U.S. Economic Forecast

SEPTEMBER 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

Aasiyah Alli, Researcher

Maegan Alexis Trinidad, Researcher

Adam Wing, Researcher

Brandt Dietry, Researcher

Sydney Boughan, Researcher

Isabella Yerby, Researcher

Wesley Giotta, Researcher

Tamara Williams, 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 Q3 2018

IN THIS U.S. FORECAST • The Rip Van Winkle recovery is finally awakening from eight-plus years of sluggish economic growth.

• The Rip Van Winkle recovery spent eight years in a stupor after over-imbibing a high proof libation of regulatory burden and policy uncertainty.

• Payroll job growth of 1.6% is expected in 2018 before rising to 2.0% in 2019, then easing to 1.7% in 2020 and 0.8% in 2021. For an economic recovery in its 10th year, we cannot expect stronger growth than this.

• Look for a very strong holiday shopping season as U.S. consumers are in a near-perfect environment to support faster spending. Rising employment, ultra-low unemployment rates, stronger balance sheets, rising disposable incomes, high levels of consumer confidence, and faster wage growth are building a foundation for an acceleration of consumption expenditures.

• The Federal Reserve raised interest rates again in June 2018; the next 25 basis point hike will happen in September followed by another in December. Stronger economic growth and higher inflation from the Trump administration’s 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 third quarter of 2021.

• Real GDP growth will accelerate to 3.1% in 2018, and then rise to 4.2% in 2019, before easing to 3.0% in 2020 and 2.2% 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 1.32 million in 2018 to 1.68 million in 2021.

• The headline unemployment rate (U-3) is expected to decline to 3.2% in early 2020. Job growth will be sufficient to keep up with labor force growth through the end of the forecast horizon. The economy is closing in on full employment and and faster wage growth will indicate it has arrived.

• Headline CPI inflation will accelerate in 2018, pushing the Fed to continue to raise interest rates and contract its balance sheet. Both headline CPI inflation and core CPI inflation will average 2.4% during 2018-2021.

Original story by Washington Irving, retold by Jon Blake, illustrated by Pep Boatella www.paepboatella.com/rip-van-winkle/Q, published by Oxford University Press (UK) for the ‘Greatest Stories’ new collection.

THE RIP VAN WINKLE RECOVERY HAS AWAKENED The U.S. economy exited the Great Recession in June of 2009, but despite many projections that the economy would roar back to life after the severe downturn, growth during this now nine-year-old recovery never did rev up.

However, this is beginning to change.

I am reminded of the story of Rip Van Winkle, published in 1819 by Washington Irving. I’m sure most people are familiar with this tale, the full text of which may be found here: www.gutenberg.org/files/19721/19721h/19721-h.htm#RIP_VAN_WINKLE. Rip was married to a sharp-tongued woman who constantly berated him for his wanting work ethic. Over the years, the berating grew worse and as Irving noted,

“…a sharp tongue is the only edged tool that grows keener with constant use.” Rip’s only respite from the constant barrage was to take his gun and dog then hike up into the Catskill Mountains to hunt for squirrels.

While sitting down to rest on one of these hikes, he heard someone calling out his name and went in search of the caller. He came across an unusual looking stranger, “He was a short, square-built old fellow, with thick bushy hair, and a grizzled beard.” The stranger was carrying a keg that seemed to be full of liquor. He beckoned Rip to assist him in carrying the keg further up the mountain.

Their climb ended when they came upon an amphitheater where “new objects of wonder presented themselves” to Rip. Irving writes:

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“On a level spot in the center was a company of odd-looking personages playing at ninepins.

They were dressed in a quaint, outlandish fashion; some wore short doublets, others jerkins, with long knives in their belts, and most of them had enormous breeches, of similar style with that of the guide’s. Their visages, too, were peculiar: one had a large head, broad face, and small, piggish eyes; the face of another seemed to consist entirely of nose, and was surmounted by a white sugarloaf hat, set off with a little red cock’s tail. They all had beards, of various shapes and colors. There was one who seemed to be the commander. He was a stout old gentleman, with a weather-beaten countenance; he wore a laced doublet, broad belt and hanger, high-crowned hat and feather, red stockings, and high-heeled shoes, with roses in them.”

“What seemed particularly odd to Rip was that, though these folks were evidently amusing themselves, yet they maintained the gravest faces, the most mysterious silence, and were, withal, the most melancholy party of pleasure he had ever witnessed. Nothing interrupted the stillness of the scene but the noise of the balls, which, whenever they were rolled, echoed along the mountains like rumbling peals of thunder.”

Rip’s companion emptied the keg into jugs and signaled Rip to serve the group. Eventually, Rip decided to taste the beverage and, being “a naturally thirsty soul,” was soon tempted to have one drink after another.

Repeating his visits to the jugs, Rip soon became overpowered by the liquor and fell into a deep sleep.

He awoke thinking he had slept through the night and feared the reprisals he would face from his wife.

He recalled the drink he consumed and blamed his predicament on the jugs from which he had repeatedly drank. He quickly realized that something was off.

There was no sign of the party nor its participants, and his dog had vanished. His gun was lying on the ground rusted, the wood stock riddled with wormholes, and his face was covered with a long-grizzled beard.

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U.S. Forecast / September 2018

Rip wandered back to his town, where he discovered his slumber had lasted for 20 years, during which his wife and many neighbors had died as he slept through the American Revolution. Rip moved in with his daughter, her husband, and son on their farm. He also discovered his son and namesake, who was supposed to work on the farm, showed a “hereditary disposition to attend to anything else but his business.”

The economic recovery has entered its 10th year, and if it continues through June of 2019, will become the longest expansion in U.S. economic history. Despite its longevity, it has paralleled the story of Rip Van Winkle.

For the first eight-plus years, the U.S. economy never seemed to emerge from its slumber but instead was sleepwalking at a historically weak pace of economic growth. Now, like Rip, it appears to be emerging from this extended period of torpor. For Rip, it was the Dutch Gin in the keg that sent him off to sleep, but for the U.S. economy, it was a bacchanalian binge that, while many decades in the making, accelerated with the passage of large complex laws such as Dodd-Frank and the Affordable Care Act. This created an atmosphere of uncertainty and depressed investment spending and hiring as the recession came to an end. This led to an extended period of lethargic economic growth that, only now, appears to be coming to an end.

Financial markets, businesses, and consumers are awakening from the overindulgence. The regulationfilled keg has been set aside and the Rip Van Winkle recovery is finally emerging into a period of significantly faster economic growth. Let’s all toast to that.

ANXIOUS INDEX Fear of Recession Ticks up in the 3rd Quarter The most recent release (3rd quarter of 2018) of the Survey of Professional Forecasters by the Federal Reserve Bank of Philadelphia suggests that the 31 forecasters surveyed for the publication put a 10.53% 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 is the estimated probability of a decline in real GDP in the quarter after a survey is taken. In the survey taken in July for the 3rd quarter of 2018, the index stands at 10.53, which means that forecasters believe there is a 10.53% chance that real GDP will decline in the 4th quarter of 2018.

The forecasters also report a 6.55% chance that we are currently (as of the 3rd quarter of 2018) experiencing a contraction in real GDP—1.2 percentage points higher than the probability the forecasters assigned for the 2nd quarter of 2018. According to the panel, the probability that real GDP growth will turn negative is averaging around 14.95% through the end of the 3rd 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 4th quarter of 2015.

The graph below plots the historical values of the anxious index, where the gray bars indicate periods of recession in the U.S. economy. The current level of the anxious index is nearly 2.4 points lower than the average level during the economic recovery (12.89).

GDP OUTLOOK GDP Growth Flexing Some Muscle Because of the Tax Cut and Jobs Act, American workers are enjoying something they have not experienced much in this economic recovery: larger paychecks. More take-home pay will lead to higher consumer spending and support already high levels of consumer confidence, and thus, faster GDP growth.

The Tax Cut and Jobs Act has given rise to 3.0%-plus growth that will 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 and ongoing regulatory rollbacks, and if the previously discussed 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 3.1%, with a projected acceleration of growth to levels equal to or greater than 3.0% in 2018 (3.1%) and 2019 (4.2%).

Figure 2.

The Anxious Index Probability of Decline in Real GDP in the Following Quarter Quarterly, 1968:Q4 to 2018:Q3 100

80 70 60 50 40 30 20 10 0

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

Probability (percent)

90

Survey Date Source: Survey of Professional Forecasters, Philadelphia Federal Reserve Bank

The probability of a recession taking place before the end of our 2021 forecast horizon is substantial; 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 and these policies are currently in place.

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In 2018, we are expecting real GDP growth to accelerate to 3.1%. Growth will jump to 4.2% in 2019 before decelerating to 3.0% in 2020 and 2.2% in 2021.

The projected growth rate for 2019 would be the first time the U.S. economy experienced annual growth at 3.8% or higher since 2004.

We expect the Federal Reserve to continue to take baby steps as it incrementally raises interest rates, and the frequency of these increases should average four moves per year through 2019. 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. There is no reason for the Fed to upset the apple cart as long as inflation continues to be controlled.

The Federal Reserve raised the federal funds rate in June 2018 and will likely follow with two additional increases this year. The central bank will continue with rate hikes in 2018 and 2019 until the anticipated target rate reaches 4.25% in the 3rd quarter of 2021.

The path of interest rate hikes will deviate from this projection if growth strays 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 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 $4.21 trillion to date. However, similar to quantitative easing itself, this is uncharted water for monetary policy; there is no previous playbook to follow on how best to carry this out, and thus, it is possible that they may deviate from the current course.

CONSUMER SPENDING I am Consumer, Hear Me Roar 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 2015, real consumer 8

U.S. Forecast / September 2018

spending growth was 3.7%; in 2016, spending grew at 2.7%; and in 2017, consumer spending expanded again at 2.5%.

In these three years, the contribution to GDP growth was outsized. Consumer spending contributed 86% in 2015, and in 2016, it contributed 115% 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 79% of the 2.2% growth last year.

Continued strong gains in employment, rapidly rising wages, and improving household balance sheets via rising home prices and financial asset values 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 boosted consumption spending in the 2nd quarter to 3.8% and should continue to support it going forward. This pace of spending growth was well above the depressed level seen in the 1st quarter of 2018, when growth was just 0.5%—this was following an outsized 3.9% growth rate in the 4th quarter of 2017.

The next three years should show a steady acceleration of consumer spending growth. Consumer spending, the largest component of GDP, is 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 signs of reappearing as the labor market continues to tighten. The economy may not quite be at full employment yet, but we are getting closer and 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 3.7% in 2015 and then slowed further in 2017 to 2.5%. 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 2.7% in 2018, and 3.8% in 2019, accelerating further to 4.0% in 2020, before easing to 3.5% in 2021.

INVESTMENT Nonresidential fixed investment spending was unusually weak in 2016, expanding by only 0.5%. 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 behavior of investment spending in 2016 was very close to what we would expect to see during a recession, though no recession was taking place.

Investment spending in this historically weak economic recovery has generally been 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.

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 $285 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 all 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 1.4%. In 2017, we saw a 7.5 percentage point swing in investment of this type, as the full year rebounded to 6.1% growth. The outlook going forward should continue to strengthen substantially.

Average growth in this type of investment spending is expected to be 7.4% over the 2018-2021 time frame, peaking at 9.9% in 2019.

Purchases of aircraft again contracted by 9.9% in 2016, but recovered by expanding to 10.2% in 2017. Over the next four years, spending on aircraft is expected to grow an average of 12.9%, 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 slowdown 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 $70 per barrel.

