U.S. Forecast May 2008

U.S. Forecast May 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 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

Decisions‌decisions. Within the next few weeks, some of us will have an important decision to make – what to do with our tax rebate checks!

Some will opt to pay off credit card debt, some may use it for travel, while others may use the money to make new purchases. The way the gas prices keep rising, many may be putting the money right into their tanks!

In any event, it will be interesting to see how or if the checks impact the economy in the next coming months. I look forward to reading future forecasts to find out.

Once again, Dr. Sean Snaith uses his wonderful sense of humor to help explain his research in this forecast. I particularly think you will enjoy his explanation of why Federal Reserve Chairman Ben Bernanke may be jealous of teenage sensation Hannah Montana. On a more serious note, Snaith addresses such topics as unemployment rates, energy prices, and housing. He also states that uncertainty continues to shroud the economy.

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.

One thing I am certain of is that you will find valuable information in this forecast. After you spend your tax rebate check, please take the time to look through this publication. Enjoy!

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 - 2010 May 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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h i g h l i g h t s o f t h e 2 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: • Why is Federal Reserve Chairman Ben Bernanke jealous of Hannah Montana?

• Uncertainty continues to shroud the economy and this quarter’s forecast. Energy prices may be the damnation or salvation of the U.S. economy in the upcoming year.

• Does the U.S. economy meet the litmus test of recession, and does it matter?

• Once bitten, twice shy. Buyers, builders and bankers will only tiptoe back into the housing market’s water, thus prolonging the time it takes for the economy to pull itself out of the current torpor.

• Job losses in construction and financial services tied to housing continue to add to the structural job losses experienced in the manufacturing and information sectors.

• Unemployment peaks at 5.8% in 2009 before falling back to 5.5% by the end of 2010.

• Even with the housing market showing some signs of life in 2008, housing starts in 2009 will only begin to slowly crawl out of the hole they have fallen into.

• Payroll job growth continues to contract slightly through the first six or seven months of 2008 but then remains near zero through the first quarter of 2009. Job growth will finally show some oomph in 2010.

• The multi-year depreciation of the dollar against major trading partners finally ends in 2009, and 2010 will be the first year since 2001 that the currency will increase in value.

H I GHL I GHTS

• What happens when the economic Red Bull wears off?

U . S . F o r eca s t

W h a t h a p p en s o nce t h e ec o n o m ic Re d B u l l™ w ea r s o ff ?

6

U.S. Forecast

become evident as this artificial boost to the economy’s oomph begins to fade. Confidence tattered by soaring energy prices, the collapse of the housing sector, and a severe credit crunch cannot be so quickly restored any more than a can of energy drink can make physical exhaustion go away with a few swallows. More rest and recovery time is still needed in both the case of physical activity and the economy.

We expect that GDP growth will slow again in 2008Q4 and 2009Q1 to a mere trickle before the lactic acid of the housing bust and credit crunch begins to clear from the economy. We expect the 4th quarter of 2008 to yield growth of 0.6% and just 0.2% in the 1st quarter of 2009. After this point, the economy will continue to accelerate through most of 2010.

T h e S o m e w h a t Le s s Anxious Index Does paltry 1st quarter GDP growth coupled with record-setting energy prices have economic forecasters concerned that a recession is just around the corner (or currently underway)? The most recent release (2nd quarter 2008) of the Survey of Professional Forecasters by the Federal Reserve Bank of Philadelphia suggests that the 45 forecasters surveyed for this publication (including the author) Figure 1

The Anxious Index Probability of Decline in Real GDP in the Following Quarter Quarterly, 1968:Q4 to 2008:Q2 100 90 80 70 60 50 40 30 20 10

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

Survey Date

1992

1991

1990

1989

1988

1987

1986

1985

1984

1983

1982

1981

1980

1979

1978

1977

1976

1975

1974

1973

1972

1971

1970

1969

0

1968

Probability (percent)

The first rounds of the tax rebate checks have been electronically deposited into consumers’ checking accounts. The remainder of the rebates made by paper checks will continue to be issued, with the last of the rebates sent by mid-July. This injection of disposable income into consumer’s pockets should begin to impact spending in the 2nd quarter and continue to boost spending through the 3rd quarter of 2008.

This fiscal policy has been coupled with an aggressive nine-month campaign of interest rate cuts. The Fed has also rolled out some policy actions not seen since the days of the Great Depression in an effort to stabilize the financial sector and prevent a worsening of the credit crunch precipitated from the sub prime mortgage meltdown.

The combination of stimulative fiscal and monetary policy unleashed on the economy simultaneously enhances the potency of both policies and will provide an economic energy boost to the economy in the 3rd quarter of 2008. This economic Red Bull™ will provide a lift to an economy that has been severely fatigued by the ongoing collapse of the housing sector and plagued by ever higher energy and commodity prices.

This burst in spending will lead to a growth rate of GDP that is expected to be the fastest growth rate of the entire year – a dubious distinction in a year with paltry growth overall. The jump in GDP growth will be a welcome lift in an otherwise dismal economic landscape. But what happens in the aftermath of this policy pick-me-up?

This is when the real economic fatigue will

U . S . F o r eca s t

are very concerned that a decline in real GDP is currently taking place and that a decline will also occur in the 3rd 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 (the name was 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 28.67%, which means that forecasters believe there is a 28.67% chance that real GDP will decline in the third quarter of 2008. The forecasters also report a 49.07% chance that we are currently in a recession.

Prior to each of the previous six recessions, the anxious index showed steep increases and surpassed the 20 percent level. The graph below 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 second quarter of 2009.

W h y B en B e r nan k e i s E n v i o u s o f Hanna h M o n t ana : She’s Got the Best of Both W o r l d s an d He ’ s Got the Worst of Both Worlds

Best of Both Worlds Oh yeah Come on You get the limo out front Hottest styles, every shoe, every color

Yeah, when you’re famous it can be kinda fun It’s really you but no one ever discovers In some ways you’re just like all your friends But on stage you’re a star You get the best of both worlds Chill it out, take it slow Then you rock out the show You get the best of both worlds Mix it all together and you know that it’s the best of both worlds

Worst of Both Worlds Oh no Come on You get recession out front Higher prices for energy and for foodstuff Yeah, the Fed’s dual mandate can be kinda fun Meeting both can be tough, I’ve discovered In some ways you’re just like all your economist friends But at the FOMC you’re a star You get the worst of both worlds Cut the rates make it grow Then pricing pressures will show You get the worst of both worlds Mix recession with inflation and you know that it’s the worst of both worlds

Institute for Economic Competitiveness

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U . S . F o r eca s t

Why would Ben Bernanke, the Chairman of the Federal Reserve System, be jealous of Disney teen sensation Hannah Montana? You can drop all crossdressing thoughts from your mind, though he may harbor a deep desire to have a little more sparkle in his wardrobe than being a central banker allows. The envy stems from the fact that she has the best of both worlds: normal teenager during the day and rock star at night, successfully keeping these two from crosscontaminating one another and allowing her to reap the benefits of fame without the adverse affect that it could have on her personal life. Ben Bernanke is not so lucky.

The Bernanke Fed has to simultaneously fight a recession (or a near-recession experience) and the threat of a sustained inflation. The Fed must also provide liquidity and promote stability in the financial sector. This is no easy task. These two economic ailments call for exactly the opposite prescriptions. Not only do recession and inflation call for opposite policy actions, but they are also exacerbated by the other’s cure. A slowing economy requires an increase in the growth rate of the money supply and interest rate cuts in order to stimulate spending and prevent/pull the economy out of a recession. This cure for recession will worsen any inflationary symptoms in the economy and only serve to push prices even higher.

On the other hand, the cure for inflation requires a reduction in the growth rate of the money supply and increases in interest rates, which has the side effect of lowering spending and dampening overall economic activity, helping to ease pressure on prices but potentially pushing a slowing economy into recession or deeper into an existing recession.

