U.S. Forecast August 2008

U.S. Forecast August 2008

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

Message From D ea n T h o ma s L . K e o n

A b o ut U n i v e r s it y o f C e n t r al F l o r ida ( U C F ) T h e Un i ve r s i t y o f C e n t r a l Fl o r i d a i s a public, multi-campus, metropolitan r e s e a r c h u n i v e r s i t y, d e d i c a t e d t o

This is the last time I will write a dean’s message while President George W. Bush is in office. The next time you receive an economic forecast, we will know who his successor is. Whether it’s John McCain or Barack Obama, one thing is for sure.

He has his work cut out for him concerning the U.S. economy!

serving its surrounding communities with their diverse and expanding populations, technological corridors, and international partners. The mission of the university is to offer high-quality undergraduate and graduate education, student development, and continuing education; to conduct research and creative activities; and to provide services that enhance the intellectual, cultural, environmental, and economic development of the metropolitan region, address national and international issues in key areas, establish UCF as a major presence, and contribute to the global

The shaky real estate market, rising unemployment rates, and high gas prices are just a few of the issues facing our new administration. It will be interesting to see how a change in leadership will affect our economy. Will it improve, or is it possible it can continue declining? Only time will tell.

In any event, for better or worse, there will be changes. You can read all about those changes in upcoming forecasts. Dr. Sean Snaith and his research staff at the Institute for Economic Competitiveness continuously monitor our economy and will keep you updated.

c o m m u n i t y.

A b o ut t h e C o lle g e o f B u s i n e s s A dmi n i s t r ati o n The College of Business Administration a d v a n c e s t h e u n i v e r s i t y ’s m i s s i o n and goals in providing intellectual leadership through research, teaching, and service. The college is striving to enhance graduate programs, while maintaining the strong undergraduate base. The college delivers research and quality business education programs at the undergraduate, masters, doctoral, and executive levels to citizens of the state of Florida and to select clientele n a t i o n a l l y a n d i n t e r n a t i o n a l l y.

The important message here is that no matter which candidate you support, be sure to vote. This presidential campaign is critical and your vote can make a difference!

L . Keon omasL. Keon ThThomas Sincerely,

Dean

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

F o r eca s t f o r t h e N at i o n Forecast 2008 - 2011 August 2008 Report

Publications of the Institute for Economic Competitiveness are made possible by the following staff: Dr. Sean Snaith, Director Barbie Barontini, Editor Published quarterly by the Institute for Economic Competitiveness, College of Business Administration, University of Central Florida Copyright Š 2008 Institute for Economic Competitiveness. All rights reserved.

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

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Hi g h l i g h t s o f t h e 3 Q 2 0 0 8 F OR E C A ST In this quarter’s U.S. Forecast from the University of Central Florida’s Institute for Economic Competitiveness:

• Falling crude prices: Has the economy been anointed with holy oil?

• Retailers may be facing another challenging holiday shopping season as weary consumers, long-forgotten tax rebate checks, and depleted home equity may have their purse strings drawn tightly.

• A recession is two consecutive quarters of negative real GDP growth, right? Right?

• Job losses in the construction sector will finally end in Q2 of 2009 while the loss of manufacturing jobs slows to a trickle. The information sector also continues to lose jobs as the sector continues to evolve.

• Unemployment, a lagging indicator of the business cycle, peaks at 5.9% in 2009 before falling back to 5.5% by the end of 2011.

• Housing starts begin a slow, deliberate climb in 2009. Even with the housing market finally showing some signs of life in 2009, by the end of 2011, housing starts will only recover to the level seen in 2002.

• The multi-year depreciation of the dollar ends in 2008 and gives way to at least three years of appreciation vis-à-vis major trading partners.

H I GHL I GHTS

• The six months making up the fourth quarter of 2008 and first quarter of 2009 will be the Bermuda Triangle for the U.S. economy — if we make it through, it will be clear sailing thereafter.

U . S . F o r eca s t

Sin g y o u t o s l ee p , af t e r t h e l o v in g .

H o w can w e s t i m u l a t e t h e ec o n o m y af t e r t h e t a x r eba t e s an d in t e r e s t r a t e cu t s ?

The last of the tax rebate checks have been mailed to consumers and, once the last dollar of these rebates is spent, the impact of these checks on the U.S. economy will quickly fade away. The Federal Reserve has acted vigorously to cut interest rates and has taken other measures to stimulate the economy, establish stability, and restore some confidence in the financial sector. The question that remains is, “Will these efforts be enough to keep the U.S. economy out of recession?�

Some politicians have already called for another stimulus package, claiming that the first effort was not enough to overcome the burden of the housing bust and credit crunch on the economy. Should the Fed resort to further interest rate cuts in an effort to keep the economy moving forward?

There are problems with both of these approaches. Cutting interest rates further runs the risk of accelerating an already high rate of price inflation. Additional tax rebates will only serve to worsen the government budget deficit and increase

the burden of the already $9.6 trillion national debt on future generations of Americans.

What can be done to stimulate the economy when fiscal policy and monetary policy offer a cure but with some very undesirable side effects?

Could there be another stimulus, a way to boost the economy without raising the national debt or further stoking the fires of inflation?

T h e S h ee r Panic I n d e x Do paltry 0.9% 1st quarter GDP growth, a fading fiscal stimulus coupled with still elevated energy prices, and a housing sector still seemingly free-falling have economic forecasters concerned that a recession is on the doorstep (or through the door)? The most recent release (3rd quarter 2008) of the Survey of Professional Forecasters by the Federal Reserve Bank of Philadelphia suggests that the 44 forecasters (including the author) surveyed for this publication are very concerned that a decline in real GDP is currently taking place and Figure 1.

The Anxious Index Probability of Decline in Real GDP in the Following Quarter The Anxious Index Probability of 1968:Q4 Decline intoReal GDP in the Following Quarter Quarterly, 2008:Q3 Quarterly, 1968:Q4 to 2008:Q3

100

100 90

80

80

70

70

60

60

40 30 20

40 30 20 10

10

0

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

0

50

2007 2008

50

Probability (percent)

Probability (percent)

90

Survey Date

Survey Date 6

U.S. Forecast | August 2008

U . S . F o r eca s t

that a decline will also occur in the 4th quarter of the year.

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 second quarter of 2008, the index stands at 46.57%, which means that forecasters believe there is a 46.57% chance that real GDP will decline in the fourth quarter of 2008. The last time the index reached this level was in the survey during the 2001 recession. The forecasters also report a 34.09% chance that we are currently (3rd quarter of 2008) in a recession.

The graph to the left plots the historical values of the anxious index, and gray bars indicate periods of recession. The current levels of the anxious index suggest that there is substantial reason to be alarmed about the possibility of a decline in real GDP. As the forecast horizon is lengthened, economists’ estimates of the probability of a recession do not fall below 20% until the third quarter of 2009.

T o B e in Rece s s i o n o r N o t T o B e in Rece s s i o n ?

Evidence is still mixed, and an a n s w e r i s m o n t h s a wa y The advance reading of GDP for the 2nd quarter of 2008 came in at 1.9%, and the data released since then suggest that the preliminary reading of 2nd quarter GDP should be revised upward a full percentage point or more. In addition to the advance reading on 2nd quarter GDP, revisions were made to the history of GDP, and growth in the 4th quarter of 2007 was revised downward to -0.2% and 1st quarter 2008 growth was revised down to 0.9%.

Now, negative growth in the 4th quarter of 2007 would be the first of the two quarters of negative GDP growth that the popular rule of thumb for recession requires. This rule of thumb is not a requirement for a recession to take place; however, if there are two consecutive quarters, it is usually the case that a recession has taken place, but a recession may still occur without two consecutive quarters of real GDP contraction.

For an example of a recession where the twoquarter rule of thumb for recession was not met, we need only look back to the most recent recession in 2001. The recession in 2001 lasted from March 2001 through November of that year.

During that year, real GDP growth was negative in the first quarter of 2001 at -0.49%, positive in the 2nd quarter, growing 1.2% and negative in the 3rd with a -1.4% growth rate.

It will likely be another six to twelve months before an answer to the recession question is forthcoming from the Business Cycles Dating Committee of the National Bureau of Economic Research. If the U.S. has not yet entered a recession and we avoid a recession in the 4th quarter of 2008 and 1st quarter of 2009, which is the next Bermuda triangle for the economy, it will seem miraculous. Standing at the very spot where this “miracle” may take place is Benjamin Bernanke. By avoiding recession and curtailing inflation he will guarantee his reappointment regardless of who wins the presidential election.

B en j a m in ’ s Oi l No w pl a y i n g a t t h e C o m m o d i t y Cinema It has been a while since Housing Hysteria Theater played on these pages. As you may recall, these were remakes of movies into which a housing bubble theme was woven. The housing sector has been central to the performance of the U.S. economy for several years now and will continue to affect the economy throughout 2009. There Institute for Economic Competitiveness

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U . S . F o r eca s t

is another sector whose role in determining the Crude oil soared the first half of 2008, peaking future path of the economy has become much at $147 per barrel and fueled extremely high levels more pronounced, particularly in 2008, and that is of inflation at both the consumer and producer the commodity sector. Just like housing before it, measure of price inflation. These high oil prices the film industry is taking notice of the dramatic spilled over into other sectors of the economy via potential of commodities, and it is with pleasure several channels, the most direct being the rising we bring you Commodity Cinema. transportation costs that high oil, gasoline, and The original film being remade for the first diesel prices foisted upon the economy. Food costs release of Commodity Cinema is Lorenzo’s Oil, were also driven up by the agricultural income which starred Nick Nolte and Susan Sarandon subsidy in energy-policy clothing known as cornand was based on a true story. They played the based ethanol. This oil-fueled price inflation made parents of a boy, Lorenzo, who has a very rare the Fed’s job of keeping the U.S. economy out of disorder, adrenoleukodystrophy. The disease is so recession under the weight of the housing bust and rare that nobody credit crunch is even working extremely on a cure or a difficult. treatment for Battling this progressive inflation and ultimately alongside fatal condition. recession is Lorenzo’s enormously parents struggle challenging to find a doctor because each of who can treat these economic their son and ailments ultimately calls for a discover a type different policy of oil (derived prescription. To from olive oil) make matters that slows the worse, the progression of prescription the disease but that helps cure does not cure it recession can Photo Illustration by the Institute for or undo damage exacerbate Economic Competitiveness already done inflation, and to the nervous the cure for system. inflation can deepen a recession.

The remake is titled Benjamin’s Oil. Benjamin, Enter Benjamin’s oil. as in Ben Bernanke, and the oil is not olive oil Falling oil and other energy prices have been a in this movie, but crude oil. The disease is not welcome development for Ben Bernanke and the some tragic, rare illness afflicting a little boy but a Fed. This will alleviate inflationary pressure in confluence of real and financial problems that are the economy and will also help buoy consumer joining together to form an exceptional threat to confidence. Benjamin’s oil is not a cure for the ills the health of the U.S. economy. of the economy, but it will allow the Fed to keep

8

U.S. Forecast | August 2008

U . S . F o r eca s t

interest rates lower for longer than otherwise would have been the case.

If oil prices were back at $147 and rising, the Fed would be forced to address the growing inflationary pressures in the economy by raising interest rates before the end of 2008. Benjamin’s oil is, thus, providing relief and slowing the progression of the malady affecting the economy.

It is not a cure for the moribund housing market nor will it reestablish the trust that has been lost in financial markets and ease the credit crunch. But by slowing the progression of what was quickly becoming runaway inflation, this “miracle” will allow the Fed to focus on stimulating spending and bringing back confidence in financial markets.

GDP O U TLOO K Advance GDP growth figures for the 2nd quarter 2008 came in at 1.9%. This is certainly a below trend rate of growth, but it will likely be revised upward. On the heels of the -0.2% growth in the 4th quarter of 2007 and the 0.9% growth of the 1st quarter of 2008, this is definitely a trend we would like to see continue.

The foreign sector has pushed the economy forward despite the substantial drag of the housing bust and credit crunch. This sector, plus the relief from falling oil prices, may be enough to get the economy through the two quarters that might be considered the Bermuda Triangle for U.S. economic growth — the 4th quarter of 2008 and the 1st quarter of 2009. These six months will be the final test for the U.S. economy. The warm glow of the tax rebates will completely fade away, and the resulting boost of energy for the economy will give way to the underlying fatigue of a housing bust not yet finished, credit markets not yet fully functioning, and a household sector still trying to make sense of it all.

We forecast that the economy will make it through the triangle without a decline in real GDP growth. We predict that real GDP growth will slow to 1.4% in 2008 Q4 and 1.0% in 2009 Q1. The primary sources of growth that we are

counting on to keep the economy out of recession include continued strength in the foreign sector (which we will address in the net exports discussion below); a boost in investment or, more precisely, a slowing of inventory declines; and lower energy prices that provide consumers with an analgesic to ease their pain. If any of these pieces of the puzzle do not fall into place, the risk of a decline in real GDP during the six months in the triangle rises significantly.

In the 2nd quarter of 2009, things should begin to stabilize; the results of the election will have been fully digested, and clear signs of a housing recovery will be evident. The lifting of the blanket of despair that has been draped over the economy will provide a boost to confidence of consumers and businesses alike. This should cause a significant jump in growth from a paltry 1st quarter growth rate.

C o n s u m e r S p en d in g Can Some Relief at the Pump Cause C o n s u m e r C o n f i d e n c e ( A n d S pe n d i n g ) t o Ju m p?

What a long, strange trip it has been for the U.S. consumer, and the ride is not quite over yet.

The highs and lows of the housing boom/bust impart great volatility to household balance sheets.

Soaring home equity and the associated wealth effect fueled spending, as did record low interest rates. The bust has been equally dramatic in terms of its downward pull on spending.