As a result, the U.S. May 2018 rig count was 1,053, up 118 year-over-year.

During 2015 and 2016, investment in mining and petroleum equipment contracted by 28.5% and 42.1%, respectively. In 2017, growth hit 44.1% and is expected to come in at 35.0% in 2018. It will average 9.0% per year during 2018-2021. This is a strong 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 ultimately slow to a trickle as a result.

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The weak start to 2016 and an environment of political uncertainty resulted in a further deceleration of investment spending growth to 0.5%. 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 5.3% in 2017 and will accelerate to 7.4% in 2018, rising to 7.5% in 2019, easing to 5.7% in 2020, and slowing to 2.5% 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 $4.2 trillion balance sheet. In time, higher interest rates will begin to drag on investment spending, as is the intention of tighter 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 9.7% from 20182021. Investment spending growth in computers and peripherals will average 3.8% during 2018-2021.

Spending on communications equipment should expand at an average annual rate of 5.6% during the same fouryear span.

Investment growth in nonresidential structures has fluctuated over the past three years. Growth turned negative in 2015 and contracted further in 2016, with spending declining 2.9% and 4.8% in those two years.

Investment in nonresidential structures grew faster in 2017 at 4.6%, and will accelerate again in 2018 before holding steady in 2019 and 2020, then decelerating again in 2021. During 2018-2021, growth is expected to average 5.4% over those four years.

Residential fixed investment growth hit 10.2% in 2015, then eased in 2016 to 6.6%, before slipping further to 3.3% in 2017. Growth will average 4.8% through 2018-2021, accelerating to a peak growth rate of 8.4% 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 6.4% on a 30-year fixed mortgage that year— and a slower pace of price appreciation. In 2021, real residential fixed investment will be $735 billion—$128 10

U.S. Forecast / September 2018

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 1.68 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 0.7% in 2017. This modest growth in spending will be significantly stronger over the next two years before growth decelerates in the final two years of our forecast. In 2018, spending should expand by 3.2%, and in 2019, it will rise again by 4.0%. During the period 2018 through 2021, federal government spending is expected to rise, growing at an annual average pace of 2.1%. 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 in 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 $847.8 billion. The deficit will grow larger in 2019, as entitlement and military spending—coupled with tax cuts—push it to $930.1 billion before rising again in 2020 to nearly $960.4 billion. The deficit will continue to grow in 2021, when government spending will exceed revenue by $1.028 trillion.

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 will, once again, exceed the $1 trillion level—the type of deficits that were the norm during 2009-2012. The amount that the projected deficits will add to the national debt over the next four years will be over $3.70 trillion, pushing the national debt total to over $25 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 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 $21.49 trillion and rising. This represents a debt of nearly $176,320 per taxpayer and $65,394 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 nearly $114.8 trillion in liabilities, boiling down to $941,980 per taxpayer.1

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 0.78 percentage points off of real GDP growth.

In 2016, the drag continued, but lessened; net exports still reduced growth by 0.30 percentage points. Again, in 2017, net exports lowered real GDP growth by 0.31 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; in 2017 and 2018, the dollar continues to return some of these gains. However, as the Fed raises interest rates and the U.S. economy experiences 1

faster growth, we expect that the dollar will appreciate significantly 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 to the total dollar value of the transaction, but rather the actual quantity of goods to be shipped (automobiles, flat screen televisions, etc.). 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 while remaining above export growth through 2021. Trade skirmishes notwithstanding, real export growth from 2018-2021 will average 5.5%, while real import growth will average 8.2% over the same time frame.

Real net exports will average -$1.2 trillion during 2018-2021, with the trade balance worsening in each successive year, coming in at nearly -$1.5 trillion in 2021. The sizeable appreciation of the dollar during 2012-2015 and another large anticipated appreciation in 2019-2020, projected 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.

National debt data from: www.usdebtclock.org

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U . S . F orecast

U N E M P LOY M E N T The national headline unemployment rate (U-3) in August 2018 remained constant at the July 2018 reading of 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 July to 62.7% in August.

The August jobs report beat expectations as growth in payroll jobs showed businesses adding 201,000 jobs after July’s 147,000 job gain. The 147,000 increase in payroll employment in August was below the average growth in monthly payrolls thus far for 2018 of 208,000, 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 having 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 August labor force participation rate of 62.7% remains depressed and is at its lowest point since March 1978. Since the end of the recession, the labor force participation rate is down 2.8 percentage points.

The Bureau of Labor Statistics (BLS) produces alternative measures of labor market weakness, including the broadest measure of unemployment (U-6). U-6 takes into account discouraged workers (currently 434,000 workers), as well as those classified as underemployed (currently just under 4.4 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 6.2 million workers are counted in the headline unemployment rate of 3.9%.

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U.S. Forecast / September 2018

U-6 stands at 7.4% as of August 2018, down 0.1 percentage points from the July 2018 level, and down 0.8 percentage points from the start of the year. The current level of U-6 is down 9.7 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-five consecutive months beginning in October 2015 and stands at the lowest level since April of 2001.

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

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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 200.0

(Billions of 2000 Dollars)

100.0 0.0 -100.0 -200.0 -300.0

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 1200.0

(Billions of Dollars)

1000.0 800.0 600.0 400.0 200.0 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 / September 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

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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 / September 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

Corporate Retained Earnings 1200.0

(Billions of Dollars)

1000.0 800.0 600.0 400.0 200.0 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 Institute for Economic Competitiveness

17

C h arts

Real Disposable Income and Consumption 6.0

(% Change Year Ago)

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 1800.0 1600.0 1400.0 1200.0 1000.0 800.0 600.0 400.0

(Billions of Dollars)

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

1.50 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 / September 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

(%)

8.0 6.0 4.0 2.0

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 1.6 1.9 5.1 0.9 1.7 8.6 13.5 4.9 -0.1 9.3 19.9 32.9 13.5 27.9 2.7 -0.3 -1.3 -7.6 26.4 -8.2 0.0 7.2 5.7 -2.6 -3.5

2.3 2.1 1.5 6.0 0.4 1.2 9.6 11.1 9.3 10.5 9.3 8.8 21.3 2.2 19.6 13.5 8.5 16.2 21.4 12.9 10.7 12.9 3.4 2.7 -1.9 -2.2

1.8 1.6 1.5 6.1 1.8 0.6 4.1 4.7 6.2 -0.5 12.7 -1.3 12.7 5.7 6.6 1.3 3.6 4.2 -4.3 1.6 3.3 12.5 3.6 1.5 -5.5 -0.3

2.4 2.6 2.9 7.1 2.6 2.4 6.9 6.8 4.8 -0.3 12.7 4.0 12.3 15.0 14.3 10.7 12.9 12.7 18.3 6.9 8.2 3.8 4.3 5.1 -2.6 0.1

2.9 2.6 3.7 7.6 3.4 3.2 1.8 3.1 6.7 0.9 16.1 0.2 12.1 2.2 10.9 -2.9 10.7 35.6 -2.4 -28.5 9.4 10.2 0.6 5.5 0.0 3.0

1.6 2.1 2.7 5.5 2.7 2.3 0.5 -1.4 4.4 -0.5 12.6 -1.2 -4.7 -9.9 -22.3 -4.8 17.7 -5.1 0.5 -42.1 7.2 6.6 -0.1 1.9 0.4 2.1

2.2 2.2 2.5 6.8 2.1 2.0 5.3 6.1 11.9 10.5 19.3 6.6 -2.1 10.2 0.9 4.6 3.4 -15.2 -1.0 44.1 1.9 3.3 3.0 4.6 0.7 -0.5

3.1 3.1 2.7 6.0 2.6 2.2 7.4 7.9 10.6 11.0 12.4 5.7 9.7 12.4 12.1 6.5 1.4 -6.6 1.3 35.0 1.2 1.1 5.7 5.0 3.2 0.7

4.2 3.7 3.8 8.3 3.2 3.3 7.5 9.9 5.6 3.0 4.5 12.4 17.5 27.3 17.4 6.4 11.9 9.6 2.5 4.3 4.2 8.4 7.6 10.6 4.0 1.5

3.0 3.1 4.0 8.1 3.1 3.6 5.7 8.0 4.2 1.2 2.8 15.3 3.8 8.9 2.7 6.5 23.1 3.2 0.4 -8.1 5.8 6.5 5.9 10.8 1.4 1.9

2.2 2.4 3.5 5.8 2.8 3.4 2.5 3.8 3.6 -0.1 2.5 5.2 -3.5 3.2 -2.1 2.3 4.6 -4.7 -2.9 4.7 5.0 3.1 2.9 6.3 -0.2 1.5

15840.7 16197.0 16495.4 16899.8 17386.7 17659.2 18050.7 15542.6 16197.0 16784.9 17521.7 18219.3 18707.2 19485.4

18612.4 20550.9

19397.7 21882.6

19987.3 23081.4

20417.4 24128.7

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 / September 2018

1.9 2.1 2.1 1.9 1.9

1.8 1.5 1.8 1.2 1.9

1.9 1.6 1.7 1.9 2.1

1.0 0.1 1.8 -3.3 2.1

1.1 1.3 2.2 -1.0 2.1

1.9 2.1 1.8 3.2 2.5

2.3 2.7 2.4 3.0 3.2

2.2 2.4 2.7 1.2 3.6

2.4 2.3 2.4 2.3 3.6

2.3 2.1 2.2 2.2 3.9

95.1 0.1 3.1 73.6 48.4 67.4 12.7 0.6 3.8 8.9 1.2 -1296.8 -445.7

94.2 0.9 3.0 74.9 89.9 76.5 14.4 0.8 4.1 8.1 1.7 -1089.2 -426.8

97.9 0.3 2.0 75.0 98.2 79.2 15.5 0.9 4.5 7.4 1.6 -680.2 -348.8

93.3 1.0 3.1 75.8 90.3 84.1 16.5 1.0 4.3 6.2 1.9 -483.6 -365.2

48.7 1.3 -1.0 75.8 127.8 92.9 17.4 1.1 4.6 5.3 2.1 -439.1 -407.8

43.2 0.0 -1.9 74.6 28.4 91.8 17.5 1.2 4.8 4.9 1.8 -587.4 -432.9

51.0 1.3 1.6 74.8 27.4 96.8 17.1 1.2 4.9 4.4 1.6 -665.8 -449.1

64.3 1.8 4.1 75.8 32.9 95.9 17.1 1.3 4.9 3.9 1.6 -847.8 -471.3

59.7 2.6 3.8 77.9 124.2 96.2 17.7 1.5 5.3 3.4 2.0 -930.1 -592.6

65.6 1.6 2.7 77.8 115.3 97.2 18.2 1.7 5.5 3.3 1.7 -960.4 -768.4

66.1 1.6 1.6 75.9 73.3 96.2 17.8 1.7 5.6 3.4 0.8 -1028.6 -948.1

0.10 0.05 0.18 1.52 2.79 3.91 4.46 1268.9 11.54 0.91 -5.82

0.14 0.09 0.18 0.76 1.80 2.92 3.66 1379.6 8.92 0.95 3.81

0.11 0.06 0.13 1.17 2.35 3.45 3.98 1642.5 18.98 0.98 3.17

0.09 0.03 0.12 1.64 2.54 3.34 4.17 1930.7 17.69 1.01 3.28

0.13 0.05 0.32 1.53 2.14 2.84 3.85 2061.2 6.92 1.17 16.08

0.40 0.32 0.61 1.34 1.84 2.60 3.65 2092.4 1.56 1.18 0.73

1.00 0.93 1.20 1.91 2.33 2.89 3.99 2448.2 17.04 1.17 -0.52

1.82 1.96 2.34 2.92 3.09 3.23 4.67 2875.7 17.44 1.13 -3.89

2.81 2.76 3.28 3.84 3.99 3.98 5.61 2951.4 2.99 1.23 9.24

3.45 3.23 3.76 4.19 4.37 4.34 6.02 2926.7 -0.83 1.25 1.74

4.03 3.70 4.28 4.53 4.66 4.62 6.36 2962.2 1.21 1.22 -2.78

13326.8 14010.1 14181.1 14991.8 15719.5 16125.1 16830.9 17583.2 6.2 5.1 1.2 5.7 4.9 2.6 4.4 4.5 11873.6 12501.2 12505.3 13206.4 13784.3 14170.9 14796.3 15512.7 5.0 5.3 0.0 5.6 4.4 2.8 4.4 4.8 12099.9 12500.8 12339.1 12838.1 13366.5 13595.5 13949.3 14327.1 2.4 3.3 -1.3 4.0 4.1 1.7 2.6 2.7 7.2 8.9 6.4 7.4 7.6 6.7 6.7 6.6 1537.2 1821.2 1788.7 1855.2 1737.0 1736.9 1831.2 2084.0 -1.6 18.7 -1.7 3.7 -6.3 0.2 5.6 14.0