This problem, known as stagflation, is pernicious and difficult to attack from a policy standpoint. It is truly the worst of both worlds. The Fed’s actions indicate that it will first focus on the economic slowdown and hope while it is waging war against recession that inflation, and more importantly inflationary expectations, does not begin to drift higher and higher. However, once they feel the economy is out of the dark, they will need to quickly pull back on the economy’s reins and raise interest rates to kill off any remaining threat of inflation. The 8

U.S. Forecast

Fed is banking on the outcome that inflation will not become entrenched in the intervening time. If inflation does spread its roots out, the likelihood for a Disney style happy ending will be limited to Hannah Montana, and Bernanke will be even more envious.

Is the U.S. Economy C u r r en t l y in Rece s s i o n ?

D o e s i t Ma t t e r ?

Official dating of the U.S. business cycle is the task of the Business Cycles Dating Committee of the National Bureau of Economic Research and takes place 6 to 18 months after each phase of the cycle has passed. Until this time has passed, no one can say with certainty that the U.S. economy is in a recession or not. There is no “early pregnancy test” that can provide an answer to the recession question. We can look to previous recessions and make comparisons between our current situation and those recessions from previous business cycles to gain some insight.

Even this exercise will not provide a definitive answer.

Business cycles are like economic snowflakes. No two are exactly alike. The structure of the economy changes over time. New industries are born, and old industries die. Technology evolves and efficiency gains are made. The capital stock grows, and the labor force changes over time. Furthermore, the shocks that are prevalent in the economy vary from one cycle to the next. So, when comparing two business cycles, we have not only two different economies but also two different sets of shocks that are propagating through the economy. We cannot expect that one cycle will exactly resemble previous cycles, but some similarities are consistent from one cycle to the next, and looking at historical episodes can provide some insight, but not definitive answers.

While we will have to wait to have the answer to the recession/no recession question, it is now an academic issue. Regardless of whether or not the economy is in a recession, we are experiencing a dramatic slowing of economic activity. The fallout from the housing sector and the credit crunch that came on the heels of the sub prime meltdown

U . S . F o r eca s t

in August of 2007 pose serious challenges to the economic well-being of the U.S. economy. The Federal Reserve Bank and the federal government have both taken action to alleviate the torpor that these events have induced. Unfortunately, the old adage that time heals all wounds is particularly relevant in this situation.

Builders, buyers, and bankers will only tiptoe back into the housing sector; the collapse in confidence will take time to restore; and none of these participants of the housing sector will be willing to dive back into the market. “Once bitten, twice shy,� they say, and many of these housing market participants still have painful wounds. By the middle of 2009, the bad memories of the housing bust will begin to fade, and confidence will be restored, but the lessons learned will prevent another bout of irrational exuberance in housing from taking place again.

GDP O U TLOOK Advance GDP growth figures for the 1st quarter 2008 came in at 0.6%. A paltry rate of growth, certainly, but given the sour sentiment regarding the economy as the year started, including the prediction by many economists that the U.S. had already entered into recession, the fact that positive growth took place was a pleasant surprise to many. It appears that in the revisions to this number yet to come growth may actually be in the 1.0% range. This is sluggish growth but certainly does not meet the rule of thumb for recessions that two consecutive quarters of negative real GDP growth must exist.

We expect 2nd quarter growth to fall under the weight of surging energy and food prices and the waning confidence that permeates the economy. We also expect GDP growth to remain positive in this quarter but fall to just 0.1%. Some of the tax rebate checks will have made their way into the hands of consumers before the quarter is over, and some of the stimulus from these checks will provide a boost to GDP in this quarter.

The 3rd quarter is likely to have the fastest GDP growth for the entire year. The largest boost to consumer spending from the tax rebate checks will

take place in this quarter and will be coupled by the lagged effects of previous interest rate cuts. We are expecting a short-lived surge in GDP growth to 2.3% in this quarter. The caffeine high will not last, and GDP will decelerate in the 4th quarter and into the 1st quarter of 2009. From this point, we expect that GDP growth will continue to accelerate through most of 2010 as the economy finally shakes off the malaise that has lingered in the wake of the housing bust.

C o n s u m e r S p en d in g Rec o r d E ne r g y P r ice s an d a Lan g ui s h in g H o u s in g Sec t o r Wei g h o n t h e C o n s u m e r

Consumers have been adrift on a stormy economic sea that has tossed them about like the crab fisherman on the Discovery Channel’s Deadliest Catch. Unfortunately, the stormy weather is not likely to abate soon, and the relief provided by the economic Dramamine in the form of tax rebate checks will prove to be short lived. Consumer sentiment has plummeted to depths that have not been seen for more than 25 years. While it likely has bottomed out in the 2nd quarter, the consumer will remain tight fisted in the 4th quarter of 2008 and through the 1st quarter of 2009.

Retailers will be looking at another tough holiday shopping season in 2008, and automobile dealers will likely be rolling out more and more incentives and low/no cost financing.

Spending on consumer durables has continued to decline, as the rough seas have undermined any appetite for large ticket purchases by consumers.

Spending on non-durables and services has been still growing and has not taken the turn for the negative that durables have experienced.

Spending on recreation was up 0.3% in the last report on consumption, a small sign that the consumer is not retrenching as deeply as might be expected given these sentiment figures. Recreational spending is a low-hanging fruit when it comes time to tightening household budgets.

Institute for Economic Competitiveness

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U . S . F o r eca s t

After a boost to spending in the 3rd quarter courtesy of the tax rebate checks, we expect consumption spending growth to turn slightly negative in the 4th quarter and into the 1st quarter of 2009. It will take that long for confidence to restore itself and for the housing hangover to finally wear off.

The wild card in all of the discussions of consumer sentiment and spending continues to be energy prices.

Energy prices have surged yet again, and oil has reached $130 per barrel. The danger to the economy remains that the collective impact of all the developments for households could collapse consumer confidence (this has happened) and ultimately spending (this has not happened—yet).

Higher energy prices and declining home equity, individually, may not be enough to cause the U.S. consumer to succumb but, collectively with tighter credit markets is a witches’ brew that could very well bring spending growth to a halt. If the energy bubble bursts sooner rather than later, this could serve to quickly reverse the fall in consumer sentiment and provide a welcome boost to the economy. On the other hand, if the predictions of $200-per-barrel oil come to fruition, it could send consumer spending and the U.S. economy with it into a nose dive.

has been suffering. Spending on commercial and healthcare structures is undergoing a significant decline that began in the first quarter and is likely to continue through most of 2009. The commercial sector was in catch-up mode in the wake of the boom on the residential side, and now that that boom has turned to bust, it was only a matter of time before it would have an impact on commercial structures. The turnaround will be mild at first and is not likely to take place until 2010.

Residential fixed investment growth has been in a downward spiral, and double-digit declines in 2007 will continue through the rest of 2008. By the end of 2008, the malaise should begin to lift. 2008 will be the worst year, with a double-digit decline of 23% as developers dramatically cut back on projects in the wake of large inventories and with housing demand hampered by the precipitous drop in confidence and tightness in credit markets. 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 of nearly 9.0%. This will mark the end of a harrowing multiyear contraction in this sector of the economy.

I n v e s t m en t

G o v e r n m en t S p en d in g

Confidence in the state of the economy and the outlook overall affect not only consumer decisions but also investment spending by firms. The souring of the economy has lead to a decline in non-residential fixed investment, and investment growth is expected to further decelerate in 2008.

The expiration of special depreciation at the end of 2008 will create a surge as companies try to squeeze in spending under this provision. This uptick will give way to further declines in investment spending through the first three quarters of 2009.

The one exception to the investment woes is spending on information technology equipment and software, which is expected to grow through 2010 at a healthy, double-digit pace.

The commercial construction sector has just now begun to feel the pain that residential construction

The improvement in the size of the Federal Government’s deficit spending that took place in 2007 turned out to be short lived. As the economy took a turn for the worse in 2008, tax revenues fell in concert with the slower economic activity, and the deficit widened once again. The fiscal stimulus package enacted by Congress and the President included $168 billion of tax rebates that will cause a spike in the size of the deficit. The tax rebates are worsening the impact of the slowing economy on the size of the budget deficit, and with little sign of a reduction in spending or large turnaround in the U.S. economy, the deficit outlook does not improve over the next few years.

