U.S. Forecast October 2012

U.S. Forecast

October 2012

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

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

Fo r eca s t fo r t h e N ati o n A b o u t U ni v e r s i t y o f C en t r a l F l o r i d a ( U C F )

Forecast 2012 - 2015 October 2012 Report

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

About the College of B u s ine s s A d m ini s t r at i o n

Copyright Š 2012 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 Elaine Vogt, Administrative Assistant Melissa Hedtke, Researcher Ashley Miller, Researcher Casey Moore, Researcher Sangitha Palaniappa, Researcher Nicholas Simons, 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.

U . S . F o r eca s t

H i g h l i g h t s o f t h e 3 Q 2 0 1 2 U . S . FO R E C A ST In this Issue of the U.S. Forecast: • What will break our economic ennui? Could the Presidential election shake the economy back to life?

• The Economic Policy Uncertainty Index has jumped in the past three months and increased the average level of uncertainty in this recovery. It is not coincidental that real GDP growth has slowed dramatically at the same time.

H I GHL I GHTS

• Real GDP growth in the 4th quarter of 2011 was revised up to 4.1%, but it has slowed dramatically to just 1.3% in the 2nd quarter of 2012.

• The tragedy of the Euro continues to develop. There are still only two possible outcomes to the crisis in the long run: the Euro ceases to exist, or member countries form a fiscal union and the Euro survives. Without the latter, the former will inevitably happen, but the drama could be unfolding for years to come.

• GDP growth in 2012 and 2013 should average 2.0% before growth accelerates to 2.7% in 2014 and then 3.2% in 2015.

• Real consumer spending growth will continue to be hampered by depressed housing values and a weak labor market recovery. During 2012-2015, the average growth will be just 2.4%.

• It is unlikely the U.S. will go over the “fiscal cliff’; expect politicians to slowly rappel down it instead.

• The housing market will steadily improve through 2015. During 2012-2015, housing starts will more than double from 761,199 in 2012 to 1,573,995 in 2015.

• Payroll employment growth remains sluggish. Economic, political, and policy uncertainty weigh on the private sector and firms are still hesitant to hire new workers. Consequently, payrolls will only expand 1.4% in 2012 and 2013.

Growth rises in 2014 to 1.6% and to 1.8% in 2015.

• Payroll employment will not reach pre-recession levels until the 4th quarter of 2014, seven years after the pre-recession peak. Uncertainty and the sputtering recovery have hamstrung the labor market’s recovery.

• Unemployment rates are expected to stay above 7% until the 4th quarter of 2015. Underemployment (U-6) remains a serious problem and currently stands at 14.7%.

Our Economic Ennui The recovery has decelerated – again.

What can free us from this listlessness?

We are now three years and one quarter into the economic recovery following the end of the Great Recession in June of 2009. It sure doesn’t feel like we have been in recovery for 39 months, particularly when job growth and economic growth have decelerated yet again this year.

The resounding question and probable determinant of the outcome of the upcoming presidential election is, “why?”

a significant number of new jobs, President Obama’s reelection would be a lock. Instead, we have a tight race in an economy that has been bound by uncertainty (see the policy uncertainty update below).

2012 is quite a different presidential race than the one in 2008. Nevertheless, you could say it is still all about hope and change. President Obama would keep us on the same policy path we have followed during the past four years and hope that the economy will change, while Governor Romney would change the President’s key policies on healthcare and financial regulation with the hope it would end our economic ennui.

I think we need to roll back the clock and look at the nascent days of this economic recovery to get some of the answers. In the fall 2009 release of this forecast, I expressed concern that the President was pursuing too many policy objectives simultaneously. He and the congress were not focusing his I will not try to predict efforts on digging the economy – Gaius Plinius Secundus the outcome of the election, out of the crevasse that we had but I hope that whatever the fallen into in the aftermath outcome is, 2013 will mark the of the financial and housing end of the listless recovery we have been experiencing since markets’ collapse and the deep recession.

June of 2009. In its place the start of a more robust phase

“

…the Only Certainty is That Nothing is Certain

I argued at the time that the administration was guilty of an “audacity of scope.” Instead of getting the economy fully back on track and repairing the damage the recession had caused, they were busy pushing forward two tremendously large and complex pieces of legislation in what would become the healthcare reform law (“Obamacare”) and financial regulatory reform law (Dodd-Frank), not to mention Cap & Trade and a couple of wars.

My fear at the time was that by pushing forward on all these problems we ran the risk of not addressing any of them adequately. Getting the economy itself back on track should have been the sole focus and could have been the crown jewel of the administration, making a second term a lock.

Instead, I worried that we were not getting a crown jewel in any of these policies, but cubic zirconia policy instead. I was wrong then. Cubic zirconia sparkles.

The policies we got are lackluster and dull. In addition, and not coincidentally, you could say the exact same thing about the US recovery.

If the US economy were currently at or nearing full employment, real GDP growing at 3% or 4%, and producing

”

of recovery that will create more jobs, increase economic output, and truly heal the financial and economic scars left over from this recession, financial and housing crises.

Economic Policy Uncertainty Continues to Rise Economic policy uncertainty binds our current economic recovery. Will these restraints loosen once the presidential election is over and the fiscal cliff has been (hopefully) avoided? We will have to wait and see, but since the last U.S. Forecast release (July 2012), the average level of economic policy uncertainty during this recovery has continued to rise, as measured by the Economic Policy Uncertainty Index.

This increase in uncertainty is the continuation of a reversal of the pattern seen in the recoveries that followed the two recessions prior to the Great Recession. Policy uncertainty during the Great Recession was much higher than during the 1990-91 and 2001 recessions, which is not surprising. The (bad) surprise is that in the wake of the Great Recession uncertainty actually increased from those already elevated levels and continues to do so through the Institute for Economic Competitiveness

5

U . S . F o r eca s t

U . S . F o r eca s t

latest months’ readings of the index.

a soothing of these economic forecasters’ worries of a double dip recession taking place - a trend that has been clearly broken in this quarter’s survey.

Figure 1 below plots the updated monthly Economic Policy Uncertainty Index along with the average levels of the index during the phases of recent business cycles.

This index was discussed in our previous forecast and the role of policy uncertainty in hamstringing the economic recovery was addressed as well. This updated chart reflects the unfortunate development that in the months since we first discussed the index here, the average level of policy uncertainty this recovery has risen even further. A sharp deceleration in the growth rate of real GDP accompanies this escalation of uncertainty.

The survey asks panelists to estimate the probability that real GDP will decline in the quarter in which the survey is taken, as well as the probabilities of a decline in each of the following four quarters. The anxious index (a term coined by The New York Times reporter David Leonhardt) is the probability of a decline in real GDP in the quarter after a survey is taken. In the survey taken in the 3rd quarter of 2012, the index stands at 16.99%, which means that forecasters believe there is a 16.99% chance that real GDP will decline in the fourth quarter of 2012, up from last quarter’s anxious index of 12.16%.

Anxious Index The most recent release (3rd quarter of 2012) of the Survey of Professional Forecasters by the Federal Reserve Bank of Philadelphia suggests that the 44 forecasters surveyed for the publication are 16. 99% convinced that a decline in real GDP will occur in the 4th quarter of 2012. This quarter’s result reflects forecasters’ rising anxiety amidst a recovery that has lost momentum. Last quarter’s anxious index was just 12.16% and was the latest result in a three quarter downward trend in the index that seemed to reflect

The forecasters also report a 13.83% chance that we are currently (as of the 3rd quarter of 2012) in a recession.

According to the panel, the probability that we will fall back into recession is averaging around 19.6% through the end of the third quarter of 2013, which implies that the possibility of a recession in the upcoming year has increased since last quarter’s survey. The rise in anxiety over the future of this economic recovery comes in the wake of a weak report on real GDP growth in the 2nd quarter of 2012 (1.3%) and a first quarter growth rate of 3.0%, which itself was down

Figure 1. The Economic Policy Uncertainty Index

from 4.1% in the 4th quarter of 2011.

The graph below plots the historical values of the anxious index. The gray bars indicate periods of recession in the U.S. economy. The current levels of the anxious index remain subdued despite concerns over the strength of the U.S. recovery and the potential fallout from the ongoing European sovereign debt crisis amid the struggle to find a lasting solution

GDP Outlook After an erratic first three quarters of 2011, the final three months of the year showed economic growth that was much improved with 4th quarter of 2011 real GDP growth at a surprisingly robust 4.1%.

Unfortunately, GDP growth has steeply decelerated from the end of last year. 1st quarter real GDP growth came in at 3.0%, and the 2nd quarter growth has fallen dangerously close to stall speed at only 1.3%. The second half of the year does not offer the prospect for much improvement. Recent economic reports on housing and the automotive sectors are bright spots on a darkening backdrop of the recovery.

We expect growth of 1.6% in the 3rd quarter and 1.7% in the 4th. As sub-par as this growth is, here is hoping that policy and political uncertainty and the rapid approach of the fiscal cliff will not dampen this growth even further.

Looking beyond 2012, the picture begins to brighten, but not immediately. 2013 looks to have growth slower than 2012 at 1.9%, but in 2014 and 2015 growth accelerates to 2.7% and 3.2% respectively.

While consumption has exhibited a modest acceleration during the recovery, the pace of consumer spending growth has remained well below the pace of growth in previous recoveries. Consumers remain burdened by depressed housing prices and a labor market that is improving, but only at a snail’s pace. Consumption spending growth during the last recovery following the 2001 recession averaged 2.9%, but we are projecting that during 2012 through the end of 2015 consumption spending growth will average 2.4%.

Given that consumption spending represents nearly 71% of US GDP, the 0.5% gap between average consumption spending growth in this and the previous recovery will continue to weigh on the pace of real GDP growth.

Consumers are still facing significant drags on spending as a result of a housing market that, despite recent signs of a pulse, has left consumer balance sheets ravaged by the precipitous drop in housing prices that wiped away trillions of dollars of wealth in the form of lost home equity. Add to this lost wealth the labor market’s poor performance thus far in the recovery and you have persistent ballast upon the US consumer, leaving this sector incapable of leading the economy into a faster pace of growth.

Figure 2.

300

Recession Expansion

250

Recession

Recession Expansion

200

The Anxious Index Probability of Decline in Real GDP in the Following Quarter Quarterly, 1968:Q4 to 2012:Q

Expansion

Expansion

100

150

100 Raw Uncertainty Data

50

Averages

Probability (percent)

Uncertainty Index

90 80 70 60 50 40 30 20

0

Year Source: Scott R. Baker, Nicholas Bloom, and Steven J. Davis, Measuring Economic Policy Uncertainty

6

U.S. Forecast | October 2012

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

10

Survey Date Institute for Economic Competitiveness

7

U . S . F o r eca s t

The November election is now the sole focus in Washington, DC, and until it has been completed, we will not see any additional fiscal policy action. That is until a lame duck congress and potentially a lame duck President addresses the fiscal cliff we are approaching at the end of 2012 and beginning of 2013 will become the purview of a lame duck Congress.

Business investment in equipment and software had been an important driver of the recovery and in recent quarters its growth reached into the double digits. But in 2012, growth in this sector of the economy has decelerated. Businesses are still flush with retained earnings after several years of record profitability, and interest rates are extremely low. Spending by businesses in areas that boost productivity, and thus dampen costs, will remain attractive areas for firms to invest, as uncertainty on the demand side of the profit equation is still elevated. This profit growth will not continue through 2015, but levels of profits will remain significantly higher than in the last recovery thanks to the focus on cost control in this recovery.

The federal government sector will remain a drag on GDP growth on the federal level throughout the entire forecast horizon. Record budget deficits and an increasingly worrisome national debt now in excess of 100% of GDP and four straight years of trillion dollar deficits have pushed the need for fiscal austerity into the center ring. As a result, real federal government spending is forecasted to contract at an average rate of -2.7% during 2012-2015.

The looming fiscal cliff on the horizon at the end of 2012 and beginning of 2013 poses both a challenge to the economy and to the need for austerity. These deadlines include the scheduled expiration of the Bush tax cuts as well as the end of the extended payroll tax cut and emergency unemployment benefits. The Deficit Reduction Super Committee’s failure to reach an agreement last year means automatic across-the-board spending cuts will also materialize starting in 2013 if some other agreement cannot be reached to get our federal budget reigned in and get a handle on the burgeoning national debt.

The federal government will have to walk a fine line between the necessity of austerity measures and the potential for derailing this flailing recovery with austerity measures that are too harsh for our current waning recovery to absorb.

Running deficits is easy; reining them in is difficult, but increasingly necessary.

State and local government budgets have been hit hard by the recession and housing crisis, and despite the significant albeit temporary federal support, steep cuts, layoffs, and in some cases tax hikes, have all been employed to bridge 8

U.S. Forecast | October 2012

U . S . F o r eca s t

budget gaps. Municipal bankruptcies have made a pointed statement that austerity is not only needed for the federal governments.

As the economy continues to recover and if in fact we are seeing the early signs of housing market recovery, the burden on these state and local governments will ease. State and local government spending growth will decline through 2013 but will turn slightly positive in 2014 and 2015, however averaging just 0.3% during those years.

C o n s u m e r Spen d in g The U.S. consumer continues to struggle with the balance sheet damage done by the housing market and a labor market that has lagged well behind the end of the recession in June of 2009. Lost wealth, weak job creation and persistently high levels of unemployment and underemployment are burdens the US consumer is going to deal with for several more years to come.

Historically, consumers have played a central role in economic recoveries, ravenous when it comes to spending behavior as the economy exits from recession into expansion.

Pent-up demand in consumer spending held off during the recession due to uncertainty about the economy. Given the depth and the length of the Great Recession, there was/is a significant amount of pent-up demand in the U.S. economy.

Unfortunately, the release of this pent-up demand has not been a continuous process, but one that has been periodic as consumers continue to heal from the housing and financial crises and face a labor market that is underperforming.

Bursts of spending growth are then followed by some retrenchment as consumers nurse their wounds.