18536.1 5.4 16314.3 5.2 14826.5 3.5 6.2 2390.1 14.9

19603.4 20569.0 5.8 4.9 17240.8 18088.3 5.7 4.9 15397.9 15872.4 3.9 3.1 6.0 5.5 2523.1 2505.7 5.6 -0.7

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

15840.7 16197.0 16495.4 16899.8 17386.7 17659.2 18050.7 18612.4

19397.7 19987.3 20417.4

15796.5 16125.8 16386.2 16809.9 17253.6 17617.5 18008.7 18559.4

19251.1 19848.8 20317.8

10843.8 11006.8 11166.9 11494.3 11921.9 12248.2 12558.7 12892.4

13387.7 13918.6 14407.3

Durables

1079.7

1144.2

1214.1

1301.0

1399.4

1476.8

1577.9

1673.1

1812.6

1959.1

2072.2

Nondurables

2482.9

2493.5

2538.5

2603.7

2691.7

2763.9

2822.0

2896.4

2990.1

3083.9

3171.7

Services

7282.1

7369.1

7415.5

7594.0

7840.0

8022.5

8184.5

8360.7

8640.8

8951.2

9252.2

1935.4

2118.5

2206.0

2357.4

2399.7

2411.2

2538.1

2725.8

2931.0

3098.4

3176.6

886.2

983.4

1029.2

1098.7

1132.6

1116.2

1183.7

1276.9

1404.2

1516.3

1573.7

303.2

331.2

351.8

368.6

393.5

410.9

459.8

508.6

537.0

559.6

579.7

Computers & Peripherals

93.9

103.5

103.0

102.6

103.5

103.0

113.8

126.2

129.9

131.4

131.3

Communications Equipment

95.9

104.8

118.1

133.1

154.6

174.0

207.4

233.1

243.4

250.2

256.5

Industrial Equipment

194.9

211.2

208.4

216.6

217.0

214.4

228.6

241.7

271.7

313.1

329.3

Transportation Equipment

177.8

215.3

242.5

272.2

304.9

290.5

284.3

312.0

366.5

380.1

366.8

34.6

35.2

37.1

42.2

42.9

38.5

42.3

47.4

60.3

65.4

67.5

50.6

60.3

64.3

73.5

81.1

63.0

62.9

70.3

82.6

84.7

82.9

424.1

479.4

485.5

536.9

520.9

494.7

517.5

551.1

586.3

624.3

638.8

Commercial & Health

95.8

103.8

107.5

121.3

134.1

157.9

162.9

165.2

184.8

226.8

237.0

Manufacturing

40.6

46.8

48.7

55.0

73.7

69.9

59.3

55.3

60.6

62.4

59.3

Power & Communication

84.6

102.4

97.8

112.5

108.7

109.0

107.3

108.3

111.0

111.5

108.3

136.7

152.9

155.4

166.0

117.7

66.9

94.8

128.1

132.2

121.2

126.9

66.5

73.6

76.1

82.3

90.0

96.5

98.2

99.3

103.5

109.5

114.9

382.5

432.0

485.5

504.2

555.3

591.3

611.1

618.0

669.6

713.0

735.2

Exports

2119.0

2191.3

2269.6

2367.0

2380.6

2378.1

2450.1

2588.8

2785.3

2948.8

3034.0

Imports

2687.1

2759.9

2802.4

2944.7

3105.5

3164.4

3308.7

3475.8

3844.0

4258.5

4526.6

Federal Government

1311.1

1286.5

1215.3

1183.2

1183.0

1187.8

1196.4

1235.0

1284.8

1302.2

1299.1

State & Local Government

1892.2

1850.5

1845.3

1848.1

1903.9

1942.8

1932.3

1946.7

1976.1

2013.0

2042.6

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 2.2 4.1 Final Sales of Domestic Product 1.9 5.1 Total Consumption 0.5 4.0 Durables -2.0 9.3 Nondurables 0.1 4.2 Services 1.0 3.1 Nonresidential Fixed Investment 11.5 7.3 Equipment & Software 8.5 3.9 Information Processing Equipment 11.4 12.3 Computers & Peripherals 28.7 19.3 Communications Equipment 4.2 15.7 Industrial Equipment 6.8 -5.3 Transportation Equipment 15.0 1.2 Aircraft 76.9 -9.0 Other Equipment 2.0 -4.0 Structures 13.9 13.3 Commercial & Health Care 14.0 -3.8 Manufacturing -6.4 -19.1 Power & Communication 22.9 4.7 Mining & Petroleum 31.0 97.1 Other 2.2 0.9 Residential Fixed Investment -3.4 -1.1 Exports 3.6 9.3 Imports 3.0 0.5 Federal Government 2.6 3.5 State & Local Government 0.9 1.4

4.2 2.8 2.9 3.2 2.6 2.9 6.9 5.3 8.5 2.4 13.1 15.6 14.8 27.5 9.6 6.3 -3.9 19.5 3.0 24.7 -0.9 0.3 3.0 6.4 6.1 1.1

4.9 4.3 3.8 10.6 3.4 3.0 8.1 11.8 6.6 5.7 2.6 8.9 30.1 20.4 20.1 2.8 0.1 7.8 7.4 1.2 1.7 9.9 12.4 12.5 6.5 1.1

4.4 3.9 4.0 8.5 3.1 3.6 7.6 11.4 3.9 -1.3 2.9 13.1 19.0 31.0 23.5 5.9 18.5 9.5 -3.1 -1.4 4.6 10.7 7.9 11.1 3.7 1.3

3.9 3.4 4.1 9.3 3.2 3.5 7.5 11.4 4.3 2.2 1.7 12.0 15.0 69.9 31.0 5.8 11.8 10.4 3.6 -3.5 8.8 11.2 5.3 12.3 3.2 1.8

3.9 3.6 4.1 8.7 3.4 3.6 7.6 10.3 4.2 2.3 2.1 18.9 20.7 8.1 13.5 9.3 31.5 17.7 3.3 -11.6 6.4 11.3 7.0 12.7 2.1 2.1

3.3 3.3 3.9 6.8 3.3 3.6 7.1 9.4 4.6 2.5 2.8 21.4 1.4 6.4 -4.2 8.6 36.0 10.7 2.5 -17.2 5.5 6.2 8.0 12.2 1.0 2.3

3.0 3.2 4.1 9.3 3.1 3.7 6.1 8.1 4.7 1.8 3.0 17.6 0.1 4.2 0.5 8.4 30.1 12.5 0.7 -14.2 5.7 4.6 6.5 11.4 1.2 1.8

2.8 3.1 3.9 7.9 3.0 3.6 4.5 6.5 4.0 0.5 3.1 13.6 1.7 5.7 -0.1 5.1 16.9 -10.9 1.9 -1.7 4.6 5.1 5.0 9.5 3.7 1.7

2.2 2.4 3.8 7.3 3.1 3.4 3.6 6.2 3.4 -1.5 3.2 6.2 0.9 5.0 0.1 1.9 6.7 -13.3 -5.2 4.7 6.3 6.0 3.7 8.8 -1.7 1.6

2.2 2.5 3.7 6.8 2.9 3.5 2.5 4.0 3.2 -1.2 2.6 8.7 -3.6 3.6 0.0 1.9 7.6 -9.9 -8.3 5.2 5.0 6.4 2.9 7.3 -0.9 1.5

1.9 2.2 3.3 4.8 2.7 3.2 2.2 3.4 3.5 -0.1 2.6 4.4 -5.5 2.8 -6.1 1.6 1.4 -6.7 -0.8 5.1 5.2 2.9 2.0 5.6 0.0 1.5

2.0 2.2 3.3 4.3 2.9 3.3 2.0 2.6 3.8 0.3 2.3 1.7 -5.4 2.0 -2.6 2.5 1.8 1.2 0.1 4.6 4.9 0.7 2.6 5.1 -0.1 1.4

2.2 2.4 3.4 5.8 2.8 3.3 2.1 2.7 4.0 1.4 2.0 1.8 -4.3 2.9 -1.2 2.8 4.0 4.2 -3.0 5.1 3.7 -0.2 3.1 4.9 -0.2 1.3

2.3 2.4 3.4 6.0 2.7 3.3 2.4 3.0 4.0 2.0 1.7 5.7 -1.3 1.5 0.8 3.1 2.1 8.2 -2.7 6.9 4.7 1.0 3.3 4.9 -0.6 1.3

Billions of Dollars Real GDP Nominal GDP

18324.0 20041.0

18507.2 20402.5

18697.2 20688.5

18921.1 21071.4

19127.0 21394.7

19312.3 21719.5

19495.6 22050.8

19655.7 22365.6

19801.4 22668.1

19940.7 22956.9

20048.3 23216.3

20158.8 23484.3

20255.8 23733.7

20358.6 23991.0

20468.7 24257.5

20586.3 24532.7

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

4.0

3.0 1.7 1.8 2.7 2.4

1.8 2.8 3.2 0.7 5.0

2.6 3.6 3.1 2.9 3.7

1.8 2.5 2.7 0.2 3.3

2.2 2.1 2.7 1.0 3.5

2.3 1.5 2.4 0.9 3.6

2.4 1.9 2.4 1.6 3.7

2.4 2.9 2.2 2.8 3.5

2.3 2.8 2.3 3.1 3.7

2.4 2.4 2.4 2.7 3.8

2.4 2.2 2.3 2.3 3.9

2.3 1.9 2.2 2.1 4.0

2.3 1.9 2.2 2.0 4.1

2.3 1.9 2.1 2.0 4.0

2.2 1.9 2.1 2.0 4.0

62.9 0.4 2.4 75.3 35.9 98.9 17.091 1.317 4.903 4.1 1.7 -970 -496

68.0 2.8 6.0 75.4 -23.2 98.3 17.202 1.262 4.797 3.9 1.7 -967 -407

63.0 3.3 5.2 75.8 44.7 93.3 16.791 1.297 4.925 3.8 1.8 -959 -478

63.4 3.6 3.6 76.6 74.1 92.8 17.317 1.385 5.147 3.7 1.5 -945 -504

62.1 2.4 3.1 77.3 97.3 94.5 17.5 1.4 5.2 3.6 2.4 -977.7 -543.9

60.3 2.1 3.2 77.8 122.2 95.7 17.8 1.5 5.3 3.5 2.1 -979.3 -585.2

58.0 2.0 3.8 78.3 136.9 96.9 17.9 1.6 5.4 3.3 2.2 -984.4 -609.0

66.6 66.2 65.9 1.4 1.8 2.0 1.3 1.4 1.6 76.5 76.1 75.7 86.5 77.2 67.8 96.8 96.1 95.8 18.0 17.8 17.7 1.7 1.7 1.7 5.6 5.6 5.6 3.3 3.4 3.5 0.8 0.7 0.6 -1062.0 -1081.4 -1101.4 -893.9 -931.2 -968.9