The fiscal stimulus package will accelerate the growth of the deficit in 2008. The package of tax

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U.S. Forecast

U . S . F o r eca s t

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 3.7% in 2008. The reduction of military expenditures in Iraq will help slow spending growth in 2009 to 1.2%. In 2010, 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.

State and local government spending will continue to decelerate through 2010, and we expect that spending will contract in both 2009 and 2010. The slowdown in spending is the result of declining revenue at the state and local levels, as the embarrassment of riches that the housing boom provided has dried up. State and local government do not have the luxury to spend as freely as the federal government does, as many are tied by law to maintain balanced budgets, and spending cuts will continue to plague state and local governments for the next several years in many regions of the country.

Net Exports 2008 will mark the 7th straight year that the dollar depreciated against the currencies of the United States’ major trading partners. The weakening of the dollar, caused by interest rate cuts and sluggish economic growth, has made U.S. exports more competitive in many world markets, and it has also made the U.S. an attractive location for international tourism. The weak dollar has led to strong export growth that helps push the economy forward even as other sectors wither in the midst of the housing

bust. The dollar has touched record lows against a number of foreign currencies, and once it is clear that the Fed has finished its cycle of interest rate cuts, the dollar will stabilize somewhat, but it will continue to be valued such that the U.S. remains a bargain for traditional vacationers as well as for foreigners traveling to the U.S. for the express purpose of shopping.

Strong growth in exports has been a key part of sustaining GDP growth as domestic expenditures have been weighed down by the housing sector, credit crunch woes, and nose-diving confidence. The foreign sector will continue to boost GDP growth over the forecast horizon. Real export growth will outpace real import growth through 2010; the gap will narrow as the depreciation of the dollar slows to a stop in mid-2009; and a slow appreciation of the dollar takes place in 2009 and 2010. The trade deficit will continue to narrow throughout our forecast horizon, but imports will continue to accelerate as export growth holds steady.

The flow of capital from the rest of the world continues to recover from the August 2007 shock at the outset of the sub prime mortgage meltdown.

In the 3rd quarter of 2007 when there was actually a net outflow of foreign capital, a response to this meltdown took place in August and into September.

Since then, capital has once again begun to pour back into the United States, which serves as a vote of confidence by the rest of the world in the soundness of the U.S. economy. Net capital inflow into the United States reached $261.3 billion in the 4th quarter of 2007 and stood at $202 billion in the 1st quarter of 2008, a dramatic turnaround from the $44.3 billion outflow of capital in the 3rd quarter.

U ne m p l o y m en t Unemployment rates have begun to drift upward as job losses from the housing slump have spread all through industries that were central to the housing boom, such as construction, real estate, mortgage finance, building supply, and furniture retail stores.

Currently, the U.S. rate of unemployment stands at 5.0%.

Institute for Economic Competitiveness

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U . S . F o r eca s t

Unemployment of 5.0% is still within the range of unemployment rates that many economists would consider being consistent with full employment in the economy. The drift upward in unemployment should continue to drift higher through most of 2009.

Unemployment tends to lag the business cycle, and we expect to continue to see it drift higher even after the economy has gotten out of the current slowdown. We are forecasting unemployment rates to continue to climb for several quarters through the end of the third quarter of 2009. We do not expect unemployment to rise to above the 5.8% level before it begins to fall again in 2010, and it is expected to reach 5.5% by the end of 2010.

Job losses associated with the housing slowdown will be the main contributor to the rise in unemployment, but these losses should remain contained to those sectors that were at the epicenter of the housing boom: construction, real estate, finance as it relates to the housing industry, and retail jobs in home improvement. There will still be job losses in other sectors undergoing structural change from global competition (manufacturing sector) and the metamorphoses that are taking place in publishing and entertainment industries (information sector).

Several sectors will continue to show strength in the face of the weakness in the economy. Education and health services as well as professional and business services will average growth rates greater than 2.0% through 2010.

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omobile and Light Truck Sales M a y 2(Millions 0 0 8 Vehicles)

Charts

99 00 01 02 03 04 05 06 07 08 09 10 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, %)

8.0 7.5 7.0 6.5 6.0 5.5 5.0

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

2.2 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6

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 Auto Sales Light Truck Sales

Consumer Prices 4.0

(% Change Year Ago)

3.0 2.0 1.0 0.0

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

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

Oil and Consumer Confidence 120.0

Oil ($ per bb) - left axis

120

100.0

110

80.0

100

60.0

90

40.0

80

20.0

70

0.0

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

60

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 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

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U.S. Forecast

96 97 98 99 00 01 02 03 04 05 06 07 08 09 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 120.0

(2002=100)

115.0 110.0 105.0 100.0 95.0 90.0 85.0

97 98 99 00 01 02 03 04 05 06 07 08 09 10 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 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 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 8.0

(% Change Year Ago)

6.0 4.0 2.0 0.0 -2.0

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 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 Unemployment Rate

Yield Curve 7.0

(%)

6.0 5.0 4.0 3.0 2.0 1.0

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U.S. Forecast

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

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Table 15. Government Receipts and Expenditures History 2002 2003

1999

2000

2001

Receipts 1891.2 Personal Tax and Nontax Receipts 893.0 Corp. Profits Tax Accruals 213.0 Indirect Business Tax and Nontax Accruals 83.9 Contributions for Social Insurance 651.7

2053.9 999.1 219.5 87.8 691.7

2016.2 994.5 164.7 85.8 717.5

Federal Government Receipt 1853.2 1879.9 2008.9 224 830.5 774.5 797.4 93 150.5 197.8 250.3 31 87.3 89.7 94.6 9 734.3 758.9 805.2 84

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 (-)

555.8 360.6 195.2 986.1 735.7 15.2 15.2 232.9 264.7 44.1 103.6

578.8 370.3 208.5 1038.1 770.0 18.3 18.3 247.3 263.2 46.1 189.5

612.9 392.6 220.3 1131.4 838.7 14.0 14.0 276.1 240.2 53.1 46.7

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

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

214.5 35.8 590.2 9.8 232.9 232.9

236.6 35.6 621.1 11.0 247.3 247.3

1065.0 252.4 -3.8 -10.0 1.8 0.0 0.0 50.4

1142.8 271.7 -4.5 -7.1 1.9 0.0 0.0 50.0

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

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

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

20

87 58 28 147 107 3 3 36 23 6 -31

State and Local Government Rec 242.7 221.3 226.6 249.0 27 30.2 32.2 35.3 43.0 5 769.2 82 642.8 675.5 717.5 13.7 15.8 19.8 23.6 2 276.1 304.6 338.5 349.1 36 276.1 304.6 338.5 349.1 36 1212.8 305.2 5.2 3.6 2.0 0.0 0.0 4.8

1281.5 332.0 16.5 -1.6 2.0 0.0 0.0 -34.2

1336.0 353.0 24.8 0.7 2.2 0.0 0.0 -20.4

t ab l e s

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

2004

May 2008

1391.3 383.8 24.1 3.4 2.4 0.0 0.0 1.6

148 40 2 1

1

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

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.

of the U.S.