The one sector that has been a steady source of growth in consumer spending is light vehicle sales. In 2005, light vehicle sales hit nearly 17 million, but when the recession and financial and housing crises descended upon the economy sales plummeted and bottomed out at 10.4 million in 2009. Since hitting that low point, sales have steadily climbed. They are expected to grow throughout the forecast horizon until hitting 16.2 million in 2015.

Pent-up demand and replacement need have driven the sector during the recovery, but even so, sales in this sector have been less robust than in the previous recovery. During that period, average sales were 16.6 million. Average historical and forecasted sales for this recovery have and will be 13.7 through 2015.

Despite the feel good sentiment towards the automotive sector, the average level of light vehicle sales is still nearly 3 million vehicles less than the previous economic recovery.

More evidence that this recovery has been severely lacking compared to previous ones.

Energy prices have been volatile in 2012 (what else is new?) and this always plays havoc with consumer spending and consumer confidence. Gasoline and oil prices (but not natural gas) remain elevated from when they were at the start of the recovery.

The labor market recovery has weakened from a solid start in the first few months of 2012. Job growth is expected to continue in the next few years, but an acceleration of job growth is still likely another year away. Payrolls are not likely to hit their pre-recession levels until the end of 2014, nearly seven years after they peaked.

The unemployment rate has followed a downward path and its future movements will be largely a function of the path followed by the labor force participation rate. At what point does payroll hiring begin to motivate those who have dropped out of the labor force to get back into the job hunt?

When they expect the declines in the unemployment rate to slow and possibly go into reverse.

In 2013, we expect that the decline in participation rates will start to turn around and thus prevent unemployment rates from falling very much over the course of the year.

Declining labor force participation rates during the recovery have exaggerated the drop in the unemployment rate thus far in the recovery, but in the future they will put a floor underneath the unemployment rate and prevent it from continuing its rapid descent.

I n v e s t m en t Nonresidential fixed investment spending grew at 8.6% in 2011 and is expected to grow 8.2% in 2012. Businesses have been earning record profits for several years, and interest rates are historically low, but uncertainty has many moving forward on investment spending only intermittently.

Policy uncertainty has risen over the past few months and weighs on these investment decisions into growing just 4.8% in 2013. Spending will accelerate in 2014 with investment growing at 7.1% and then expand to 6.4% in 2015.

The cost of borrowing is likely to remain subdued for an extended period given the Fed’s extended commitment through 2015 to low interest rates. We expect the 10-year Treasury yield to remain below 3.0% until the fourth quarter of 2014, after which we expect the Fed will slowly begin the process of hiking interest rates and pulling back the reins on monetary stimulus. However, borrowing costs are not what is hampering investment decisions. Given the past several years of record profits, many firms have the ability to finance investment spending internally without the need to turn to

credit markets. The now ubiquitous uncertainty is the likely culprit that is holding firms in place and not pulling the trigger on many projects.

We are expecting that business spending on equipment and software will grow at an annual average rate of 7.0% in 2012 through 2015, down by 0.5% from last quarter’s forecast. Investment in computers and peripherals will continue to be strong due to pent-up investment demand, companies seeking cost reduction, and productivity-focused IT plans. This type of spending reaps benefits regardless of how the revenue side of the profit equation is performing.

During the recession, businesses had to focus on the cost side of the profit equation, since this was the only thing in their control. However, even as revenues have begun to grow again the cost-centric mentality of businesses persists. You can never lower profits by reducing costs.

The commercial real estate sector experienced a burst of activity when investment in non-residential structures showed robust growth in 2011Q2 through 2012Q1. We expect growth to continue to sharply decelerate in the second half of 2012 before accelerating slightly in 2013.

Commercial developers rightly remain cautious and credit flows into the sector have not been adequately restored, thus there is little short term impetus for investment in structures in the second half of 2012. Wealth-depleted consumers and passable job growth will hold demand for retail and office space in check. Investment in non-residential structures will come back in 2014 and 2015 with growth of 7.6% and 5.8%.

Investment in transportation equipment grew robustly in 2010 (61.9%) and 2011 (34.4%) and will grow in double digits in 2012 before decelerating to a 4.5% growth rate in 2015. This type of investment will have an average growth rate of 9.3% during the four years from 2012 through 2015.

An ongoing venting of pent-up demand, replacement need, and persistent low interest rates will bolster light vehicle sales that will grow from 2011 levels of 12.7 million to a level slightly below 16.2 million in 2015. This level is still over 800,000 vehicles below the peak sales during the previous expansion.

Residential fixed investment growth was negative for six straight years through 2011. The woes in the housing sector are well known and have been discussed frequently here and elsewhere, but the worm may finally be beginning to turn.

In 2012, residential fixed investment growth not only turns positive, but is expected to grow by 11.0% from admittedly depleted levels. It will average 17.4% growth through 20132015 with a peak growth rate in 2014 of 20.3%. In that final year of our forecast real residential fixed investment will be over $188 billion lower than its 2005 peak of $775 billion.

Institute for Economic Competitiveness

9

U . S . F o r eca s t

Housing starts bottomed out in 2009 at 0.554 million and have bounced along a soft bottom since that time.

Inventories of new homes have fallen significantly and existing inventories are being absorbed, though the question of how much additional shadow inventory remains is still unanswered. Housing prices are gaining some traction and non-distressed inventory is moving more quickly. There are growing indications of a nascent recovery in housing.

We expect starts to continue to accelerate in 2013 reaching nearly 1.6 million in 2015.

G o v e r n m en t Spen d in g Government spending has been thrust into the center ring of the global economy because of the European sovereign debt crisis, the trillion dollar deficits run by the U.S. in each of the past four years, and the debt ceiling standoff last year. Now the impending “fiscal cliff” has become the focus of fiscal policy. Multiple tax cuts – the Bush tax cuts and payroll tax cuts – are set to expire at the end of 2012, and the failure of the deficit reduction super committee to agree on budget cuts last year has triggered across the board spending cuts (sequestration) set to kick in starting 2013.

Austerity is back in style and this fiscal fashion trend is needed as fiscal imbalances in the US risk a fate for the US economy like that which has unfolded in Europe. However, the consequences of the fiscal cliff unfolding as the current legislation dictates would be traumatic for a wavering US economic recovery. If all elements of the fiscal cliff play themselves out, as currently slated, the US economy would be knocked back into recession.

This scenario is highly unlikely, despite the partisanship and acrimony of the political environment in our country.

How the fiscal cliff is addressed in both the short run and longer term will depend in large part on the outcome of the election in November. I expect that a short-term extension of tax cuts and a delay in the sequestration of spending will give the economy more time to recover and be on firmer ground before the inevitable austerity measures are put in place. A gradualist approach to the fiscal cliff is the most prudent course to follow.

The long run solution will require changes to entitlement programs, increased revenue and decreased discretionary spending. The President’s bipartisan deficit reduction commission authored a report on what this long run fix might look like.

The Simpson-Bowles report lays out a set of policies that are going to be politically difficult to implement, but are, largely, the exact type of changes that must take place.

10

U.S. Forecast | October 2012

U . S . F o r eca s t

Deficits are easy to run, everyone likes tax cuts and more spending - these things buy votes for politicians. Tax hikes and spending cuts are far less popular among constituents.

It is not surprising that the report was quickly shelved. That is too bad, because the report provides the guidance we will need to tackle these problems.

There is a lot of heavy lifting that has yet to be done to address our debt and deficit problems. Politically, these issues are going to require difficult compromises and painful decisions to be made, the type of decisions that politicians have been putting off for years. Fixing our deficit and debt problem must include substantive entitlement reform, a long time third rail issue in American politics.

Even though we have run federal budget deficits from 2009-2012 that we are projecting will exceed $5.1 trillion in total, the economy continues to grow at a sluggish pace.

The debate over whether or not the economic stimulus act worked continues to overshadow any possibility of further fiscal stimulus (aside from averting the fiscal cliff). The national debt that stands in excess of $16.1 trillion (nearly 105% of GDP) also looms large and is a growing threat to the U.S. economy.

The national debt as previously mentioned is over $16.1 trillion and rising. This represents a debt of over $141,000 per taxpayer and over $51,000 per citizen. Trillion-dollar federal budget deficits are a hallmark of the Obama administration, which we are forecasting will have run average deficits of $1.286 trillion during 2009-2012.

We are forecasting the federal budget deficit to shrink to $879 billion in 2013, to $711 billion in 2014 and to $657 billion in 2015. Though we are projecting deficits to get smaller, the additional debt that will be added to the national debt over these three years will exceed $2.2 trillion, pushing the national debt total well over $18 trillion.

Net Exports The international sector continues to be a growing source of concern with the European Union in a recession that appears to be deepening as the sovereign debt crisis continues to roil. This crisis does not threaten only Europe, but the global economy. This remains the biggest risk to the U.S. economic recovery and the crisis is not going to end anytime soon.

The European Central Bank has announced that it will buy sovereign debt of countries that are in trouble. This was an important step taken by the ECB and the debt purchases come with austerity strings attached. However, in the end you cannot solve a fiscal policy problem with monetary policy regardless of the strings that come with the debt

purchases.

Overall trade growth will continue through the end of our 2015 forecast period. However, real export and import growth will both decelerate in 2012. Factors both domestic and foreign will weigh down on export and import growth, which are expected to be 4.0% and 3.2% this year.

Average real export growth is expected to be 4.5% through 2012-2015, with a slowdown in 2012 as the European debt crisis that brought recession to Europe has depressed the value of the Euro and made US exports more expensive. Real imports will expand over the same period with an average growth of 4.2%. The near term deceleration of import growth is a function of the continuing wealth effects of lost home equity faced by consumers, the still weak labor market, and the deceleration in the pace of the US economic recovery.

In 2012 and 2013, the U.S. dollar will appreciate vis-àvis our major trading partners. The strengthening is helped in part by the recession uncertainty due to the sovereign debt crisis in the E.U. that continues to depress the value of the Euro and a continued flight to the quality of US treasuries in the face of escalating uncertainty over a slowing Global economic recovery. Once this wave of Global uncertainty has begun to abate, we expect the dollar will depreciate again in 2014 and 2015 in the wake of still large and persistent imbalances in the US economy.

market report highlights the need to look at more than a single metric of how the labor market is performing. The US labor market is a complex and nuanced creature, the health of which cannot be adequately gauged by a single metric, such as the unemployment rate (U-3).

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

U-6 remains painfully high at 14.7% in September, steady from the August figure, but down from its peak of 17.2% in October of 2009. It will be several years before we see the unemployment rate fall back into a range consistent with full employment. By the end of 2015, the unemployment rate will still stand at 6.9%.

The current account deficit will be mostly stable through the end of our forecast horizon averaging $510 billion during 2012-2015, with a worsening of the deficit in 2014-15 as the dollar begins to depreciate. We expect net exports to average -$443 billion during 2012 through the end of 2015.

U ne m p l o y m en t The labor market in the United States showed signs of improvement in the first quarter of the year with respectable gains in payroll employment, but that has quickly given way to anemic job growth thus far in the 2nd quarter. The unemployment rate had been on a steady march downward, but with the caveat of a falling labor force participation rate.

The national unemployment rate ticked further down in September to 7.8%. This jobs report showed conflicting pictures of the labor market with only 114,000 new workers on business payroll, but an increase of 873,000 people in the household survey who were reporting that they are employed. However, 581,000 of those were working part time for economic reasons. In other words, they wanted to work full time, but could only find part time work.

The mixed message in the most recent jobs and labor

Institute for Economic Competitiveness

11

U . S . F o r eca s t C h a r t s

utomobile and Light Truck Sales October 2012 (Millions Vehicles)

30-Year Mortgage Rates and Housing Starts F OR E C A ST f o r t h e na t i o n

(Mortgage rates - Left axis, %)

9.0

2.5

8.0

2.0

7.0

1.5

6.0

1.0

5.0

0.5

4.0 3.0

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

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 30-Year Fixed Mortgage Rate Housing Starts - Millions

0.0

Automobile and Light Truck Sales 11.0

(Millions Vehicles)

Charts

10.0 9.0 8.0 7.0 6.0 5.0 4.0

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Auto Sales Light Truck Sales

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

(Billions of 2000 Dollars)

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Change in Real Business Inventories Institute for Economic Competitiveness

13

U . S . F o r eca s t C h a r t s

U . S . F o r eca s t C h a r t s

Consumer Prices (% Change Year Ago)

6.0

Real GDP Growth and Federal Funds Rate

4.0

5.0

2.0

0.0

0.0 -2.0

(%)

10.0

-5.0

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Consumer Price Index Core Consumer Price Index

-10.0

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Quarterly Growth Rate Real GDP Fed Funds Rate

Federal Budget Surplus 500.0

(Billions of Dollars)

100.0 95.0

-500.0

90.0

-1000.0

85.0

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Federal Budget Surplus

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

14

U.S. Forecast | October 2012

(2002=100)

110.0 105.0

0.0

-1500.0

Industrial Production

(%)

80.0

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Industrial Production

Private Fixed Nonresidential Investment 2200.0

(Billions of Dollars)

2000.0 1800.0 1600.0 1400.0 1200.0 1000.0

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Fed Funds Rate

800.0

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Private Fixed Nonresidential Investment Institute for Economic Competitiveness

15

U . S . F o r eca s t C h a r t s

U . S . F o r eca s t C h a r t s

Manufacturing Employment 18.0

(Millions)

17.0 16.0 15.0 14.0 13.0 12.0 11.0

Oil and Consumer Confidence 140.0

110

100.0

100

80.0

90

60.0

80

40.0

70

20.0

60

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Manufacturing Employment

10.0

0.0

0.0

-2.0 -4.0

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Annual Growth Rate of M2 Annual Growth Rate of M1

(Millions)

140.0

130.0 125.0

U.S. Forecast | October 2012

-6.0

-200 -300 -400 -500

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Real Disposable Income Consumption

Trade Balance and Real Exchange Rate

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Total Nonfarm Employment

1.40 1.30 1.20 1.10

-600 -700 -800

135.0

120.0

(% Change Year Ago)

2.0

Total Nonfarm Payroll Employment

16

8.0 4.0

20.0

145.0

50

6.0

30.0

-10.0

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Price of Oil WTI Consumer Sentiment

Real Disposable Income and Consumption

Money Supply

40.0

120

120.0

0.0

(Annual Growth Rate %)

Oil ($ Per Barrel) - Left Axis

1.00 0.90 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Trade Balance (Billions $) Left axis U.S. Dollar Real Exchange Rate (2000 = 1.0) Right axis

0.80

Institute for Economic Competitiveness

17

U . S . F o r eca s t C h a r t s

U . S . F o r eca s t Tab l e s Table 1. Summary of the Long-Term Forecast of the U.S.