This torpor was temporarily alleviated with the tax rebate checks. Despite being in the middle of tax season, the IRS managed to get the bulk of the checks sent in the 2nd quarter of the year. For the record, you may want to remember the speed with which the economic stimulus package was proposed, passed, signed into law and implemented. Like the housing boom was a oncein-a-lifetime event, I do not expect to ever see such expeditious fiscal policy again.

Institute for Economic Competitiveness

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U . S . F o r eca s t

The one positive that has developed as far as consumers are concerned is the bursting of the energy bubble. As oil prices roared to $147 per barrel, consumer confidence nosedived; it was salt in consumers’ wounds. On top of everything else, like rising unemployment, higher food prices, nosediving house prices, and 401k tanking, it was now going to cost you $4 per gallon to fill up that SUV you bought with a home equity loan. No wonder consumer sentiment dropped to levels not seen since May 1980. This is particularly remarkable given the fact the U.S. was in a severe recession at that time; real GDP growth in the 2nd quarter of 1980 plunged by over 8%!

Energy prices have reversed course and are significantly lower than peak levels in July. This is a welcome development for consumers, and it has already begun to lift consumer sentiment. It is not a miracle cure for the economy, but to beleaguered consumers, any relief from the misery is welcome.

Retailers will be looking at another tough holiday shopping season in 2008, and automobile dealers will likely continue many of the programs, incentives, and low/zero interest rate financing that are already being offered.

Spending on consumer durables will continue to decline, as economic pessimism will continue to undercut any appetite for large-ticket purchases by consumers. Spending on services has been still growing and has not yet taken the turn for the negative that durables have experienced.

I n v e s t m en t A lack of business confidence will lead to continued deceleration of investment spending by firms. With some industries cutting jobs from their payroll, it is not an environment that has firms thinking about capital investments — at least in the near term. The weakening of the economy has led to a decline in non-residential fixed investment growth, which is expected to decelerate into 2009. Stimulus checks have done very little to stimulate investment spending in the near term.

The Fed’s ability to keep interest rates lower for a 10

U.S. Forecast | August 2008

longer period due to falling energy prices will help lower the cost of capital. The expiration of special depreciation at the end of 2008 will create a surge as companies try to squeeze in spending under this provision in the 4th quarter of 2008.

The commercial construction sector has just now begun to feel the pain that residential construction has been suffering. Spending on structures is likely to decline in the 4th quarter of 2008, the start of a significant decline that is likely to continue through most of 2009. The commercial sector was still in catch-up mode after the record boom on the residential side; the malaise of the residential sector is unfortunately spreading. The turnaround will be mild at first and is not likely to take place until the end of 2010.

Falling energy prices will eventually lead to a fall in investment in structures for the mining and petroleum industry, unless of course there is major hurricane damage to infrastructure in the Gulf of Mexico.

The one exception to the non-residential investment woes is spending on information technology equipment and software, which we expect to grow through 2011 at a healthy pace.

Residential fixed investment growth has been in a near freefall with double-digit declines in 2007; this fall will continue through the rest of 2008.

While it may seem that housing has fallen into a bottomless pit, there is a bottom to housing’s decline. After a huge decline of greater than 20% in 2008, residential fixed investment will reach the bottom of the well. In 2009, the malaise should begin to lift. Buyers, builders, and bankers will very cautiously return to the housing sector. The precipitous decline in starts is part of the healing process that the residential sector needed to go through, and in the second quarter of 2009, the housing sector should be out of its nosedive, and residential fixed investment should return to a more robust growth rate. This will mark the end of a traumatic multi-year contraction in this sector of the economy.

U . S . F o r eca s t

G o v e r n m en t S p en d in g As the economy slowed dramatically at the end of 2007 and into 2008, tax revenues fell as well, and the federal budget deficit widened once again after four years of shrinking. On top of this, the fiscal stimulus package enacted by Congress and the president including $168 billion of tax rebates will cause a spike in the size of the deficit for 2008 to $388 billion. The tax rebates have worsened the impact of the slowing economy on the size of the budget deficit. With little sign of a reduction in spending or a dramatic, near-term turnaround in the U.S. economy, the deficit outlook does not begin to improve until 2010 when stronger economic growth is anticipated.

The fiscal stimulus package will accelerate the growth of the deficit in 2008. The package of tax rebates and other tax write-offs will result in a spike in the federal deficit. The budget deficit will increase by more than 200% over the 2007 budget deficit. Due to the temporary nature of the fiscal stimulus policy, the deficit should stabilize in 2009 and 2010; this will depend, in part, on who is in the White House and what parties have control of Congress at that time.

We expect real government spending growth of 4.4% in 2008. The eventual reduction of military expenditures in Iraq will help slow spending growth in 2009 to 1.8%. In 2010 and 2011, we expect that for the first time in over a decade, real government spending growth will actually decline.

These budget deficits will require the attention of the new administration and some actions that might curtail deficits will take place, in part, by lowering spending or from troop drawdown in Iraq and Afghanistan. The other side of the corrective action could entail higher tax rates; this will only be likely if a Democrat occupies the Oval Office, while a Republican win would lead to additional spending restraint.

The fiscal reality is the laundry lists of programs that are being spouted off during the campaign are not all going to come to fruition. Campaign rhetoric will quickly meet the cold budgetary

calculus that will orphan many of these programs at the campaign stump.

State and local government spending will continue to decelerate through 2010, and we expect that spending will contract in both 2009 and 2010 but finally recover in 2011. The slowdown in spending is the result of declining revenue at the state and local levels, as the tax windfall that the housing boom provided has more than dried up.

State and local government cannot spend as freely as the federal government does as many are tied by law to maintain balanced budgets. Spending cuts will continue to plague state and local governments through 2009 and 2010, particularly in states such as Florida and California where the housing hangover is pronounced.

Net Exports 2008 will mark the end of seven straight years that the U.S. dollar has depreciated against the currencies of the United States’ major trading partners. The weakening of the dollar, which was fueled by years of current account deficits and helped recently by interest rate cuts and sluggish economic growth, despite being derided in the media, has made U.S. exports more competitive in many world markets. It has also made the U.S. an attractive location for international tourism.

Tourists have visited the U.S. in large numbers, which, in some cases, was with the sole intent of shopping in the U.S. to enjoy the “sale� on U.S.dollar denominated goods.

The weak dollar has led to strong export growth that has helped push the economy forward even as many other sectors of the economy wither in the midst of the housing bust. In fact, in the 2nd quarter of 2008, real GDP growth was 2.42% higher thanks to net exports. This means that in absence of the foreign sector, the 2nd quarter advance GDP growth rate would have been -0.5%.

Trade saved the day, and it will likely help for another quarter or two.

It appears that the U.S. dollar may have touched its low point and has recently appreciated against Institute for Economic Competitiveness

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U . S . F o r eca s t

several major currencies. This is likely to continue as many short and longer term determinates of exchange rates, such as purchasing power parity and real interest rate differentials, point toward a stronger dollar.

Eventually, the stronger dollar and improving domestic economy will lead to a rise in import growth and a reduction in export growth (this is also being fueled by slowdowns or recessions in several of our trading partners’ economies.)

That will diminish net exports’ contribution to GDP growth in the future, but it might just be there long enough to get us through the Bermuda Triangle.

The flow of capital from the rest of the world into the U.S. has recovered from the initial shock of the sub-prime mortgage meltdown. In the 3rd quarter of 2007, there was actually a net outflow of foreign capital; this was one of the greatest threats to the U.S. economy that emanated from the whole crisis. Foreign capital inflows have helped keep long-term interest rates much lower then they would be in the absence of this inflow of capital.

U ne m p l o y m en t Unemployment rates continue to drift upward as job losses from the housing slump have spread all through industries that were at ground zero of the housing boom, such as construction, real estate, title insurance, mortgage finance, building supply, and other retail stores. Currently, the U.S. rate of unemployment stands at 5.7 %.

The drift upward in unemployment should continue through most of 2009, peaking at nearly 6.0%. Unemployment lags the business cycle, and we expect to continue to see it drift higher even after the economy has emerged out of the current slump. We are forecasting unemployment rates to continue to climb for several quarters through the end of the third quarter of 2009. We do not

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U.S. Forecast | August 2008

expect unemployment to rise above the 6.0% level before it begins to fall again late in 2009 through 2010, and it is expected to reach 5.3% by the end of 2011.

Job losses associated with the housing slowdown will be the main contributor to the rise in unemployment. However, there will still be job losses in other sectors undergoing structural change from global competition (manufacturing sector) and the transformations that are taking place in publishing and entertainment industries (information sector).

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tomobile and Light Truck Sales August 2008 (Millions Vehicles)

Charts

99 00 01 02 03 04 05 06 07 08 09 10 11 Auto Sales Light Truck Sales

F OR E C A ST f o r t h e na t i o n

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

30-Year Mortgage Rates and Housing Starts 8.5

(Mortgage rates - Left axis, %)

2.2

8.0

2.0

7.5

1.8

7.0

1.6

6.5

1.4

6.0

1.2

5.5

1.0

5.0

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 30-Year Fixed Mortgage Rate Housing Starts - Millions

0.8

Automobile and Light Truck Sales 11.0

(Millions Vehicles)

10.0 9.0 8.0 7.0 6.0

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Auto Sales Light Truck Sales

Consumer Prices 6.0

(% Change Year Ago)

5.0 4.0 3.0 2.0 1.0 0.0

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Consumer Price Index Core Consumer Price Index Institute for Economic Competitiveness

15

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

Oil and Consumer Confidence 140.0

Oil ($ Per Barrel) - Left Axis

120

120.0

110

100.0

100

80.0

90

60.0

80

40.0

70

20.0

60

0.0

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Price of Oil WTI Consumer Sentiment

50

Real GDP Growth and Federal Funds Rate 8.0

(%)

6.0 4.0 2.0 0.0 -2.0

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Quarterly Growth Rate Real GDP Fed Funds Rate

Money Supply

20.0

(Annual Growth Rate %)

15.0 10.0 5.0 0.0 -5.0 -10.0

16

U.S. Forecast | August 2008

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Annual Growth Rate of M2 Annual Growth Rate of M1

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

Industrial Production 125.0 120.0 115.0 110.0 105.0 100.0 95.0 90.0 85.0

(2002=100)

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Industrial Production

Manufacturing Employment 18.0

(Millions)

17.0 16.0 15.0 14.0 13.0 12.0

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Manufacturing Employment

Total Nonfarm Payroll Employment 145.0

(Millions)

140.0 135.0 130.0 125.0 120.0

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Total Nonfarm Employment

Institute for Economic Competitiveness

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

Real Disposable Income and Consumption 7.0

(% Change Year Ago)

6.0 5.0 4.0 3.0 2.0 1.0 0.0

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Real Disposable Income Consumption

Civilian Unemployment Rate 6.5

(%)

6.0 5.5 5.0 4.5 4.0 3.5

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Unemployment Rate

Yield Curve 7.0

(%)

6.0 5.0 4.0 3.0 2.0 1.0

18

U.S. Forecast | August 2008

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 1-Year T-Bill Yield 5 Year Treasury Bond Yield 25 year Treasury Bond Yield

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

0 -100 -200 -300 -400 -500 -600 -700 -800

Trade Balance and Real Exchange Rate

1.20 1.10 1.00 0.90 0.80 0.70

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Trade Balance (Billions $) Left axis U.S. Dollar Real Exchange Rate (2000 = 1.0) Right axis

0.60

Twin Deficits 400.0

(Billions of Dollars)

200.0 0.0 -200.0 -400.0 -600.0 -800.0 -1000.0

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 U.S. Federal Budget Surplus Current Account

Change in Real Business Inventories 150.0

(Billions of 2000 Dollars)

100.0 50.0 0.0 -50.0 -100.0

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Change in Real Business Inventories Institute for Economic Competitiveness

19

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

Federal Budget Surplus 400.0

(Billions of Dollars)

200.0 0.0 -200.0 -400.0 -600.0 -800.0

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Federal Budget Surplus

Private Fixed Nonresidential Investment 2000.0

(Billions of Dollars)

1800.0 1600.0 1400.0 1200.0 1000.0 800.0

20

U.S. Forecast | August 2008

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Private Fixed Nonresidential Investment

Table 15. Government Receipts and Expenditures

2001

Receipts Personal Tax and Nontax Receipts Corp. Profits Tax Accruals Indirect Business Tax and Nontax Accruals Contributions for Social Insurance

2053.9 999.1 219.5 87.8 691.7

2016.2 994.5 164.7 85.8 717.5

Federal Government Receipts an 1853.2 1879.9 2008.9 2266.9 251 830.5 774.5 797.4 930.7 104 150.5 197.8 250.3 341.0 38 87.3 89.7 94.6 99.2 9 734.3 758.9 805.2 850.1 90

Expenditures Purchases Goods & Services National Defense Other Transfer Payments To Persons To Foreigners Grants in Aid to State & Local Gov't Net Interest Subsidies less Surplus of Gov't Entities Surplus (+) or Deficit (-)

1864.4 578.8 370.3 208.5 1038.1 770.0 18.3 247.3 263.2 46.1 189.5

1969.5 612.9 392.6 220.3 1131.4 838.7 14.0 276.1 240.2 53.1 46.7

2101.1 679.7 437.1 242.5 1243.0 916.9 18.8 304.6 213.7 39.1 -248.0

893.2 236.6 35.6 621.1 11.0 247.3

915.8 242.7 30.2 642.8 13.7 276.1

1269.5 1142.8 271.7 -4.5 -7.1 1.9 0.0 50.0

1368.2 1212.8 305.2 5.2 3.6 2.0 0.0 4.8

Receipts Personal Tax/Nontax Receipts Corporate Profits Indirect Business Tax and Nontax Accruals Contributions for Social Insurance Federal Grants-In-Aid Expenditures Purchases Goods & Services Transfer Payments Interest Received Net Subsidies Dividends Received Net Wage Accruals Surplus (+) or Deficit (-)

2005

August 2008

2252.1 756.4 497.2 259.2 1328.7 963.7 23.6 338.5 196.5 45.4 -372.2

2379.5 825.6 550.7 274.9 1390.6 1012.3 26.2 349.1 203.8 45.5 -370.6

2558.6 875.5 588.1 287.5 1478.0 1078.5 35.6 360.9 238.5 63.9 -291.7

20

271 93 62 30 156 117 2 35 26 5 -20

State and Local Government Receipt 929.0 979.5 1061.2 1162.4 124 221.3 226.6 249.0 277.1 30 32.2 35.3 43.0 56.3 6 675.5 717.5 769.2 829.0 87 15.8 19.8 23.6 24.2 2 304.6 338.5 349.1 360.9 35 1444.3 1281.5 332.0 16.5 -1.6 2.0 0.0 -34.2

1514.6 1336.0 353.0 24.8 0.7 2.2 0.0 -20.4

1592.8 1391.3 383.8 24.1 3.4 2.4 0.0 1.6

t ab l e s

F OR E C A ST f o r t h e na t i o n

2002

History 2003 2004

2000

1684.9 1479.8 403.5 16.5 8.7 2.5 0.0 29.5

176 157 40 1

4

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

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

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.