1999

2000

2001

2002

2007

2008

Forecast 2009

2010

4.4 4.5 5.1 11.8 4.6 4.0 9.2 12.7 21.2 41.4 19.2 -0.1 16.8 51.6 11.8 -0.4 3.2 -22.6 17.3 -8.5 0.9 6.1 4.3 11.4 2.2 4.7

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

Composition of Real GDP, Percent Change 1.6 2.5 3.6 3.1 2.9 2.2 1.2 2.5 3.3 3.3 2.8 2.5 2.7 2.8 3.6 3.2 3.1 2.9 7.2 5.8 6.4 4.9 3.8 4.7 2.5 3.2 3.6 3.6 3.6 2.4 1.9 1.9 3.2 2.7 2.7 2.8 -9.2 1.0 5.8 7.2 6.6 4.7 -6.1 2.8 7.3 9.6 6.0 1.3 -4.6 5.8 9.4 9.6 7.5 8.3 5.4 13.1 11.4 26.4 17.8 19.3 -21.0 1.4 9.9 3.3 10.1 5.6 -7.3 2.9 -3.0 7.7 3.7 1.4 7.9 -10.4 -10.9 -6.2 20.5 12.4 -26.6 -22.3 -3.5 -22.8 -21.7 36.8 -0.4 -8.7 30.4 17.3 5.7 -35.2 -17.0 -3.9 1.3 0.5 8.4 12.9 -15.6 -6.4 2.5 -0.6 7.3 9.2 -41.2 -6.0 5.0 17.9 7.7 5.6 7.7 18.9 -1.5 -12.6 -17.6 -2.9 -23.1 18.2 14.9 5.6 13.5 14.3 -15.4 -4.3 2.2 -4.8 5.2 18.2 4.8 8.4 10.1 6.6 -4.5 -17.0 -2.0 1.3 9.8 6.9 8.4 8.1 3.5 4.1 11.3 5.9 5.9 1.9 7.0 6.8 4.2 1.5 2.2 1.7 0.3 1.6 2.2 3.1 0.2 -0.2

1.5 1.6 1.8 -0.1 0.5 2.8 1.7 1.1 7.0 18.8 4.3 -3.5 -8.5 -17.1 -7.1 3.0 -5.5 14.1 6.5 5.9 10.8 -23.2 8.4 0.9 3.7 1.0

1.3 1.2 1.1 -1.1 1.0 1.6 -1.2 1.7 3.4 10.7 1.3 -3.8 7.1 7.9 20.8 -7.4 -14.8 -10.8 -4.2 2.1 -6.6 -4.5 8.3 2.1 1.2 -0.8

3.1 2.7 2.7 5.9 2.4 2.3 2.6 5.2 5.8 18.8 1.6 5.1 7.9 5.0 -5.1 -3.0 2.1 17.0 -3.5 -17.0 -1.2 19.0 7.6 5.6 -0.7 -0.3

9470.4 9268.4

2.4 1.9 2.7 -1.1 4.0

19.3 2.9 4.3 80.7 71.5 105.8 16.888 1.647 4.636 4.2 2.4 122 -302

30.4 2.8 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 -460

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))

4.97 4.63 5.08 5.54 5.64 5.86 7.43 1326 22.3 0.953 -1.6

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

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)

7802 5.1 6695 4.7 6862 3.0 2.4 517 10.1

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

U.S. Forecast

2005

2006

Prices & Wages, Percent Change, Annual Rate 1.7 2.2 3.2 3.3 2.7 2.6 2.2 2.0 3.3 3.7 1.9 4.0 2.0 1.2 2.1 2.1 2.6 2.3 1.0 3.5 4.5 5.1 0.3 6.6 3.1 3.9 3.7 2.9 3.1 3.1

2.2 3.4 2.6 3.8 4.4

22

2004

Billions of Dollars 9817.0 9890.7 10048.9 10301.1 10675.7 11003.5 11319.4 11566.8 9817.0 10128.0 10469.6 10960.8 11685.9 12433.9 13194.7 13841.4

1.6 2.6 2.0 2.9 3.5

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. $)

History 2003

11733.9 11891.7 12261.4 14328.5 14827.6 15581.5 2.1 3.2 2.3 5.5 3.1

2.0 1.5 2.2 0.2 2.9

1.9 1.7 2.1 0.3 2.8

Other Measures 41.5 56.6 66.1 2.8 1.9 1.0 2.5 3.3 2.2 76.3 78.6 79.4 48.2 34.0 41.7 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 -640 -755 -811

72.2 1.8 1.7 79.4 0.0 85.6 16.112 1.344 4.958 4.6 1.1 -163 -739

105.1 2.0 0.8 78.4 -16.5 73.2 15.136 0.911 4.091 5.2 0.2 -429 -748

96.7 1.5 1.9 77.9 -1.0 79.2 15.035 1.040 4.076 5.7 0.2 -427 -696

92.0 2.3 3.2 80.0 43.5 89.3 15.821 1.449 4.559 5.6 1.1 -428 -700

Financial Markets, NSA 1.13 1.35 3.21 4.96 1.01 1.36 3.13 4.72 1.24 1.89 3.62 4.93 2.97 3.43 4.05 4.75 4.02 4.27 4.29 4.79 5.05 5.12 4.56 4.87 5.82 5.84 5.86 6.42 964 1131 1207 1311 -1.3 18.0 6.8 8.6 0.916 0.840 0.825 0.812 -12.3 -8.1 -1.8 -1.5

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

2.33 1.66 1.92 2.82 3.70 4.39 5.83 1370 -7.2 0.697 -8.9

3.52 3.27 3.58 3.77 4.46 4.90 6.40 1483 8.2 0.693 -0.7

4.71 4.57 4.75 4.90 5.16 5.48 6.95 1599 7.9 0.718 3.6

Incomes 9727 10301 6.1 5.9 8681 9092 6.3 4.7 8009 8148 3.6 1.7 2.1 0.5 897 1187 35.3 32.4

11660 6.2 10177 5.7 8655 3.1 0.4 1410 4.3

12160 4.3 10720 5.3 8829 2.0 0.7 1309 -7.1

12621 3.8 11074 3.3 8936 1.2 0.7 1371 4.7

13257 5.0 11598 4.7 9204 3.0 1.0 1399 2.1

31.1 3.7 1.3 74.0 14.0 87.6 16.643 1.854 5.443 6.0 -0.3 -375 -522

9164 3.2 8163 4.2 7730 2.2 2.1 665 15.6

10983 6.6 9629 5.9 8397 3.1 0.4 1352 14.0

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

Product

2001

2002

History 2003

2004

2005

2006

2007

2008

Forecast 2009

1999

2000

2010

9470.4

9817.0

9890.7 10048.9 10301.1 10675.7 11003.5 11319.4 11566.8

11733.9 11891.7 12261.4

9404.1

9760.5

9921.0 10036.5 10285.1 10619.8 10966.9 11275.9 11561.5

11749.5 11890.2 12215.6

6438.6

6739.4

6910.4

7099.3

7295.4

7561.3

7803.6

8044.1

8277.8

8426.9

8522.5

8750.6

804.5

863.3

900.7

964.8

1020.6

1084.8

1137.4

1180.5

1235.4

1233.8

1220.2

1291.9

Nondurables

1876.6

1947.2

1986.7

2037.1

2103.0

2177.6

2255.4

2337.6

2392.8

2404.2

2429.3

2486.4

Services

3758.0

3928.8

4023.2

4100.4

4178.8

4310.9

4427.3

4545.5

4674.8

4805.8

4880.8

4993.9

1133.3

1232.1

1180.5

1071.5

1081.8

1144.3

1225.8

1306.8

1368.4

1390.8

1373.8

1410.2

840.2

918.9

874.2

820.2

843.1

905.1

991.8

1050.6

1064.5

1076.5

1095.2

1151.8

398.5

467.6

459.0

437.4

462.7

505.7

554.3

595.9

645.5

690.3

713.6

755.1

Computers & Peripherals

83.9

101.6

103.7

108.9

123.2

137.2

173.5

203.9

243.3

288.9

320.0

380.2

Communications Equipment

95.4

124.1

114.7

90.5

91.4

100.1

103.4

113.8

120.0

125.2

126.8

128.9

Industrial Equipment

147.9

159.2

145.7

134.5

138.4

134.0

144.3

149.6

151.7

146.3

140.4

147.5

Transportation Equipment

167.6

160.8

141.7

126.3

118.3

142.9

159.5

171.9

154.0

140.5

150.3

162.2

31.7

32.6

33.5

23.9

17.8

17.3

12.8

10.1

13.6

11.2

12.0

12.6

45.7

40.9

30.4

30.1

27.4

35.8

41.7

44.0

28.6

25.6

30.8

29.2

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

Nonresidential Fixed Investment Equipment & Software Information Processing Equipment