65.7 2.2 1.7 75.4 61.8 95.9 17.7 1.7 5.6 3.5 0.6 -1122.7 -998.5

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

1.74 1.84 2.25 2.77 2.92 3.08 4.54 2703 -4.2 1.136 10.5

1.92 2.09 2.46 3.03 3.19 3.28 4.78 3028 57.4 1.115 -7.4

2.19 2.36 2.69 3.33 3.48 3.52 5.08 3040 1.6 1.145 11.3

2.4 2.5 3.0 3.6 3.7 3.7 5.3 2999 -5.3 1.2 11.9

2.7 2.7 3.2 3.8 3.9 3.9 5.6 2956 -5.6 1.2 15.3

2.9 2.9 3.4 4.0 4.1 4.1 5.7 2929 -3.6 1.3 10.8

3.2 3.0 3.5 4.0 4.2 4.2 5.8 2922 -1.0 1.3 6.5

3.2 3.0 3.6 4.1 4.3 4.2 5.9 2933 1.5 1.3 1.9

3.4 3.2 3.7 4.1 4.3 4.3 6.0 2925 -1.1 1.2 -8.7

3.5 3.2 3.8 4.2 4.4 4.4 6.0 2924 -0.1 1.2 -2.7

3.7 3.4 4.0 4.3 4.5 4.5 6.1 2926 0.3 1.2 -2.1

3.7 3.4 4.0 4.4 4.6 4.5 6.2 2945 2.6 1.2 -2.7

4.0 3.6 4.2 4.5 4.7 4.6 6.3 2955 1.5 1.2 -2.5

4.2 3.9 4.5 4.6 4.7 4.7 6.4 2970 2.0 1.2 -2.1

4.2 3.9 4.4 4.6 4.7 4.7 6.4 2978 1.1 1.2 -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)

17319 5.1 15289 7.0 14220 4.4 7.2 1899 38.4

17503 4.3 15456 4.5 14310 2.6 6.8 2073 42.0

17662 3.7 15579 3.2 14363 1.5 6.5 2104 6.1

17850 4.3 15726 3.8 14416 1.5 5.9 2261 33.3

18138 6.6 15974 6.5 14591 5.0 6.1 2301 7.3

18397 5.8 16193 5.6 14740 4.1 6.1 2368 12.2

18669 6.0 16427 5.9 14908 4.6 6.2 2422 9.4

18941 6.0 16663 5.9 15067 4.3 6.2 2469 8.1

19223 6.1 16910 6.1 15215 4.0 6.2 2507 6.3

19488 5.6 17139 5.5 15343 3.4 6.1 2530 3.7

19729 5.0 17350 5.0 15457 3.0 5.9 2532 0.3

19973 5.0 17564 5.0 15576 3.1 5.7 2523 -1.4

20219 5.0 17779 5.0 15701 3.2 5.7 2513 -1.6

20451 4.7 17984 4.7 15815 2.9 5.6 2504 -1.3

20686 4.7 18191 4.7 15930 2.9 5.4 2497 -1.3

20920 4.6 18399 4.6 16044 2.9 5.3 2509 2.0

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 / September 2018

58.5 62.8 65.8 66.8 67.0 1.6 1.6 1.2 1.6 1.5 3.6 2.6 2.3 1.7 1.8 78.4 78.3 78.0 77.6 77.1 140.5 132.8 121.7 109.1 97.6 97.6 97.6 97.6 96.8 96.9 17.8 18.0 18.1 18.2 18.2 1.6 1.6 1.6 1.7 1.7 5.4 5.4 5.5 5.6 5.7 3.3 3.2 3.3 3.3 3.3 1.8 1.7 2.0 0.7 0.8 -989.7 -1009.7 -1026.2 -1027.0 -1037.4 -632.4 -680.0 -738.5 -797.6 -857.4

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

18324.0 18507.2 18697.2 18921.1 19127.0 19312.3 19495.6 19655.7 19801.4 19940.7 20048.3 20158.8 20255.8 20358.6 20468.7 20586.3 18274.4 18503.7 18631.6 18827.8 19006.6 19167.3 19336.8 19493.6 19646.5 19796.1 19915.7 20037.0 20144.3 20255.6 20374.2 20497.1 12722.8 12847.8 12938.7 13060.5 13189.8 13321.4 13455.8 13583.8 13722.1 13855.5 13984.1 14112.7

14227.7 14345.0 14467.0 14589.7

Durables

1628.2

1664.9

1678.1

1721.0

1756.5

1796.0

1833.8

1864.2

1906.2

1942.9

1977.2

2010.1

2033.8

2055.4

2084.5

2115.0

Nondurables

2858.6

2888.4

2907.1

2931.4

2954.0

2977.6

3002.3

3026.6

3049.4

3072.4

3095.7

3118.0

3138.9

3161.1

3182.8

3203.8

Services Nonresidential Fixed Investment Equipment & Software Information Processing Equipment