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

Twin Deficits 500.0

(Billions of Dollars)

0.0 -500.0 -1000.0 -1500.0

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 U.S. Federal Budget Surplus Current Account

Civilian Unemployment Rate 10.0

(%)

Real GDP Nominal GDP

9.0 8.0

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

7.0 6.0 5.0 4.0 3.0

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Unemployment Rate

Yield Curve 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0

18

U.S. Forecast | October 2012

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

(%)

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 1-Year T-Bill Yield 5 Year Treasury Bond Yield 30 year Treasury Bond Yield

2004

2005

2006

3.5 3.1 3.3 7.3 2.8 2.7 6.2 7.9 9.9 11.5 10.9 -2.7 21.0 10.6 29.0 1.1 2.5 5.0 -16.7 16.6 1.4 9.9 9.6 11.1 4.1 -0.2

3.1 3.2 3.4 5.9 3.2 3.0 6.7 8.6 7.3 11.7 1.9 8.3 13.5 -10.0 18.7 1.5 -0.8 17.8 -2.0 10.5 -5.5 6.3 6.8 6.2 1.3 -0.2

2.7 2.6 2.9 4.5 2.6 2.6 8.0 7.6 8.7 23.3 12.8 8.4 9.2 -5.1 7.2 9.2 6.1 10.3 7.9 14.7 9.3 -7.2 9.0 6.1 2.1 0.9

History 2007 2008

2010

2011

2012

Composition of Real GDP, Percent Change 1.9 -0.3 -3.0 2.4 1.8 2.2 0.2 -2.3 0.9 2.0 2.3 -0.5 -1.9 1.8 2.5 5.0 -4.9 -5.1 6.2 7.2 1.9 -1.2 -1.8 2.3 2.3 2.0 0.5 -1.4 1.0 1.9 6.5 -0.7 -18.0 0.9 8.6 3.3 -4.2 -16.2 8.9 11.0 8.1 2.2 -3.9 4.6 5.0 14.1 8.4 -5.3 3.1 12.3 11.5 -4.7 -9.4 12.7 -5.7 4.0 -3.8 -21.2 -0.9 13.3 -4.1 -23.0 -45.6 61.9 34.4 30.6 -3.3 -25.0 6.9 -0.8 -18.2 -12.7 -23.3 -1.0 41.7 14.0 6.7 -21.1 -14.7 2.7 10.0 -3.6 -30.9 -24.2 -2.1 18.1 25.8 5.2 -27.8 3.3 39.0 11.6 1.0 -15.9 -8.9 6.2 8.4 -33.9 23.6 23.4 15.2 13.2 -18.3 -26.4 -6.3 -18.7 -23.9 -22.0 -3.6 -1.2 9.3 6.3 -9.0 11.2 6.7 2.4 -2.7 -13.4 12.5 4.9 1.3 7.2 6.1 4.5 -2.8 1.4 0.0 2.2 -1.8 -3.4

Billions of Dollars 12246.9 12623.0 12958.5 13206.4 13161.9 12758.0 13063.0 13299.1 11853.3 12623.0 13377.2 14028.7 14291.6 13973.7 14498.9 15075.7

2.2 2.0 2.0 7.3 1.1 1.5 8.2 7.8 4.1 8.7 -0.6 7.7 22.5 37.5 18.0 9.4 5.6 22.3 15.6 4.1 10.2 11.0 4.0 3.2 -2.5 -1.6

3.3 3.4 2.1 4.9 3.1

3.2 3.2 2.5 3.0 2.9

41.5 2.7 2.3 76.2 58.3 95.2 16.867 1.950 5.914 5.5 1.1 -413 -629

56.5 1.6 3.3 78.2 49.8 88.6 16.948 2.073 6.181 5.1 1.7 -319 -746

66.1 0.9 2.2 78.5 63.2 87.3 16.504 1.812 5.712 4.6 1.8 -248 -801

72.3 1.5 2.5 78.5 28.7 85.6 16.089 1.342 4.418 4.6 1.1 -162 -710

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))

1.35 1.37 1.89 3.43 4.27 5.12 5.84 1131 18.0 1.020 -8.1

3.21 3.15 3.62 4.05 4.29 4.56 5.87 1207 6.8 1.000 -1.8

4.96 4.73 4.93 4.75 4.79 4.87 6.41 1311 8.6 0.985 -1.4

5.02 4.35 4.52 4.43 4.63 4.84 6.34 1477 12.8 0.930 -5.6

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

9937 6.0 8889 6.1 9153 3.4 3.6 923 40.2

10486 5.5 9277 4.4 9277 1.4 1.6 1228 33.1

11268 7.5 9916 6.9 9653 4.0 2.6 1349 10.1

11912 5.7 10424 5.1 9880 2.4 2.4 1293 -4.2

Forecast 2013 2014

1.9 1.9 2.4 5.9 1.9 1.9 4.8 6.6 7.5 16.7 7.8 9.4 7.1 0.0 7.8 0.3 2.6 3.5 -8.3 0.7 6.0 13.0 3.5 4.3 -3.2 -0.8

2.7 2.7 2.6 4.9 2.1 2.4 7.1 7.0 9.4 15.7 14.7 7.5 3.3 2.9 1.7 7.6 20.9 6.7 3.2 0.9 6.8 20.3 4.0 4.9 -3.1 0.1

2015

3.2 3.1 2.4 4.4 1.7 2.4 6.4 6.7 7.1 12.8 11.1 6.6 4.5 4.6 1.6 5.8 21.5 0.8 2.1 -5.5 8.2 18.7 6.6 4.2 -2.1 0.5

13590.9 13843.0 14211.1 14662.7 15682.3 16245.6 16928.0 17736.6

Prices & Wages, Percent Change, Annual Rate 2.9 2.2 0.9 1.3 2.1 2.9 3.8 -0.3 1.6 3.1 2.3 2.3 1.7 1.0 1.7 3.9 6.4 -2.5 4.2 6.0 3.1 2.9 1.5 1.9 2.2

2.8 2.7 1.8 3.6 3.8

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

2009

1.8 2.0 2.2 1.6 2.0

1.7 1.4 1.8 0.8 2.1

1.5 1.8 2.0 0.7 2.5

1.5 1.7 2.0 0.4 2.6

Other Measures 61.7 79.4 95.1 3.0 3.1 0.7 -11.3 5.4 4.1 65.5 71.2 75.0 -137.9 58.0 36.5 66.3 71.8 67.4 10.402 11.555 12.735 0.554 0.586 0.612 3.868 3.704 3.797 9.3 9.6 9.0 -4.4 -0.7 1.2 -1416 -1294 -1297 -382 -442 -466

93.8 1.0 4.0 77.7 54.1 76.5 14.2 0.8 4.1 8.2 1.4 -1137.4 -497.3

89.7 0.3 2.2 78.2 48.0 82.7 15.0 1.0 4.4 8.0 1.4 -879.7 -448.3

85.8 0.9 2.5 78.5 42.7 84.6 15.7 1.3 4.9 7.7 1.6 -711.3 -521.9

80.9 1.3 3.4 79.4 50.9 87.5 16.2 1.6 5.1 7.1 1.8 -657.2 -574.7

Financial Markets, NSA 1.93 0.16 0.18 0.10 1.37 0.15 0.14 0.05 1.82 0.47 0.32 0.18 2.80 2.19 1.93 1.52 3.67 3.26 3.21 2.79 4.28 4.07 4.25 3.91 6.04 5.04 4.69 4.46 1221 947 1139 1269 -17.2 -18.9 21.6 11.5 0.888 0.926 0.898 0.846 -4.1 4.8 -2.8 -5.8

0.1 0.1 0.2 0.8 1.8 2.9 3.7 1364.2 7.7 0.9 4.4

0.2 0.1 0.2 1.1 2.2 3.2 3.5 1412.4 3.5 0.9 4.7

0.2 0.2 0.3 1.5 2.9 3.9 4.4 1469.1 4.0 0.9 -2.9

1.7 1.6 2.0 2.8 4.0 4.6 5.7 1384.7 -5.7 0.9 -2.9

Incomes 11867 12322 -4.8 3.8 10722 11127 -2.7 3.8 9837 10017 -2.8 1.8 4.7 5.1 1171 1443 22.8 24.6

13428 3.7 11942 3.4 10315 1.6 3.9 1641.5 11.5

13981 4.1 12349 3.4 10543 2.2 3.7 1752.3 6.8

14650 4.8 12917 4.6 10860 3.0 4.0 1658.4 -5.4

15362 4.9 13545 4.9 11209 3.2 4.7 1563.1 -5.7

99.6 0.6 -3.5 74.3 -37.6 63.8 13.195 0.900 3.655 5.8 -0.6 -455 -677

12460 4.6 11025 5.8 10119 2.4 5.4 1051 -18.6

12947 5.1 11549 3.8 10150 1.3 4.3 1475 2.2

Institute for Economic Competitiveness

19

U . S . F o r eca s t Tab l e s

U . S . F o r eca s t Tab l e s

Table 2. Real Gross Domestic Product

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

Table 2. Real Gross Domestic Product

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

History 2004

2005

2006

2007

Forecast 2008

2009

2010

2011

2012

2013

2012Q1

2014

2015

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

12246.9 12623.0 12958.5 13206.4 13161.9 12758.0 13063.0 13299.1

13590.9 13843.0 14211.1 14662.7

12181.3 12573.0 12899.3 13177.6 13200.6 12899.7 13010.3 13265.3

13535.2 13793.4 14161.5 14604.8

8515.8

8803.5

9054.5

9262.9

9211.7

9032.6

9196.2

9428.8

9615.2

9843.6 10101.3 10347.8

Durables

1060.9

1123.4

1174.2

1232.4

1171.8

1109.1

1178.3

1262.6

1354.2

1434.6

1505.1

1571.9

Nondurables

1892.8

1953.4

2005.0

2042.9

2019.1

1982.8

2029.3

2075.2

2097.1

2138.0

2182.1

2219.3

Services

5562.7

5726.8

5875.6

5990.1

6017.0

5930.6

5987.6

6101.5

6190.4

6310.8

6464.2

6616.8

1263.0

1347.3

1455.5

1549.9

1537.7

1259.9

1268.5

1378.2

1489.1

1560.9

1672.3

1779.9

917.3

995.6

1071.1

1106.8

1059.4

885.2

963.9

1070.0

1152.6

1229.2

1314.8

1402.6

443.1

475.3

516.3

558.2

569.7

546.4

571.7

600.2

624.5

671.3

734.1

785.8

Computers & Peripherals

70.6

78.9

97.1

110.7

119.5

112.6

116.0

130.3

141.1

164.6

190.2

214.6

Communications Equipment

81.7

83.2

93.8

104.4

99.1

89.3

100.5

94.7

94.1

101.4

116.4

129.3

Industrial Equipment

147.4

159.6

172.9

179.9

172.9

136.2

134.6

152.6

163.9

179.3

192.7

205.4

Transportation Equipment

161.1

181.7

198.2

190.2

146.9

75.9

123.2

164.7

200.8

214.9

222.1

231.9

25.1

22.0

20.6

26.8

26.0

19.1

20.4

19.8

26.8

26.7

27.4

28.7

40.8

48.2

51.6

42.1

36.5

27.9

27.7

39.3

45.9

49.5

50.3

51.1

346.7

351.8

384.0

438.2

466.4

368.1

310.6

319.2

347.8

348.7

375.1

396.9

137.1

135.9

144.2

158.6

152.7

105.8

79.4

77.6

81.9

84.0

101.5

123.3

Manufacturing

25.5

29.9

33.0

39.0

48.6

50.9

36.8

36.9

44.6

46.1

49.2

49.6

Power & Communication

46.2

45.2

48.7

67.8

74.0

74.5

62.5

56.8

65.3

59.7

61.6

62.8

Mining & Petroleum

69.9

77.1

88.3

93.6

101.5

66.1

77.3

94.8

98.1

98.7

99.6

94.1

Other

67.4

63.7

69.6

80.3

90.4

73.9

54.2

50.6

55.7

59.0

63.1

68.2

729.5

775.0

718.2

584.2

444.4

344.8

332.2

327.6

363.5

411.0

494.8

586.6

Exports

1222.6

1305.1

1422.1

1554.4

1649.3

1498.7

1665.6

1776.9

1847.1

1911.9

1988.5

2120.3

Imports

1910.4

2027.8

2151.5

2203.3

2144.0

1853.9

2085.2

2184.9

2254.1

2351.9

2466.6

2571.0

865.0

876.3

894.9

906.1

971.1

1030.6

1076.8

1047.0

1020.6

987.6

957.3

937.3

1497.1

1493.6

1507.2

1528.1

1528.1

1561.8

1534.1

1482.0

1458.7

1447.6

1448.8

1455.7

Nonresidential Fixed Investment Equipment & Software Information Processing Equipment

Aircraft Other Equipment Structures Commercial & Health

Residential Fixed Investment

Federal Government State & Local Government

20

U.S. Forecast | October 2012

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

Real GDP Nominal GDP

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

2.0 2.4 2.4 11.5 1.6 1.3 7.5 5.4 5.9 14.7 5.2 -13.6 24.9 -7.0 22.3 12.9 11.1 -7.8 94.3 -8.4 3.0 20.6 4.4 3.1 -4.2 -2.2