Aircraft Other Equipment Structures

293.2

313.2

306.1

253.8

243.5

246.7

247.8

268.6

303.4

311.7

288.7

279.8

129.4

137.6

130.3

109.8

102.6

105.1

104.3

111.9

122.0

115.3

98.2

100.1

Manufacturing

33.9

31.8

28.5

16.7

15.4

16.2

19.0

20.4

21.5

24.5

21.7

25.4

Power & Communication

40.8

46.8

48.2

47.1

41.0

33.7

32.7

35.2

41.9

44.3

42.5

41.0

Mining & Petroleum

21.3

27.2

32.0

24.5

29.0

33.3

35.1

39.8

45.6

48.1

49.0

40.7

Other

67.9

69.9

66.6

55.9

53.4

54.6

51.9

54.6

64.6

71.2

66.4

65.6

443.6

446.9

448.5

469.9

509.4

560.2

597.1

569.5

472.8

363.2

344.5

410.3

Exports

1008.2

1096.3

1036.7

1013.3

1026.1

1126.1

1203.4

1304.1

1409.9

1527.2

1653.4

1779.0

Imports

1304.5

1475.8

1435.8

1484.6

1545.0

1720.0

1821.5

1928.6

1965.5

1982.5

2023.1

2135.9

573.7

578.8

601.4

643.4

687.1

715.9

726.5

742.3

755.1

783.0

792.5

787.4

1113.2

1142.8

1179.0

1215.5

1217.8

1215.8

1219.7

1239.0

1266.4

1278.9

1269.1

1265.5

Commercial & Health Care

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 theSummary Forecast of theof U.S. Table 3. Quarterly the

Forecast of the U.S.

2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2010Q1 2010Q1 2010Q2 2010Q3 2010Q4 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.

4.8 3.9 2.8 4.4 2.2 2.8 9.1 6.1 6.4 11.2 4.4 7.9 0.0 -68.9 -40.0 15.4 5.1 -7.4 19.8 23.4 30.4 -22.3 17.9 4.3 6.9 1.9

0.6 2.4 2.3 2.0 1.2 2.8 5.9 3.1 13.9 29.4 12.4 -13.6 -17.6 -39.7 -3.7 11.9 1.7 53.3 26.5 6.5 16.2 -28.0 6.4 -1.4 0.5 2.7

0.6 -0.2 1.0 -6.2 -1.3 3.4 -2.6 -0.7 6.1 16.7 -3.8 10.0 -24.6 33.5 -24.0 -6.3 -11.3 30.4 -17.2 -8.1 0.1 -29.8 5.4 2.5 4.5 0.6

Composition 0.1 2.3 1.4 2.0 1.7 2.9 -1.0 7.7 0.4 2.0 2.8 2.6 -2.8 -1.8 -3.6 -1.0 2.2 4.3 17.8 12.4 3.8 6.3 -10.9 -26.9 -8.1 12.4 -51.1 -9.4 18.5 29.0 -1.2 -3.5 -7.4 -8.9 -2.0 -15.5 4.8 -1.3 -3.0 2.7 8.7 1.3 -28.1 -23.5 6.9 8.5 -2.6 2.0 3.4 3.1 -0.3 0.0

of Real GDP, Percent Change, Annual Rate 0.6 0.2 2.1 2.6 2.7 3.1 -0.2 0.0 2.4 2.3 2.4 2.6 0.0 -0.2 1.6 2.0 2.5 2.8 -5.5 -8.1 2.4 1.9 6.7 6.4 0.1 -0.1 2.0 2.3 2.2 2.2 0.9 1.1 1.3 1.9 2.0 2.4 2.8 -5.4 -0.1 -0.6 1.6 1.0 7.8 -3.4 4.8 3.0 3.3 3.9 5.2 -1.0 6.2 4.0 4.5 5.0 14.2 -6.3 19.4 15.5 18.1 17.6 7.7 -8.4 4.6 0.6 0.8 1.4 -0.7 -0.6 1.3 3.8 5.9 0.5 34.0 -10.6 9.3 4.0 2.4 1.8 2.2 36.5 12.2 1.6 5.0 5.4 39.5 15.1 15.6 4.6 -3.0 -37.5 -7.4 -9.7 -10.9 -8.8 -2.2 -5.7 -22.5 -18.9 -21.6 -10.7 4.7 1.1 -27.2 -41.1 23.0 13.8 9.5 13.4 -3.6 -5.0 -7.0 -8.3 -1.2 -5.2 20.7 11.2 -5.7 -20.6 -16.9 -24.5 -9.8 -12.7 -13.7 0.9 -0.2 -2.7 -17.2 -3.8 8.8 11.8 14.5 20.5 8.4 7.5 8.1 8.4 7.7 7.4 6.0 0.8 -0.1 2.6 5.3 5.8 2.6 1.2 -0.5 -0.5 -0.7 -0.4 -0.8 -1.0 -1.2 -0.9 -0.8 -0.5

Prices & Wages, Percent Change, Annual Rate 2.3 2.5 2.5 1.2 2.2 1.9 3.5 1.8 2.1 0.6 1.9 1.3 2.3 2.3 2.2 2.2 2.3 2.1 4.0 1.5 1.9 0.5 -0.7 -0.8 3.3 3.1 3.1 2.8 3.0 2.8

2.4 4.9 2.5 8.9 3.4

2.6 4.3 2.5 8.8 3.0

1.0 3.2 2.3 7.9 3.1

75.2 6.1 3.5 79.8 26.0 85.7 15.867 1.300 4.757 4.7 0.8 -230 -710

90.5 1.9 0.4 79.3 -21.7 77.5 16.105 1.151 4.387 4.8 0.8 -227 -692

97.9 1.3 -0.1 78.8 2.7 72.9 15.209 1.035 4.390 4.9 -0.3 -334 -722

112.6 0.5 -1.2 78.3 -33.2 69.9 14.891 0.893 4.158 5.1 -0.3 -726 -762

109.3 2.3 2.1 78.3 -28.2 73.2 15.250 0.866 3.925 5.2 0.0 -470 -759

Other Key Measures 100.7 99.0 98.7 95.2 0.7 0.7 2.4 2.5 1.4 1.3 2.7 3.2 78.2 77.8 77.7 77.9 -7.4 -2.4 -10.6 -1.0 76.8 75.4 78.6 79.7 15.195 14.815 15.033 15.055 0.851 0.901 0.989 1.089 3.893 3.989 4.038 4.097 5.4 5.6 5.7 5.8 0.0 0.0 0.4 0.6 -439 -408 -431 -435 -750 -724 -701 -684

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))

5.07 4.35 4.52 4.50 4.73 4.94 6.55 1491 -1.5 0.758 -11.9

4.50 3.44 3.62 3.79 4.26 4.61 6.23 1494 0.9 0.721 -19.2

3.18 2.15 2.10 2.75 3.66 4.41 5.87 1350 -38.5 0.709 -7.0

2.09 1.41 1.83 2.96 3.77 4.51 5.98 1359 2.6 0.695 -7.9

2.00 1.47 1.84 2.86 3.75 4.40 5.84 1364 1.5 0.693 -0.9

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)

11735 5.4 10245 5.8 8692 4.0 0.4 1410 -8.7

11857 4.1 10349 4.0 8695 0.1 0.0 1426 4.3

11986 4.4 10476 4.9 8726 1.4 0.2 1355 -19.8

12180 6.5 10906 16.4 9007 12.8 2.9 1303 -15.2

12185 0.2 10722 -6.8 8792 -9.6 -0.2 1304 0.3

12288 3.4 10774 1.9 8792 0.0 -0.2 1275 -8.9

24

U.S. Forecast

3.7 3.3 3.4 7.8 2.8 2.9 6.4 8.3 7.6 17.6 1.9 7.1 18.0 7.0 14.3 1.8 8.6 16.1 -3.4 -11.7 1.7 21.2 6.6 7.9 -1.0 0.4