8267.9

8331.8

8391.0

8452.2

8527.7

8601.6

8678.5

8755.3

8834.8

8913.6

8989.4

9067.0

9139.6

9214.8

9289.6

9364.8

2654.0

2701.5

2746.7

2800.8

2852.4

2904.5

2958.2

3009.0

3054.3

3088.4

3115.7

3135.1

3152.1

3167.5

3184.0

3203.0

1250.9

1262.7

1279.0

1315.1

1351.2

1388.1

1422.5

1454.9

1483.3

1506.9

1529.9

1545.2

1558.0

1568.0

1578.5

1590.2

490.5

504.9

515.4

523.6

528.6

534.1

539.6

545.7

552.0

557.5

562.2

566.6

571.5

576.8

582.5

588.2

Computers & Peripherals

121.3

126.7

127.5

129.3

128.8

129.5

130.3

131.1

131.7

131.8

131.3

130.9

130.9

131.0

131.4

132.1

Communications Equipment

222.9

231.2

238.4

239.9

241.6

242.7

243.9

245.6

247.4

249.3

251.2

252.8

254.5

255.9

257.2

258.3

Industrial Equipment

238.5

235.2

243.9

249.1

256.9

264.3

276.0

289.7

301.7

311.5

316.2

322.8

326.3

327.7

329.2

333.8

Transportation Equipment

300.7

301.6

312.2

333.4

348.2

360.6

378.0

379.3

379.3

380.9

381.8

378.3

373.0

367.8

363.8

362.6

Aircraft Other Equipment Structures Commercial & Health Manufacturing

46.2

45.1

48.0

50.3

53.8

61.4

62.6

63.6

64.2

65.1

65.9

66.5

67.0

67.3

67.8

68.0

69.3

68.6

70.1

73.4

77.4

82.8

85.5

84.6

84.7

84.7

84.7

84.7

83.4

82.8

82.6

82.7

533.3

550.1

558.6

562.4

570.6

578.8

591.8

604.1

616.3

624.1

627.0

629.9

632.4

636.4

640.8

645.7

167.2

165.6

164.0

164.0

171.1

176.0

188.4

203.5

217.3

226.0

229.7

234.0

234.8

235.8

238.1

239.4

56.0

53.1

55.5

56.6

57.9

59.3

61.8

63.4

65.3

63.4

61.2

59.6

58.6

58.8

59.4

60.6

Power & Communication

106.5

107.8

108.6

110.5

109.7

110.6

111.6

112.3

112.4

113.0

111.5

109.1

108.9

108.9

108.1

107.3

Mining & Petroleum

109.2

129.4

136.7

137.1

136.7

135.4

131.3

125.3

120.5

120.0

121.4

123.0

124.5

125.9

127.5

129.6

Other

99.2

99.4

99.2

99.6

100.7

102.9

104.5

105.9

107.4

108.6

110.3

111.6

113.0

114.4

115.5

116.8

615.3

613.7

614.1

628.8

645.1

662.4

680.4

690.6

698.4

707.2

717.5

728.8

734.0

735.2

734.9

736.6

Exports

2517.8

2574.2

2593.1

2670.3

2721.4

2757.0

2804.2

2858.4

2903.5

2939.1

2965.8

2986.9

3001.4

3021.0

3044.5

3069.2

Imports

3420.1

3424.1

3477.6

3581.2

3677.1

3785.1

3899.8

4014.1

4123.8

4218.3

4307.8

4384.0

4444.5

4499.7

4553.6

4608.5

Federal Government

1213.1

1223.4

1241.8

1261.6

1272.9

1283.1

1289.8

1293.2

1296.9

1308.7

1303.0

1300.1

1300.2

1299.9

1299.1

1297.2

State & Local Government

1937.7

1944.3

1949.7

1955.2

1961.7

1970.5

1980.6

1991.7

2000.8

2009.0

2017.2

2024.9

2032.2

2039.3

2046.0

2052.6

Residential Fixed Investment

Institute for Economic Competitiveness

23

T ables Table 5. Annual Employment

Table 5. Annual Employment History 2011

2012

2013

2014

Forecast 2015

2016

2017

2018

2019

2020

2021

Millions Total Nonfarm Employment

131.943 134.172 136.369 138.937

141.82 144.349 146.624

149.00

151.97

154.53

155.81

Private Nonfarm

109.850 112.253 114.522 117.060

119.79 122.119 124.301

126.66

129.48

131.63

132.79

Mining

0.739

0.797

0.811

0.838

0.76

0.617

0.628

0.68

0.68

0.69

0.70

Construction

5.530

5.646

5.857

6.149

6.46

6.726

6.954

7.24

7.63

8.25

8.70

Manufacturing

11.727

11.927

12.019

12.184

12.34

12.353

12.444

12.74

12.96

13.02

12.91

Trade, Transportation and Utilities

25.070

25.473

25.854

26.379

26.89

27.261

27.491

27.76

28.00

28.03

27.99

Transportation & Warehousing

4.305

4.415

4.497

4.657

4.87

5.013

5.168

5.32

5.46

5.51

5.54

Financial Activities

7.696

7.783

7.886

7.977

8.12

8.286

8.454

8.58

8.75

8.89

8.99

Education & Health

20.322

20.769

21.085

21.436

22.02

22.639

23.188

23.63

23.84

23.90

24.21

Professional & Business Services

17.331

17.932

18.516

19.063

19.63

20.047

20.466

21.05

22.61

23.69

23.81

2.673

2.675

2.705

2.727

2.75

2.794

2.794

2.75

2.71

2.74

2.80

Leisure & Hospitality

13.352

13.770

14.255

14.690

15.15

15.656

16.056

16.33

16.35

16.52

16.76

Government

22.093

21.920

21.847

21.876

22.03

22.230

22.323

22.34

22.49

22.90

23.01

2.860

2.822

2.770

2.734

2.76

2.794

2.805

2.79

2.80

2.92

2.80

19.233

19.098

19.077

19.143

19.27

19.436

19.518

19.54

19.70

19.97

20.22

Total Nonfarm Employment

1.22

1.69

1.64

1.88

2.08

1.78

1.58

1.62

1.99

1.68

0.83

Private Nonfarm

1.84

2.19

2.02

2.22

2.34

1.94

1.79

1.90

2.22

1.67

0.88

13.57

2.08

3.06

3.81

-16.56

-15.18

8.70

4.47

1.66

1.00

2.84

Construction

1.93

1.74

4.36

5.58

5.03

3.32

3.30

4.39

6.99

7.85

4.01

Manufacturing

1.76

1.47

0.97

1.69

0.66

-0.12

1.46

2.84

1.01

-0.12

-1.18

Trade, Transportation and Utilities

1.95

1.48

1.84

2.08

1.50

1.39

0.71

0.82

0.91

-0.14

-0.14

Transportation & Warehousing

2.33

2.61

1.91

4.54

3.85

3.07

2.94

2.88

2.15

0.64

0.25

Financial Activities

0.47

1.29

1.22

1.52

1.83

2.08

1.84

1.35

2.14

1.86

0.41

Education & Health

1.92

1.99

1.35

2.09

2.96

2.72

2.08

1.77

0.44

0.51

1.48

Professional & Business Services

3.58

3.27

3.16

3.16

2.88

1.83

2.22

3.65

8.48

2.55

0.16

-0.41

-0.18

1.91

0.39

1.01

1.96

-1.25

-2.04

-0.20

1.94

1.10

2.80

3.11

3.62

2.95

3.46

2.93

2.30

1.32

-0.15

1.64

1.32

Government

-1.38

-0.38

-0.27

0.47

0.67

1.00

0.13

0.09

1.08

1.28

1.00

Federal

-0.85

-1.04

-2.52

-0.06

0.95

1.46

-0.18

-0.16

0.00

3.90

0.00

State & Local

-1.46

-0.28

0.06

0.55

0.63

0.93

0.18

0.13

1.24

1.38

1.14

Information

Federal State & Local

Growth Rates

Mining

Information Leisure & Hospitality

24

U.S. Forecast / September 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

148.07 148.69 149.34 149.91 150.79 151.59 152.41 153.08 153.72 154.50 154.78 155.11 155.42 155.69 155.94 156.18

Private Nonfarm

125.75 126.36 126.99 127.56 128.39 129.14 129.89 130.49 131.00 131.40 131.88 132.24 132.49 132.70 132.90 133.09

Mining

0.66

0.68

0.68

0.67

0.68

0.68

0.68

0.68

0.68

0.68

0.69

0.69

0.70

0.70

0.71

0.71

Construction

7.14

7.20

7.26

7.34

7.44

7.55

7.69

7.85

8.02

8.18

8.33

8.47

8.58

8.67

8.74

8.81

Manufacturing

12.61 12.68 12.81 12.88 12.93 12.96 12.95 13.01 13.04 13.05 13.02 12.99 12.97 12.93 12.90 12.84

Trade, Transportation and Utilities

27.69 27.76 27.78 27.81 27.91 27.97 28.06 28.06 28.05 28.00 28.03 28.02 28.01 27.99 27.99 27.98

Transportation & Warehousing

5.27

5.31

5.34

5.38

5.42

5.45

5.47

5.49

5.50

5.51

5.52

5.53

5.54

5.54

5.54

5.54

Financial Activities

8.54

8.57

8.59

8.62

8.69

8.72

8.78

8.80

8.83

8.87

8.92

8.96

8.99

8.99

9.00

9.00

Education & Health

23.46 23.57 23.71 23.76 23.79 23.84 23.86 23.87 23.85 23.85 23.91 23.99 24.07 24.17 24.25 24.34

Professional & Business Services

20.77 20.92 21.09 21.40 21.94 22.41 22.86 23.21 23.51 23.68 23.77 23.80 23.82 23.80 23.80 23.84

Information

2.76

2.77

2.76

2.72

2.70

2.72

2.72

2.72

2.72

2.72

2.74

2.77

2.79

2.80

2.80

2.80

Leisure & Hospitality

16.24 16.29 16.38 16.39 16.36 16.34 16.36 16.37 16.40 16.46 16.57 16.64 16.67 16.74 16.80 16.86

Government

22.32 22.33 22.34 22.35 22.41 22.46 22.52 22.59 22.72 23.09 22.90 22.87 22.93 22.99 23.04 23.10

Federal State & Local

2.79

2.79

2.80

2.80

2.80

2.80

2.80

2.80

2.85

3.15

2.89

2.80

2.80

2.80

2.80

2.80

19.53 19.54 19.55 19.55 19.61 19.66 19.72 19.80 19.87 19.94 20.01 20.07 20.13 20.19 20.25 20.30

Growth Rates Total Nonfarm Employment

1.72

1.67

1.74

1.53

2.37

2.12

2.15

1.76

1.68

2.02

0.74

0.84

0.81

0.69

0.64

0.63

Private Nonfarm

2.05

1.94

2.02

1.77

2.61

2.33

2.34

1.83

1.58

1.23

1.46

1.08

0.77

0.63

0.59

0.58

10.44 12.67

-0.47

-5.89

2.54

3.62

0.72

-0.33

-1.30

0.48

2.52

2.26

2.64

4.51

2.18

1.91

Mining Construction

6.47

3.36

3.25

4.19

5.52

5.97

7.40

8.33

8.64

8.01

7.14

6.73

5.50

4.18

3.20

2.92

Manufacturing

2.67

2.44

4.03

2.09

1.73

0.91

-0.43

1.81

0.91

0.31

-0.84

-0.85

-0.77

-1.19

-1.02

-1.77

Trade, Transportation and Utilities

1.50

1.03

0.30

0.45

1.44

0.83

1.29

0.04

-0.20

-0.60

0.36

-0.10

-0.20

-0.32

0.03

-0.08

Transportation & Warehousing

3.38

2.94

2.40

2.80

3.20

1.93

2.13

1.35

0.63

0.32

0.92

0.69

0.63

0.32

0.07

-0.03

Financial Activities

1.53

1.41

1.09

1.35

3.41

1.45

2.56

1.14

1.27

1.68

2.41

2.08

1.00

0.29

0.16

0.18

Education & Health

1.96

1.93

2.37

0.83

0.45

0.93

0.36

0.01

-0.33

0.11

0.97

1.28

1.45

1.63

1.42

1.42

Professional & Business Services

2.31

2.96

3.24

6.07 10.42

8.93

8.26

6.29

5.18

2.99

1.47

0.56

0.23

-0.33

0.00

0.74

-2.66

0.97

-1.50

-4.96

-3.44

2.80

0.08

-0.24

1.22

-0.30

2.73

4.10

2.83

1.92

0.42

-0.77

1.52

1.20

2.26

0.31

-0.90

-0.45

0.44

0.31

0.67

1.62

2.72

1.53

0.74

1.70

1.49

1.37

Government

-0.16

0.19

0.19

0.16

0.97

0.90

1.09

1.38

2.27

6.72

-3.30

-0.58

1.07

1.03

0.96

0.94

Federal

-1.18

-0.38

0.91

0.00

0.00

0.00

0.00

0.00

7.79 49.21 -29.14 -12.26

0.00

0.00

0.00

0.00

State & Local

-0.01

0.27

0.08

0.19

1.11

1.03

1.24

1.57

1.51

1.22

1.18

1.09

1.07

Information Leisure & Hospitality

1.47

1.35

1.20

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

109.3 110.2 110.6 111.4 111.9 112.5 113.1 113.8 114.5 115.1 115.8 116.5 117.2 117.8 118.5 119.2

Consumption

107.5 108.0 108.5 109.1 109.5 109.9 110.2 110.6 111.1 111.7 112.2 112.8 113.2 113.7 114.2 114.7

Durables

88.1

87.8

87.5

87.2

86.7

86.1

85.5

85.0

84.6

84.2

84.0

83.7

83.3

83.0

82.7

82.4

Motor Vehicles

97.6

97.4

97.9

98.0

98.0

97.9

97.7

97.7

97.8

98.0

98.2

98.4

98.6

98.7

98.8

99.0

Furniture

86.3

86.9

85.9

85.7

85.6

85.3

84.9

84.4

84.0

83.6

83.3

83.0

82.7

82.4

82.1

81.9

Other Durables

89.4

88.7

88.5

88.1

87.7

87.2

86.8

86.4

86.2

85.9

85.7

85.5

85.3

85.1

84.8

84.6

Nondurables

99.1

99.5

99.4

99.9

99.9

99.8

99.7

99.7 100.2 100.9 101.3 101.6 101.9 102.2 102.4 102.7

Food

103.1 103.4 103.6 103.6 103.4 103.5 103.7 104.0 104.3 104.7 105.1 105.6 106.1 106.5 106.9 107.3

Clothing & Shoes

100.2 100.3 100.5 100.5

99.7

99.1

98.6

98.3

98.0

97.8

97.7

97.7

97.6

97.5

97.4

97.4

Gasoline & Oil

77.0

77.6

76.4

80.0

79.4

78.5

76.3

75.3

77.9

80.6

81.4

81.6

81.4

81.1

80.9

80.7

Fuel

78.9

79.9

74.7

71.5

80.5

80.4

79.3

79.3

81.7

84.2

85.5

86.1

86.4

86.6

86.9

87.2

Services

113.8 114.5 115.3 116.2 116.9 117.6 118.3 119.0 119.8 120.5 121.3 122.0 122.7 123.5 124.2 124.9

Housing

118.0 119.1 120.1 121.1 122.1 123.0 123.9 124.8 125.7 126.5 127.3 128.1 128.9 129.7 130.5 131.2

Electricity

109.0 108.1 107.3 107.6 107.9 107.6 107.5 107.8 108.6 109.1 109.7 110.3 110.7 111.2 112.0 112.6

Natural Gas

105.6 105.0 103.8 104.3 103.4 101.1

Water & Sewer

122.9 124.3 125.6 126.9 127.6 128.3 129.0 129.8 130.6 131.5 132.4 133.4 134.4 135.6 136.9 138.1

Telephone

85.8

85.8

85.8

85.9

86.2

86.3

99.7

85.9

99.9 101.9 102.0 102.5 103.4 103.1 103.6 105.2 106.3

85.9

86.0

86.1

86.2

86.3

86.3

86.4

86.5

86.5

Transportation

105.4 106.4 107.1 107.5 107.7 108.3 108.7 109.1 109.5 109.9 110.4 110.9 111.4 111.9 112.4 112.9

Other Services

113.7 114.3 115.5 116.5 117.3 118.2 118.9 119.6 120.4 121.1 121.9 122.8 123.5 124.2 124.9 125.6