2000

2001

2002

3.7 3.8 4.7 7.4 3.8 4.5 8.7 9.4 17.4 21.1 30.1 7.7 -4.0 2.8 -10.3 6.8 6.3 -5.4 15.1 27.7 2.9 0.8 8.8 13.2 0.9 2.7

0.8 1.6 2.5 4.3 2.0 2.4 -4.1 -4.8 -1.6 2.6 -7.1 -8.4 -11.7 3.7 -25.3 -2.1 -5.0 -10.2 3.0 18.5 -4.8 0.4 -5.3 -2.6 3.9 3.2

1.6 1.2 2.7 7.2 2.5 1.9 -9.2 -6.1 -4.6 5.4 -21.0 -7.3 -10.9 -26.6 -0.4 -17.0 -15.6 -41.2 -1.5 -23.1 -15.4 4.8 -2.0 3.5 7.0 3.1

History 2003 2004

2005

2006

Composition of Real GDP, Percent Change 2.5 3.6 2.9 2.8 2.0 2.5 3.3 3.1 2.8 2.4 2.8 3.6 3.0 3.0 2.8 5.8 6.4 4.6 4.5 4.8 3.2 3.6 3.4 3.7 2.5 1.9 3.2 2.6 2.5 2.6 1.0 5.8 7.2 7.5 4.9 2.8 7.3 9.4 7.3 1.7 5.8 9.4 8.1 9.1 9.6 13.1 11.4 16.2 24.8 17.9 1.4 9.9 2.6 11.8 7.0 2.9 -3.0 8.4 5.8 1.4 -6.2 20.5 15.9 7.7 -11.2 -22.3 -3.5 -4.4 -15.0 22.9 -8.7 30.4 22.1 6.7 -35.4 -3.9 1.3 1.3 8.3 12.6 -6.4 2.5 -0.7 6.1 8.3 -6.0 5.0 17.9 10.3 14.2 -12.6 -17.6 -2.8 8.1 23.0 18.2 14.9 9.8 11.8 9.5 -4.3 2.2 -4.8 7.8 19.2 8.4 10.1 6.3 -7.0 -17.9 1.3 9.8 7.0 9.1 8.4 4.1 11.3 6.0 6.0 2.2 6.8 4.2 1.2 2.3 1.6 0.2 -0.2 -0.1 1.3 2.3

Billions of Dollars 9817.0 9890.7 10048.9 10301.1 10675.7 10989.5 11294.9 11523.9 9817.0 10128.0 10469.6 10960.8 11685.9 12421.9 13178.4 13807.6 Prices & Wages, Percent Change, Annual Rate 2.2 3.2 3.4 2.8 2.6 2.0 3.3 3.7 1.9 4.0 1.2 2.1 2.1 2.6 2.3 3.5 4.5 5.1 0.3 6.6 3.9 3.7 2.9 3.1 3.1

2.2 3.4 2.6 3.8 4.4

2.4 1.9 2.7 -1.1 4.0

1.7 2.2 2.0 1.0 3.1

30.4 2.7 4.2 80.1 57.8 107.6 17.342 1.573 4.614 4.0 2.2 236 -417

26.0 2.6 -3.4 73.9 -31.8 89.2 17.115 1.601 4.727 4.7 0.0 127 -385

26.1 4.1 -0.1 72.8 15.2 89.6 16.816 1.710 4.997 5.8 -1.1 -160 -461

31.1 3.7 1.3 74.0 14.0 87.6 16.643 1.854 5.443 6.0 -0.3 -375 -523

Other Measures 41.5 56.6 66.1 2.8 1.8 1.0 2.5 3.3 2.2 76.3 78.6 79.4 48.2 39.1 46.3 95.2 88.6 87.3 16.866 16.948 16.504 1.949 2.073 1.812 5.914 6.181 5.703 5.5 5.1 4.6 1.1 1.7 1.8 -411 -321 -248 -625 -729 -788

Federal Funds Rate (%) 3-Month Treasury Bill Rate (%) 1-Year Treasury Note Yield (%) 5-Year Treasury Note Yield (%) 10-Year Treasury Note Yield (%) 25-Year Treasury Note Yield (%) 30-Year Fixed Mortgage Rate (%) S&P 500 Stock Index (% change) Exchange Rate, Major Trading Partners (% change (negative = depreciation))

6.24 5.81 6.11 6.15 6.03 5.95 8.06 1427 7.7 1.000 4.9

3.89 3.43 3.48 4.55 5.02 5.50 6.97 1192 -16.4 1.060 6.0

1.67 1.61 2.00 3.82 4.61 5.42 6.54 996 -16.7 1.044 -1.5

1.13 1.01 1.24 2.97 4.02 5.05 5.82 964 -1.3 0.916 -12.3

Personal Income (Bil. of $) (% change) Disposable Income (Bil. of $) (% change) Real Disposable Income (Bil. Of 2000 $) (% change) Saving Rate (%) After-Tax Profits (Billions of $) (% change)

8430 8.0 7194 7.5 7194 4.8 2.4 508 -1.6

8724 3.5 7487 4.1 7333 1.9 1.8 504 -0.9

8882 1.8 7830 4.6 7562 3.1 2.4 576 15.2

9164 3.2 8163 4.2 7730 2.2 2.1 665 15.6

Oil - WTI ($ per barrel) Productivity (% change) Industrial Production (% change) Factory Operating Rate Nonfarm Inven. Chg. (Bil. of 2000 $) 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. $)

22

U.S. Forecast | August 2008

2007

2008

Forecast 2009 2010

2011

1.9 2.1 1.3 -1.7 1.1 1.8 4.5 1.8 8.8 17.4 8.0 1.0 -17.1 3.1 -15.7 10.2 1.2 22.6 16.5 14.3 13.6 -20.1 8.7 -0.9 4.4 0.8

2.2 1.8 1.7 -0.5 1.4 2.2 3.3 7.8 8.6 17.5 3.7 -0.5 21.2 7.5 31.8 -5.4 -4.0 -12.1 -7.8 0.6 -10.6 0.1 7.7 3.9 1.8 -1.3

3.1 3.1 3.1 5.6 2.5 3.0 5.8 7.8 7.1 19.4 4.0 4.9 8.7 5.5 14.7 0.6 4.3 12.3 -3.1 -11.7 4.4 12.3 6.5 6.2 -0.8 0.6

3.2 2.9 3.2 6.2 2.9 2.9 4.6 9.0 9.5 21.2 4.0 3.1 12.0 7.5 -1.4 -4.7 -2.5 -0.1 -6.5 -13.0 1.5 17.8 6.8 6.9 -0.7 -0.5

11739.3 11997.9 12376.3 12759.2 14386.1 14993.1 15675.6 16380.5 2.6 4.6 2.4 6.9 2.9

1.2 0.5 1.7 -0.9 2.6

1.5 1.1 1.5 0.0 2.7

1.3 1.6 1.5 1.0 2.8

72.2 1.4 1.7 79.4 -3.7 85.6 16.089 1.341 4.958 4.6 1.1 -162 -731

110.6 2.6 0.3 78.1 -29.5 65.2 14.202 0.979 4.324 5.5 0.4 -388 -755

101.2 1.8 1.5 78.6 10.1 73.7 14.853 1.140 4.352 5.9 1.5 -415 -780

93.6 2.0 2.9 78.2 36.8 80.8 15.558 1.447 4.742 5.6 1.5 -359 -809

93.5 2.0 2.7 78.4 39.6 83.1 15.972 1.708 5.332 5.4 1.2 -328 -839

Financial Markets, NSA 1.35 3.21 4.96 1.36 3.13 4.72 1.89 3.62 4.93 3.43 4.05 4.75 4.27 4.29 4.79 5.12 4.56 4.87 5.84 5.86 6.42 1131 1207 1311 18.0 6.8 8.6 0.840 0.824 0.812 -8.1 -1.8 -1.4

5.02 4.38 4.52 4.43 4.63 4.84 6.33 1477 12.8 0.767 -5.6

2.32 1.82 2.19 3.04 3.77 4.43 6.07 1343 -9.0 0.709 -7.4

2.37 2.27 2.59 3.07 3.64 4.19 5.67 1454 8.3 0.730 3.0

3.79 3.72 3.96 4.26 4.59 5.02 6.27 1611 10.8 0.756 3.5

4.49 4.28 4.53 4.79 4.98 5.36 6.72 1715 6.5 0.776 2.7

Incomes 10270 10994 5.6 7.1 9062 9641 4.4 6.4 8122 8407 1.4 3.5 0.4 0.7 1207 1405 34.6 16.6

11663 6.1 10170 5.5 8644 2.8 0.6 1436 2.2

12200 4.6 10693 5.1 8758 1.3 0.7 1351 -5.9

12753 4.5 11152 4.3 8962 2.3 1.2 1384 2.4

13346 4.6 11645 4.4 9258 3.3 1.3 1343 -2.9

13967 4.7 12168 4.5 9550 3.2 1.4 1335 -0.6

9727 6.1 8681 6.3 8009 3.6 2.1 897 35.3

U . S . F o r eca s t Tab l e s Table 2.Gross Real GrossProduct Domestic Table 2. Real Domestic 2000

Product

2001

2002

History 2003 2004

2005

2006

2007

2008

Forecast 2009 2010

2011

Real GDP Billions 2000 Dollars Gross Domestic Product Final Sales of Domestic Product Total Consumption Durables

9817.0

9890.7 10048.9 10301.1 10675.7 10989.5 11294.9 11523.9

11739.3 11997.9 12376.3 12759.2

9760.5

9921.0 10036.5 10285.1 10619.8 10947.3 11249.3 11523.5

11763.9 11978.7 12329.3 12709.1

6739.4

6910.4

7099.3

7295.4

7561.3

7791.7

8029.0

8252.8

8356.5

8499.5

8774.4

9046.9

863.3

900.7

964.8

1020.6

1084.8

1134.4

1185.1

1242.4

1221.4

1214.9

1289.8

1362.5

Nondurables

1947.2

1986.7

2037.1

2103.0

2177.6

2252.7

2335.3

2392.6

2420.1

2455.0

2526.8

2589.8

Services

3928.8

4023.2

4100.4

4178.8

4310.9

4420.9

4529.9

4646.2

4731.5

4837.3

4978.5

5127.7

1232.1

1180.5

1071.5

1081.8

1144.3

1226.2

1318.2

1383.0

1444.6

1491.9

1561.2

1651.2

918.9

874.2

820.2

843.1

905.1

989.6

1061.0

1078.9

1098.5

1184.6

1290.2

1391.5

467.6

459.0

437.4

462.7

505.7

546.7

596.6

653.9

711.1

772.7

845.6

905.2

Computers & Peripherals

101.6

103.7

108.9

123.2

137.2

159.3

198.6

234.1

275.0

323.2

391.6

467.5

Communications Equipment

124.1

114.7

90.5

91.4

100.1

102.7

114.7

122.7

132.5

137.3

142.8

148.5

Nonresidential Fixed Investment Equipment & Software Information Processing Equipment

Industrial Equipment

159.2

145.7

134.5

138.4

134.0

145.3

153.5

155.7

157.2

156.4

161.2

169.1

Transportation Equipment

160.8

141.7

126.3

118.3

142.9

164.4

177.0

157.2

130.2

156.3

174.6

189.8

32.6

33.5

23.9

17.8

17.3

16.0

13.5

16.6

17.0

18.3

19.6

20.7

40.9

30.4

30.1

27.4

35.8

43.4

46.3

29.9

24.6

32.5

31.8

36.4

313.2

306.1

253.8

243.5

246.7

249.8

270.3

304.6

335.2

316.8

301.9

303.7

137.6

130.3

109.8

102.6

105.1

104.3

110.6

119.7

121.1

116.2

113.3

118.2

Aircraft Other Equipment Structures Commercial & Health Care Manufacturing

31.8

28.5

16.7

15.4

16.2

19.0

20.9

23.9

29.1

25.6

25.5

28.7

Power & Communication

46.8

48.2

47.1

41.0

33.7

32.7

35.3

43.5

50.4

46.5

43.4

42.0

Mining & Petroleum

27.2

32.0

24.5

29.0

33.3

36.5

40.7

44.5

50.9

50.9

44.2

39.0

Other

69.9

66.6

55.9

53.4

54.6

51.9

55.9

66.7

75.5

67.4

68.4

71.4

446.9

448.5

469.9

509.4

560.2

595.4

552.9

453.8

362.1

361.0

425.1

477.3

Exports

1096.3

1036.7

1013.3

1026.1

1126.1

1205.3

1314.9

1425.9

1549.3

1668.2

1782.4

1898.9

Imports

1475.8

1435.8

1484.6

1545.0

1720.0

1821.9

1930.5

1972.4

1954.8

2031.3

2172.5

2306.3

578.8

601.4

643.4

687.1

715.9

724.5

741.0

752.9

785.6

799.6

794.1

787.6

1142.8

1179.0

1215.5

1217.8

1215.8

1214.3

1230.2

1259.0

1268.8

1252.7

1245.9

1253.5

Residential Fixed Investment

Federal Government State & Local Government

Institute for Economic Competitiveness

23

U . S . F o r eca s t Tab l e s Table 3. Quarterly Summary of the Forecast of the U.S.