2012Q2

1.7 2.0 1.7 0.0 0.5 2.4 4.2 4.7 -2.6 -19.6 -10.9 13.8 15.0 94.4 4.4 2.8 10.1 37.7 -14.3 -4.8 15.1 8.9 6.0 2.9 -0.2 -1.4

2012Q3

1.6 1.7 2.0 8.0 1.1 1.4 1.9 6.0 1.5 6.9 -3.7 1.9 10.9 -3.2 -2.1 -7.7 -4.3 12.2 -28.3 -13.0 20.1 9.0 1.8 2.1 1.3 -0.9

2012Q4

1.7 2.0 2.4 6.4 2.5 1.7 4.4 6.7 11.4 37.2 12.2 11.4 -4.8 -21.7 -10.2 -1.2 -2.0 -0.7 -11.8 5.5 -0.1 7.9 3.8 1.5 -5.8 -1.3

2013Q1

2.0 1.9 2.6 6.9 2.1 2.1 4.6 6.2 7.4 14.9 6.9 8.0 11.9 1.8 29.8 0.5 3.9 -0.3 -8.9 1.9 5.6 12.5 4.4 5.5 -3.5 -0.8

2013Q2

2013Q4

2014Q1

2014Q2

2014Q3

Composition of Real GDP, Percent Change, Annual Rate 1.9 1.9 2.5 2.6 3.0 3.3 1.8 1.9 2.3 2.7 3.1 3.3 2.5 2.5 2.4 2.7 2.7 2.8 6.1 5.0 4.2 4.4 5.2 5.5 2.0 2.4 2.1 2.1 1.9 2.0 2.0 2.1 2.2 2.6 2.5 2.6 6.1 5.7 7.8 7.5 7.6 6.6 8.1 6.3 7.7 6.3 7.0 7.0 9.3 9.6 9.4 9.6 10.1 8.3 16.0 23.7 18.0 13.0 13.7 13.9 15.8 11.6 10.9 16.4 21.1 12.3 13.5 8.3 10.3 5.4 6.6 5.3 12.9 3.1 1.9 0.9 1.9 6.7 -0.6 1.3 2.7 3.1 3.2 5.4 13.6 7.1 -4.4 6.1 -6.7 -0.2 1.0 4.2 8.2 10.7 9.3 5.6 0.3 2.1 27.9 25.4 29.0 20.7 -3.3 3.3 5.6 21.0 7.2 -3.2 3.5 1.3 2.2 2.7 3.7 4.7 2.2 6.1 1.6 2.9 -1.0 -4.0 0.1 8.1 4.4 6.3 9.0 9.3 16.1 18.7 22.4 19.1 20.1 22.2 3.5 2.1 3.0 3.6 5.3 5.6 6.3 5.6 5.8 4.6 4.2 3.9 -3.9 -3.5 -3.3 -3.0 -2.8 -2.7 -0.5 -0.2 0.1 0.1 0.2 0.3

2014Q4

3.6 3.5 2.9 5.9 1.9 2.7 7.1 7.8 7.7 12.4 11.2 6.9 6.4 3.2 11.7 5.4 21.2 -7.1 7.3 -5.5 9.2 24.3 5.8 4.5 -2.3 0.4

2015Q1

2.9 2.9 1.8 2.9 1.2 1.8 7.4 7.8 7.5 11.4 12.7 8.4 7.0 4.7 0.0 6.4 21.5 -1.9 4.1 -4.6 10.3 21.2 6.9 4.5 -2.0 0.4

2015Q2

3.2 3.1 2.4 4.4 1.6 2.4 5.5 5.4 5.7 12.8 8.2 5.2 2.0 4.7 1.1 5.7 21.6 3.1 -0.8 -5.7 6.8 16.0 7.0 4.2 -1.8 0.8

2015Q3

3.1 3.1 2.5 3.9 2.0 2.5 5.1 5.3 5.5 14.0 8.4 5.9 2.1 6.0 0.2 4.4 19.1 12.2 -4.0 -9.5 4.8 11.2 7.8 4.0 -1.8 0.6

2015Q4

2.9 3.1 2.6 4.8 2.0 2.4 4.9 4.8 5.3 14.1 7.5 7.0 -0.8 5.9 -4.3 5.0 20.8 9.8 -6.5 -7.5 4.1 8.2 7.5 3.5 -1.4 0.6

Billions of Dollars 13506.4 13564.5 13618 13674.6 13741.2 13806.5 13870 13954.5 14042.8 14148.1 14263.6 14389.9 14494.8 14608.4 14721.3 14826.4 15478.3 15606.1 15755.5 15889.1 16037 16169.5 16310.9 16465.1 16634.9 16822.4 17020.7 17233.9 17435.9 17635.1 17837.5 18038 Prices & Wages, Percent Change, Annual Rate 1.4 1.7 1.3 1.6 1.5 1.5 2.1 1.7 1.9 1.8 1.7 1.7 1.8 2.2 2.2 1.0 1.6 0.6 0.4 0.7 2.1 2.1 2.3 2.9 2.5

2.0 2.5 2.1 1.9 1.7

1.6 0.8 2.6 -3.1 2.1

2.2 2.6 1.8 4.0 1.9

1.7 0.5 1.9 0.3 1.8

1.8 1.0 1.9 0.2 2.3

102.9 -0.5 5.8 77.6 62.0 75.5 14.147 0.715 4.047 8.3 2.1 -1059 -549

93.5 2.2 2.5 77.5 54.3 76.3 14.103 0.736 4.033 8.2 1.0 -1095 -495

91.4 0.7 1.7 77.7 51.9 75.0 14.254 0.772 4.013 8.3 1.1 -1061 -498

87.2 -0.1 2.8 77.9 48.2 79.2 14.345 0.823 4.112 8.2 1.3 -1017 -447

88.7 0.2 1.8 78.1 50.1 82.1 14.664 0.877 4.220 8.0 1.5 -873 -421

89.6 0.1 2.2 78.2 48.0 82.8 14.989 0.940 4.347 8.0 1.6 -818 -428

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

0.10 0.07 0.16 0.90 2.04 3.14 3.92 1347 46.1 0.869 2.8

0.15 0.09 0.19 0.79 1.82 2.94 3.80 1350 0.9 0.881 5.9

0.14 0.10 0.18 0.65 1.60 2.69 3.58 1386 11.0 0.888 3.0

0.16 0.12 0.19 0.68 1.63 2.74 3.53 1373 -3.8 0.890 0.9

0.16 0.12 0.23 0.82 1.71 2.82 3.34 1386 3.7 0.896 2.7

0.16 0.12 0.23 1.02 1.87 2.93 3.30 1398 3.7 0.914 8.6

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

13227 6.6 11776 6.3 10214 3.7 3.6 1671 29.6

13362 4.2 11888 3.8 10292 3.1 4.0 1648 -5.3

13491 3.9 11996 3.7 10335 1.7 3.9 1607 -9.6

13633 4.3 12109 3.8 10417 3.2 4.1 1640 8.3

13756 3.6 12183 2.5 10454 1.4 3.8 1765 34.2

13905 4.4 12281 3.2 10506 2.0 3.6 1760 -1.2

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

2013Q3

1.4 1.7 2.1 0.3 2.4

1.5 1.5 1.9 0.1 2.5

1.8 1.9 2.0 1.0 2.7

1.4 1.3 1.9 -0.5 2.5

1.5 1.5 1.9 0.4 2.6

1.6 2.2 1.9 1.9 2.7

Other Key Measures 90.4 90.0 88.1 86.3 0.1 0.9 0.9 1.4 2.5 1.8 2.4 2.4 78.2 78.3 78.2 78.3 45.3 48.6 42.8 40.3 82.3 83.5 83.2 83.7 15.193 15.259 15.427 15.645 1.017 1.065 1.138 1.220 4.473 4.590 4.667 4.828 8.0 7.9 7.9 7.8 1.6 1.6 1.5 1.5 -787 -781 -755 -761 -458 -486 -514 -519

84.9 1.4 3.5 78.5 41.5 85.0 15.848 1.308 4.895 7.7 1.7 -757 -521

83.8 1.6 3.4 78.9 46.0 86.5 16.004 1.405 5.010 7.5 1.9 -748 -533

83.9 1.0 3.6 79.1 49.7 86.8 16.063 1.479 5.063 7.3 1.7 -701 -567

79.7 1.3 3.5 79.3 52.9 88.1 16.133 1.549 5.062 7.2 1.7 -729 -573

78.3 1.4 3.5 79.6 54.1 87.9 16.180 1.615 5.097 7.0 1.8 -744 -573

81.8 1.2 2.7 79.6 46.8 87.1 16.276 1.653 5.065 6.9 1.8 -752 -585

Financial Markets, NSA 0.16 0.16 0.16 0.16 0.12 0.12 0.12 0.12 0.23 0.24 0.24 0.23 1.22 1.37 1.40 1.47 2.37 2.69 2.73 2.79 3.39 3.75 3.81 3.90 3.50 3.82 4.15 4.34 1424 1442 1458 1470 7.6 5.0 4.6 3.2 0.943 0.942 0.920 0.900 13.0 -0.2 -9.0 -8.6

0.16 0.11 0.23 1.51 2.84 3.94 4.42 1478 2.2 0.886 -6.2

0.38 0.30 0.43 1.69 3.10 4.12 4.64 1471 -1.7 0.879 -3.0

0.91 0.81 1.10 2.19 3.62 4.42 5.22 1435 -9.6 0.878 -0.3

1.37 1.34 1.76 2.59 3.93 4.58 5.67 1383 -13.5 0.872 -2.5

1.90 1.84 2.26 2.95 4.13 4.69 5.90 1357 -7.5 0.868 -2.1

2.43 2.39 2.86 3.40 4.32 4.86 6.10 1364 2.2 0.863 -2.0

Incomes 14205 14398 4.2 5.6 12534 12683 4.4 4.8 10645 10726 3.0 3.1 3.7 3.8 1740 1638 -1.1 -21.4

14733 4.8 12995 5.0 10904 3.5 4.1 1664 1.3

14910 4.9 13157 5.1 10999 3.5 4.2 1672 2.0

15089 4.9 13275 3.7 11049 1.8 4.2 1572 -22.0

15271 4.9 13459 5.6 11163 4.2 4.6 1560 -2.9

15454 4.9 13640 5.5 11270 3.9 4.9 1560 -0.1

15633 4.7 13807 5.0 11353 3.0 5.0 1560 0.0

14058 4.5 12399 3.9 10566 2.3 3.6 1745 -3.4

14559 4.5 12836 4.9 10811 3.2 3.9 1659 5.1

Institute for Economic Competitiveness

21

U . S . F o r eca s t Tab l e s Table 4. Quarterly Gross Domestic Product

U . S . F o r eca s t Tab l e s Table 5. Annual Employment

Table 4. Quarterly Gross Domestic Product

2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4

Table 5. Annual Employment 2004

2005

2006

History 2007 2008

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

13506.4 13564.5 13618.0 13674.6 13741.2 13806.5 13870.0 13954.5 14042.8 14148.1 14263.6 14389.9 14494.8 14608.4 14721.3 14826.4 13440.1 13506.2 13564.2 13630.4 13695.3 13757.8 13821.3 13899.4 13993.2 14100.9 14215.1 14336.9 14438.1 14548.6 14660.2 14772.3

9546.8 9586.9 9635.4 9691.6 9754.3 9813.6 9873.8 9932.7 9999.2 10065.3 10134.1 10206.6 10252.5 10314.4 10379.0 10445.4

Communications Equipment

Forecast 2013 2014

2015

Millions Total Nonfarm Employment

131.419 133.694 136.091 137.595 136.794 130.787 129.856 131.359

133.22 135.119 137.265

139.70

Private Nonfarm

109.801 111.890 114.116 115.375 114.288 108.231 107.368 109.255

111.29 113.272 115.429

117.77

0.620

0.663

0.709

0.644

0.655

0.736

0.79

0.764

0.744

0.71

2088.9 2091.7 2097.5 2110.3 2121.1 2131.5 2144.0 2155.3 2166.4 2176.7 2187.4 2197.7 2204.5 2213.1 2224.3 2235.3

Construction

6.973

7.333

7.690

7.627

7.162

6.013

5.518

5.504

5.53

5.607

6.011

6.71

6145.9 6182.2 6203.9 6229.6 6262.2 6293.6 6326.3 6361.0 6402.6 6442.6 6483.9 6527.8 6557.4 6596.4 6636.8 6676.5

Manufacturing

14.315

14.226

14.156

13.878

13.403

11.845

11.527

11.736

11.97

12.108

12.291

12.45

1470.0 1485.2 1492.3 1508.7 1525.6 1548.4 1570.0 1599.8 1628.9 1659.1 1686.0 1715.2 1746.1 1769.5 1791.4 1812.8

Trade, Transportation and Utilities

25.536

25.960

26.277

26.627

26.296

24.906

24.637

25.017

25.33

25.753

26.039

26.32

1129.6 1142.7 1159.5 1178.6 1196.4 1220.0 1238.6 1261.7 1281.1 1302.8 1325.1 1350.1 1375.8 1393.9 1412.0 1428.7

Transportation & Warehousing

4.250

4.363

4.469

4.542

4.509

4.240

4.189

4.290

4.38

4.525

4.677

4.84

Services

Computers & Peripherals

2012

0.562

Nondurables

Information Processing Equipment

2011

0.523

1336.1 1335.9 1361.8 1383.1 1406.3 1427.3 1445.0 1459.8 1475.7 1494.3 1514.3 1536.1 1547.1 1564.0 1578.9 1597.6