26

U.S. Forecast / September 2018

T ables Table 8. Percent Change in Implicit Price Deflators

Table 8. Percent Change in Implicit Price Deflators

2018Q1 2018Q2

2018Q3

2018Q4

2019Q1 2019Q2

2019Q3

2019Q4

2020Q1 2020Q2

2020Q3

2020Q4

2021Q1 2021Q2

2021Q3

2021Q4

GDP

2.0

3.0

1.8

2.6

1.8

2.2

2.3

2.4

2.4

2.3

2.4

2.4

2.3

2.3

2.3

2.2

Consumption

2.5

1.8

1.7

2.3

1.4

1.4

1.2

1.5

2.0

2.0

1.9

1.9

1.7

1.7

1.7

1.7

Durables

-1.1

-1.4

-1.5

-1.2

-2.4

-2.6

-2.6

-2.3

-2.0

-1.6

-1.4

-1.3

-1.5

-1.6

-1.5

-1.5

Motor Vehicles

-0.5

-0.9

2.3

0.4

-0.2

-0.5

-0.5

-0.1

0.5

0.9

0.9

0.8

0.6

0.5

0.5

0.5

Furniture

0.2

2.9

-4.6

-0.7

-0.6

-1.6

-1.9

-2.0

-2.0

-1.8

-1.6

-1.6

-1.4

-1.3

-1.3

-1.2

Other Durables

1.9

-2.8

-1.3

-1.7

-1.5

-2.4

-2.0

-1.7

-1.2

-1.1

-1.0

-1.0

-1.0

-1.1

-1.1

-1.0

Nondurables

3.9

1.4

-0.3

2.2

0.0

-0.2

-0.7

0.1

2.2

2.5

1.7

1.4

1.1

1.0

1.0

1.0

Food

0.2

1.2

0.6

0.0

-0.5

0.4

0.8

0.9

1.1

1.5

1.7

1.8

1.8

1.6

1.5

1.4

Clothing & Shoes

8.8

0.5

0.5

0.3

-3.4

-2.2

-2.0

-1.3

-1.2

-0.7

-0.4

-0.3

-0.4

-0.3

-0.2

-0.1

Gasoline & Oil

20.0

3.1

-5.8

20.1

-3.1

-4.4 -10.8

-5.1

14.7

14.1

4.4

0.8

-1.0

-1.2

-1.1

-0.9

Fuel

38.9

5.2 -23.6 -16.1

61.1

-0.8

-5.1

-0.3

12.8

12.9

6.3

2.8

1.3

1.0

1.3

1.4

Services

2.6

2.5

2.8

2.9

2.5

2.5

2.4

2.5

2.5

2.5

2.5

2.5

2.4

2.4

2.4

2.4

Housing

3.3

3.6

3.4

3.5

3.3

3.1

3.0

2.9

2.9

2.7

2.6

2.5

2.5

2.5

2.3

2.3

Electricity

1.5

-3.2

-2.9

1.2

0.9

-1.1

-0.4

1.3

3.1

1.8

2.1

2.3

1.5

1.9

2.6

2.2

Natural Gas

3.9

-2.4

-4.5

2.0

-3.4

-8.6

-5.2

0.5

8.3

0.4

2.1

3.5

-1.0

1.9

6.3

4.2

Water & Sewer

3.0

4.4

4.4

4.0

2.3

2.2

2.3

2.5

2.6

2.7

2.8

3.0

3.0

3.6

3.8

3.8

Telephone

-1.4

-0.2

0.3

0.2

1.7

0.4

-2.1

0.3

0.3

0.5

0.4

0.3

0.3

0.4

0.3

0.4

Transportation

-0.9

3.9

2.7

1.7

0.4

2.2

1.6

1.5

1.3

1.5

1.9

1.8

1.8

1.8

1.9

1.8

Other Services

3.9

2.1

4.1

3.6

2.8

2.9

2.6

2.4

2.4

2.6

2.7

2.7

2.5

2.2

2.3

2.4

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

98.1 100.0 101.8 103.7 104.8 105.9 107.9 110.4

112.8 115.5 118.2

Consumption

98.1 100.0 101.3 102.9 103.1 104.2 106.1 108.3

110.0 112.0 114.0

2011

Durables Motor Vehicles

2012

101.3 100.0

History 2013 2014 2015

98.0

95.5

2016

2017

93.4

91.2

89.1

87.6

85.8

84.1

82.9

98.7 100.0 100.5 100.6 100.5

99.4

98.2

97.7

97.8

98.1

98.8

Furniture

100.0 100.0

98.1

94.7

92.4

90.0

87.5

86.2

85.0

83.5

82.3

Other Durables

100.8 100.0

97.9

94.4

90.8

90.4

89.5

88.7

87.0

85.8

84.9

Nondurables

97.7 100.0 100.1 100.6

97.1

95.9

97.4

99.5

99.8 101.0 102.3

Food

97.7 100.0 101.0 102.9 104.1 103.0 102.9 103.4

103.7 104.9 106.7

Clothing & Shoes

96.5 100.0 101.0 101.3 100.0

99.8

99.2 100.4

98.9

97.8

97.5

Gasoline & Oil

96.6 100.0

97.2

93.5

68.7

61.0

68.9

77.8

77.4

80.4

81.1

Fuel

98.6 100.0

98.8

98.3

69.8

58.0

66.9

76.2

79.9

84.4

86.8

Services

97.8 100.0 102.3 104.9 106.8 109.3 112.0 115.0

118.0 120.9 123.8

Housing

97.8 100.0 102.3 105.0 108.2 111.8 115.6 119.6

123.5 126.9 130.1

Electricity

100.0 100.0 102.1 105.8 106.4 105.2 107.5 108.0

107.7 109.4 111.6

Natural Gas

110.8 100.1 104.9 112.3

96.6 104.3 104.6

101.0 102.4 104.5

Water & Sewer

95.0 100.0 104.4 108.1 112.8 116.8 120.7 124.9

128.7 132.0 136.2

Telephone

99.9 100.0

Transportation

98.1 100.0 101.0 102.3 102.5 103.4 104.7 106.6

108.4 110.1 112.1

Other Services

97.5 100.0 102.9 105.4 107.5 109.6 111.9 115.0

118.5 121.5 124.5

28

U.S. Forecast / September 2018

99.3

98.2

99.0 95.8

95.2

87.1

85.8

86.1

86.1

86.4

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

2.0

2.1

1.8

1.6

Consumption

2.7

1.8

1.2

-0.3

-1.6

Durables

Forecast 2019 2020 2021

2016

2017

2018

0.9

1.5

2.0

2.4

2.2

2.4

2.3

1.2

0.3

1.6

1.8

2.1

1.4

2.0

1.7

-2.2

-2.6

-2.0

-2.9

-1.9

-1.3

-2.5

-1.6

-1.5

Motor Vehicles

3.5

0.8

0.5

-0.3

-0.2

-1.5

-1.1

0.3

-0.3

0.7

0.5

Furniture

0.0

-0.2

-2.9

-3.0

-2.4

-2.8

-3.0

-0.5

-1.5

-1.7

-1.3

Other Durables

2.5

-2.1

-2.5

-3.6

-4.0

0.5

-1.0

-1.0

-1.9

-1.1

-1.1

Nondurables

5.9

1.9

-0.6

-0.4

-3.1

0.4

1.6

1.8

-0.2

2.0

1.0

Food

5.1

1.3

0.7

2.8

0.3

-1.8

0.7

0.5

0.4

1.5

1.6

Clothing & Shoes

4.2

2.6

0.3

-0.3

-1.3

0.0

-1.5

2.5

-2.2

-0.6

-0.3

Gasoline & Oil

19.9

4.8

-5.3

-10.6

-16.8

7.6

15.1

9.4

-5.8

8.5

-1.0

Fuel

26.2

3.4

-0.3

-8.8

-29.1

8.5

17.3

1.1

13.7

8.7

1.3

Services

2.2

2.3

2.5

2.3

1.8

2.7

2.4

2.7

2.5

2.5

2.4

Housing

1.9

2.3

2.4

2.8

3.2

3.5

3.3

3.5

3.1

2.7

2.4

Electricity Natural Gas Water & Sewer Telephone

2.6

-0.7

3.1

3.1

-0.6

0.4

2.3

-0.8

0.2

2.3

2.0

-2.5

-4.3

2.2

6.6

-12.1

6.7

4.1

-0.3

-4.2

3.6

2.8

4.7

5.7

3.7

4.1

3.9

3.3

3.2

4.0

2.3

2.8

3.6

-2.3

0.8

-1.0

-2.4

0.0

-3.0

-7.7

-0.3

0.1

0.4

0.3

Transportation

3.7

1.2

1.6

1.1

-0.4

1.1

2.0

1.8

1.5

1.6

1.8

Other Services

2.9

2.3

3.1

2.3

1.8

2.0

2.1

3.4

2.7

2.6

2.3

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

13326.8 14010.1 14181.1 14991.8 15719.5 16125.1 16830.9 17583.2

18536.1 19603.4 20569.0

Wages & Salaries

8225.9

8566.7

8834.2

9248.1

9696.8

9956.2 10407.2 10865.2

Other Labor Income

1107.3

1125.9

1194.7

1228.1

1272.8

1294.2

1348.1

1388.0

1433.7

1505.1

1582.0

Nonfarm Income

1164.4

1286.4

1315.2

1377.5

1365.5

1381.8

1462.0

1542.9

1632.2

1671.3

1672.4

64.9

60.9

88.3

70.1

56.4

37.5

38.9

40.4

50.6

64.1

67.4

478.6

518.0

557.0

608.4

651.8

694.8

730.2

762.1

792.7

805.0

810.3

Farm Income Rental Income Dividends

11388.7 12013.4 12604.3

681.5

835.1

793.3

953.4

1033.3

1075.7

1108.6

1151.8

1260.2

1376.3

1422.7

Interest Income

1269.4

1330.5

1273.0

1347.8

1438.1

1440.9

1523.0

1610.6

1705.7

1884.8

2120.5

Transfer Payments

2358.7

2363.0

2424.3

2540.3

2683.0

2778.1

2859.7

2971.5

3120.7

3269.4

3417.8

423.9

437.2

578.0

607.1

635.6

658.5

693.3

729.9

758.5

794.0

829.1

Personal Income

6.2

5.1

1.2

5.7

4.9

2.6

4.4

4.5

5.4

5.8

4.9

Wages & Salaries

3.8

4.1

3.1

4.7

4.9

2.7

4.5

4.4

4.8

5.5

4.9

Other Labor Income

2.2

1.7

6.1

2.8

3.6

1.7

4.2

3.0

3.3

5.0

5.1

Nonfarm Income

8.8

10.6

2.2

4.7

-0.9

1.2

5.8

5.5

5.8

2.4

0.1

Farm Income

70.6

-6.1

45.6

-19.4

-19.2

-33.4

4.3

5.1

25.4

27.2

5.3

Rental Income

21.3

3.9

9.8

8.3

7.5

5.1

5.9

3.8

3.4

0.7

0.9

Dividends

23.6

46.5

-7.5

22.4

3.7

4.9

2.4

5.6

11.2

7.3

1.5

3.8

3.9

-2.7

6.9

6.8

0.7

8.9

3.1

8.4

11.5

12.9

0.4

1.1

2.5

6.2

4.6

3.5

2.9

4.1

5.4

4.8

4.5

-13.1

4.8

44.8

5.4

4.4

3.8

5.4

5.0

4.4

4.6

4.4

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

13679.6 13877.2 14034.3 14247.6 14439.7 14634.5 14826.7 15023.4 15250.7 15477.2 15696.2 15914.1 16111.6 16312.1 16520.6 16731.0

durable goods

1434.5 1461.6 1467.6 1500.4 1522.0 1545.9 1567.9 1584.6 1612.3 1636.7 1659.9 1681.8 1695.1 1706.3 1724.0 1742.8

furniture and appliances

324.1

332.0

333.3

336.9

340.5

346.8

351.6

355.8

361.3

367.0

372.4

378.6

384.3

389.1

393.4

397.4

information processing equipment

136.6

139.0

140.7

143.0

144.8

146.8

149.2

151.7

153.3

154.9

156.6

158.0

159.5

160.9

162.1

163.6

motor vehicles and parts

498.5

507.5

504.8

521.8

530.5

541.4

549.5

553.1

567.4

578.2

588.4

597.0

598.9

599.9

607.6

616.7

other durable goods

152.3

155.9

158.6

163.5

166.8

169.0

170.7

172.4

174.0

175.6

176.9

178.2

179.4

180.6

181.9

183.3

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

2833.2 2872.5 2889.0 2928.7 2951.1 2973.1 2992.2 3017.0 3056.7 3098.7 3135.5 3168.9 3199.1 3229.8 3260.3 3290.3 385.5

