilities

82.8

99.1

95.1

108.8

106.4

109.4

103.1

102.2

104.3

102.1

99.0

110.9

123.8

126.0

134.2

95.9

54.5

86.2

110.9

108.4

108.3

111.6

Business Fixed Investment

10.9

6.9

5.8

7.7

0.4

0.7

7.7

8.0

6.7

6.1

4.9

Producers Dur. Equipment

14.4

8.4

5.8

5.0

3.2

-3.4

9.4

7.8

7.1

7.1

4.6

Nonresidential Structures

15.3

7.8

9.5

15.0

-8.6

4.4

8.8

10.1

9.2

6.3

6.2

Non-Farm Buildings

14.7

7.3

9.8

20.8

11.2

14.0

-0.1

7.6

15.9

9.8

7.8

Commercial

14.7

9.9

18.7

20.3

9.8

27.1

-1.1

2.4

14.9

20.7

10.6

Industrial

37.4

8.1

9.1

37.8

15.0

-7.4

-8.4

17.6

35.0

-5.3

1.3

Other Buildings

3.6

4.5

1.7

12.0

12.2

14.9

7.9

10.3

5.7

7.1

8.2

Utilities

2.4

18.4

17.5

-1.7

16.3

11.2

-5.7

2.3

7.2

0.9

6.4

36.6

1.9

8.0

28.9

-47.8

-29.3

116.8

25.9

-5.1

2.1

1.3

Mines & Wells

1296.7 1395.5 1463.5

Annual Growth Rate

Mines & Wells

32

U.S. Forecast / June 2018

T ables 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

3587.4

3596.6

3795.7

4003.6

4211.1

Personal Tax and Nontax Receipts

1129.1

1164.7

1302.0

1403.0

1528.5

1540.5

1603.5

1627.9

1722.7

1824.0

1931.3

299.4

363.1

378.1

436.6

437.1

401.2

401.3

345.8

382.7

403.8

415.6

Corp. Profits Tax Accruals Indirect Business Tax and Nontax Accruals

108.6

115.1

124.8

135.4

140.2

137.0

132.3

153.6

145.5

153.3

161.3

Contributions for Social Insurance

904.0

938.1

1091.3

1140.9

1193.4

1230.2

1287.3

1340.8

1396.6

1467.7

1541.2

Expenditures

3818.3

3789.1

3782.2

3901.4

4028.0

4149.4

4252.5

4454.3

4707.7

4966.1

5213.1

Purchases Goods & Services

1303.5

1292.5

1229.5

1218.1

1224.0

1231.5

1260.7

1323.1

1382.3

1432.9

1462.8

National Defense

836.9

817.8

767.0

745.6

731.6

728.9

744.4

776.7

791.4

821.4

838.7

Other

466.5

474.7

462.5

472.5

492.4

502.6

516.2

546.4

590.9

611.6

624.0

Transfer Payments

2327.0

2300.8

2346.2

2448.7

2572.8

2648.4

2709.0

2797.1

2949.4

3086.7

3220.3

To Persons

1779.9

1783.6

1823.5

1881.9

1967.2

2018.4

2074.5

2137.7

2270.0

2387.9

2503.9

57.6

55.3

53.8

52.8

53.3

53.6

53.0

52.6

55.5

57.3

58.3

Grants in Aid to State & Local Gov't

To Foreigners

472.5

444.0

450.0

494.8

532.1

555.5

559.6

584.3

600.4

616.3

631.7

Net Interest

398.0

401.6

393.4

416.8

412.1

447.8

472.7

550.9

622.1

703.7

795.6

66.7

66.5

69.9

65.6

61.5

64.8

65.0

66.1

65.7

64.4

63.5

-1244.1

-1090.1

-643.8

-610.2

-586.7

-697.3

-665.1

-857.7

-912.0

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

-962.4 -1002.0

State and Local Government Receipts and Expenditures Receipts

2030.5

2057.2

2136.8

2236.7

2350.7

2416.3

2490.4

2645.6

2774.2

2907.1

3043.8

Personal Tax/Nontax Receipts

1368.3

1416.1

1481.4

1526.7

1584.1

1628.7

1696.9

1815.2

1913.2

2014.0

2119.1

324.1

346.7

375.9

382.6

409.4

419.6

444.8

500.2

536.0

563.4

597.0

50.2

52.5

55.5

57.8

59.2

58.1

54.3

59.1

69.1

75.4

78.6

Corporate Profits Indirect Business Tax and Nontax Accruals Contributions for Social Insurance Federal Grants-In-Aid Expenditures Purchases Goods & Services

18.2

18.0

18.5

19.6

19.8

20.3

20.5

21.2

22.2

23.3

24.5

472.5

444.0

450.0

494.8

532.1

555.5

559.6

584.3

600.4

616.3

631.7

2246.42 2277.93 2327.30 2405.62 2497.02 2583.67 2669.24 2756.52

2858.8

2990.0

3122.4 2482.1

1865.3

1866.1

1886.6

1938.9

1994.9

2036.3

2093.2

2171.4

2259.5

2368.7

Transfer Payments

582.1

558.0

571.3

625.0

680.0

695.6

700.4

731.0

753.0

775.4

797.6

Interest Received

125.9

141.4

141.8

121.3

122.3

136.6

137.0

136.7

140.8

147.5

156.6

17.9

10.8

10.3

10.4

10.1

7.1

7.3

4.3

1.1

-1.9

-4.9

2.6

3.3

3.6

3.8

4.2

4.6

4.7

4.9

5.2

5.4

5.6

-215.9

-220.8

-190.5

-168.9

-146.4

-167.4

-178.8

-111.0

-84.6

-82.9

-78.7

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

Institute for Economic Competitiveness

33

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

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

Forecast

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Net Exports Goods & Services