3.5 3.2 3.2 6.0 2.7 3.0 7.2 8.8 8.1 17.4 3.6 6.9 17.6 3.1 25.9 3.4 8.9 14.1 -2.4 -7.9 4.1 20.9 6.4 8.6 -1.3 1.0

Billions of Dollars 11658.9 11675.7 11693.1 11697.1 11763.9 11781.4 11786.7 11847.7 11925.3 12007.0 12100.6 12203.2 12317.3 12424.6 13970.5 14074.2 14185.2 14228.6 14393.9 14506.2 14604.3 14724.5 14904.0 15077.5 15267.9 15469.6 15687.9 15900.6 1.0 2.8 2.4 1.6 3.1

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. $)

3.4 3.0 2.7 6.2 2.3 2.3 4.8 6.5 6.5 18.0 1.6 7.0 12.3 3.3 1.1 0.6 10.1 25.7 0.2 -21.0 -1.1 21.1 7.0 6.1 -0.7 0.3

1.9 1.5 2.1 0.4 2.8

1.9 1.6 2.0 -0.3 2.6

1.9 1.7 2.1 0.7 3.0

1.9 1.8 2.1 0.6 2.9

93.8 2.3 2.7 78.3 10.1 83.1 15.238 1.181 4.179 5.8 0.8 -427 -674

93.1 2.3 2.8 78.9 24.4 86.7 15.410 1.273 4.281 5.8 1.1 -410 -681

92.4 2.2 3.5 79.7 36.9 88.4 15.725 1.398 4.407 5.7 1.5 -411 -684

91.4 2.3 3.9 80.5 51.4 90.5 15.985 1.507 4.643 5.6 1.6 -397 -706

91.0 1.8 3.9 80.9 61.4 91.8 16.165 1.617 4.905 5.5 1.7 -384 -732

Financial Markets, NSA 2.05 2.54 3.24 4.00 1.62 2.22 2.97 3.80 1.93 2.56 3.34 4.12 2.71 3.03 3.54 4.16 3.63 3.89 4.32 4.76 4.23 4.43 4.79 5.17 5.62 5.81 6.25 6.71 1407 1432 1461 1499 12.6 7.3 8.0 10.3 0.693 0.689 0.687 0.693 -0.1 -2.5 -0.8 3.2

4.30 4.07 4.29 4.34 4.84 5.22 6.83 1538 10.4 0.702 5.4

4.46 4.29 4.47 4.57 4.97 5.25 6.84 1563 6.5 0.710 4.6

4.61 4.48 4.65 4.79 5.05 5.36 6.85 1589 6.6 0.716 3.2

4.85 4.73 4.91 5.08 5.26 5.59 7.02 1611 5.6 0.721 2.7

4.95 4.77 4.96 5.16 5.36 5.71 7.09 1633 5.5 0.724 1.8

Incomes 12417 12541 4.2 4.0 10897 11008 4.6 4.1 8844 8908 2.4 2.9 0.4 0.7 1382 1364 33.5 -5.2

12838 4.7 11255 4.3 9028 2.8 0.9 1373 2.6

12997 5.0 11372 4.2 9084 2.5 0.8 1367 -1.7

13162 5.1 11513 5.0 9158 3.3 1.0 1392 7.5

13340 5.4 11672 5.5 9244 3.7 1.1 1415 6.4

13529 5.7 11836 5.6 9332 3.8 1.2 1424 2.5

12689 4.7 11134 4.6 8965 2.6 0.8 1364 -0.1

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

Table 4. Quarterly Gross Domestic Product 2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 Billions 2000 Dollars Gross Domestic Product 11658.9 11675.7 11693.1 11697.1 11763.9 11781.4 11786.7 11847.7 Final Sales of Domestic Product 11626.4 11695.2 11689.1 11731.1 11791.2 11786.4 11786.6 11856.0 Total Consumption 8302.2 8349.1 8369.1 8405.3 8466.6 8466.6 8462.1 8496.3 Durables 1241.9 1248.1 1228.7 1225.6 1249.1 1231.9 1206.9 1214.1 Nondurables 2396.8 2404.2 2396.3 2398.9 2410.6 2411.0 2410.1 2422.0 Services 4689.5 4722.4 4762.2 4796.1 4827.0 4838.0 4851.2 4867.2 Nonresidential Fixed Investment 1387.3 1407.8 1398.8 1389.1 1382.8 1392.6 1373.8 1373.3 Equipment & Software 1073.5 1081.7 1079.8 1070.2 1067.6 1088.4 1079.1 1092.0 Information Processing Equipment 648.7 671.3 681.6 685.3 692.7 701.7 699.9 710.8 Computers & Peripherals 243.9 261.8 272.8 284.9 293.7 304.1 299.4 313.9 Communications Equipment 120.2 123.9 122.7 123.9 125.8 128.3 125.6 127.0 Industrial Equipment 156.0 150.6 154.4 150.2 140.1 140.3 140.0 139.8 137.6 134.8 139.0 150.8 146.8 150.2 Transportation Equipment 153.3 146.6 Aircraft 12.8 11.5 12.5 10.9 10.6 10.7 11.7 12.0 Other Equipment 25.0 24.8 23.3 24.3 26.1 28.7 29.8 30.9 Structures 311.1 320.3 315.2 314.3 311.6 305.8 298.4 290.3 Commercial & Health Care 122.9 123.4 119.9 117.7 115.1 108.6 103.4 97.9 23.7 25.5 25.3 24.4 22.7 20.4 21.5 Manufacturing 20.9 Power & Communication 43.2 46.1 44.1 44.6 44.5 44.1 43.5 42.7 Mining & Petroleum 47.8 48.5 47.6 47.2 47.5 50.0 51.4 50.6 Other 67.6 70.3 70.3 71.9 72.1 70.3 68.1 65.8 Residential Fixed Investment 463.3 430.9 398.8 370.8 349.0 334.0 330.8 338.1 Exports 1441.2 1464.1 1483.8 1509.4 1541.6 1574.1 1603.9 1636.4 Imports 1974.3 1967.3 1979.7 1967.0 1976.7 2006.5 2010.3 2009.7 Federal Government 764.0 765.0 773.7 780.3 786.5 791.6 794.1 793.1 State & Local Government 1269.6 1278.3 1280.1 1279.3 1279.3 1276.9 1273.8 1270.1 Table 5. Annual Employment

Table 5. Annual Employment 1999

2000

2001

2002

History 2003

2004

2005

11925.3 12007.0 12100.6 12203.2 12317.3 12424.6 11923.7 11994.4 12073.6 12163.9 12263.7 12361.2 8539.2 8592.5 8652.0 8710.4 8784.4 8855.4 1219.7 1240.2 1260.0 1279.4 1304.4 1323.9 2435.9 2449.2 2462.9 2476.9 2494.6 2511.4 4890.5 4914.4 4944.4 4973.3 5009.9 5047.8 1371.3 1376.9 1380.4 1396.8 1419.0 1444.6 1100.3 1109.3 1120.0 1138.2 1161.7 1187.2 717.8 726.0 735.2 747.1 761.3 776.7 326.0 340.8 355.8 371.8 388.2 405.1 127.2 127.5 127.9 128.5 129.1 130.2 140.3 141.6 143.7 146.2 148.8 151.4 151.7 152.6 153.3 158.1 165.2 172.4 12.1 12.2 12.4 12.5 12.7 12.8 31.3 31.1 28.1 28.2 29.2 31.1 283.9 282.3 278.3 278.7 280.0 282.3 95.2 96.4 96.6 99.1 101.2 103.5 22.3 22.8 23.6 25.1 26.1 27.0 41.9 41.7 41.2 41.2 40.9 40.6 48.0 46.0 43.2 40.9 39.7 38.9 65.9 65.9 65.4 65.3 65.5 66.2 348.1 360.8 379.2 399.2 420.4 442.3 1670.6 1702.9 1734.5 1764.8 1793.9 1822.8 2022.7 2049.7 2079.6 2111.3 2153.2 2199.4 792.2 790.9 790.1 788.7 786.7 784.0 1267.4 1265.0 1263.3 1264.4 1265.6 1268.7