394.1

397.1

404.7

407.0

409.1

412.6

415.5

418.5

421.9

424.9

428.4

431.0

434.2

437.2

19.5

21.5

22.3

21.5

24.0

24.0

23.5

23.4

24.1

24.8

25.1

25.2

25.3

25.3

25.4

25.4

321.0

324.4

319.2

335.2

333.4

332.1

325.6

323.5

334.7

345.8

350.1

351.7

351.9

351.8

351.9

352.1

988.3

other nondurable goods

1118.8

439.7

997.3 1002.3 1009.2 1013.4 1018.5 1024.6 1031.3 1038.4 1046.4 1054.8 1063.4 1071.7 1079.3 1086.4 1093.2 1135.1

1148.1

1158.1

1173.3

1189.5

1206.0 1223.4 1241.0 1259.9 1280.8 1300.3 1319.2 1339.2 1359.5 1379.7

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

12722.8 12847.8 12938.7 13060.5 13189.8 13321.4 13455.8 13583.8 13722.1 13855.5 13984.1 14112.7 14227.7 14345.0 14467.0 14589.7

durable goods

1628.2 1664.9 1678.1 1721.0 1756.5 1796.0 1833.8 1864.2 1906.2 1942.9 1977.2 2010.1 2033.8 2055.4 2084.5 2115.0

furniture and appliances

375.5

381.9

388.0

393.0

397.7

406.7

414.3

421.4

430.1

438.8

447.1

456.3

464.7

472.2

479.0

485.2

information processing equipment

185.6

191.9

196.5

200.7

209.3

216.8

225.0

233.0

239.4

245.5

250.9

256.0

261.3

267.0

272.5

278.7

motor vehicles and parts

510.7

521.1

515.4

532.3

541.5

553.2

562.2

566.1

580.0

589.8

598.9

606.5

607.6

607.9

614.9

623.3

other durable goods

181.1

187.2

191.7

199.0

204.1

208.2

211.5

214.9

217.8

220.7

223.2

225.7

228.1

230.5

233.2

235.8

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

2858.6 2888.4 2907.1 2931.4 2954.0 2977.6 3002.3 3026.6 3049.4 3072.4 3095.7 3118.0