Equipment & Software

2010

Mining

Durables

Nonresidential Fixed Investment

2009

622.2

618.1

620.4

637.3

648.8

663.3

678.7

694.2

710.3

727.6

742.3

756.2

770.0

780.6

791.2

801.5

Financial Activities

8.031

8.153

8.328

8.300

8.143

7.770

7.653

7.681

7.74

7.834

7.916

7.89

142.8

135.2

137.5

148.8

154.1

159.9

168.6

175.7

181.2

187.1

193.3

199.1

204.5

210.8

217.8

225.1

Education & Health

16.950

17.370

17.825

18.321

18.838

19.190

19.528

19.885

20.31

20.635

21.046

21.41

96.0

93.2

92.3

95.0

96.6

100.2

103.0

105.7

109.8

115.2

118.6

121.8

125.5

128.0

130.6

133.0

Professional & Business Services

16.388

16.952

17.572

17.947

17.740

16.570

16.721

17.330

17.93

18.542

19.184

20.08

Information

3.117

3.061

3.038

3.032

2.984

2.803

2.707

2.658

2.64

2.679

2.736

2.79

Leisure & Hospitality

12.492

12.813

13.109

13.428

13.441

13.074

13.042

13.318

13.63

13.862

13.921

13.88

Government

21.618

21.804

21.975

22.219

22.507

22.556

22.488

22.105

21.94

21.847

21.836

21.92

2.731

2.732

2.733

2.735

2.762

2.831

2.976

2.858

2.81

2.744

2.671

2.62

18.887

19.073

19.242

19.484

19.745

19.725

19.512

19.247

19.12

19.103

19.164

19.31

Industrial Equipment

158.5

163.7

164.5

169.0

172.3

177.8

181.4

185.9

188.3

191.4

193.8

197.1

201.1

203.7

206.6

210.1

Transportation Equipment

193.6

200.5

205.8

203.2

209.0

215.4

217.1

218.1

218.6

219.6

223.2

226.7

230.6

231.7

232.9

232.5

24.0

28.4

28.1

26.5

26.6

26.6

26.6

26.8

27.0

27.2

27.6

27.8

28.1

28.5

28.9

29.3

46.0

46.5

46.2

45.0

48.0

49.6

50.4

49.9

50.6

49.7

49.7

51.1

51.1

51.2

51.3

50.7

349.7

352.2

345.1

344.1

344.5

345.4

348.9

355.9

365.1

373.3

378.4

383.5

389.5

394.9

399.2

404.1

Commercial & Health

81.0

82.9

82.0

81.6

82.4

82.5

82.9

88.1

93.3

99.4

104.2

109.3

114.8

120.5

125.9

132.0

Manufacturing

41.4

44.9

46.2

46.1

46.1

45.7

46.0

46.7

49.0

49.8

49.4

48.5

48.3

48.6

50.1

51.2

Power & Communication

70.5

67.8

62.4

60.5

59.1

59.6

59.8

60.1

60.5

61.1

61.8

62.9

63.5

63.4

62.7

61.7

100.4

99.2

95.8

97.1

97.5

98.0

99.5

99.9

100.6

100.3

99.3

97.9

96.8

95.4

93.0

91.2

Total Nonfarm Employment

1.10

1.73

1.79

1.11

-0.58

-4.39

-0.70

1.16

1.42

1.42

1.59

1.77

53.0

54.9

57.5

57.5

58.3

58.3

59.4

60.1

61.0

62.3

63.7

65.2

66.8

67.9

68.7

69.4

Private Nonfarm

1.28

1.90

1.99

1.10

-0.94

-5.30

-0.78

1.76

1.86

1.78

1.90

2.03

352.1

359.7

367.5

374.6

385.8

400.5

418.1

439.7

459.3

480.8

505.5

533.7

560.0

581.1

596.8

608.7

Mining

5.16

9.36

10.03

5.74

6.70

-14.62

11.54

12.35

2.27

-3.05

-3.24

-5.05

4.31

5.81

2.36

-1.95

-9.22

-16.60

-3.43

0.74

-0.16

3.29

9.72

11.55

-0.05

-0.84

-1.04

-2.05

-5.37

-11.44

0.57

1.96

2.16

1.21

1.24

1.52

Aircraft Other Equipment Structures

Mining & Petroleum Other Residential Fixed Investment

Federal State & Local

Growth Rates

Exports

1818.7 1845.5 1853.6 1870.8 1891.0 1907.5 1917.6 1931.7 1948.7 1974.2 2001.3 2029.8 2064.0 2099.5 2139.4 2178.3

Construction

Imports

2234.2 2250.1 2261.8 2270.2 2301.0 2336.2 2368.5 2402.0 2429.0 2454.2 2477.8 2505.2 2533.2 2559.4 2584.5 2606.8

Manufacturing

Federal Government

1023.1 1022.7 1025.9 1010.6 1001.6

Trade, Transportation and Utilities

1.53

1.65

1.14

1.17

-3.28

-4.72

0.65

1.59

1.12

1.91

0.92

1.15

State & Local Government

1465.3 1460.2 1456.9 1452.3 1449.2 1447.5 1446.7 1446.9 1447.2 1448.1 1449.2 1450.6 1452.0 1454.8 1456.9 1459.0

Transportation & Warehousing

2.58

2.48

2.60

0.89

-2.71

-5.67

1.35

2.03

2.49

3.68

3.29

3.49

Financial Activities

0.95

2.13

1.35

-1.31

-2.45

-4.32

-0.32

0.36

0.96

1.60

0.48

-0.70

Education & Health

2.36

2.51

2.62

2.88

2.56

1.71

1.77

2.00

2.02

1.56

1.94

1.94

Professional & Business Services

2.99

3.74

3.08

1.64

-3.65

-5.19

2.96

3.57

3.39

3.46

4.25

4.26

-2.04

-1.07

-0.93

-0.04

-3.10

-6.04

-2.31

-1.65

0.20

0.90

3.18

1.60

Leisure & Hospitality

2.59

2.15

2.85

2.15

-1.63

-2.49

1.23

2.29

2.21

1.38

-0.05

-0.27

Government

0.62

0.81

1.03

1.16

1.00

-0.20

-0.97

-1.20

-0.57

-0.21

0.07

0.56

-0.37

0.34

-0.21

0.54

1.19

2.40

4.72

-0.92

-1.71

-2.72

-2.48

-1.84

0.77

0.88

1.20

1.25

0.98

-0.55

-1.34

-1.24

-0.40

0.16

0.43

0.90

991.6

982.7

974.4

967.0

960.3

953.8

948.2

943.4

939.2

934.9

931.5

Information

Federal State & Local

22

U.S. Forecast | October 2012

Institute for Economic Competitiveness

23

U . S . F o r eca s t Tab l e s

U . S . F o r eca s t Tab l e s Table 7. Quarterly Implicit Price Deflators (2000=100)

Table 6. Quarterly Employment

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

Table 6. Quarterly Employment

2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4

Employment (Millions)

GDP

114.6 115.1 115.7 116.2 116.7 117.1 117.6 118.0 118.5 118.9 119.3 119.8 120.3 120.7 121.2 121.7

Consumption

115.3 115.5 116.1 116.2 116.5 116.9 117.3 117.7 118.2 118.7 119.2 119.6 120.2 120.6 121.0 121.6

Total Nonfarm Employment

132.7 133.0 133.4 133.8 134.3 134.9 135.4 135.9 136.4 136.9 137.5 138.2 138.8 139.4 140.0 140.6

Durables

Private Nonfarm

110.7 111.1 111.5 111.9 112.5 113.0 113.5 114.1 114.6 115.1 115.7 116.3 116.9 117.5 118.1 118.7

Motor Vehicles

90.2

89.9

89.4

89.3

89.0

88.7

88.3

88.1

87.9

87.8

87.6

87.5

87.3

87.2

87.0

86.9

108.3 109.5 109.4 109.8 110.0 110.0 109.9 110.0 110.2 110.5 110.7 111.0 111.3 111.5 111.7 112.0

Mining

0.8

0.8

0.8

0.8

0.8

0.8

0.8

0.8

0.8

0.7

0.7

0.7

0.7

0.7

0.7

0.7

Furniture

Construction

5.6

5.5

5.5

5.5

5.5

5.6

5.6

5.7

5.8

5.9

6.1

6.3

6.4

6.6

6.8

7.0

Other Durables

115.9 114.4 113.7 113.9 114.2 114.5 114.6 115.0 115.5 116.1 116.5 117.0 117.5 118.0 118.4 118.9

Manufacturing

11.9

12.0

12.0

12.0

12.0

12.1

12.1

12.2

12.3

12.3

12.3

12.3

12.4

12.4

12.5

12.5

Nondurables

122.1 121.5 123.0 122.2 121.9 121.9 122.4 122.6 122.8 122.9 123.1 123.4 123.9 124.0 124.2 125.1

Trade, Transportation and Utilities

25.2

25.3

25.4

25.4

25.6

25.7

25.8

25.9

25.9

26.0

26.1

26.2

26.2

26.3

26.4

26.5

Transportation & Warehousing

4.4

4.4

4.4

4.4

4.5

4.5

4.5

4.6

4.6

4.7

4.7

4.7

4.8

4.8

4.9

4.9

Food

120.5 120.7 121.3 122.5 123.7 124.3 124.5 124.4 124.4 124.5 124.7 124.9 125.3 125.8 126.2 126.6

Financial Activities

7.7

7.7

7.7

7.8

7.8

7.8

7.9

7.9

7.9

7.9

7.9

7.9

7.9

7.9

7.9

7.9

Education & Health

20.2

20.3

20.3

20.5

20.5

20.6

20.7

20.8

20.9

21.0

21.1

21.2

21.2

21.4

21.5

21.6

Professional & Business Services

17.7

17.9

18.0

18.1

18.3

18.5

18.6

18.8

18.9

19.0

19.3

19.6

19.8

20.0

20.2

20.4

2.6

2.6

2.6

2.6

2.7

2.7

2.7

2.7

2.7

2.7

2.8

2.8

2.8

2.8

2.8

Leisure & Hospitality

13.5

13.6

13.7

13.7

13.8

13.9

13.9

13.9

13.9

13.9

13.9

13.9

13.9

13.9

Government

22.0

22.0

21.9

21.9

21.9

21.9

21.8

21.8

21.8

21.8

21.8

21.9

21.9

2.8

2.8

2.8

2.8

2.8

2.8

2.7

2.7

2.7

2.7

2.7

2.6

19.2

19.1

19.1

19.1

19.1

19.1

19.1

19.1

19.1

19.1

19.2

19.2

Information

Federal State & Local

92.2

92.0

91.7

91.5

91.4

91.3

91.2

91.1

91.2

91.2

91.2

91.1

Clothing & Shoes 102.2 103.5 104.7 105.2 105.7 106.0 106.2 106.5 106.9 107.1 107.2 107.3 107.5 107.6 107.7 107.8

178.8 173.5 170.3 163.6 159.8 158.4 159.8 159.9 159.5 158.7 158.0 157.2 157.4 155.0 153.9 156.1

2.8

Services

118.0 118.6 119.1 119.6 120.3 120.9 121.5 122.1 122.9 123.6 124.3 124.9 125.6 126.3 126.9 127.6

13.9

13.9

Housing

115.4 115.9 116.5 117.1 117.7 118.4 119.1 119.7 120.5 121.2 121.9 122.5 123.1 123.7 124.3 124.9

21.9

21.9

22.0

Electricity

131.5 131.1 129.9 131.1 132.2 133.3 134.6 136.0 137.1 138.0 138.7 139.2 140.1 141.1 141.5 141.7

2.6

2.6

2.6

2.6

19.2

19.3

19.3

19.4

0.99

1.11

1.32

1.51

1.60

1.54

1.57

1.49

1.52

1.72

1.92

1.71

1.74

1.76

1.83

Private Nonfarm

2.58

1.33

1.46

1.70

1.87

1.95

1.88

1.87

1.79

1.83

2.03

2.22

1.97

1.94

1.97

2.05

Mining

9.94

2.37

-0.09

-3.59

-3.29

-8.10

-2.52

1.41

-3.58

-2.06

-3.30

-4.17

-4.76

-5.32

-5.67

-4.85

Construction

2.19

-2.64

-1.37

1.11

1.61

2.15

3.48

5.73

6.74

8.66 10.50 11.59 12.13 11.72 10.70

9.76

Manufacturing

3.59

2.02

1.49

1.45

-0.78

2.53

1.28

1.77

2.13

0.75

0.84

1.21

1.52

1.30

1.26

1.96

Trade, Transportation and Utilities

1.54

0.89

1.04

0.98

2.41

1.80

2.04

1.35

0.42

0.81

1.19

1.24

0.85

1.08

1.21

1.42

Transportation & Warehousing

3.32

1.00

1.88

3.76

3.84

3.55

3.82

3.53

3.21

3.03

3.30

3.63

3.84

3.32

3.53

3.28

Financial Activities

0.89

1.32

0.60

1.02

1.32

1.26

1.99

1.81

0.74

0.63

0.55

-0.01

-0.65

-0.96

-0.53

-0.68

Education & Health

2.50

2.00

1.39

2.20

0.88

1.61

1.94

1.79

2.85

1.69

1.35

1.86

1.31

2.12

1.95

2.37

Professional & Business Services

4.77

2.58

3.15

3.08

4.13

3.80

3.04

2.88

2.32

3.91

5.08

5.70

4.63

4.34

4.31

3.75

-2.00

0.41

1.61

0.76

4.06

1.28

-0.24

-1.50

2.82

6.90

2.97

0.05

2.53

2.18

0.98

0.72

3.50

1.20

2.04

2.09

2.14

1.57

0.70

1.10

0.72

-0.41

-0.57

0.04

0.15

-0.95

-0.26

-0.03

Government

-0.26

-0.73

-0.67

-0.63

-0.34

-0.23

-0.22

-0.04

-0.07

-0.11

0.11

0.35

0.34

0.66

0.64

0.62

Federal

-1.59

-1.50

-1.51

-2.23

-2.62

-2.76

-2.76

-2.76

-2.76

-2.52

-2.41

-2.24

-2.24

-1.75

-1.75

-1.62

State & Local

-0.06

-0.62

-0.54

-0.39

-0.01

0.15

0.15

0.36

0.31

0.24

0.47

0.72

0.70

0.99

0.97

0.93

U.S. Forecast | October 2012

92.4

Fuel

2.11

24

92.6

164.4 156.5 163.6 153.4 145.5 142.7 144.5 144.2 143.1 141.7 140.4 139.1 139.2 135.7 134.2 137.0