Table 3. Quarterly Summary of the Forecast of the U.S. 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4

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.

2.9 1.6 1.6 -1.9 1.6 2.2 4.1 4.2 5.9 18.1 8.8 11.7 -16.8 -11.2 -25.4 4.1 -5.3 15.0 8.2 15.1 -0.8 -12.5 8.3 4.2 2.2 -0.2

1.4 0.5 0.0 -7.5 -0.4 1.5 8.8 16.7 10.3 24.3 10.3 -2.4 93.2 8.1 70.3 -6.0 -13.9 -16.5 -5.2 13.1 -13.7 -14.8 7.8 5.8 2.7 -1.6

1.0 0.8 1.4 -0.6 0.0 2.5 -1.8 0.4 3.8 0.5 -7.3 -8.3 0.0 6.2 41.0 -6.0 -0.7 -36.8 -13.5 12.5 -21.9 -4.2 6.5 3.7 1.9 -1.7

Composition of Real GDP, Percent Change, Annual Rate 3.2 3.1 3.4 3.0 3.2 3.1 2.7 3.1 2.6 2.9 2.7 3.2 3.1 2.7 2.8 2.5 3.4 3.3 3.2 3.7 3.2 4.4 0.6 9.4 6.8 5.2 7.6 4.6 2.6 3.1 3.1 2.6 2.9 3.2 2.8 2.7 2.5 2.6 3.0 3.0 3.2 3.1 1.3 5.2 8.0 2.7 4.6 4.7 3.5 9.9 11.8 12.2 6.6 7.2 7.2 6.0 11.8 11.1 9.6 9.3 8.0 7.9 6.7 26.8 23.0 15.0 20.4 18.9 20.3 18.6 5.0 2.6 3.6 4.8 4.3 3.7 3.4 -8.0 9.2 9.4 1.8 0.6 0.8 0.3 26.0 22.2 27.3 -2.5 7.9 7.4 4.0 14.1 5.7 8.3 7.4 6.0 7.6 3.4 13.2 9.5 84.4 -66.5 -2.8 1.6 6.5 -16.1 -9.2 -1.5 -6.5 -1.7 -1.5 -2.9 -1.5 -6.1 4.9 -11.0 0.1 2.3 -1.0 -30.5 17.0 0.3 -4.8 4.3 -3.6 8.7 -18.6 -11.8 -2.5 -7.3 -1.7 -5.5 -12.2 -24.9 -26.8 -13.4 -6.9 -11.8 -11.4 -13.6 -21.8 1.2 1.7 1.9 4.3 5.9 6.1 14.9 18.6 19.1 18.9 16.2 12.1 9.9 8.1 7.3 5.8 7.1 6.2 6.6 6.6 2.4 6.1 8.7 7.8 5.2 7.4 6.4 1.2 -0.4 -0.9 -0.6 -0.8 -1.2 -1.3 -2.0 -1.5 -0.9 -0.4 -0.1 0.2 0.4

Prices & Wages, Percent Change, Annual Rate 1.4 1.2 1.6 1.5 1.4 1.3 1.1 1.2 1.2 1.1 1.2 1.0 1.6 1.5 1.6 1.5 1.5 1.4 -0.2 -0.2 -0.1 0.8 -0.1 -0.6 2.5 2.3 2.8 2.5 2.8 2.7

3.4 4.1 2.4 4.9 3.0

2.2 1.4 2.1 1.1 3.0

0.1 -1.8 1.7 -4.4 2.5

113.1 2.8 0.1 78.0 -28.5 62.5 13.511 0.906 4.365 5.9 1.5 -395 -785

107.8 1.1 0.0 77.9 -4.9 65.8 13.985 0.941 4.199 5.9 1.5 -373 -801

104.1 0.6 1.5 78.3 -1.3 69.7 14.532 0.999 4.162 5.9 1.2 -394 -792

101.6 2.8 3.6 78.6 0.5 72.9 14.847 1.127 4.252 5.9 2.3 -411 -769

100.1 2.1 3.9 78.7 13.9 74.2 14.866 1.172 4.408 5.9 1.5 -403 -768

Other Key Measures 99.1 97.3 94.8 92.3 2.1 1.7 1.9 1.8 2.6 2.5 3.0 2.9 78.8 78.4 78.3 78.1 27.2 35.1 36.9 37.4 78.0 80.4 80.5 81.1 15.166 15.362 15.511 15.710 1.262 1.331 1.410 1.488 4.585 4.616 4.676 4.756 5.8 5.7 5.6 5.6 1.7 1.5 1.5 1.3 -369 -346 -345 -343 -792 -811 -801 -812

Federal Funds Rate (%) 3-Month Treasury Bill Rate (%) 1-Year Treasury Note Yield (%) 5-Year Treasury Note Yield (%) 10-Year Treasury Note Yield (%) 25-Year Treasury Note Yield (%) 30-Year Fixed Mortgage Rate (%) S&P 500 Stock Index (% change) Exchange Rate, Major Trading Partners (% change (negative = depreciation))

2.00 1.67 2.29 3.23 3.91 4.50 6.35 1309 -18.4 0.714 9.1

2.00 1.85 2.29 3.02 3.63 4.23 5.96 1342 10.1 0.715 0.9

2.11 1.89 2.29 2.93 3.51 4.10 5.68 1392 14.9 0.720 2.8

2.25 2.10 2.47 3.02 3.56 4.13 5.66 1439 13.7 0.726 3.2

2.50 2.40 2.66 3.10 3.65 4.19 5.68 1475 9.8 0.732 3.4

Personal Income (Bil. of $) (% change) Disposable Income (Bil. of $) (% change) Real Disposable Income (Bil. Of 2000 $) (% change) Saving Rate (%) After-Tax Profits (Billions of $) (% change)

12247 1.7 10705 -4.7 8717 -8.9 0.0 1361 -3.7

12374 4.1 10792 3.3 8721 0.2 0.0 1322 -11.5

12530 5.0 10967 6.5 8827 4.9 0.8 1413 27.6

12683 4.9 11097 4.7 8942 5.2 1.3 1362 -14.6

12829 4.6 11217 4.3 9010 3.0 1.4 1378 4.8

24

U.S. Forecast | August 2008

3.2 3.2 2.7 3.7 2.2 2.9 6.0 8.0 6.5 18.1 3.8 7.0 9.4 7.9 12.5 1.0 5.1 17.8 1.8 -18.4 3.7 13.1 6.1 4.5 -0.7 0.9

3.4 3.5 3.6 10.2 2.5 3.1 8.1 9.5 7.1 18.6 4.6 13.2 9.2 7.1 12.5 4.6 8.3 24.5 6.1 -13.7 4.0 9.6 6.1 7.0 -0.4 1.0

2.9 2.8 3.0 7.6 2.1 2.7 8.4 9.4 6.8 18.1 6.0 13.0 8.5 6.9 11.7 5.5 8.5 13.6 5.0 -0.2 1.6 4.0 6.0 7.2 -0.4 1.2

Billions of Dollars 11784.7 11825.8 11855.6 11950.2 12042.0 12143.7 12234.1 12332.6 12427.0 12511.6 12604.7 12706.8 12816.2 12909.2 14480.8 14656.5 14776.0 14896.2 15062.7 15237.2 15411.0 15593.4 15769.0 15928.8 16107.5 16288.6 16476.6 16649.2 3.1 5.2 3.0 3.6 3.3

Oil - WTI ($ per barrel) Productivity (% change) Industrial Production (% change) Factory Operating Rate Nonfarm Inven. Chg. (Bil. of 2000 $) 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. $)

3.0 3.0 2.7 3.7 2.0 2.8 5.7 7.4 6.4 16.3 3.5 3.1 11.5 2.6 32.7 1.4 6.5 12.2 -6.2 -9.5 3.4 14.0 6.6 5.7 -0.7 0.6

1.5 1.1 1.4 -0.4 2.9

1.2 1.4 1.4 0.6 2.7

1.2 1.8 1.5 1.6 2.9

1.3 2.0 1.5 2.0 2.8

90.0 1.6 2.4 77.9 37.8 81.1 15.649 1.559 4.919 5.5 1.1 -341 -814

89.8 1.9 3.0 78.0 38.3 81.9 15.615 1.618 5.052 5.5 1.2 -317 -811

91.1 2.2 2.5 78.4 39.4 83.3 15.682 1.696 5.257 5.4 1.2 -322 -811

95.0 2.3 2.3 78.6 39.1 83.8 16.195 1.751 5.448 5.3 1.3 -316 -848

97.9 2.0 2.2 78.6 41.4 83.3 16.396 1.767 5.572 5.3 1.0 -317 -887

Financial Markets, NSA 2.63 3.17 3.57 3.99 2.70 3.18 3.57 3.88 2.92 3.42 3.79 4.10 3.25 3.71 4.11 4.43 3.82 4.19 4.48 4.71 4.35 4.68 4.92 5.13 5.68 5.87 6.18 6.42 1510 1560 1604 1629 9.6 13.2 11.4 6.2 0.742 0.749 0.755 0.758 5.2 4.0 3.0 1.8

4.44 4.25 4.52 4.79 4.98 5.37 6.62 1651 5.3 0.760 1.2

4.50 4.30 4.56 4.81 5.00 5.38 6.73 1674 5.6 0.770 4.9

4.50 4.29 4.53 4.79 4.99 5.37 6.73 1701 6.4 0.774 2.1

4.49 4.28 4.52 4.78 4.97 5.35 6.71 1728 6.5 0.778 2.2

4.48 4.27 4.50 4.76 4.96 5.34 6.70 1758 7.0 0.782 1.8

Incomes 13120 13269 4.6 4.5 11441 11574 4.1 4.6 9134 9215 2.8 3.6 1.2 1.3 1342 1355 -11.5 3.9

13573 4.5 11849 4.6 9382 3.5 1.4 1330 -3.9

13730 4.6 11957 3.7 9440 2.5 1.4 1319 -3.4

13883 4.4 12094 4.6 9516 3.2 1.5 1338 5.7

14047 4.7 12238 4.8 9589 3.1 1.4 1344 1.9

14209 4.6 12381 4.7 9657 2.8 1.3 1339 -1.6

12971 4.4 11326 3.9 9070 2.7 1.3 1381 0.9

13422 4.6 11715 4.9 9300 3.7 1.3 1344 -3.3

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

Table 4. Quarterly Gross Domestic Product 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 Billions 2000 Dollars Gross Domestic Product 11784.7 11825.8 11855.6 11950.2 12042.0 12143.7 12234.1 12332.6 Final Sales of Domestic Product 11812.0 11825.4 11848.4 11941.0 12018.8 12106.6 12188.9 12285.5 8381.0 8410.3 8469.8 8522.8 8595.1 8665.2 8734.3 Total Consumption 8381.2 Durables 1222.0 1198.9 1197.0 1210.1 1211.9 1240.4 1261.7 1278.0 Nondurables 2431.6 2429.1 2428.9 2444.7 2463.7 2482.6 2498.7 2516.7 Services 4743.4 4761.0 4790.2 4822.4 4852.7 4884.1 4920.9 4958.0 1478.0 1471.4 1476.1 1495.1 1525.1 1535.4 1553.0 Nonresidential Fixed Investment 1446.1 Equipment & Software 1090.4 1136.0 1137.0 1165.2 1199.7 1236.4 1256.8 1279.4 Information Processing Equipment 715.7 734.1 741.0 763.0 784.1 802.8 821.4 837.8 Computers & Peripherals 278.8 295.8 296.1 316.0 334.1 346.7 364.4 381.5 134.3 137.8 135.3 137.0 137.8 139.1 140.7 142.3 Communications Equipment Industrial Equipment 160.3 159.3 156.0 152.9 156.4 160.1 160.9 161.1 Transportation Equipment 115.5 142.5 142.5 151.7 160.1 171.1 170.0 173.4 Aircraft 17.0 17.3 17.6 18.2 18.4 18.8 19.2 19.5 Other Equipment 22.9 27.0 29.7 30.7 31.4 38.1 31.7 31.5 Structures 341.0 335.9 330.8 317.5 310.1 308.9 303.9 302.6 Commercial & Health Care 121.5 117.3 117.1 116.6 114.8 116.2 113.1 113.1 Manufacturing 30.5 29.2 26.6 24.5 25.6 25.6 25.3 25.6 Power & Communication 51.3 50.7 49.0 46.7 45.3 45.0 44.2 44.0 47.0 46.2 44.9 Mining & Petroleum 52.2 53.9 55.6 52.2 48.7 Other 76.8 74.2 70.1 66.3 66.5 66.8 67.1 67.8 Residential Fixed Investment 355.6 342.5 338.9 351.6 367.9 385.5 403.8 420.1 Exports 1566.1 1596.6 1622.4 1655.3 1685.5 1709.8 1740.2 1767.1 Imports 1949.7 1977.7 1996.1 2008.0 2038.5 2082.8 2123.3 2151.0 789.6 795.0 798.8 801.1 800.3 798.4 797.2 795.6 Federal Government State & Local Government 1270.9 1266.0 1260.6 1254.2 1249.5 1246.7 1245.5 1245.2