3138.9 3161.1 3182.8 3203.8

384.7

392.8

395.3

402.6

408.4

412.8

418.4

422.7

427.0

431.2

434.7

438.6

441.8

445.4

448.7

24.8

27.0

29.8

30.1

29.8

29.8

29.6

29.5

29.4

29.4

29.3

29.3

29.2

29.2

29.2

451.4 29.1

416.9

418.1

417.7

418.9

419.9

423.0

426.8

429.5

429.4

429.2

429.9

431.1

432.3

433.6

434.8

436.1

958.6

964.5

967.9

974.6

979.8

983.7

987.5

991.7

995.7

1061.4 1073.4 1083.7 1091.9 1102.0

1114.0

1125.6

1138.3

1151.8

999.6 1003.3 1007.0 1010.3 1013.4 1016.3 1019.2 1165.8

1180.3

1193.2

1205.8 1219.3 1232.9 1246.2

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

0.5

3.9

2.8

3.8

4.0

4.0

4.0

3.8

4.1

3.9

3.7

3.7

3.3

3.3

3.4

3.4

-2.0

9.0

3.2

10.2

8.3

9.0

8.4

6.6

9.0

7.7

7.1

6.6

4.7

4.2

5.7

5.9

furniture and appliances

1.7

6.9

6.4

5.1

4.8

9.1

7.5

6.8

8.3

8.1

7.5

8.3

7.4

6.4

5.8

5.2

information processing equipment

8.1

13.5

9.5

8.7

17.1

14.3

15.2

14.1

11.0

10.2

8.9

8.0

8.4

8.6

8.3

9.1

-13.3

8.2

-4.4

13.1

6.9

8.7

6.5

2.7

9.8

6.8

6.2

5.1

0.7

0.2

4.6

5.5

5.1

13.4

9.6

15.3

10.1

8.1

6.3

6.4

5.4

5.3

4.5

4.5

4.2

4.3

4.6

4.5

motor vehicles and parts other durable goods nondurables

0.1

4.2

2.6

3.3

3.1

3.2

3.3

3.2

3.0

3.0

3.0

2.9

2.7

2.8

2.8

2.6

-7.6

8.5

2.5

7.4

5.7

4.3

5.4

4.1

4.1

3.9

3.2

3.6

2.9

3.2

3.0

2.4

-26.4

35.2

41.4

3.3

-3.7

0.2

-3.1

-1.4

-0.2

-0.6

-1.3

-0.8

-0.4

-0.2

-0.5

-0.6

-1.7

1.1

-0.4

1.2

1.0

2.9

3.5

2.6

-0.1

-0.1

0.6

1.1

1.2

1.2

1.1

1.2

food

2.2

2.5

1.4

2.8

2.2

1.6

1.6

1.7

1.6

1.6

1.5

1.5

1.3

1.2

1.2

1.1

other nondurable goods

2.0

4.6

3.9

3.1

3.7

4.4

4.2

4.6

4.8

5.0

5.1

4.4

4.3

4.6

4.5

4.4

clothing & shoes fuel oil & coal gasoline & motor oil

30

U.S. Forecast / September 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

10641.1 11006.8 11317.2 11824.0 12294.5 12766.9 13321.4 13959.7

14731.1 15584.5 16418.8

1093.5

1144.2

1189.4

1242.4

1306.6

1346.6

1406.5

1466.0

1555.1

1647.7

1717.1

furniture and appliances

246.9

253.9

263.6

274.2

288.1

301.3

315.4

331.6

348.6

369.8

391.0

information processing equipment

101.8

107.9

111.0

114.6

119.2

123.8

131.6

139.8

148.2

155.7

161.5

motor vehicles and parts

365.2

396.6

417.5

442.3

473.9

483.7

498.2

508.1

543.6

582.7

605.8

other durable goods

121.8

126.9

129.7

135.2

139.3

139.9

145.9

157.6

169.7

176.2

181.3

2424.6

2493.5

2540.6

2619.2

2613.1

2649.7

2749.6

2880.8

2983.4

3115.0

3244.8

332.6

345.2

350.5

358.0

366.3

373.0

379.7

395.4

411.0

423.4

435.5

nondurables clothing & shoes fuel oil & coal

27.0

24.1

25.3

26.4

19.7

15.9

17.0

21.2

23.7

24.8

25.3

gasoline & motor oil

386.8

397.8

393.0

376.9

289.5

258.9

290.0

325.0

328.7

345.5

351.9

food

819.5

846.2

864.0

897.6

921.0

944.2

965.8

999.3

1021.9

1050.7

1082.6

other nondurable goods

858.7

880.2

907.8

960.2

1016.6

1057.6

1097.2

1140.0

1198.1

1270.5

1349.4

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

10843.8 11006.8 11166.9 11494.3 11921.9 12248.2 12558.7 12892.4

13387.7 13918.6 14407.3

1079.7

1144.2

1214.1

1301.0

1399.4

1476.8

1577.9

1673.1

1812.6

1959.1

2072.2

246.9

253.9

268.8

289.5

311.8

334.7

360.4

384.6

410.0

443.1

475.3

94.8

107.9

119.5

130.7

142.0

158.5

175.5

193.7

221.0

247.9

269.9

motor vehicles and parts

370.1

396.6

415.3

439.8

471.4

486.5

507.2

519.9

555.8

593.8

613.4

other durable goods

119.9

126.9

134.0

147.5

160.8

162.9

172.5

189.8

209.7

221.9

231.9

2482.9

2493.5

2538.5

2603.7

2691.7

2763.9

2822.0

2896.4

2990.1

3083.9

3171.7

344.6

345.2

347.1

353.4

366.1

373.9

382.9

393.8

415.5

432.9

446.8

furniture and appliances information processing equipment

nondurables clothing & shoes fuel oil & coal

27.4

24.1

25.6

26.8

28.3

27.5

25.4

27.9

29.7

29.4

29.2

gasoline & motor oil

400.3

397.8

404.2

403.2

421.6

424.4

420.9

417.9

424.8

429.9

434.2

food

839.0

846.2

855.5

872.1

884.9

916.8

938.9

966.4

985.7

1001.4

1014.8

other nondurable goods

871.6

880.2

906.1

947.6

991.7

1018.4

1045.1

1077.6

1120.0

1172.8

1226.0

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

1.2

1.6

1.9

3.8

3.0

2.8

2.7

2.8

4.0

3.9

3.4

durable goods

3.6

6.4

5.1

9.2

6.0

6.8

7.7

5.3

8.3

7.8

5.2

furniture and appliances

3.5

2.4

7.3

8.5

7.7

6.3

9.6

5.1

7.2

8.3

6.3

18.7

13.4

7.7

12.2

6.2

13.3

10.4

10.3

16.1

9.9

8.9

motor vehicles and parts

0.4

7.8

1.4

9.6

4.3

7.3

5.0

1.3

6.4

7.2

2.8

other durable goods

3.0

8.4

6.2

10.9

7.7

0.2

8.5

11.4

8.0

5.0

4.5

-0.2

0.7

2.8

3.0

3.0

2.0

3.1

2.6

3.2

3.0

2.8

information processing equipment

nondurables clothing & shoes

0.6

0.3

0.9

3.9

2.5

1.4

4.7

2.9

5.0

3.8

2.9

-15.0

7.1

23.2

-1.1

8.8

1.9

4.5

16.9

-2.0

-0.7

-0.4

gasoline & motor oil

-2.1

-1.2

2.7

1.4

3.6

-1.2

0.1

0.1

2.5

0.4

1.2

food

-0.7

1.6

1.6

1.5

1.4

4.4

2.8

2.2

1.8

1.5

1.2

1.3

1.2

4.4

5.1

4.5

1.0

3.6

3.4

4.2

4.8

4.4

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

1907.5 2118.5 2211.5 2394.3 2449.7 2442.1 2587.9 2817.0

3059.6 3263.8 3401.8

Producers Dur. Equipment

881.3

983.4 1027.0 1090.8 1118.3 1090.9 1150.4 1245.3

Nonresidential Structures

404.5

479.4

492.5

577.1

572.2

545.7

585.4

646.4

707.2

773.8

815.5

Non-Farm Buildings

170.5

191.8

204.1

234.9

281.7

318.6

323.6

337.8

376.3

438.9

466.3

Commercial

67.0

75.6

84.3

103.0

116.9

144.5

153.6

161.5

184.4

233.7

250.3

Industrial

39.6

46.8

49.9

58.1

79.3

75.7

65.8

63.7

71.2

75.9

75.0

Other Buildings

63.9

69.4

70.0

73.8

85.5

98.4

104.2

112.6

120.6

129.3

141.0

Utilities

90.7

112.2

108.9

126.3

125.5

124.7

126.3

132.4

143.6

156.3

165.0

124.7

152.9

155.6

187.8

136.5

74.4

107.4

147.3

156.7

144.8

148.4

Mines & Wells

1369.9 1478.9 1548.9

Billions 2009 Dollars Business Fixed Investment

1935.4 2118.5 2206.0 2357.4 2399.7 2411.2 2538.1 2725.8

2931.0 3098.4 3176.6

Producers Dur. Equipment

886.2

983.4 1029.2 1098.7 1132.6 1116.2 1183.7 1276.9

Nonresidential Structures

424.1

479.4

485.5

536.9

520.9

494.7

517.5

551.1

586.3

624.3

638.8

Non-Farm Buildings

175.0

191.8

199.3

222.0

261.0

289.6

285.1

283.7

311.1

358.0

370.1

Commercial

69.0

75.6

82.5

98.2

109.2

132.9

137.9

139.3

156.5

196.8

205.7

Industrial

40.6

46.8

48.7

55.0

73.7

69.9

59.3

55.3

60.6

62.4

59.3

Other Buildings

65.4

69.4

68.0

68.9

78.2

86.9

87.8

89.0

94.2

99.9

106.0

Utilities

93.6

112.2

107.6

123.1

120.5

119.1

117.3

118.2

121.5

122.2

119.2

136.7

152.9

155.4

166.0

117.7

66.9

94.8

128.1

132.2

121.2

126.9

Business Fixed Investment

11.7

7.1

5.9

7.9

-0.9

1.5

7.2

10.4

7.7

5.8

3.8

Producers Dur. Equipment

13.2

8.8

4.5

5.3

1.0

-2.1

9.2

8.6

9.5

7.1

3.7

Nonresidential Structures

16.6

8.4

10.2

16.1

-10.2

3.5

6.3

13.5

9.7

7.5

5.5

Non-Farm Buildings

14.7

7.3

10.8

21.0

11.4

15.1

-1.1

6.0

17.6

11.8

6.1

Commercial

14.6

9.6

19.7

20.2

10.0

28.4

-0.1

5.6

27.2

19.0

4.8

Industrial

38.0

8.5

11.1

38.6

15.2

-7.2

-11.5

3.1

14.8

-1.7

5.6

Other Buildings

3.3

4.4

2.3

12.3

11.6

17.8

5.1

8.9

6.0

8.3

9.0

Utilities

2.4

18.4

25.8

-6.4

13.8

10.0

-7.2

13.9

8.4

5.8

6.6

40.3

4.2

4.9

34.1

-47.9

-31.8

89.6

40.6

-5.9

-1.8

2.5

Mines & Wells

1404.2 1516.3 1573.7

Annual Growth Rate

Mines & Wells

32

U.S. Forecast / September 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

2572.8

2700.3

3139.0

3292.2

3446.3

3475.5

3558.8

3503.0

3709.6

3912.8

4083.9

Personal Tax and Nontax Receipts

1130.3

1165.8

1302.3

1403.1

1528.3

1545.7

1613.4

1623.6

1741.3

1854.6

1946.7

224.0

274.7

298.4

339.6

329.6

327.1

284.6

164.7

193.8

207.2

208.4

Corp. Profits Tax Accruals Indirect Business Tax and Nontax Accruals

108.6

115.2

125.5

136.3

140.4

137.7

131.5

159.6

164.9

175.9

184.4

Contributions for Social Insurance

903.2

938.0

1091.8

1140.3

1191.4

1225.0

1283.2

1345.1

1397.8

1463.1

1527.7

Expenditures

3814.7

3779.0

3776.9

3894.0

4015.2

4140.6

4254.2

4463.3

4692.3

4937.9

5175.8

Purchases Goods & Services

1298.9

1286.5

1226.6

1214.2

1220.9

1232.2

1265.2

1328.0

1407.8

1457.0

1485.9

National Defense

834.0

814.2

764.2

742.5

729.5

727.3

743.9

776.7

815.6

844.1

863.5

Other

465.0

472.4

462.4

471.6

491.3

504.9

521.3

551.3

592.1

612.9

622.5

Transfer Payments

2326.6

2299.5

2344.4

2446.9

2573.3

2656.7

2725.2

2830.5

2966.1

3103.2

3239.8

To Persons

1779.5

1781.8

1821.5

1879.5

1966.8

2024.1

2091.7

2171.4

2289.6

2407.1

2525.1

57.6

55.3

53.9

52.8

52.7

54.7

52.4

54.2

55.5

57.3

58.3

Grants in Aid to State & Local Gov't

To Foreigners

472.5

444.4

450.1

495.1

533.4

557.1

559.3

582.3

597.5

613.6

629.9

Net Interest

399.2

401.2

393.4

415.3

402.9

428.3

452.9

508.0

552.4

621.6

701.6

65.8

65.4

69.3

64.8

60.3

63.0

62.8

65.5

62.2

60.9

60.1

-1242.0

-1078.6

-637.9

-601.8

-568.9

-665.1

-695.4

-960.3

-982.8 -1025.1

-1091.9

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

State and Local Government Receipts and Expenditures Receipts

2030.4

2056.3

2145.6

2259.4

2368.6

2421.9

2484.2

2601.0

2746.1

2886.3

3015.0

Personal Tax/Nontax Receipts

1366.4

1414.7

1490.6

1543.5

1592.8

1628.5

1689.8

1773.8

1889.3

1997.1

2093.3

322.9

343.1

373.5

382.3

406.9

408.6

421.2

446.9

480.5

508.1

534.0

48.4

50.7

53.9

56.6

56.3

53.9

52.9

55.0

65.0

69.9

70.5

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

17.9

17.2

17.7

18.7

19.2

20.0

20.6

21.6

22.5

23.7

24.8

472.5

444.4

450.1

495.1

533.4

557.1

559.3

582.3

597.5

613.6

629.9

2305.43 2339.06 2411.03 2496.14 2592.22 2667.75 2743.33 2831.57

2936.7

3075.9

3217.6 2531.3

1849.4

1850.5

1905.8

1952.9

2013.3

2058.8

2109.2

2201.0

2297.9

2413.5

Transfer Payments

576.5

550.1

560.8

616.2

673.7

689.0

690.7

720.9

742.4

764.6

787.3

Interest Received

198.6

215.9

205.9

196.0

200.9

213.7

217.2

209.9

207.3

215.0

225.9

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

13.7

8.1

6.3

4.4

2.8

1.2

3.5

3.7

1.1

-1.9

-4.9

3.4

4.1

4.7

5.1

5.2

5.5

5.9

6.3

6.7

6.9

7.2

-275.1

-282.8

-265.4

-236.7

-223.6

-245.8

-259.1

-230.6

-190.6

-189.6

-202.6

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

-579.5

-568.6

-490.8

-508.3

-521.4

-520.6

-578.4

-599.6

-652.0

-756.1

-849.8

Current Account

-445.7

-426.8

-348.8

-365.2

-407.8

-432.9

-449.1

-471.3

-592.6

-768.4

-948.1

Exports -Goods & Services

2103.0

2191.3

2273.4

2371.0

2265.0

2217.6

2350.2

2590.4

2820.7

3028.6

3178.3

Merchandise Balance

-741.0

-741.1

-700.5

-749.9

-761.9

-751.1

-807.5

-858.1

-966.1 -1126.6

-1275.2

Food, Feed & Beverage

126.25

133.05

136.16

143.72

127.72

130.52

132.74

149.41

158.3

165.7

174.4

Industrial Supplies Excl Petroleum

485.3

483.2

492.4

500.7

418.1

387.3

456.2

544.3

586.4

640.1

710.5

Motor Vehicles & Parts

133.0

146.2

152.7

159.8

151.9

150.3

157.6

168.1

180.3

184.6

188.8

Capital Goods, Excl. MVP

494.2

527.5

534.8

551.8

539.8

519.9

533.6

579.0

638.6

694.1

654.2

Billions of Dollars

Computer Equipment

48.5

49.2

48.1

48.8

46.8

45.1

46.0

51.7

60.1

63.5

66.7

Other

365.4

383.9

381.7

389.8

373.5

353.9

366.5

395.7

437.2

487.6

444.7

Consumer Goods, Excl. MVP

174.7

181.0

188.1

198.4

197.3

193.3

197.1

201.7

226.0

231.7

247.9

Other Consumer

48.8

50.7

55.1

60.5

59.5

61.3

58.6

71.7

82.2

88.5

97.7

640.7

669.7

714.2

756.1

770.7

774.9

814.3

876.2

949.0

1024.0

1104.7

Imports -Goods & Services

2682.5

2759.9

2764.2

2879.3

2786.5

2738.1

2928.6

3190.1

3472.8

3784.6

4028.2

Merchandise

Services Billions of Dollars

2240.5

2301.4

2296.4

2391.5

2287.3

2221.0

2378.5

2598.3

2860.5

3150.9

3367.6

Food, Feed & Beverage

108.3

111.1

116.0

126.8

128.8

131.0

138.8

148.6

152.5

162.2

171.7

Petroleum & Products

462.1

434.3

387.8

353.6

197.2

159.6

199.6

249.8

252.3

253.4

252.1

Industrial Supplies Excl Petroleum

292.8

288.9

291.3

316.3

290.8

277.8

306.3

348.9

381.2

436.5

486.6

Motor Vehicles & Parts

255.2

298.5

309.6

329.5

350.0

351.1

359.8

370.3

378.7

395.0

407.5

Capital Goods, Excl. MVP

513.4

551.8

559.0

598.8

607.2

593.9

643.6

707.7

766.1

835.0

911.0

Computer Equipment

119.7

122.3

121.2

122.0

120.3

114.6

128.5

143.9

148.4

153.5

157.7

Other

358.2

389.4

390.8

423.5

431.6

429.3

463.7

506.3

548.2

608.6

679.6

Consumer Goods, Excl. MVP

515.9

518.8

532.9

558.7

596.4

585.2

603.9

645.2

780.7

887.3

930.6

Other Consumer

92.8

97.9

99.9

107.8

116.9

122.5

126.4

127.8

149.1

181.5

208.1

441.9

458.5

467.8

487.8

499.1

517.2

550.0

591.8

612.2

633.8

660.6

Net Exports Goods & Services

-568.1

-568.6

-532.8

-577.7

-724.9

-786.2

-858.7

-886.9

-1058.8

-1309.6

-1492.6

Exports G & S

2119.0

2191.3

2269.6

2367.0

2380.6

2378.1

2450.1

2588.8

2785.3

2948.8

3034.0

Imports G & S

2687.1

2759.9

2802.4

2944.7

3105.5

3164.4

3308.7

3475.8

3844.0

4258.5

4526.6

Services Billions 2009 Dollars

Exports & Imports % Change Exports G & S

9.1

3.2

5.9

1.7

-6.6

1.8

8.4

11.3

7.3

6.5

4.7

Imports G & S

10.9

0.3

1.1

4.4

-5.5

2.9

8.5

9.2

7.5

9.6

5.0

Real Exports G & S

4.6

2.1

6.1

3.1

-1.5

0.9

4.7

7.1

7.0

4.5

2.8

Real Imports G & S

3.8

0.6

3.1

6.8

3.4

3.1

5.5

5.6

12.1

9.2

5.1

34

U.S. Forecast / September 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

W W W. I E C . U C F. E D U