Total Nonfarm Employment

Leisure & Hospitality

92.4

Gasoline & Oil

Growth Rates

Information

92.5

Natural Gas

79.0

75.4

75.7

75.3

77.3

80.5

84.3

87.8

90.6

93.0

94.3

94.7

94.3

93.1

93.1

93.5

Water & Sewer

142.9 145.6 147.2 148.6 150.1 151.5 152.8 154.1 155.3 156.6 157.8 159.0 160.2 161.5 162.8 164.0

Telephone

103.7 103.9 103.6 103.5 103.0 102.5 102.3 102.0 101.7 101.4 101.2 100.9 100.6 100.4 100.1

Transportation

123.4 124.0 124.1 124.4 124.9 125.4 125.8 126.3 126.9 127.5 128.0 128.5 129.1 129.6 130.1 130.7

Other Services

124.7 125.7 126.3 126.9 127.5 128.0 128.7 129.3 129.9 130.6 131.4 132.2 132.9 133.6 134.4 135.2

99.8

Institute for Economic Competitiveness

25

U . S . F o r eca s t Tab l e s

U . S . F o r eca s t Tab l e s

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

Table 8. Percent Change in Implicit Price Deflators

Table 8. Percent Change in Implicit Price Deflators

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

2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4

History 2004 2005 2006 2007 2008 2009 2010 2011

Forecast 2012 2013 2014 2015

GDP

2.0

1.6

2.2

1.7

1.8

1.4

1.7

1.3

1.6

1.5

1.4

1.5

1.8

1.4

1.5

1.6

Consumption

2.5

0.7

1.9

0.6

1.0

1.2

1.6

1.4

1.7

1.6

1.5

1.5

1.8

1.4

1.5

2.0

GDP

96.8 100.0 103.2 106.2 108.6 109.5 111.0 113.4

115.4 117.4 119.1 121.0

Durables

-1.0

-1.2

-2.0

-0.8

-1.2

-1.5

-1.6

-1.2

-0.6

-0.7

-0.7

-0.7

-0.6

-0.6

-0.7

-0.7

Consumption

97.1 100.0 102.7 105.5 108.9 109.0 111.1 113.8

115.8 117.1 118.9 120.8

Motor Vehicles

-0.3

4.4

-0.2

1.7

0.4

0.0

-0.1

0.1

0.8

1.0

1.0

1.0

1.0

0.9

0.8

0.8

Furniture

2.0

-0.2

0.6

-0.8

-0.9

-1.0

-1.1

-1.0

-0.5

-0.4

-0.3

-0.2

0.0

0.1

0.0

-0.1

Other Durables

1.6

-4.8

-2.4

0.6

1.1

0.9

0.6

1.2

1.9

1.8

1.6

1.5

1.7

1.6

1.5

1.6

Nondurables

4.2

-2.1

5.0

-2.4

-1.1

0.2

1.5

0.6

0.7

0.6

0.6

0.7

1.7

0.3

1.0

2.8

Nondurables

Food

1.3

0.7

2.0

3.9

3.9

2.1

0.5

-0.2

0.0

0.3

0.5

0.7

1.4

1.4

1.3

1.5

Clothing & Shoes

2.4

5.0

4.8

1.9

1.9

1.2

0.7

1.3

1.5

0.6

0.5

0.3

0.7

0.4

0.5

0.4

Gasoline & Oil

15.5 -17.8

19.3 -22.6 -19.1

-7.5

5.1

-0.9

-2.8

-3.9

-3.8

-3.6

0.3

-9.6

-4.6

8.8

Fuel

16.7 -11.5

-7.0 -15.0

-8.9

-3.4

3.6

0.1

-1.0

-1.8

-1.9

-2.0

0.5

-5.9

-3.0

5.8

Services

2.5

2.1

1.6

1.9

2.2

2.1

2.1

2.1

2.4

2.4

2.2

2.1

2.2

2.1

2.1

2.1

Housing

2.3

1.9

2.0

2.1

2.2

2.2

2.3

2.3

2.4

2.4

2.4

2.0

2.0

2.0

2.0

1.9

Electricity

-1.3

-1.3

-3.6

3.7

3.4

3.4

3.9

4.4

3.3

2.6

2.0

1.4

2.6

2.8

1.2

0.6

-22.5 -16.9

1.4

-1.7

10.8

17.7

20.1

17.6

13.3

11.1

5.7

1.7

-1.3

-5.2

0.0

1.5

Natural Gas Water & Sewer

5.7

8.0

4.5

3.9

4.0

3.8

3.6

3.3

3.3

3.3

3.2

3.1

3.1

3.2

3.1

3.1

Telephone

1.6

0.9

-1.0

-0.5

-2.0

-1.8

-0.9

-1.3

-1.2

-1.1

-0.7

-1.1

-1.1

-1.1

-0.9

-1.2

Transportation

2.8

1.8

0.2

1.2

1.6

1.3

1.4

1.5

2.0

1.7

1.6

1.6

1.9

1.5

1.5

1.8

Other Services

3.5

3.2

1.8

1.9

1.9

1.7

2.0

2.0

1.9

2.1

2.6

2.3

2.2

2.3

2.4

2.4

26

U.S. Forecast | October 2012

Durables Motor Vehicles Furniture

101.1 100.0 98.4 98.4 100.0 100.1 99.9 100.0 99.6

96.4 99.6 98.9

94.6 97.8 98.1

92.8 91.6 90.8 97.9 104.0 107.5 97.8 93.7 92.4

89.7 88.5 87.7 87.1 109.2 109.9 110.6 111.6

Other Durables

101.5 100.0 101.8 105.5 109.1 110.4 110.9 114.3

114.5 114.6 116.3 118.2

96.1 100.0 103.2 106.5 112.6 109.2 112.6 119.4

122.2 122.2 123.1 124.3

Food 98.3 100.0 101.7 105.6 112.1 113.4 113.7 118.2 Clothing & Shoes 100.9 100.0 99.6 98.6 97.9 98.8 98.1 99.8

121.2 124.2 124.6 126.0 103.9 106.1 107.1 107.7

Gasoline & Oil Fuel

82.1 100.0 112.8 123.9 144.9 105.5 124.8 156.9 74.6 100.0 114.2 123.5 168.4 114.3 134.1 171.6

159.5 144.2 141.1 136.5

Services Housing Electricity

96.7 100.0 103.4 107.0 110.6 112.2 114.4 116.4 97.6 100.0 103.6 107.3 110.2 112.2 112.2 113.8 94.2 100.0 112.1 116.7 124.2 128.1 128.3 130.7

118.8 121.2 123.9 126.6 116.2 118.7 121.5 124.0 130.9 134.0 138.3 141.1

Natural Gas Water & Sewer

83.7 100.3 102.7 102.5 116.1 90.3 88.5 86.0 95.0 100.0 104.9 110.3 116.7 123.9 131.8 138.6

76.3 82.5 93.1 93.5 146.1 152.1 157.2 162.1

Telephone Transportation Other Services

100.7 100.0 100.6 102.4 104.0 105.5 104.9 103.3 96.5 100.0 104.2 106.6 112.5 115.7 118.1 121.4 95.4 100.0 104.1 107.4 112.5 115.4 119.1 122.3

103.7 102.5 101.3 100.2 124.0 125.6 127.7 129.9 125.9 128.4 131.0 134.1

92.5

91.8

91.2

91.2

171.5 159.5 158.3 155.6

Institute for Economic Competitiveness

27

U . S . F o r eca s t Tab l e s

U . S . F o r eca s t Tab l e s

Table 10. Percent Change in Implicit Price Deflators

Table 10. Percent Change in Implicit Price Deflators

GDP Consumption Durables Motor Vehicles Furniture Other Durables

History 2007 2008

2004

2005

2006

3.2

3.5

2.9

2.6

3.0 -0.9 1.6 -0.1 -0.3

3.3 -1.3 1.0 -0.3 -0.2

1.9 -1.8 -0.7 -0.1 3.2

3.5 -1.9 0.5 -1.5 2.5

Table 12. Personal Consumption Expenditures (Current Dollars)

Table 12. Personal Consumption Expenditures (Current Dollars)

Forecast 2013 2014

2009

2010

2011

2012

2.1

0.5

1.8

2.0

1.9

1.5

1.5

1.6

1.8 -2.1 -4.0 0.3 3.4

1.4 -1.1 5.5 -2.0 1.3

1.5 -2.0 3.6 -4.3 0.6

2.5 -0.5 3.4 -0.1 3.2

1.4 -1.2 1.4 0.4 -1.3

1.3 -1.3 0.1 -1.0 1.0

1.6 -0.7 1.0 -0.4 1.7

2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4

2015 all goods & services

11007.2 11073.7 11183.5 11265.5 11367.7 11471.8 11586.7 11695.6 11823.2 11950.0 12077.8 12209.1 12318.7 12435.7 12561.3 12703.4

1.7 -0.6 0.9 0.0 1.6

durable goods

1204.6 1201.0 1218.0 1234.6 1251.6 1265.6 1276.2 1285.5 1297.4 1311.6 1326.8 1343.5 1351.2 1363.8 1374.4 1388.4

clothing & shoes

Nondurables Food Clothing & Shoes Gasoline & Oil Fuel

4.9 2.7 -0.5 28.8 41.8

4.5 1.5 -1.3 31.8 33.1

0.5 1.7 0.2 -0.8 -0.3

6.4 4.7 -1.2 30.4 28.5

1.0 7.0 -0.9 5.1 23.2

2.8 -1.7 1.4 26.7 -0.3

2.3 1.3 -1.4 13.3 16.0

5.9 5.1 4.4 19.7 27.2

1.2 2.0 3.5 -1.4 -4.2

0.3 1.6 1.3 -5.6 -2.2

0.6 0.4 0.7 -3.5 -1.7

1.4 1.4 0.5 -1.3 -0.6

Services Housing Electricity Natural Gas

3.2 2.4 1.8 14.7

3.8 2.5 10.2 44.9

3.1 4.4 8.6 -18.3

3.5 3.0 5.3 3.5

3.0 2.6 8.4 19.1

1.4 0.9 -0.3 -17.9

1.8 0.3 0.5 -0.9

1.9 1.9 2.5 -2.0

2.0 2.1 -0.6 -9.9

2.1 2.3 3.8 16.5

2.3 2.3 2.3 7.9

2.1 2.0 1.8 -1.2

Water & Sewer

5.9

5.0

4.9

5.2

6.7

6.0

5.8

4.9

5.5

3.7

3.2

3.1

Telephone Transportation Other Services

-1.7 1.4 4.4

0.2 4.9 4.7

1.2 2.5 4.0

1.5 3.4 3.3

2.0 6.0 5.0

0.7 2.0 2.2

-1.0 1.5 2.9

-1.3 3.3 3.0

0.3 1.5 2.6

-1.5 1.5 1.9

-1.0 1.8 2.2

-1.1 1.7 2.3

furniture and appliances

2006

2007

278.3

281.6

284.0

285.7

287.0

287.9

288.9

291.5

292.6

294.0

101.0

101.7

102.6

103.2

104.2

105.4

106.7

107.6

109.1

110.4

111.6

motor vehicles and parts

402.1

396.4

400.9

406.7

414.8

420.8

423.8

425.8

432.1

440.5

449.8

460.3

462.8

467.6

472.7

480.8

other durable goods

129.7

130.6

136.6

138.6

140.1

141.2

142.3

143.4

144.0

144.7

145.6

146.7

147.6

148.6

149.4

150.3

2009

2010

2011

2012

2013

2014

2551.3 2540.9 2579.2 2579.3 2585.4 2599.3 2624.2 2641.8 2659.8 2676.2 2693.3 2711.0 2730.7 2743.2 2763.5 2796.6 363.1

362.9

368.7

371.8

373.8

375.5

377.7

379.5

380.4

381.4

383.7

385.1

385.1

387.9

390.7

21.2

21.9

23.1

23.2

22.7

22.6

22.9

22.9

23.0

22.9

22.9

22.8

22.8

22.5

22.4

393.3 22.7

419.3

405.2

418.3

399.1

382.6

377.1

381.9

380.8

377.7

372.9

368.0

363.9

362.6

352.5

349.0

356.9

891.3

898.6

905.7

912.5

919.5

927.4

935.7

food

827.0

827.4

833.4

841.6

851.4

860.5

868.7

875.8

883.6

other nondurable goods

920.6

923.5

935.7

943.6

955.0

963.6

973.1

982.7

995.2 1007.6 1020.1 1033.5 1047.6 1060.8 1074.1 1088.1

Consumer Expenditures by Type Billions 2005 Dollars all goods & services

9546.8 9586.9 9635.4 9691.6 9754.3 9813.6 9873.8 9932.7 9999.2 10065.3 10134.1 10206.6 10252.5 10314.4 10379.0 10445.4

durable goods

1336.1 1335.9 1361.8 1383.1 1406.3 1427.3 1445.0 1459.8 1475.7 1494.3 1514.3 1536.1 1547.1 1564.0 1578.9 1597.6

furniture and appliances

286.0

285.7

288.0

291.9

295.1

298.8

303.5

307.8

310.9

313.1

314.7

315.9

316.9

319.7

321.0

322.6

information processing equipment

174.5

178.2

180.6

185.5

191.4

197.2

202.8

209.0

214.8

221.8

229.7

238.0

245.4

254.3

263.0

271.5

motor vehicles and parts

371.2

362.1

366.5

370.3

377.3

382.7

385.5

387.2

392.1

398.8

406.2

414.7

415.9

419.4

423.0

429.4

other durable goods

108.0

111.3

117.3

118.9

119.9

120.8

121.6

122.2

122.2

122.4

122.8

123.3

123.6

124.0

124.3

124.6

nondurables clothing & shoes fuel oil & coal

2088.9 2091.7 2097.5 2110.3 2121.1 2131.5 2144.0 2155.3 2166.4 2176.7 2187.4 2197.7 2204.5 2213.1 2224.3 2235.3 355.3