-580.0

-565.7

-492.0

-509.5

-524.0

-521.2

-571.6

-638.0

-545.8

-609.9

-696.4

Current Account

-444.6

-426.2

-349.5

-373.8

-434.6

-451.7

-466.2

-579.1

-576.3

-701.1

-853.1

Exports -Goods & Services

2106.4

2198.2

2276.6

2373.6

2264.9

2214.6

2344.0

2569.3

2810.5

3040.9

3246.7

Merchandise Balance

-740.6

-741.2

-702.2

-751.5

-761.9

-752.5

-811.2

-910.4

-896.0 -1028.1

-1182.4

Food, Feed & Beverage

126.25

133.05

136.16

143.72

127.74

130.56

136.50

144.96

156.1

163.6

172.3

Industrial Supplies Excl Petroleum

485.3

483.2

492.4

500.7

417.4

386.8

454.9

541.0

547.0

589.9

636.8

Motor Vehicles & Parts

133.0

146.2

152.7

159.8

151.9

150.3

158.1

175.7

200.0

203.3

210.3

Capital Goods, Excl. MVP

494.2

527.5

534.8

551.8

539.8

519.8

533.7

581.8

648.7

713.3

721.1

Billions of Dollars

Computer Equipment

48.5

49.2

48.1

48.8

46.8

45.1

46.1

51.8

55.1

58.6

61.0

Other

365.4

383.9

381.7

389.8

373.4

353.8

366.5

399.0

452.0

512.7

520.0

Consumer Goods, Excl. MVP

174.7

181.0

188.1

198.4

197.4

193.4

197.8

201.8

237.0

248.3

274.8

Other Consumer

53.4

55.1

58.6

63.6

62.9

65.1

65.8

73.8

79.9

86.0

95.3

639.5

672.2

713.9

755.7

767.7

768.5

797.1

850.3

941.8

1036.4

1136.3

Imports -Goods & Services

2686.4

2763.8

2768.6

2883.2

2789.0

2735.8

2915.6

3207.3

3356.3

3650.7

3943.1

Merchandise

Services Billions of Dollars

2244.7

2305.8

2301.5

2396.1

2290.5

2224.2

2381.8

2642.2

2775.9

3040.9

3299.1

Food, Feed & Beverage

108.3

111.1

116.0

126.8

128.8

131.0

139.2

138.3

130.9

140.5

149.5

Petroleum & Products

462.1

434.3

387.8

353.6

197.2

159.6

200.7

235.9

199.0

205.6

197.7

Industrial Supplies Excl Petroleum

292.7

288.8

291.3

316.2

290.5

277.2

306.8

363.8

393.1

446.6

505.7

Motor Vehicles & Parts

255.2

298.5

309.6

329.5

350.0

351.0

360.4

369.7

366.3

386.4

414.7

Capital Goods, Excl. MVP

513.4

551.8

559.0

598.8

606.8

593.9

644.6

713.6

777.3

851.9

914.5

Computer Equipment

119.7

122.3

121.2

122.0

120.3

114.5

128.4

133.2

135.4

141.7

146.3

Other

358.2

389.4

390.8

423.5

431.3

429.4

464.8

527.0

581.2

647.4

705.6

Consumer Goods, Excl. MVP

515.9

518.8

532.9

558.7

596.6

585.4

605.9

683.7

720.1

764.3

833.4

Other Consumer

97.1

102.4

105.0

112.4

120.7

126.1

124.2

137.2

189.0

245.6

283.6

441.6

458.0

467.1

487.1

498.5

511.6

533.8

565.1

580.5

609.8

644.0

Net Exports Goods & Services

-459.4

-447.1

-404.9

-427.7

-545.3

-586.2

-621.8

-639.0

-740.0

-949.4 -1117.1

Exports G & S

1898.3

1963.2

2031.5

2118.4

2127.1

2120.1

2191.4

2337.8

2547.0

2715.7

2841.8

Imports G & S

2357.7

2410.2

2436.4

2546.1

2672.4

2706.3

2813.2

2976.8

3287.0

3665.1

3958.9

Services Billions 2009 Dollars

Exports & Imports % Change Exports G & S

8.7

3.4

5.6

1.7

-6.7

1.6

8.0

10.7

8.2

7.8

6.4

Imports G & S

10.9

0.3

1.2

4.3

-5.6

2.9

8.0

8.8

4.9

9.8

6.7

Real Exports G & S

4.2

2.2

6.0

3.1

-1.8

0.7

5.0

9.1

7.7

5.7

4.3

Real Imports G & S

3.5

0.3

2.5

6.3

2.9

2.7

4.8

6.4

11.9

10.7

6.4

34

U.S. Forecast / June 2018

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

UNIVERSIT Y OF CENTR AL FLORIDA INSTITUTE FOR ECONOMIC COMPETITIVENESS P. O . B OX 1 6 1 4 0 0 ORL ANDO, FLORIDA 32816 P H 4 0 7. 8 2 3 . 1 4 5 3 • F X 4 0 7. 8 2 3 . 1 4 5 4

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