12427.0 12511.6 12604.7 12706.8 12816.2 12909.2 12379.3 12463.4 12555.9 12656.8 12766.5 12857.1 8814.1 8884.0 8943.3 9004.7 9085.6 9154.1 1302.4 1317.4 1329.7 1341.9 1376.1 1402.4 2536.9 2554.8 2567.8 2581.9 2598.0 2611.7 4998.1 5036.9 5072.2 5108.5 5147.6 5182.5 1571.3 1585.1 1607.8 1632.0 1665.1 1699.9 1302.5 1322.2 1346.8 1373.7 1406.2 1439.3 854.3 868.7 882.5 896.9 912.8 928.4 400.9 419.6 436.7 456.4 477.6 499.2 143.6 144.8 146.0 147.4 149.1 151.4 161.4 161.5 162.8 165.7 171.1 176.7 176.5 178.3 183.4 187.7 192.1 196.2 19.8 20.0 20.1 20.5 20.9 21.3 31.6 32.2 34.8 35.9 37.0 38.1 301.5 299.3 300.4 301.1 304.5 308.8 113.7 113.4 115.3 116.7 119.2 121.7 25.3 25.9 26.7 27.8 29.6 30.6 43.4 42.1 41.4 41.6 42.3 42.8 43.6 42.1 41.1 39.2 37.9 37.8 68.9 69.9 70.5 71.1 71.9 72.2 432.9 443.6 459.1 474.1 485.5 490.4 1796.4 1826.0 1856.2 1884.5 1913.1 1941.9 2190.5 2225.3 2256.8 2282.2 2322.2 2363.9 793.1 790.6 789.2 787.9 787.0 786.2 1245.8 1247.1 1248.9 1251.7 1254.9 1258.6

Table 5. Annual Employment

Table 5. Annual Employment 2000

Total Nonfarm Employment Private Nonfarm Mining Construction Manufacturing Trade, Transportation, and Utilities Transportation & Warehousing Financial Activities Education & Health Professional & Business Services Information Leisure & Hospitality Government Federal State & Local

Total Nonfarm Employment Private Nonfarm Mining Construction Manufacturing Trade, Transportation, and Utilities Transportation & Warehousing Financial Activities Education & Health Professional & Business Services Information Leisure & Hospitality Government Federal State & Local

2001

2002

History 2003 2004

2005

2006

2007

131.794 131.830 130.340 129.996 131.419 133.695 136.092 137.618 111.003 110.709 108.831 108.416 109.799 111.889 114.121 115.418 0.520 0.532 0.512 0.503 0.523 0.562 0.620 0.662 6.788 6.826 6.715 6.736 6.973 7.333 7.693 7.616 17.265 16.440 15.257 14.508 14.315 14.226 14.157 13.883 26.225 25.986 25.500 25.287 25.532 25.960 26.278 26.605 4.412 4.373 4.224 4.184 4.248 4.362 4.470 4.536 7.688 7.809 7.848 7.976 8.030 8.153 8.329 8.310 15.109 15.643 16.201 16.588 16.951 17.372 17.825 18.327 16.672 16.480 15.975 15.985 16.387 16.949 17.572 17.966 3.629 3.629 3.394 3.189 3.117 3.061 3.037 3.029 11.860 12.032 11.986 12.175 12.494 12.813 13.107 13.470 20.790 21.120 21.509 21.580 21.620 21.806 21.971 22.200 2.865 2.763 2.766 2.760 2.731 2.732 2.732 2.727 17.925 18.357 18.744 18.820 18.889 19.074 19.239 19.474

2.17 2.14 0.52 3.74 -0.33 1.77 2.66 0.54 2.13 4.50 6.21 2.74 2.36 3.44 2.19

0.03 -0.26 2.38 0.57 -4.78 -0.91 -0.86 1.57 3.53 -1.13 0.02 1.46 1.59 -3.40 2.41

-1.13 -1.69 -3.81 -1.63 -7.16 -1.87 -3.40 0.50 3.57 -3.05 -6.46 -0.38 1.84 0.09 2.11

-0.26 -0.38 -1.85 0.31 -4.90 -0.84 -0.94 1.63 2.39 0.06 -6.04 1.58 0.33 -0.19 0.41

1.09 1.28 4.03 3.51 -1.31 0.97 1.53 0.68 2.19 2.51 -2.25 2.62 0.19 -1.06 0.37

1.73 1.90 7.46 5.16 -0.62 1.67 2.69 1.53 2.48 3.43 -1.79 2.55 0.86 0.04 0.98

1.79 2.00 10.28 4.93 -0.48 1.23 2.48 2.16 2.61 3.68 -0.78 2.30 0.76 0.00 0.86

1.12 1.14 6.84 -0.99 -1.94 1.24 1.48 -0.23 2.81 2.24 -0.27 2.77 1.05 -0.20 1.22

2008

Forecast 2009 2010

2011

138.160 140.214 142.385 144.143 115.677 117.577 119.643 121.350 0.711 0.713 0.676 0.653 7.260 7.171 7.355 7.567 13.520 13.182 13.035 13.061 26.551 26.928 27.453 27.557 4.539 4.610 4.768 4.916 8.256 8.429 8.632 8.807 18.941 19.732 20.124 20.378 18.142 18.945 19.739 20.476 2.990 2.934 2.932 2.952 13.724 13.949 14.071 14.250 22.482 22.638 22.742 22.794 2.736 2.741 2.788 2.725 19.746 19.896 19.954 20.069

0.39 0.23 7.37 -4.67 -2.62 -0.20 0.07 -0.64 3.35 0.98 -1.28 1.89 1.27 0.36 1.40

1.49 1.64 0.48 -1.21 -2.50 1.42 1.56 2.08 4.18 4.43 -1.86 1.64 0.69 0.19 0.76

1.55 1.76 -5.20 2.56 -1.10 1.95 3.41 2.42 1.99 4.19 -0.08 0.87 0.46 1.70 0.29

1.235 1.426 -3.486 2.884 0.196 0.379 3.122 2.024 1.264 3.734 0.687 1.276 0.229 -2.243 0.577

Institute for Economic Competitiveness

25

U . S . F o r eca s t Tab l e s Table 6. Quarterly Employment

Table 6. Quarterly Employment 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4

Total Nonfarm Employment Private Nonfarm Mining Construction Manufacturing Trade, Transportation, and Utilities Transportation & Warehousing Financial Activities Education & Health Professional & Business Services Information Leisure & Hospitality Government Federal State & Local

138.2 115.7 0.7 7.2 13.5 26.5 4.5 8.3 19.0 18.1 3.0 13.7 22.5 2.7 19.8

138.8 116.2 0.7 7.2 13.3 26.6 4.6 8.3 19.2 18.4 3.0 13.8 22.6 2.7 19.8

139.2 116.6 0.7 7.1 13.3 26.6 4.6 8.3 19.4 18.6 2.9 13.9 22.6 2.7 19.9

140.0 117.4 0.7 7.1 13.2 26.8 4.6 8.4 19.7 18.9 2.9 14.0 22.6 2.7 19.9

140.5 117.9 0.7 7.2 13.1 27.0 4.6 8.5 19.8 19.1 2.9 14.0 22.6 2.7 19.9

Employment (Millions) 141.1 141.7 142.2 142.6 118.5 118.9 119.4 119.9 0.7 0.7 0.7 0.7 7.3 7.3 7.3 7.4 13.1 13.0 13.0 13.0 27.2 27.3 27.4 27.5 4.7 4.7 4.7 4.8 8.5 8.6 8.6 8.6 19.9 20.0 20.1 20.2 19.3 19.5 19.7 19.8 2.9 2.9 2.9 2.9 14.0 14.0 14.0 14.1 22.7 22.8 22.8 22.7 2.7 2.8 2.8 2.8 19.9 19.9 19.9 20.0

143.0 120.3 0.7 7.4 13.0 27.5 4.8 8.7 20.2 20.0 2.9 14.1 22.7 2.7 20.0

143.5 120.7 0.7 7.5 13.0 27.6 4.9 8.7 20.3 20.2 2.9 14.2 22.8 2.7 20.0

143.9 121.2 0.7 7.5 13.0 27.5 4.9 8.8 20.3 20.4 3.0 14.2 22.8 2.7 20.0

144.4 121.6 0.6 7.6 13.1 27.6 4.9 8.8 20.4 20.6 3.0 14.3 22.8 2.7 20.1

144.8 121.9 0.6 7.7 13.1 27.6 5.0 8.9 20.5 20.7 3.0 14.3 22.8 2.7 20.1

Total Nonfarm Employment Private Nonfarm Mining Construction Manufacturing Trade, Transportation, and Utilities Transportation & Warehousing Financial Activities Education & Health Professional & Business Services Information Leisure & Hospitality Government Federal State & Local

1.53 1.53 13.19 -1.29 -2.34 1.18 1.02 2.03 4.90 2.87 -2.46 1.42 1.54 0.54 1.68

1.51 1.64 5.65 -1.24 -4.50 1.16 1.66 1.88 3.95 6.43 -2.87 2.40 0.84 -0.20 0.99

1.23 1.35 -2.08 -4.12 -0.30 0.05 -0.26 1.47 4.17 4.44 -3.05 1.75 0.63 -0.32 0.76

2.34 2.75 -4.45 0.25 -2.81 3.34 3.05 3.39 5.85 5.19 -1.40 2.13 0.18 0.00 0.20

1.49 1.74 -7.69 2.67 -3.63 2.84 3.89 2.34 2.61 4.29 0.40 0.63 0.20 0.12 0.21

1.74 2.01 -7.88 4.83 -1.64 2.73 2.67 3.26 1.43 4.48 0.84 0.71 0.35 1.18 0.24

Growth Rates 1.48 1.50 1.42 1.82 -6.17 -2.51 2.95 1.60 -0.95 0.47 1.60 1.46 2.96 3.60 2.19 1.97 1.32 2.18 3.83 4.15 -0.26 -0.92 0.41 0.85 1.83 -0.19 13.32 -2.93 0.24 0.20

1.12 1.31 -3.35 1.19 -0.08 0.25 2.94 2.46 1.23 3.30 1.51 1.56 0.12 -3.29 0.59

1.23 1.37 -3.56 3.75 0.10 0.14 2.61 2.11 1.21 3.29 1.74 1.40 0.44 -0.82 0.62

1.24 1.40 -3.94 4.18 0.02 -0.13 2.87 2.13 0.90 4.51 0.29 1.22 0.38 -0.69 0.53

1.31 1.46 -4.39 3.92 0.95 0.24 2.86 1.82 1.41 3.84 0.04 0.83 0.50 -0.34 0.61

1.03 1.08 -3.36 2.35 0.81 0.15 2.68 0.99 0.66 2.79 0.34 1.23 0.74 -0.34 0.89

1.27 1.63 -2.88 1.38 -0.15 1.44 4.76 1.67 1.62 3.88 -0.44 1.32 -0.58 -8.54 0.54

Table 7. Quarterly Implicit Price Deflators (2000=100) Table 7. Quarterly Implicit Price Deflators (2000=100) 2008Q3 GDP Consumption Durables Motor Vehicles Furniture Other Durables Nondurables Food Clothing & Shoes Gasoline & Oil Fuel Services Housing Household Operations Electricity Natural Gas Water & Sewer Telephone Domestic Service Other Household Transportation Other Services

26

2008Q4

122.9 122.8 86.0 98.2 66.6 102.8 127.2 126.8 89.4 244.2 272.0 129.6 128.5 133.8 145.1 206.0 143.3 99.5 130.8 136.0 127.1 142.2

U.S. Forecast | August 2008

123.9 123.7 85.8 98.2 66.1 103.1 129.0 128.4 89.3 256.0 277.4 130.4 129.0 135.0 147.2 208.4 144.8 99.7 131.5 136.9 128.1 143.4

2009Q1 124.6 124.2 85.6 98.3 65.5 103.3 129.3 129.5 89.4 250.3 271.2 131.2 129.4 135.2 148.5 203.4 146.4 99.8 132.2 137.8 128.8 144.7

2009Q2 124.7 124.1 85.3 98.4 64.9 103.6 127.6 130.2 89.4 222.7 251.6 131.8 129.8 134.8 148.1 197.9 147.9 99.3 132.9 138.8 129.2 146.0

2009Q3 125.1 124.5 85.1 98.7 64.2 103.8 127.8 130.4 89.3 222.0 247.2 132.5 130.2 134.8 147.2 197.9 149.4 99.1 133.6 139.6 129.7 147.0

2009Q4 125.5 124.9 84.9 99.0 63.5 103.9 128.1 130.4 89.2 223.2 243.8 133.1 130.8 134.7 146.3 197.8 150.9 98.7 134.2 140.5 130.2 147.9

2010Q1 126.0 125.3 84.7 99.3 62.9 104.1 128.4 130.5 89.2 224.1 239.4 133.7 131.3 134.6 145.5 197.4 152.2 98.1 134.7 141.3 130.8 148.7

2010Q2 126.4 125.6 84.5 99.5 62.2 104.3 128.4 130.5 89.1 222.9 234.0 134.3 131.9 135.0 145.1 202.9 153.5 97.6 135.1 142.1 131.2 149.6

2010Q3 126.9 126.0 84.2 99.7 61.6 104.4 128.7 130.7 89.0 222.4 232.0 134.9 132.4 135.4 145.2 205.7 154.7 97.1 135.4 142.8 131.8 150.6

2010Q4 127.3 126.3 83.9 99.8 60.9 104.5 128.8 131.0 88.9 220.6 229.3 135.5 133.0 135.5 145.4 206.2 155.8 96.6 135.7 143.4 132.3 151.5

2011Q1 127.8 126.7 83.6 99.9 60.3 104.6 129.1 131.3 88.8 220.3 227.9 136.1 133.5 135.4 145.5 204.8 156.8 96.1 135.9 144.1 132.8 152.5