350.8

352.2

353.6

353.8

354.4

355.7

356.4

355.8

356.2

358.0

359.0

358.3

360.5

362.7

11.9

12.6

13.6

14.2

14.2

14.3

14.3

14.3

14.4

14.4

14.5

14.5

14.5

14.5

14.5

14.6

254.9

258.7

255.7

260.1

263.0

264.3

264.3

264.1

263.8

263.1

262.1

261.6

260.5

259.7

260.2

260.4

364.7

food

686.4

685.4

687.0

687.2

688.5

692.2

698.0

704.0

710.2

715.9

720.9

725.2

728.1

731.2

735.0

738.9

other nondurable goods

792.9

794.5

800.2

805.4

811.4

816.1

821.6

826.6

832.3

837.5

842.7

848.4

854.0

858.6

863.5

868.5

2015

Real Consumer Expenditures Annual Growth Rate Consumer spending on…

13428.3 13981.0 14650.2 15361.8 8599.8 8947.3 9346.3 9793.2

931.6 1025.9 43.9 178.2 555.0

960.2 1103.6 29.4 146.5 702.2

980.5 1052.6 37.8 143.7 791.9

1052.4 1046.1 51.8 231.6 783.4

1067.2 939.5 39.9 289.7 533.3

1097.3 1059.1 44.3 349.2 581.7

1139.0 1102.8 54.6 409.7 676.3

1172.1 1147.5 57.1 460.3 737.5

1222.8 1203.8 57.5 504.5 805.6

1292.5 1278.4 59.5 525.4 831.4

1372.9 1354.3 58.5 517.0 852.6

Interest Income 860.2 Transfer Payments 1415.5 419.2 Personal Social Insurance Tax

987.0 1508.6 445.2

1127.5 1605.0 475.1

1265.1 1718.5 499.6

1382.0 1879.2 517.2

1093.3 2140.1 506.3

1016.6 2284.3 515.2

1008.8 2319.3 424.4

1006.6 2371.7 436.9

1021.7 2458.7 481.6

1091.4 2604.4 525.4

1238.9 2744.3 607.7

Percent Change, Annual Rate Personal Income Wages & Salaries Other Labor Income Nonfarm Income Farm Income

6.0 4.9 3.5 10.1 38.7

5.5 5.6 6.5 4.3 -11.1

7.5 5.8 3.1 7.6 -32.7

5.7 5.1 2.1 -4.6 28.3

4.6 2.7 7.3 -0.6 39.9

-4.8 -3.3 1.4 -10.1 -20.7

3.8 2.2 2.8 12.7 12.0

5.1 4.1 3.8 4.2 23.5

3.7 3.7 2.9 4.1 4.6

4.1 4.0 4.3 4.9 0.7

4.8 4.5 5.7 6.2 4.5

4.9 4.8 6.2 5.9 -1.6

Rental Income Dividends Interest Income Transfer Payments

-9.4 43.3 0.2 6.0

-10.9 -0.6 19.4 6.3

-23.8 26.8 10.9 6.7

32.7 7.6 13.7 7.6

66.4 -9.1 2.6 10.1

12.6 -29.2 -21.9 15.3

16.3 28.2 -2.1 6.0

22.4 11.7 -1.8 0.2

11.3 10.7 2.7 3.4

8.0 6.2 2.1 3.8

1.7 2.5 9.6 6.1

-3.2 2.2 15.3 5.2

6.1

5.9

6.7

5.2

2.0

-2.0

2.7

-12.9

3.7

11.1

9.7

17.6

U.S. Forecast | October 2012

274.8

100.0

Consumer spending on…

874.6 984.1 49.7 198.4 548.3

28

272.1

99.1

gasoline & motor oil

Personal Income Billions Current Dollars

Personal Social Insurance Tax

269.7

98.1

fuel oil & coal

Forecast 2008

9937.3 10485.9 11268.1 11912.3 12460.2 11867.0 12321.9 12947.3 6693.4 7065.1 7477.0 7855.9 8068.3 7799.4 7970.0 8295.2

Other Labor Income Nonfarm Income Farm Income Rental Income Dividends

266.6

98.0

gasoline & motor oil

History

Personal Income Wages & Salaries

264.1

97.7

nondurables

Table 11. Personal Income and its Components 2005

264.6

information processing equipment

Table 11. Personal Income and its Components

2004

Consumer Expenditures by Type Billions Current Dollars

Consumer spending on…

all goods & services

2.4

1.7

2.0

2.3

2.6

2.4

2.5

2.4

2.7

2.6

2.7

2.9

1.8

2.4

2.5

2.6

11.1

0.0

7.7

6.3

6.7

6.0

5.0

4.1

4.3

5.1

5.4

5.8

2.9

4.4

3.8

4.7

8.3

-0.5

3.2

5.5

4.4

5.0

6.3

5.7

4.0

2.8

2.1

1.5

1.3

3.5

1.6

2.0

information processing equipment

10.6

8.6

5.5

10.7

12.7

12.3

11.4

12.2

11.1

13.0

14.2

14.5

12.5

14.4

13.7

12.9

motor vehicles and parts

durable goods furniture and appliances

12.4

-9.8

4.9

4.1

7.6

5.8

2.9

1.8

5.1

6.8

7.4

8.4

1.2

3.3

3.5

6.0

other durable goods

7.6

12.2

21.5

5.4

3.5

2.8

2.7

2.0

-0.1

0.7

1.2

1.8

0.9

1.4

1.0

1.0

nondurables

1.6

0.5

1.1

2.4

2.0

2.0

2.3

2.1

2.1

1.9

2.0

1.9

1.2

1.6

2.0

2.0

clothing & shoes

5.8

-5.1

1.7

1.6

0.2

0.6

1.5

0.7

-0.6

0.5

2.0

1.1

-0.7

2.5

2.4

2.2

-55.5

25.6

30.6

17.6

0.8

1.6

0.9

0.9

1.8

0.9

1.2

0.7

0.3

-0.7

1.1

0.7

0.6

5.9

-4.6

6.9

4.3

2.1

0.0

-0.3

-0.4

-1.2

-1.4

-0.7

-1.7

-1.3

0.7

0.4

food

0.0

-0.5

0.9

0.1

0.8

2.2

3.4

3.5

3.5

3.2

2.8

2.4

1.6

1.7

2.1

2.1

other nondurable goods

3.5

0.8

2.9

2.6

3.1

2.3

2.7

2.4

2.8

2.5

2.5

2.7

2.7

2.2

2.3

2.4

fuel oil & coal gasoline & motor oil

Institute for Economic Competitiveness

29

U . S . F o r eca s t Tab l e s

U . S . F o r eca s t Tab l e s Table 14. Business Fixed Investment

Table 13. Personal Consumption Expenditures (2000 Dollars)

Table 13. Personal Consumption Expenditures (2005 Dollars) History 2004

2005

2006

2007

Table 14. Business Fixed Investment History

Forecast 2008

2009

2010

2011

2012

2013

2014

2015

2004

2005

2006

2007

Consumer Expenditures by Type Billions Current Dollars all goods & services

8270.6

8803.5

9301.0

9772.3 10035.5

9845.9 10215.7 10729.0

durable goods

1072.9

1123.4

1155.0

1188.4

1108.9

1029.6

1079.4

1146.4

1214.5

1269.7

1319.8

1369.4

247.0

261.3

271.5

271.3

257.9

235.4

241.3

251.7

266.2

276.7

286.2

291.8

59.4

67.0

75.3

86.1

84.9

82.4

91.7

94.7

98.2

101.3

104.9

403.9

408.2

394.8

399.9

339.3

316.0

342.7

373.6

401.5

421.3

445.7

information processing equipment motor vehicles and parts other durable goods

11132.5 11530.5 12015.0 12504.7

2011

2012

2013

2014

2015

Business Fixed Investment

1223.0 1347.3 1505.3 1637.5 1656.3 1349.3 1338.4 1479.6

1622.1 1704.9 1838.1 1983.6

916.4

995.6 1071.7 1112.6 1070.0

898.2

962.1 1074.7

306.7

351.8

433.7

524.9

586.3

451.1

376.3

404.8

457.6

470.0

515.3

561.5

109.6

Non-Farm Buildings

196.7

212.9

247.6

297.3

322.0

253.9

177.0

173.8

199.2

216.1

258.2

308.1

471.0

Commercial

104.3

112.9

128.4

150.8

149.1

95.5

64.7

65.3

71.8

78.2

101.9

133.8

99.5

109.9

118.8

117.9

111.1

116.0

125.8

133.9

141.7

145.3

149.0

1953.4

2069.8

2175.5

2272.8

2164.8

2285.5

2478.4

2562.7

2612.7

2685.1

2758.5

298.7

314.0

327.3

335.4

330.9

317.0

331.6

349.2

366.6

376.6

382.7

389.3

17.9

20.0

20.6

21.8

25.9

20.6

22.3

24.5

22.4

22.8

22.9

22.6

gasoline & motor oil

231.6

283.8

314.7

343.0

384.5

278.7

330.1

403.8

410.5

380.6

370.6

355.3

food

613.0

644.5

674.2

711.2

746.4

742.3

760.6

810.2

832.4

864.1

894.8

923.8

other nondurable goods

658.2

691.1

733.0

764.1

785.1

806.1

840.8

890.7

930.8

968.6

1014.1

1067.6

fuel oil & coal

2010

Producers Dur. Equipment

92.9

clothing & shoes

2009

Nonresidential Structures

1819.3

nondurables

2008

Billions Current Dollars

Consumer spending on…

furniture and appliances

Forecast

Consumer Expenditures by Type Billions 2005 Dollars Consumer spending on…

1164.4 1234.9 1322.8 1422.1

Industrial

23.7

29.9

35.1

43.7

57.4

61.2

43.3

44.2

55.0

59.7

66.9

70.7

Other Buildings

68.7

70.2

84.1

102.8

115.6

97.1

69.0

64.2

72.3

78.2

89.3

103.6

Utilities

48.6

51.4

61.1

85.6

99.5

98.6

88.4

85.8

101.2

95.1

97.7

101.1

Mines & Wells

51.9

77.1

114.2

130.9

151.7

88.6

101.9

135.6

147.5

148.8

146.9

139.2

Billions 2005 Dollars Business Fixed Investment

1263.0 1347.3 1455.5 1549.9 1537.7 1259.9 1268.5 1378.2

1489.1 1560.9 1672.3 1779.9

Producers Dur. Equipment

917.3

995.6 1071.1 1106.8 1059.4

885.2

963.9 1070.0

Nonresidential Structures

346.7

351.8

384.0

438.2

466.4

368.1

310.6

319.2

1152.6 1229.2 1314.8 1402.6 347.8

348.7

375.1

396.9

Non-Farm Buildings

213.9

212.9

229.2

260.5

272.0

214.1

153.9

148.3

164.7

170.9

194.8

222.2

114.4

112.9

118.4

131.2

124.5

78.3

54.6

53.9

57.2

59.6

74.2

93.2

all goods & services

8515.8

8803.5

9054.5

9262.9

9211.7

9032.6

9196.2

9428.8

9615.2

9843.6 10101.3 10347.8

Commercial

durable goods

1060.9

1123.4

1174.2

1232.4

1171.8

1109.1

1178.3

1262.6

1354.2

1434.6

1505.1

1571.9

247.2

261.3

272.5

274.4

262.8

240.7

257.5

272.5

287.9

301.3

313.6

320.0

Industrial

25.5

29.9

33.0

39.0

48.6

50.9

36.8

36.9

44.6

46.1

49.2

49.6

Other Buildings

74.1

70.2

77.9

90.3

99.3

85.6

63.1

57.8

63.3

65.7

71.6

79.5

Utilities

52.1

51.4

56.2

75.6

82.5

82.4

71.1

65.0

73.9

68.7

69.8

70.7

Mines & Wells

69.9

77.1

88.3

93.6

101.5

66.1

77.3

94.8

98.1

98.7

99.6

94.1

12.6

5.7

5.9

8.6

7.1

furniture and appliances information processing equipment

52.5

67.0

85.0

105.9

113.6

119.6

143.3

161.6

179.7

200.1

226.1

258.5

410.4

408.2

394.4

401.4

346.8

322.6

329.5

347.4

367.5

383.2

403.0

422.0

90.3

99.5

108.2

111.9

106.4

99.0

102.5

106.7

113.9

121.1

122.7

124.1

1892.8

1953.4

2005.0

2042.9

2019.1

1982.8

2029.3

2075.2

2097.1

2138.0

2182.1

2219.3

296.0

314.0

328.7

340.1

338.1

321.0

338.1

350.0

353.0

355.1

357.2

361.6

24.0

20.0

18.0

17.6

15.4

18.0

16.6

14.3

13.1

14.3

14.5

14.5

gasoline & motor oil

282.1

283.8

278.9

276.8

265.3

264.1

264.6

257.3

257.4

263.9

262.7

260.2

Producers Dur. Equipment

8.5

6.3

food

623.9

644.5

663.0

673.2

666.0

654.8

668.8

685.3

686.5

695.7

718.0

733.3

Nonresidential Structures

12.6

14.9

other nondurable goods

668.2

691.1

717.3

737.5

739.7

727.7

745.6

777.4

798.2

818.9

840.2

861.2

Non-Farm Buildings

10.8

7.3

9.3

10.0

motor vehicles and parts other durable goods nondurables clothing & shoes fuel oil & coal