2006

2007

Millions Total Nonfarm Employment 128.992 131.794 131.830 130.340 129.996 131.419 133.695 136.092 137.618 Private Nonfarm 108.680 111.003 110.709 108.831 108.416 109.799 111.889 114.121 115.418 Mining 0.518 0.520 0.532 0.512 0.503 0.523 0.562 0.620 0.662 7.616 Construction 6.545 6.788 6.826 6.715 6.736 6.973 7.333 7.693 Manufacturing 17.323 17.265 16.440 15.257 14.508 14.315 14.226 14.157 13.883 Trade, Transportation, and Utilities 25.770 26.225 25.986 25.500 25.287 25.532 25.960 26.278 26.605 Transportation & Warehousing 4.298 4.412 4.373 4.224 4.184 4.248 4.362 4.470 4.536 Financial Activities 7.646 7.688 7.809 7.848 7.976 8.030 8.153 8.329 8.310 Education & Health 14.795 15.109 15.643 16.201 16.588 16.951 17.372 17.825 18.327 Professional & Business Services 15.955 16.672 16.480 15.975 15.985 16.387 16.949 17.572 17.966 Information 3.418 3.629 3.629 3.394 3.189 3.117 3.061 3.037 3.029 Leisure & Hospitality 11.544 11.860 12.032 11.986 12.175 12.494 12.813 13.107 13.470 Government 20.312 20.790 21.120 21.509 21.580 21.620 21.806 21.971 22.200 Federal 2.770 2.865 2.763 2.766 2.760 2.731 2.732 2.732 2.727 State & Local 17.542 17.925 18.357 18.744 18.820 18.889 19.074 19.239 19.474

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

2.44 2.51 -8.37 6.47 -1.35 2.32 3.13 2.48 2.42 5.36 6.18 2.77 2.02 -0.04 2.35

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

Growth Rates 1.09 1.73 1.28 1.90 4.03 7.46 3.51 5.16 -1.31 -0.62 0.97 1.67 1.53 2.69 0.68 1.53 2.19 2.48 2.51 3.43 -2.25 -1.79 2.62 2.55 0.19 0.86 -1.06 0.04 0.37 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

137.864 138.149 139.704 115.453 115.628 117.062 0.695 0.706 0.670 7.195 6.888 6.985 13.498 13.176 13.081 26.547 26.499 26.796 4.529 4.537 4.668 8.185 8.213 8.393 18.833 19.286 19.586 18.192 18.495 19.353 3.009 2.959 2.910 13.722 13.864 13.863 22.411 22.521 22.642 2.724 2.722 2.767 19.687 19.799 19.875

0.18 0.03 4.98 -5.53 -2.77 -0.22 -0.15 -1.50 2.76 1.26 -0.67 1.88 0.95 -0.09 1.09

0.21 0.15 1.68 -4.24 -2.38 -0.18 0.16 0.34 2.41 1.66 -1.64 1.03 0.49 -0.05 0.57

1.12 1.24 -5.08 1.41 -0.72 1.12 2.89 2.19 1.56 4.63 -1.67 0.00 0.54 1.63 0.39

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 2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4

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

137.8 115.6 0.7 7.6 13.9 26.6 4.5 8.3 18.4 18.0 3.0 13.5 22.2 2.7 19.5

138.0 115.7 0.7 7.5 13.8 26.7 4.5 8.3 18.5 18.1 3.0 13.6 22.3 2.7 19.6

137.9 115.6 0.7 7.4 13.7 26.6 4.5 8.2 18.7 18.1 3.0 13.7 22.4 2.7 19.6

137.8 115.4 0.7 7.3 13.5 26.6 4.5 8.2 18.8 18.1 3.0 13.7 22.4 2.7 19.7

137.8 115.4 0.7 7.1 13.4 26.5 4.5 8.2 18.9 18.2 3.0 13.7 22.4 2.7 19.7

Employment (Millions) 137.9 137.9 138.0 138.2 115.4 115.4 115.5 115.7 0.7 0.7 0.7 0.7 7.0 6.9 6.9 6.9 13.3 13.3 13.2 13.1 26.5 26.4 26.5 26.5 4.5 4.5 4.5 4.5 8.1 8.2 8.2 8.2 19.0 19.1 19.2 19.4 18.4 18.4 18.4 18.5 3.0 3.0 3.0 3.0 13.8 13.9 13.9 13.8 22.5 22.5 22.5 22.5 2.7 2.7 2.7 2.7 19.7 19.8 19.8 19.8

138.5 116.0 0.7 6.9 13.1 26.6 4.6 8.2 19.4 18.7 2.9 13.8 22.5 2.7 19.8

138.9 116.2 0.7 6.9 13.0 26.7 4.6 8.3 19.5 18.9 2.9 13.8 22.7 2.8 19.8

139.4 116.7 0.7 6.9 13.1 26.8 4.6 8.4 19.6 19.2 2.9 13.8 22.7 2.8 19.9

140.0 117.3 0.7 7.0 13.1 26.8 4.7 8.4 19.6 19.5 2.9 13.9 22.6 2.7 19.9

140.6 117.9 0.7 7.1 13.1 26.9 4.7 8.5 19.7 19.8 2.9 13.9 22.6 2.7 19.9

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

0.75 0.83 5.39 -2.32 -1.65 0.71 0.81 -0.27 3.37 1.20 -0.97 2.56 0.36 -0.24 0.45

0.79 0.64 3.96 -4.63 -1.80 0.45 0.53 -2.28 2.51 2.54 -0.66 3.41 1.59 0.69 1.71

-0.32 -0.62 7.23 -7.41 -2.84 -1.13 -0.83 -1.50 2.95 -0.57 -1.06 1.12 1.20 -0.78 1.48

-0.26 -0.41 3.38 -7.00 -4.29 -0.09 0.71 -0.91 2.72 1.09 -0.93 0.54 0.53 0.41 0.55

0.05 -0.09 4.09 -6.12 -3.90 -0.72 -2.31 -2.31 2.84 2.57 -0.85 1.47 0.77 -0.22 0.91

0.02 -0.10 2.63 -7.60 -1.89 -0.89 0.03 -2.13 0.61 2.58 1.43 2.69 0.64 -0.24 0.77

Growth Rates 0.01 0.43 -0.08 0.44 3.47 1.03 -5.02 -1.79 -1.63 -2.61 -1.65 1.32 -1.27 1.35 2.43 1.74 2.63 3.61 0.43 0.30 -4.28 -2.78 2.00 -0.29 0.48 0.38 -0.31 -0.03 0.59 0.43

0.82 0.92 -5.05 0.80 -1.65 1.39 2.61 1.42 0.68 3.98 -1.42 0.33 0.32 1.00 0.23

1.11 0.96 -6.67 0.17 -0.99 0.61 2.33 2.73 1.20 4.59 -1.55 -0.08 1.85 13.22 0.29

1.48 1.76 -6.89 3.16 0.59 1.58 3.85 2.23 1.51 6.06 -2.46 -0.42 0.04 -2.96 0.47

1.63 2.05 -5.78 4.45 0.82 1.01 3.55 3.23 1.65 6.34 -2.35 0.72 -0.55 -8.59 0.58

1.69 1.95 -5.17 4.97 1.21 0.59 3.76 3.76 0.63 5.39 -0.46 1.90 0.32 -3.29 0.81

0.61 0.69 -2.39 -1.13 -2.29 1.29 2.37 0.47 2.95 2.97 -0.56 -1.25 0.25 0.12 0.26

Table 7. Quarterly Implicit Price Deflators (2000=100) Table 7. Quarterly Implicit Price Deflators (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 26

U.S. Forecast

2007Q3

2007Q4

2008Q1

2008Q2

2008Q3

2008Q4

2009Q1

2009Q2

2009Q3

2009Q4

2010Q1

2010Q2

2010Q3

2010Q4

119.8 117.9 87.1 98.9 69.6 99.3 118.8 120.4 90.0 186.7 194.3 124.9 125.1 124.6 137.1 158.8 136.8 97.4 125.3 130.4 120.1 133.4