2011Q2 128.2 127.1 83.3 99.9 59.7 104.7 129.6 131.7 88.7 221.4 228.0 136.7 134.0 135.5 145.6 205.1 157.8 95.6 136.0 144.7 133.3 153.5

2011Q3 128.6 127.6 83.0 100.0 59.0 104.9 130.3 132.1 88.7 225.4 230.5 137.3 134.6 135.6 145.9 206.3 158.8 95.1 136.1 145.3 134.0 154.6

2011Q4 129.0 128.2 82.7 100.0 58.4 105.0 131.1 132.6 88.6 230.4 232.6 138.0 135.2 136.1 146.2 209.8 159.8 94.7 136.3 145.9 134.6 155.6

U . S . F o r eca s t Tab l e s Table 8. Percent Change in Implicit Price Deflators Table 8. Percent Change in Implicit Price Deflators

2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 GDP Consumption Durables Motor Vehicles Furniture Other Durables Nondurables Food Clothing & Shoes Gasoline & Oil Fuel Services Housing Household Operations Electricity Natural Gas Water & Sewer Telephone Domestic Service Other Household Transportation Other Services

3.1 4.2 -1.0 -0.7 -3.2 2.7 6.8 6.0 -0.5 27.1 2.7 3.8 2.9 6.6 3.4 21.8 5.1 4.1 3.4 5.1 7.7 7.8

3.4 3.1 -1.2 -0.1 -3.4 1.1 5.7 4.9 -0.4 19.3 7.9 2.5 1.4 3.6 5.8 4.6 4.3 1.0 2.2 2.7 3.0 3.1

2.2 1.6 -1.0 0.4 -3.5 1.1 0.9 3.5 0.2 -9.0 -8.9 2.4 1.2 0.7 3.5 -9.7 4.2 0.1 2.1 2.6 2.3 3.9

0.1 -0.5 -1.1 0.6 -3.8 0.9 -5.1 2.1 0.0 -44.0 -28.9 1.9 1.2 -1.2 -0.9 -10.7 4.3 -1.8 2.2 2.7 1.2 3.5

1.4 1.3 -1.0 1.0 -4.1 0.8 0.7 0.7 -0.2 -1.3 -7.0 2.0 1.4 0.0 -2.5 0.0 4.1 -0.9 1.9 2.6 1.6 2.8

1.2 1.2 -1.0 1.1 -4.1 0.6 0.8 0.1 -0.5 2.1 -5.6 1.8 1.6 -0.4 -2.6 -0.2 3.8 -1.8 1.7 2.4 1.5 2.3

1.6 1.2 -0.9 1.2 -4.1 0.8 0.8 0.2 -0.1 1.7 -7.1 1.8 1.7 -0.5 -2.2 -0.8 3.6 -2.1 1.5 2.3 1.8 2.4

1.5 1.1 -1.1 0.9 -4.1 0.6 0.3 0.2 -0.5 -2.1 -9.0 1.8 1.7 1.3 -0.9 11.1 3.4 -2.3 1.3 2.2 1.4 2.3

1.4 1.2 -1.2 0.8 -4.2 0.5 0.7 0.6 -0.3 -1.0 -3.5 1.8 1.6 1.0 0.3 5.5 3.1 -1.9 1.0 2.0 1.7 2.6

1.3 1.0 -1.4 0.6 -4.3 0.4 0.4 0.8 -0.5 -3.2 -4.7 1.7 1.6 0.3 0.5 1.0 2.9 -2.3 0.8 1.9 1.5 2.5

1.5 1.2 -1.4 0.3 -4.2 0.4 0.9 1.0 -0.4 -0.6 -2.4 1.7 1.6 -0.2 0.3 -2.8 2.6 -1.9 0.5 1.7 1.6 2.7

1.2 1.4 -1.4 0.2 -4.2 0.4 1.4 1.1 -0.3 2.0 0.2 1.8 1.6 0.2 0.3 0.5 2.6 -2.1 0.5 1.7 1.6 2.6

1.2 1.7 -1.4 0.1 -4.1 0.5 2.3 1.4 -0.2 7.3 4.3 1.9 1.6 0.5 0.6 2.4 2.4 -1.9 0.4 1.6 1.9 2.8

1.3 1.8 -1.5 0.1 -4.2 0.5 2.5 1.5 -0.3 8.8 3.6 2.0 1.7 1.2 0.9 6.9 2.5 -1.9 0.4 1.7 1.8 2.6

Table Annual Implicit Price Deflators Table 9.9.Annual Implicit Price Deflators (2000=100) (2000=100)

GDP Consumption Durables Motor Vehicles Furniture Other Durables Nondurables Food Clothing & Shoes Gasoline & Oil Fuel Services Housing Household Operations Electricity Natural Gas Water & Sewer Telephone Domestic Service Other Household Transportation Other Services

2000

2001

2002

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

102.4 102.1 98.1 100.5 94.1 100.3 101.5 102.9 98.0 96.3 101.7 103.3 103.9 104.6 108.1 118.8 102.9 98.0 103.8 104.9 101.7 104.0

104.2 103.5 95.8 100.1 88.7 99.5 102.1 105.0 95.4 90.4 91.7 106.0 107.8 103.7 106.8 101.1 106.2 98.1 107.6 109.5 102.9 108.3

History 2003 2004 106.4 105.6 92.4 97.7 83.3 97.9 104.1 107.0 93.0 105.2 109.7 109.4 110.4 107.7 109.3 123.8 110.2 97.2 110.3 114.8 106.0 113.1

109.5 108.4 90.7 96.9 79.9 98.0 107.6 110.3 92.7 124.0 125.4 112.9 113.2 109.9 111.2 134.1 116.9 95.2 112.8 117.8 108.3 118.2

2005

2006

2007

2008

113.0 111.6 90.0 98.5 76.8 97.7 111.6 112.7 91.7 151.3 159.5 116.7 116.1 115.5 117.8 161.2 122.8 94.4 116.6 122.0 112.6 123.7

116.7 114.7 88.8 99.1 73.3 98.5 115.0 115.3 91.3 170.3 180.3 120.8 120.3 121.5 132.1 165.1 128.9 95.1 120.8 126.7 116.2 129.1

119.8 117.7 87.2 98.6 69.9 99.4 118.4 119.7 90.6 184.6 192.3 124.7 124.7 124.8 137.3 163.1 135.4 97.0 125.4 129.7 119.3 134.4

122.6 122.1 86.2 98.4 67.0 102.2 126.1 125.8 89.6 236.5 263.9 128.9 128.0 131.9 144.1 194.3 142.4 98.8 130.1 134.8 125.6 140.6

Forecast 2009 2010 125.0 124.4 85.2 98.6 64.5 103.7 128.2 130.1 89.3 229.6 253.5 132.2 130.0 134.9 147.5 199.3 148.6 99.2 133.2 139.2 129.5 146.4

126.7 125.8 84.3 99.6 61.9 104.3 128.6 130.7 89.0 222.5 233.7 134.6 132.2 135.1 145.3 203.1 154.0 97.3 135.2 142.4 131.5 150.1

2011 128.4 127.4 83.2 99.9 59.3 104.8 130.0 131.9 88.7 224.4 229.7 137.0 134.3 135.6 145.8 206.5 158.3 95.4 136.1 145.0 133.7 154.1

Institute for Economic Competitiveness

27

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 Nondurables Food Clothing & Shoes Gasoline & Oil Fuel Services Housing Household Operations Electricity Natural Gas Water & Sewer Telephone Domestic Service Other Household Transportation Other Services

2000

2001

2002

History 2003 2004

2005

2006

2007

2008

2.2 2.5 -1.6 0.4 -4.5 -0.8 4.0 2.3 -1.3 28.6 37.8 2.7 3.2 1.9 1.6 16.5 2.5 -3.4 4.4 3.8 2.5 3.6

2.4 2.1 -1.9 0.5 -5.9 0.3 1.5 2.9 -2.0 -3.5 2.2 3.3 3.9 4.6 8.1 22.3 2.9 -2.0 3.8 4.9 1.7 4.0

1.7 1.4 -2.4 -0.4 -5.7 -0.8 0.6 2.0 -2.7 -5.0 -9.4 2.7 3.8 -0.9 -1.1 -13.5 3.2 0.2 3.7 4.3 1.2 4.1

2.1 2.0 -3.6 -2.4 -6.0 -1.6 2.0 1.9 -2.5 17.0 20.0 3.2 2.5 3.9 2.4 22.5 3.7 -0.9 2.5 4.9 2.9 4.4

3.3 2.9 -0.8 1.7 -3.8 -0.4 3.7 2.2 -1.0 21.9 27.2 3.3 2.6 5.1 5.9 19.9 5.0 -0.8 3.4 3.6 4.0 4.6

3.2 2.8 -1.3 0.6 -4.6 0.8 3.0 2.3 -0.4 13.8 13.8 3.5 3.6 5.3 12.2 4.4 4.9 0.7 3.6 3.8 3.1 4.4

2.7 2.6 -1.8 -0.5 -4.6 1.0 3.0 3.8 -0.8 8.9 6.8 3.3 3.7 2.7 3.9 -0.9 5.1 2.0 3.8 2.4 2.7 4.1

2.3 3.8 -1.1 -0.2 -4.2 2.8 6.5 5.1 -1.1 28.2 37.4 3.4 2.7 5.7 5.0 19.1 5.2 1.9 3.8 3.9 5.3 4.7

2007

2008

2.9 2.6 -1.8 -0.8 -4.1 0.1 3.3 3.1 -0.4 18.1 14.7 3.2 2.5 2.1 1.7 8.4 6.1 -2.0 2.2 2.6 2.2 4.6

Forecast 2009 2010 1.9 1.9 -1.1 0.2 -3.7 1.4 1.7 3.5 -0.3 -2.3 -3.3 2.5 1.6 2.3 2.4 3.5 4.4 0.4 2.4 3.3 3.1 4.1

1.4 1.1 -1.1 1.0 -4.1 0.7 0.3 0.4 -0.3 -2.8 -7.7 1.8 1.6 0.1 -1.5 1.9 3.6 -1.9 1.5 2.3 1.6 2.5

2011 1.4 1.3 -1.4 0.4 -4.1 0.5 1.1 1.0 -0.4 0.8 -1.7 1.8 1.6 0.4 0.3 1.7 2.8 -2.0 0.6 1.8 1.7 2.6

Table 11. Personal Income and its Components

Table 11. Personal Income and its Components 2000

2001

2002

Personal Income 8429.7 Wages & Salaries 5782.7 Other Labor Income 609.9 Nonfarm Income 705.7 Farm Income 22.7 Rental income 150.3 Dividends 376.1 Interest Income 1011.0 Transfer Payments 1084.1 Personal Social Insurance Tax 359.2

8724.1 5942.1 642.7 752.2 19.7 167.4 369.0 1011.0 1193.9 374.5

8881.9 6091.2 745.1 757.8 10.6 153.0 397.2 936.1 1286.2 384.8

Personal Income Wages & Salaries Other Labor Income Nonfarm Income Farm Income Rental income Dividends Interest Income Transfer Payments Personal Social Insurance Tax 28

U.S. Forecast | August 2008

8.0 8.0 8.5 8.6 -19.6 2.0 12.1 8.9 6.1 6.2

3.5 2.8 5.4 6.6 -12.8 11.5 -1.8 0.0 10.1 4.3

1.8 2.5 15.9 0.7 -46.1 -7.8 7.7 -7.4 7.8 2.7

History 2003 2004

2005

2006

Personal Income Billions Current Dollars 9163.6 9727.2 10269.8 10993.9 11663.3 6325.4 6656.4 7030.8 7433.8 7812.4 815.6 868.5 926.0 956.8 991.9 782.1 874.3 925.7 998.6 1012.2 29.2 37.4 34.1 16.2 44.0 133.0 118.4 40.9 44.3 40.0 422.6 537.1 574.9 699.4 785.9 914.1 895.1 1022.0 1125.5 1214.3 1351.0 1422.5 1520.7 1603.0 1713.3 396.5 420.5 446.2 477.0 500.4

3.2 3.8 9.6 3.2 269.0 -11.7 6.4 -2.3 5.0 3.0

Growth Rates 6.1 5.6 7.1 5.2 5.6 5.7 6.5 6.6 3.3 11.8 5.9 7.9 32.5 -8.1 -49.9 -68.9 14.7 -10.4 26.7 8.2 21.6 -2.1 14.1 10.2 5.3 6.9 5.4 6.0 6.1 6.9

6.1 5.1 3.7 1.4 200.3 -7.8 12.5 7.9 6.9 4.9

Forecast 2009 2010

2011

12199.6 12753.3 13346.0 13967.2 8152.8 8565.3 8976.5 9385.1 1029.0 1079.1 1131.4 1182.0 1050.2 1123.8 1184.3 1236.0 42.8 36.3 32.6 31.0 55.9 61.3 60.6 58.8 849.5 877.4 884.3 881.0 1192.6 1197.4 1286.6 1418.1 1859.6 1946.5 2026.6 2118.7 521.7 548.3 576.2 607.2

4.6 4.4 3.7 3.7 -2.5 39.3 8.1 -1.7 8.5 4.3

4.5 5.1 4.9 7.0 -14.9 15.0 3.3 0.5 4.7 5.1

4.6 4.8 4.9 5.4 -9.9 -1.0 0.8 7.4 4.1 5.1

4.7 4.6 4.5 4.4 -5.0 -2.9 -0.4 10.2 4.5 5.4

U . S . F o r eca s t Tab l e s Table 12. Personal Expenditures Table 12. Personal ConsumptionConsumption Expenditures (Current Dollars)

(Current Dollars)