Industrial

Consumer spending on… all goods & services

3.3

2.8

3.2

1.7

-2.5

-0.3

2.9

1.9

2.1

2.5

2.8

2.3

durable goods

5.9

3.1

7.1

4.6

-12.6

3.5

9.6

6.1

6.5

5.6

5.2

4.0

furniture and appliances

6.5

6.2

1.4

1.2

-9.2

-1.6

8.2

6.1

4.2

5.5

2.6

2.1

25.9

26.8

28.7

21.3

0.8

11.9

18.1

13.9

9.2

12.7

13.9

14.1

motor vehicles and parts

1.6

-6.8

5.8

0.6

-23.5

8.2

11.3

4.2

3.2

4.6

7.1

3.6

other durable goods

6.8

10.8

5.8

4.1

-12.5

1.4

5.5

1.1

12.4

2.8

0.9

1.1

nondurables

2.7

3.1

2.9

0.8

-3.1

0.4

3.0

1.4

1.4

2.1

2.0

1.7

clothing & shoes fuel oil & coal gasoline & motor oil

5.2

7.2

3.4

2.3

-3.8

-0.9

7.6

0.7

1.0

0.8

0.7

1.6

-18.3

-18.2

3.5

-7.9

9.1

9.6

-8.0

-14.2

9.1

1.0

1.2

0.4

0.7

-0.6

-0.4

-1.8

-4.0

-1.1

0.2

-1.5

2.3

1.6

-0.9

-0.5

food

2.5

3.6

2.9

0.8

-4.0

2.1

2.1

1.4

0.1

2.5

3.0

1.9

other nondurable goods

3.3

3.3

4.2

1.7

-1.2

-0.1

3.7

3.7

2.4

2.6

2.6

2.4

30

U.S. Forecast | October 2012

Business Fixed Investment

Commercial

Real Consumer Expenditures Annual Growth Rate

information processing equipment

Annual Growth Rate 9.5

8.4

11.7

9.0

-5.8

-18.2

8.2

6.9

3.5

25.2

22.0

-11.2

-8.3

11.1

12.3

6.1

6.2

7.9

6.5

5.1

-34.5

2.1

15.8

4.9

5.2

10.4

8.7

18.7

22.6

-0.1

-33.7

-21.3

15.7

10.4

10.7

21.2

20.4

15.3

17.3

-11.8

-44.7

-16.8

9.6

7.8

16.4

33.6

31.0

30.4

13.8

16.1

46.6

23.0

-12.0

-28.8

49.0

13.7

6.7

9.8

10.7

Other Buildings

9.2

1.7

26.0

22.6

6.7

-29.7

-19.5

4.3

11.2

8.7

17.3

14.6

Utilities

5.5

3.8

23.9

54.9

0.8

-4.1

16.0

1.1

11.2

-0.8

4.8

0.3

38.0

51.3

50.0

4.8

24.1

-46.9

66.0

29.9

-1.6

0.7

-3.1

-6.1

Mines & Wells

Institute for Economic Competitiveness

31

U . S . F o r eca s t Tab l e s

U . S . F o r eca s t Tab l e s Table 16. U.S. Exports and Imports of Goods and Services

Table 15. Government Receipts and Expenditures

Table 15. Government Receipts and Expenditures

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

History

Forecast

2004

2005

2006

2007

2008

2009

2010

2014.0

2290.1

2524.5

2654.7

2502.3

2226.5

2395.4

Personal Tax and Nontax Receipts

799.2

931.9

1049.9

1165.6

1101.3

857.0

Corp. Profits Tax Accruals

250.3

341.0

395.0

362.8

233.6

200.4

2011

History

2012

2013

2014

2015

2519.6

2691.6

2953.5

3143.3

3337.2

894.2

1075.2

1148.5

1281.5

1370.8

1438.5

305.1

304.2

370.8

433.4

452.0

459.3

Forecast

2004

2005

2006

2007

2008

-618.7

-722.7

-769.3

-713.1

-709.8

Federal Government Receipts and Expenditures Receipts

Indirect Business Tax and Nontax Accruals Contributions for Social Insurance Expenditures

94.3

98.8

99.4

94.5

94.0

91.4

95.5

107.4

114.0

116.1

130.3

136.1

807.6

852.6

904.6

945.3

973.1

949.1

969.8

905.5

939.3

1005.9

1074.3

1184.2

2393.4

2573.1

2728.3

2900.0

3115.7

3455.9

3703.4

3757.0

3749.5

3768.5

3898.7

4068.7

Purchases Goods & Services

824.7

876.3

931.7

976.4

1080.1

1143.6

1223.1

1222.1

1209.4

1184.6

1166.2

1159.3

National Defense

550.8

589.1

624.9

662.3

737.8

776.0

817.7

820.8

807.6

788.1

773.9

768.6

Other

273.9

287.3

306.9

314.1

342.3

367.6

405.3

401.3

401.8

396.5

392.4

390.7

Transfer Payments

1405.1

1491.3

1587.1

1690.5

1841.9

2157.5

2310.8

2309.4

2316.6

2378.9

2507.5

2635.6

To Persons

1014.3

1078.0

1180.7

1254.2

1385.7

1605.4

1708.6

1735.8

1778.0

1835.1

1903.9

1990.4

30.9

40.9

35.0

42.2

45.3

53.5

54.7

58.7

59.3

61.0

62.0

63.0

Grants in Aid to State & Local Gov't

349.2

361.2

359.0

380.8

395.5

482.6

531.1

497.8

461.5

464.6

523.1

563.4

Net Interest

204.6

239.0

261.0

291.0

272.1

228.6

251.7

294.7

292.8

278.0

296.4

343.2

45.7

64.1

53.9

50.2

53.6

62.8

62.4

73.8

77.2

72.5

70.1

66.7

-379.5

-283.0

-203.8

-245.2

-613.5 -1229.4 -1308.1 -1237.4

-1057.9

-815.0

-755.4

-731.6

To Foreigners

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

State and Local Government Receipts and Expenditures Receipts

1601.0

1730.5

1829.7

1923.1

1944.8

1961.4

2042.5

2064.4

2079.0

2139.6

2259.4

2370.3

Personal Tax/Nontax Receipts

1059.4

1163.1

1249.1

1313.6

1326.4

1264.9

1304.6

1360.8

1411.6

1458.2

1506.0

1561.8

248.6

276.7

302.5

323.1

334.4

287.6

300.6

322.8

337.5

350.2

361.9

378.0

41.7

55.0

59.1

57.8

47.4

45.5

44.5

47.6

49.0

55.4

54.4

52.1

Corporate Profits Indirect Business Tax and Nontax Accruals Contributions for Social Insurance Federal Grants-In-Aid Expenditures Purchases Goods & Services Government Social Benefits Transfer Payments Interest Received Net Subs idies

24.1

24.8

21.8

18.9

19.0

19.0

18.4

18.3

17.4

17.1

17.7

18.5

349.2

361.2

359.0

380.8

395.5

482.6

531.1

497.8

461.5

464.6

523.1

563.4

1609.33 1704.50 1778.63 1910.83 2017.05 2074.63 2132.10 2166.35 1408.2

1493.6

1586.7

1697.9

1798.0

1823.6

1834.4

1837.7

2191.12 2238.72 2347.32 2439.65 1845.4

1862.5

1902.4

1953.6

384.3

404.8

402.9

433.7

456.7

495.1

528.3

538.5

547.8

577.1

652.3

702.2

384.3

404.8

402.9

433.7

456.7

495.1

528.3

538.5

547.8

577.1

652.3

702.2

19.0

10.9

2.1

0.4

16.2

23.0

30.3

36.2

40.2

40.0

39.7

41.1

-0.6

0.3

1.7

16.2

15.3

12.5

14.1

14.4

16.5

16.4

15.7

14.9

2009

2010

2011

2012

2013

2014

2015

-568.1

-565.7

-525.2

-582.8

-580.4

Billions of Dollars Net Exports Goods & Services

-388.7

-511.6

Current Account

-628.5

-745.8

-800.6

-710.3

-677.1

-381.9

-442.0

-465.9

-497.3

-448.3

-521.9

-574.7

Exports -Goods & Services

1180.2

1305.1

1471.1

1661.7

1846.8

1587.5

1844.5

2094.2

2197.7

2281.8

2383.3

2561.0

Merchandise Balance

-663.5

-780.7

-835.7

-818.9

-830.1

-505.8

-645.1

-738.4

-732.1

-690.1

-749.1

-763.9

Food, Feed & Beverage

56.55

58.95

65.98

84.28

108.33

93.93

107.70

126.23

137.96

139.42

134.59

142.38

Industrial Supplies Excl Petroleum

199.5

227.5

267.3

316.2

386.9

293.5

388.5

484.4

485.9

497.8

519.3

550.1

Motor Vehicles & Parts Capital Goods, Excl. MVP Computer Equipment

89.2

98.4

107.3

121.3

121.5

81.7

112.0

133.1

148.6

152.8

160.5

177.3

327.6

358.4

404.1

433.0

457.7

391.5

447.8

493.2

531.0

558.7

586.0

636.2

42.8

45.5

47.6

45.6

43.9

37.7

43.8

48.4

50.7

51.7

54.1

61.9

Other

238.7

257.0

291.9

314.5

339.8

279.0

332.0

364.7

388.9

407.3

427.7

464.2

Consumer Goods, Excl. MVP

103.3

115.3

129.1

146.0

161.3

149.4

165.2

175.0

182.7

194.0

206.0

216.4

41.0

47.5

50.8

61.3

61.8

54.6

57.4

62.5

68.2

70.9

75.0

79.9

363.2

399.0

446.6

499.7

549.3

522.7

565.9

619.7

643.4

668.2

701.8

758.6

Imports -Goods & Services

1798.9

2027.8

2240.4

2374.8

2556.5

1976.2

2356.1

2662.3

2763.4

2807.0

2966.1

3141.5

Merchandise

1501.7

1708.0

1884.9

2000.7

2146.3

1587.5

1947.0

2229.2

2303.3

2319.0

2446.6

2582.3

Other Consumer Services

Billions of Dollars

62.1

68.1

75.0

81.7

90.4

82.9

92.5

108.3

110.3

109.3

113.5

119.4

Petroleum & Products

Food, Feed & Beverage

180.5

251.9

302.5

346.7

476.1

267.7

353.8

462.3

434.5

352.4

337.8

316.2

Industrial Supplies Excl Petroleum

226.4

266.0

291.4

295.7

318.9

196.8

249.6

293.1

288.2

299.1

324.8

351.5

Motor Vehicles & Parts

228.2

239.5

256.6

256.6

233.2

159.2

225.7

255.2

298.1

308.0

326.8

354.3

Capital Goods, Excl. MVP

344.5

380.8

420.0

446.0

458.7

374.1

450.3

513.4

561.4

587.5

631.9

690.0

88.6

93.3

101.4

105.2

101.2

94.2

117.3

119.7

126.7

132.4

138.3

146.1

Computer Equipment Other

231.6

261.7

290.2

306.5

322.0

249.2

301.8

358.1

396.4

414.3

451.3

499.2

Consumer Goods, Excl. MVP

377.2

411.5

446.1

478.2

486.7

431.4

486.5

517.4

524.6

572.9

615.0

649.0

82.9

90.3

93.5

95.9

82.3

75.5

88.7

79.6

86.3

89.8

96.7

101.9

297.3

319.8

355.4

374.0

410.1

388.7

409.1

433.0

460.0

488.0

519.5

559.1

Net Exports Goods & Services

-687.9

-722.7

-729.4

-648.8

-494.8

-355.2

-419.7

-408.0

-407.0

-440.0

-478.1

-450.7

1222.6

1305.1

1422.1

1554.4

1649.3

1498.7

1665.6

1776.9

1847.1

1911.9

1988.5

2120.3

2144.0

1853.9

2085.2

2184.9

2254.1

2351.9

2466.6

2571.0

Other Consumer Services

Billions 2005 Dollars

Dividends Received

2.0

2.1

2.3

2.4

2.9

2.1

2.2

2.3

2.3

2.4

2.4

2.5

Exports G & S

Net Wage Accruals

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Imports G & S

1910.4

2027.8

2151.5

2203.3

-8.4

26.0

51.0

12.2

-72.3

-113.2

-89.7

-102.0

-112.1

-99.1

-87.9

-69.4

Exports G & S

11.7

10.3

14.0

14.6

0.5

3.5

14.4

9.0

5.4

3.2

5.8

8.2

Imports G & S

19.1

12.1

5.4

9.0

-1.7

0.9

14.4

11.0

1.3

4.0

6.0

5.9

Real Exports G & S

7.2

6.8

10.5

10.1

-1.7

2.4

8.8

4.3

4.0

3.3

5.1

7.3

Real Imports G & S

11.0

5.3

4.2

0.9

-5.7

-3.3

11.1

3.5

2.4

5.8

4.3

4.1

Surplus (+) or Deficit (-)

Exports & Imports % Change

32

U.S. Forecast | October 2012

Institute for Economic Competitiveness

33

In Appeciation

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

He is president of Real Property Specialists, Inc., located in Orlando, Florida.

Founded in 1992, Real Property Specialists, Inc., is a fullservice brokerage company that has built a reputation of providing highly personalized service while being responsive and flexible to its clients' individual needs. They offer a range of commercial real estate services in the Central Florida area including brokerage, appraisal, development, property management and tenant representation.

Real Property Specialists, Inc., has set a new standard of excellence in client service by providing these key advantages over the competition:

Responsiveness. You work directly with a decision

maker who has the flexibility to immediately attend to your needs.

Consistency. We are a unified firm employing team-

members who are committed to the success of our clients.

We pride ourselves on our ability to maintain a dedicated, professional staff that is able to build long-term, comfortable and prosperous relationships with our clients.

Accountability. At Real Property Specialists, our client is the real "Boss." We are accountable to no one other than the client. No company policy interferes with our ability to serve the individual needs of each client.

Experience. The staff at Real Property Specialists is

highly qualified, with most associates having more than a decade of experience in the industry. Our personal portfolio of shopping centers gives us first-hand knowledge of what is important when leasing, managing or selling a property.

Appraisers • Brokers • Consultants 6700 Conroy-Windermere Road, Suite 230 | Orlando, FL 32835 407.291.9000 | www.realpropertyspecialists.com

Sean M . Snai t h , P h . D .

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

U ni v e r s i t y o f C en t r a l F l o r i d a College of Business Administration Institute for Economic Competitiveness P. O . B o x 1 6 1 4 0 0 , O r l a n d o , F l o r i d a 3 2 8 1 6 P H 4 0 7. 8 2 3 . 1 4 5 3

FA X 4 0 7. 8 2 3 . 1 4 5 4

w w w. i e c . u c f. e d u