2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 Consumer spending on‌ all goods & services durable goods furniture & appliances computers & software motor vehicles & parts other durable goods nondurables clothing & shoes fuel oil & coal gasoline & motor oil food other nondurable goods

Consumer Expenditures by Type Billions Current Dollars 10292.4 10371.2 10449.0 10510.3 10610.5 10732.8 10853.8 10969.4 11103.1 11219.9 11328.3 11444.6 11596.3 11736.7 1142.4 1159.9 1051.2 1028.4 1024.2 1032.6 1031.4 1053.0 1068.5 1079.3 1096.6 1105.5 1111.9 1118.0 443.5 422.8 414.9 401.9 399.3 399.9 406.0 411.0 415.3 421.4 426.5 431.2 436.3 449.8 79.2 67.4 67.3 67.8 69.0 70.0 71.4 72.6 73.8 75.0 76.0 77.0 78.1 80.3 442.2 392.0 375.9 387.0 399.5 396.5 408.7 417.8 422.5 430.1 430.9 430.6 429.1 449.7 220.9 206.9 207.6 204.8 202.8 203.5 206.3 207.2 208.6 211.7 214.1 215.6 217.4 224.0 3385.8 3425.1 3092.0 3132.6 3139.6 3119.8 3149.5 3179.9 3207.2 3232.6 3264.3 3291.0 3315.6 3345.6 414.7 385.5 382.0 380.3 382.8 386.0 390.4 392.5 396.1 401.4 405.5 407.4 410.4 418.3 27.8 32.7 32.2 30.9 29.4 29.2 28.8 28.4 27.9 27.8 27.7 27.7 27.7 27.9 433.0 444.3 461.1 451.2 412.7 417.6 422.3 425.4 425.4 426.4 424.6 423.7 425.7 441.2 1598.4 1612.5 1437.4 1455.8 1471.9 1486.8 1500.5 1512.0 1523.3 1534.7 1547.0 1559.3 1571.3 1584.4 911.9 792.1 801.4 805.2 808.1 816.1 826.4 837.7 848.4 861.7 873.9 885.6 897.4 925.2

all goods & services durable goods furniture & appliances computers & software motor vehicles & parts other durable goods nondurables clothing & shoes fuel oil & coal gasoline & motor oil food other nondurable goods

8381.2 1222.0 634.6 255.5 399.1 205.3 2431.6 431.2 12.0 181.9 1133.5 698.4

8381.0 1198.9 628.0 262.9 382.9 205.6 2429.1 427.7 11.6 180.1 1134.2 702.4

8410.3 1197.0 613.7 273.3 393.8 202.3 2428.9 425.6 11.4 180.3 1136.7 701.2

8469.8 1210.1 615.7 287.0 405.9 200.0 2444.7 428.4 11.7 185.3 1142.2 699.6

Consumer Expenditures by Type Billions 2000 Dollars 8522.8 8595.1 8665.2 8734.3 8814.1 8884.0 1211.9 1240.4 1261.7 1278.0 1302.4 1317.4 623.0 639.1 653.7 667.3 684.4 700.2 300.0 315.0 330.0 344.5 359.9 375.5 401.8 413.0 421.0 424.7 431.5 431.7 200.4 203.1 203.6 204.8 207.7 209.9 2463.7 2482.6 2498.7 2516.7 2536.9 2554.8 432.3 437.7 440.2 444.8 451.1 456.3 11.8 11.8 11.8 11.9 12.0 12.1 188.1 189.2 189.8 190.9 191.7 192.5 1150.8 1159.5 1167.6 1175.7 1183.4 1190.6 702.1 707.0 712.4 717.3 724.2 730.2

8943.3 1329.7 715.3 391.2 431.1 211.3 2567.8 458.9 12.1 192.3 1196.8 735.7

9004.7 1341.9 731.4 407.9 429.4 213.0 2581.9 462.6 12.1 192.3 1203.4 741.0

9085.6 1376.1 751.2 425.4 442.3 216.3 2598.0 467.8 12.1 192.1 1209.7 748.2

9154.1 1402.4 769.9 443.5 449.8 219.1 2611.7 472.2 12.0 191.5 1215.8 754.1

all goods & services durable goods furniture & appliances computers & software motor vehicles & parts other durable goods nondurables clothing & shoes fuel oil & coal gasoline & motor oil food other nondurable goods

1.6 -1.9 3.8 18.0 -9.4 1.3 1.6 4.3 -1.1 0.8 1.1 1.9

0.0 -7.5 -4.1 11.7 -16.3 0.4 -0.4 -3.3 -12.9 -3.9 0.2 2.3

1.4 -0.6 -9.1 15.8 11.4 -6.3 0.0 -2.0 -7.2 0.3 0.9 -0.7

2.8 4.4 1.3 20.1 12.3 -4.5 2.6 2.6 10.1 11.1 1.9 -0.9

Real Consumer Expenditures Annual Growth Rate 2.5 3.4 3.3 3.2 3.7 3.2 0.6 9.4 6.8 5.2 7.6 4.6 4.8 10.3 9.1 8.4 10.3 9.2 18.1 19.9 19.0 17.6 17.9 17.3 -4.0 11.1 7.7 3.6 6.4 0.2 0.8 5.3 1.0 2.5 5.6 4.3 3.1 3.1 2.6 2.9 3.2 2.8 3.6 5.0 2.3 4.2 5.6 4.7 4.4 -0.3 0.9 2.5 2.4 3.1 6.1 2.4 1.3 2.2 1.9 1.5 3.0 3.0 2.8 2.8 2.6 2.4 1.5 2.7 3.1 2.8 3.9 3.3

2.7 3.7 8.6 16.7 -0.6 2.7 2.0 2.3 1.6 -0.3 2.1 3.0

2.7 3.7 9.0 17.1 -1.6 3.2 2.2 3.2 -0.1 0.0 2.2 2.9

3.6 10.2 10.8 17.1 12.1 6.1 2.5 4.5 -2.7 -0.5 2.1 3.9

3.0 7.6 10.0 17.0 6.8 5.3 2.1 3.7 -2.1 -1.1 2.0 3.2

Institute for Economic Competitiveness

29

U . S . F o r eca s t Tab l e s Table Personal Consumption Expenditures Table 13.13.

Personal Consumption Expenditures (2000 Dollars) (2000 Dollars) History 2000

2001

2002

Consumer spending on‌ all goods & services durable goods furniture & appliances computers & software motor vehicles & parts other durable goods nondurables clothing & shoes fuel oil & coal gasoline & motor oil food other nondurable goods

6739.4 863.3 312.9 43.8 386.5 141.8 1947.2 297.7 15.8 175.7 925.2 532.9

7055.0 883.7 312.1 42.0 407.9 143.0 2017.1 297.7 15.4 171.6 967.9 564.4

7350.7 923.9 323.1 44.6 429.3 149.7 2079.6 303.5 14.2 164.5 1001.9 595.5

all goods & services durable goods furniture & appliances computers & software motor vehicles & parts other durable goods nondurables clothing & shoes fuel oil & coal gasoline & motor oil food other nondurable goods

6739.4 863.3 312.9 43.8 386.5 141.8 1947.2 297.7 15.8 175.7 925.2 532.9

6910.4 900.7 331.8 55.4 405.8 143.1 1986.7 303.7 15.2 178.3 940.2 549.2

7099.3 964.8 364.3 74.1 429.0 151.3 2037.1 318.3 15.5 181.9 954.6 567.1

2003

Forecast 2004

2005

2006

2007

2008

2009

2010

2011

Consumer Expenditures by Type Billions Current Dollars 7703.6 942.7 331.5 46.6 431.7 157.1 2190.2 310.9 16.9 192.7 1046.0 623.7

8195.9 983.9 355.7 51.6 436.8 167.9 2343.7 325.0 18.3 231.4 1113.1 655.9

8694.1 1020.8 377.3 55.5 443.1 175.9 2514.1 341.5 21.0 283.6 1181.2 686.8

9207.2 1052.0 403.5 59.1 434.0 189.0 2685.2 360.2 22.4 313.8 1257.4 731.4

9710.2 1082.8 415.3 63.3 440.4 198.7 2833.0 374.0 26.3 340.6 1329.1 762.9

10202.5 10575.6 11036.6 11526.5 1052.3 1035.3 1087.5 1133.1 418.8 401.8 418.5 440.2 66.3 69.6 74.3 78.6 398.7 397.9 425.3 437.9 205.4 204.3 210.4 219.5 3050.8 3147.2 3248.8 3368.0 381.2 384.9 398.9 412.7 31.9 29.6 27.9 27.7 428.6 425.9 425.4 430.9 1421.5 1492.8 1541.1 1591.6 787.6 814.0 855.4 905.0

Consumer Expenditures by Type Billions 2000 Dollars 7295.4 1020.6 397.8 94.8 442.1 161.9 2103.0 334.2 15.4 183.2 977.7 593.2

7561.3 1084.8 445.1 118.5 450.8 173.3 2177.6 350.7 14.6 186.7 1009.4 618.0

7791.7 1134.4 490.9 147.7 449.9 183.0 2252.7 372.3 13.2 187.4 1047.7 637.3

8029.0 1185.1 550.2 181.3 437.9 195.6 2335.3 394.4 12.4 184.2 1090.1 666.1

8252.8 1242.4 594.0 214.0 446.7 204.0 2392.6 412.9 13.7 184.5 1110.6 687.3

8356.5 1221.4 625.1 248.3 405.2 205.1 2420.1 425.4 12.1 181.2 1130.1 695.2

8499.5 1214.9 622.9 293.8 403.6 201.5 2455.0 431.0 11.7 185.7 1147.3 702.5

8774.4 1289.8 676.4 352.5 427.2 206.5 2526.8 448.1 12.0 191.2 1179.3 721.0

9046.9 1362.5 741.9 417.0 438.1 214.9 2589.8 465.4 12.1 192.1 1206.4 744.7

1.7 -0.5 -0.3 18.3 -0.2 -1.8 1.4 1.3 -3.3 2.5 1.5 1.1

3.2 6.2 8.6 20.0 5.9 2.5 2.9 4.0 2.3 3.0 2.8 2.6

3.1 5.6 9.7 18.3 2.5 4.1 2.5 3.9 1.0 0.4 2.3 3.3

Real Consumer Expenditures Annual Growth Rate all goods & services durable goods furniture & appliances computers & software motor vehicles & parts other durable goods nondurables clothing & shoes fuel oil & coal gasoline & motor oil food other nondurable goods

30

4.7 7.4 11.6 33.6 3.9 8.9 3.8 5.3 -3.4 -0.3 3.5 4.8

U.S. Forecast | August 2008

2.5 4.3 6.0 26.2 5.1 0.9 2.0 2.0 -3.9 1.5 1.6 3.1

2.7 7.2 9.8 34.1 6.1 5.8 2.5 4.8 2.7 2.1 1.5 3.3

2.8 5.8 9.1 27.6 3.1 7.0 3.2 5.0 -0.6 0.7 2.4 4.6

3.6 6.4 12.0 25.4 2.0 7.2 3.6 5.0 -5.5 1.9 3.2 4.2

3.0 4.6 10.3 24.7 -0.2 5.6 3.4 6.2 -9.6 0.4 3.8 3.1

3.0 4.5 12.1 22.8 -2.4 6.9 3.7 6.0 -5.1 -1.7 4.1 4.5

2.8 4.8 8.0 18.0 2.0 4.3 2.5 4.7 10.4 0.1 1.9 3.2

1.3 -1.7 5.3 16.1 -9.3 0.6 1.1 3.0 -11.5 -1.7 1.8 1.2

U . S . F o r eca s t Tab l e s Table Business Fixed Investment Table 14.14.

Business Fixed Investment 2000

2001

2002

Business Fixed Investment Producers Dur. Equipment Nonresidential Structures Non-Farm Buildings Commercial Industrial Other Buildings Utilities Mines & Wells

1232.1 918.9 313.2 222.8 121.3 31.8 69.7 51.5 27.2

1176.8 854.2 322.6 216.4 118.2 29.5 68.7 54.4 39.2

1066.3 787.1 279.2 180.6 97.0 17.8 65.8 54.6 35.6

Business Fixed Investment Producers Dur. Equipment Nonresidential Structures Non-Farm Buildings Commercial Industrial Other Buildings Utilities Mines & Wells

1232.1 918.9 313.2 222.8 121.3 31.8 69.7 51.5 27.2

1180.5 874.2 306.1 208.4 114.2 28.5 65.6 52.8 32.0

Business Fixed Investment Producers Dur. Equipment Nonresidential Structures Non-Farm Buildings Commercial Industrial Other Buildings Utilities Mines & Wells

8.7 7.9 10.9 7.4 11.2 -1.9 6.0 15.8 31.9

-4.4 -7.0 3.2 -2.7 -2.3 -7.0 -1.5 5.5 45.3

History 2003 2004

2005

Forecast 2009 2010

2006

2007

2008

2011

1077.4 800.2 277.2 174.7 91.7 16.7 66.2 49.2 45.7

Billions Current Dollars 1154.5 1273.1 1414.1 856.3 935.5 1003.7 298.2 337.6 410.4 236.4 188.4 203.2 101.1 109.5 124.7 18.5 23.3 27.4 68.9 70.4 84.3 44.7 47.0 56.0 55.7 76.6 107.9

1503.8 1023.5 480.3 279.8 143.7 33.0 103.1 70.6 118.1

1588.9 1046.0 543.0 308.3 148.7 41.9 117.8 84.9 136.6

1645.8 1130.2 515.6 291.0 142.7 38.5 109.8 81.1 130.0

1712.8 1222.9 489.9 293.1 139.8 39.8 113.4 76.5 104.9

1805.3 1306.2 499.1 319.4 150.3 46.3 122.7 74.9 88.6

1071.5 820.2 253.8 170.0 91.2 16.7 62.1 51.8 24.5

1081.8 843.1 243.5 160.3 83.9 15.4 61.0 45.6 29.0

Billions 2000 Dollars 1144.3 1226.2 1318.2 905.1 989.6 1061.0 246.7 249.8 270.3 163.1 161.7 174.0 86.9 85.9 90.1 16.2 19.0 20.9 60.0 56.8 63.0 38.8 38.0 41.7 33.3 36.5 40.7

1383.0 1078.9 304.6 195.5 98.2 23.9 73.6 50.5 44.5

1444.6 1098.5 335.2 209.8 98.7 29.1 82.5 57.7 50.9

1491.9 1184.6 316.8 194.2 93.3 25.6 75.8 53.3 50.9

1561.2 1290.2 301.9 191.5 89.8 25.5 76.9 50.0 44.2

1651.2 1391.5 303.7 202.5 93.7 28.7 80.8 48.6 39.0

-9.3 -7.7 -13.4 -16.5 -17.8 -39.5 -4.2 1.3 -8.8

1.1 1.7 -0.6 -3.1 -5.1 -4.6 0.6 -9.6 28.8

Annual Growth Rate 7.1 10.3 11.1 7.0 9.3 7.3 7.6 13.2 21.5 7.8 8.0 16.3 10.2 8.4 13.9 10.4 27.2 17.4 4.0 2.3 19.8 -8.9 5.2 19.1 21.8 37.6 40.7

6.3 2.0 17.1 18.3 15.3 20.3 22.2 26.0 10.0

5.7 2.2 13.2 10.5 3.6 27.5 14.7 20.7 15.6

3.6 8.0 -4.9 -5.6 -4.0 -7.8 -6.6 -4.4 -4.1

4.1 8.2 -4.9 0.7 -2.0 3.5 3.3 -5.6 -19.0

5.4 6.8 1.9 9.0 7.5 16.3 8.2 -2.1 -15.5

Institute for Economic Competitiveness

31

U . S . F o r eca s t Tab l e s Table 15. Government Receipts and Expenditures

Table 15. Government Receipts and Expenditures

Receipts Personal Tax and Nontax Receipts Corp. Profits Tax Accruals Indirect Business Tax and Nontax Accruals Contributions for Social Insurance

2053.9 999.1 219.5 87.8 691.7

2016.2 994.5 164.7 85.8 717.5

Federal Government Receipts and Expenditures 1853.2 1879.9 2008.9 2266.9 2510.4 2651.3 830.5 774.5 797.4 930.7 1049.9 1167.3 150.5 197.8 250.3 341.0 389.0 365.4 87.3 89.7 94.6 99.2 98.0 97.7 734.3 758.9 805.2 850.1 902.4 942.3

2650.9 1164.1 323.8 96.8 980.0

2811.4 1250.7 344.7 96.8 1030.1

2943.6 1326.0 344.9 99.1 1080.2

3082.1 1398.0 348.7 102.7 1135.4

Expenditures Purchases Goods & Services National Defense Other Transfer Payments To Persons To Foreigners Grants in Aid to State & Local Gov't Net Interest Subsidies less Surplus of Gov't Entities Surplus (+) or Deficit (-)

1864.4 578.8 370.3 208.5 1038.1 770.0 18.3 247.3 263.2 46.1 189.5

1969.5 612.9 392.6 220.3 1131.4 838.7 14.0 276.1 240.2 53.1 46.7

2101.1 679.7 437.1 242.5 1243.0 916.9 18.8 304.6 213.7 39.1 -248.0

3080.3 1058.6 725.2 333.4 1797.8 1368.9 34.9 390.2 287.7 50.0 -429.4

3205.7 1108.0 762.4 345.6 1874.7 1421.2 32.7 416.8 286.9 53.5 -394.3

3287.3 1120.7 761.7 359.0 1944.6 1469.5 33.1 437.8 290.4 49.8 -343.6

3400.0 1130.5 762.0 368.5 2022.9 1527.7 33.6 457.2 316.3 49.2 -317.9

893.2 236.6 35.6 621.1 11.0 247.3

915.8 242.7 30.2 642.8 13.7 276.1

State and Local Government Receipts and Expenditures 929.0 979.5 1061.2 1162.4 1242.2 1304.1 1336.7 221.3 226.6 249.0 277.1 303.3 325.4 342.8 32.2 35.3 43.0 56.3 60.8 60.9 54.3 675.5 717.5 769.2 829.0 878.2 917.8 939.6 15.8 19.8 23.6 24.2 23.1 22.8 23.7 304.6 338.5 349.1 360.9 358.0 376.3 390.2

1375.7 351.0 59.2 965.5 24.6 416.8

1434.5 375.4 57.5 1001.6 25.3 437.8

1489.7 401.3 56.3 1032.1 26.2 457.2

1269.5 1142.8 271.7 -4.5 -7.1 1.9 0.0 50.0

1368.2 1212.8 305.2 5.2 3.6 2.0 0.0 4.8

2096.2 1851.8 492.1 11.0 8.9 3.0 0.0 -62.7

2140.9 1872.8 521.0 12.6 8.8 3.0 0.0 -14.1

2206.8 1917.8 551.8 14.9 4.6 3.1 0.0 8.9

Expenditures Purchases Goods & Services Transfer Payments Interest Received Net Subsidies Dividends Received Net Wage Accruals Surplus (+) or Deficit (-)

32

U.S. Forecast | August 2008

1444.3 1281.5 332.0 16.5 -1.6 2.0 0.0 -34.2

2252.1 756.4 497.2 259.2 1328.7 963.7 23.6 338.5 196.5 45.4 -372.2

1514.6 1336.0 353.0 24.8 0.7 2.2 0.0 -20.4

2379.5 825.6 550.7 274.9 1390.6 1012.3 26.2 349.1 203.8 45.5 -370.6

1592.8 1391.3 383.8 24.1 3.4 2.4 0.0 1.6

2005

2558.6 875.5 588.1 287.5 1478.0 1078.5 35.6 360.9 238.5 63.9 -291.7

1684.9 1479.8 403.5 16.5 8.7 2.5 0.0 29.5

2006

2711.6 932.1 624.2 308.0 1568.1 1177.1 29.7 358.0 264.2 52.9 -201.1

1765.3 1576.0 401.0 13.7 5.4 2.7 0.0 46.2

2007

2880.6 979.3 662.2 317.1 1666.7 1250.6 36.3 376.3 290.7 47.4 -229.3

1892.4 1695.6 430.8 13.9 12.8 2.8 0.0 10.4

2008

Forecast 2009 2010

2001

Receipts Personal Tax/Nontax Receipts Corporate Profits Indirect Business Tax and Nontax Accruals Contributions for Social Insurance Federal Grants-In-Aid

2002

History 2003 2004

2000

2031.3 1817.9 458.1 13.1 9.8 2.9 0.0 -75.0

2011

U . S . F o r eca s t Tab l e s Table Exports and Imports of Goods and Services Table 16.16.

U.S. U.S. Exports and Imports of Goods and Services 2000

2001

2002

Net Exports Goods & Services -379.5 Current Account -417.4 Exports - Goods & Services 1096.3 Merchandise Balance -454.7 Food, Feed & Beverage 47.85 Industrial Supplies Excl Petroleum 166.7 Motor Vehicles & Parts 80.4 Capital Goods, Excl. MVP 357.0 Computer Equipment 55.5 Other 253.4 Consumer Goods, Excl. MVP 89.4 Other Consumer 43.1 Services 312.0

-367.0 -384.7 1032.8 -429.5 49.43 155.3 75.4 321.7 47.6 221.6 88.3 41.0 301.6

-424.4 -461.3 1005.9 -485.0 49.60 153.5 78.9 290.5 38.6 201.5 84.4 40.7 308.4

Imports - Goods & Services 1475.8 Merchandise 1243.5 Food, Feed & Beverage 46.0 Petroleum & Products 120.2 Industrial Supplies Excl Petroleum 172.8 Motor Vehicles & Parts 195.9 Capital Goods, Excl. MVP 347.0 Computer Equipment 89.8 Other 230.9 Consumer Goods, Excl. MVP 282.0 Other Consumer 79.6 Services 232.3

1399.9 1168.0 46.6 103.6 164.8 189.8 298.0 74.0 192.7 284.5 80.7 231.9

Net Exports Goods & Services Exports G & S Imports G & S

-379.5 1096.3 1475.8

10.6 18.0 8.8 13.2

Exports G & S Imports G & S Real Exports G & S Real Imports G & S

History 2003 2004

2005

Forecast 2009 2010

2006

2007

2008

2011

-499.4 -523.4 1040.8 -550.9 55.03 168.3 80.7 293.7 39.9 207.1 89.9 36.9 316.4

Billions of Dollars -615.4 -713.6 -757.3 -625.0 -729.0 -788.1 1182.4 1311.5 1480.8 -669.6 -787.1 -838.3 56.55 58.95 65.98 199.5 227.5 267.3 89.2 98.4 107.0 331.4 363.3 415.0 42.8 45.5 47.6 238.7 257.0 292.3 129.1 103.3 115.3 38.4 44.9 47.8 364.1 403.1 448.7

-707.8 -731.2 1662.4 -819.4 84.28 303.0 121.1 447.4 45.5 314.6 146.1 47.3 513.2

-735.6 -754.9 1934.7 -885.9 120.47 384.2 126.6 486.9 46.8 347.5 166.6 62.6 587.3

-697.7 -780.3 2118.4 -869.8 113.37 414.6 149.6 551.8 46.9 390.6 187.8 67.2 634.1

-707.0 -809.3 2255.9 -887.1 105.89 431.2 167.4 594.0 48.2 405.3 211.0 71.5 674.9

1430.3 1189.4 49.7 103.5 158.4 203.8 283.3 75.2 182.7 308.0 82.8 241.0

1540.2 1284.0 55.8 133.1 174.4 210.1 295.9 76.5 195.3 334.0 80.6 256.2

Billions of Dollars 1797.8 2025.1 2238.1 1499.5 1705.3 1882.7 62.1 68.1 75.0 180.5 251.9 302.5 225.1 264.8 290.1 228.2 239.5 256.6 343.6 379.4 418.3 88.6 93.3 101.4 230.7 260.3 288.5 377.2 411.5 446.2 82.9 90.3 94.2 298.3 319.8 355.4

2370.2 1985.2 81.7 331.0 294.4 258.9 444.5 105.2 304.9 478.6 96.2 385.1

2670.3 2247.7 90.1 511.6 330.1 249.8 475.8 110.9 326.9 488.2 102.1 422.5

2816.1 2366.0 95.7 557.1 346.8 251.4 510.5 117.5 347.3 492.5 112.1 450.1

2962.9 3131.6 2480.1 2613.73 97.2 99.5 541.4 542.7 351.6 368.6 282.2 302.4 547.2 585.5 126.3 135.3 367.4 391.3 536.9 579.2 123.6 135.9 482.8 517.9

-399.1 1036.7 1435.8

-471.4 1013.3 1484.6

-518.9 1026.1 1545.0

Billions 2000 Dollars -593.8 -616.6 -615.7 1126.1 1205.3 1314.9 1720.0 1821.9 1930.5

-546.5 1425.9 1972.4

-405.5 1549.3 1954.8

-363.1 1668.2 2031.3

-390.1 -407.37 1782.4 1898.9 2172.5 2306.3

-5.6 -4.9 -5.3 -2.6

-2.3 2.6 -2.0 3.5

3.5 7.8 1.3 4.1

Exports & Imports % Change 13.6 10.9 12.9 12.2 16.7 12.7 10.6 5.9 9.8 7.0 9.1 8.4 11.3 6.0 6.0 2.2

16.4 12.6 8.7 -0.9

9.6 5.6 7.7 3.9

-727.6 -839.1 2404.0 -916.7 109.03 450.4 179.8 634.1 51.3 426.0 235.5 76.0 719.2

6.5 5.2 6.8 6.9

Institute for Economic Competitiveness

6.6 5.7 6.5 6.2

33

In Appreciation

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

Director, Institute for Economic Competitiveness.

Ph.D., Pennsylvania State University 1996; M.A., Pennsylvania State University 1994; B.S., Allegheny College 1989.

Sea n M . S n ait h , P h . D .

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

Sean Snaith is Director of the Institute for Economic Competitiveness in the College of Business Administration at the University of Central Florida.

Dr. Snaith received his B.S. in Economics from Allegheny College and his M.A. and Ph.D. in Economics from Pennsylvania State University. He has taught at Penn State, the American University in Cairo, the University of North Dakota and the University of the Pacific. While at the University of North Dakota, he served as the Director of the Bureau of Business and Economic Research and as Director of the Business Forecasting Center at the University of the Pacific.

Snaith also served with International Planning and Research, a Boston area consulting firm, where his work included forecasting, market sizing, economic analyses, and econometric modeling for a variety of clients including IBM, Dell, Compaq, and HewlettPackard.

Snaith is a director of the Association of University Business of Economic Research, a member of the National Association of Business Economics, and the American Economics Association. He is also a member of the Western Blue Chip Economic Forecast Panel, the Federal Reserve Bank of Philadelphia Survey of Professional Forecasters, Livingston Survey, Bloomberg U.S. Economic Indicator Survey and USA Today’s Quarterly Survey of Top Economists. He is frequently quoted in the media and has published articles on a variety of topics including exchange rate modeling, predicting educational outcomes, the economics of information technology, and telemedicine.

For more information Sean Snaith, Director Institute for Economic Competitiveness College of Business Administration University of Central Florida P.O. Box 161400 Orlando, FL 32816 PH: 407.823.1451 FAX: 407.823.1454 EMAIL: ssnaith@bus.ucf.edu www.iec.ucf.edu

U n i v e r s it y o f C e n t r al F l o r ida 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 PH 407.823.1453

FAX 407.823.1454

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