120.6 119.0 86.7 99.1 68.6 99.6 120.8 121.5 90.3 202.8 214.9 126.0 126.1 125.5 140.0 156.1 138.4 97.5 126.1 131.3 120.7 135.1

121.3 120.1 86.7 98.7 68.3 100.8 122.8 122.9 90.2 214.6 237.1 126.8 127.0 126.7 140.3 162.6 140.3 97.5 128.5 132.2 122.1 136.5

121.6 121.1 86.6 98.6 67.8 102.3 124.2 124.6 89.9 220.1 250.6 128.0 127.8 129.0 141.4 177.8 141.9 97.7 129.3 133.0 123.8 137.4

122.4 122.0 86.5 98.8 67.2 102.8 125.1 125.8 90.0 221.5 243.3 129.1 128.4 132.1 143.6 199.6 143.4 97.7 130.2 133.9 124.6 138.3

123.1 122.5 86.4 99.1 66.6 103.2 125.3 126.7 90.2 214.5 234.6 130.0 129.1 133.7 145.6 207.4 144.9 97.7 130.9 134.8 125.3 139.3

123.9 123.2 86.2 99.3 66.0 103.5 125.9 127.6 90.2 214.5 228.5 130.9 129.8 134.5 146.0 211.7 146.4 97.5 131.6 135.7 126.1 140.3

124.3 123.6 86.1 99.6 65.5 103.8 125.6 128.2 90.3 203.5 219.8 131.7 130.6 134.5 145.6 209.6 148.0 97.3 132.3 136.6 126.9 141.3

125.0 124.2 86.0 100.0 64.9 104.1 126.2 128.8 90.3 204.9 218.7 132.5 131.4 134.1 145.0 205.6 149.5 97.1 133.0 137.5 127.6 142.3

125.6 124.7 85.9 100.3 64.3 104.4 126.5 129.3 90.3 202.3 217.1 133.3 132.2 133.6 144.4 200.0 151.0 96.8 133.6 138.4 128.3 143.3

126.2 125.2 85.7 100.6 63.7 104.7 126.8 129.8 90.4 200.9 217.2 134.0 133.0 133.5 144.1 197.8 152.5 96.5 134.2 139.2 129.0 144.3

126.8 125.7 85.6 100.9 63.1 104.9 127.3 130.2 90.4 200.8 217.2 134.8 133.8 133.3 144.1 193.8 153.9 96.2 134.8 140.1 129.6 145.3

127.4 126.3 85.4 101.2 62.5 105.2 127.7 130.7 90.4 199.6 216.5 135.6 134.6 133.5 144.3 194.2 155.3 95.9 135.3 140.8 130.4 146.3

128.0 126.8 85.2 101.4 61.9 105.5 128.1 131.1 90.5 199.6 216.7 136.4 135.4 133.7 144.6 193.3 156.6 95.6 135.7 141.6 131.1 147.2

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

2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 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

1.0 1.8 -1.8 1.7 -6.2 -0.3 1.1 4.6 -1.8 -9.4 19.1 2.8 2.9 -0.7 0.7 -20.5 6.5 1.8 0.1 3.5 4.8 4.0

2.4 3.9 -1.7 0.7 -5.8 1.4 6.9 3.6 1.2 34.4 42.3 3.4 3.1 2.8 8.3 -6.9 4.8 0.3 2.5 2.6 1.8 4.9

2.6 3.5 -0.2 -1.4 -1.7 4.9 6.4 4.8 -0.4 23.3 41.4 2.7 2.9 3.9 0.9 16.8 5.6 0.2 7.8 2.7 4.6 4.2

1.0 3.5 -0.3 -0.6 -3.1 5.6 4.7 5.3 -1.1 10.2 22.7 3.5 2.4 7.2 3.1 37.4 4.4 0.8 2.5 2.6 5.7 2.7

2.3 2.9 -0.6 1.0 -3.7 2.1 3.0 4.0 0.2 2.5 -11.6 3.4 2.1 9.7 6.4 48.9 4.4 0.1 2.9 2.7 2.5 2.7

2.5 1.9 -0.6 1.1 -3.5 1.4 0.5 3.0 0.8 -12.7 -14.3 3.0 2.1 4.9 5.4 15.8 4.2 0.1 2.1 2.6 2.5 2.7

2.5 2.2 -0.6 0.8 -3.3 1.4 1.9 2.5 0.4 0.0 -10.4 2.8 2.2 2.3 1.2 8.2 4.2 -1.1 2.1 2.6 2.5 3.0

1.2 1.2 -0.5 1.4 -3.4 1.3 -0.9 2.1 0.3 -20.4 -15.2 2.5 2.3 -0.2 -1.2 -3.8 4.3 -0.7 2.1 2.7 2.4 2.9

2.2 2.0 -0.4 1.6 -3.6 1.1 1.9 1.7 0.1 2.8 -2.0 2.4 2.5 -0.9 -1.6 -7.7 4.2 -0.8 2.1 2.6 2.3 2.9

1.9 1.5 -0.7 1.3 -3.7 1.0 0.8 1.6 -0.1 -5.2 -3.0 2.2 2.5 -1.5 -1.6 -10.9 4.0 -1.2 1.9 2.5 2.1 2.6

1.9 1.7 -0.7 1.2 -3.8 1.0 1.1 1.4 0.1 -2.8 0.2 2.3 2.4 -0.3 -0.9 -4.3 3.9 -1.2 1.8 2.5 2.2 2.8

1.9 1.7 -0.8 1.1 -3.8 1.0 1.4 1.3 0.0 -0.1 0.0 2.2 2.4 -0.7 0.0 -8.1 3.7 -1.4 1.6 2.4 2.0 2.7

1.9 1.8 -0.8 1.0 -3.8 1.1 1.2 1.5 0.3 -2.4 -1.3 2.4 2.4 0.7 0.5 0.7 3.5 -1.2 1.4 2.3 2.3 2.7

1.9 1.8 -0.7 1.0 -3.8 1.2 1.5 1.4 0.3 -0.1 0.3 2.3 2.4 0.4 1.0 -1.7 3.4 -1.4 1.3 2.2 2.3 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

1999

2000

2001

2002

History 2003

2004

2005

2006

2007

2008

Forecast 2009

2010

97.9 97.6 101.6 99.6 104.7 100.8 96.2 97.7 101.3 78.2 72.7 97.4 96.9 98.1 98.4 84.9 97.6 103.5 95.8 96.3 97.5 96.5

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 99.1 100.0 100.0 100.0 100.0 100.0 100.0

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

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

113.0 111.6 90.0 98.6 76.8 97.7 111.6 112.7 91.7 150.8 159.6 116.7 116.1 115.5 118.0 160.2 123.1 94.4 116.6 122.0 112.7 123.4

116.6 114.7 88.9 99.3 73.4 98.4 115.0 115.3 91.3 170.5 180.3 120.7 120.3 121.5 132.3 164.2 129.1 95.1 120.8 126.7 117.0 128.2

119.7 117.6 87.3 98.7 70.1 99.4 118.4 119.6 90.6 185.5 192.6 124.6 124.7 124.7 137.5 161.5 135.8 97.0 125.4 129.9 119.4 132.9

122.1 121.4 86.5 98.8 67.5 102.3 124.3 125.0 90.1 217.7 241.4 128.5 128.1 130.4 142.7 186.9 142.6 97.7 129.8 133.5 123.9 137.9

124.7 123.9 86.1 99.8 65.2 104.0 126.0 128.5 90.3 206.3 221.0 132.1 131.0 134.2 145.3 206.7 148.8 97.2 132.6 137.0 127.2 141.8

127.1 126.0 85.5 101.0 62.8 105.1 127.5 130.4 90.4 200.2 216.9 135.2 134.2 133.5 144.3 194.8 154.6 96.1 135.0 140.4 130.0 145.8

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 1999

2000

2001

2002

History 2003

2004

2005

2006

2007

2008

Forecast 2009

2010

1.4 1.7 -2.4 0.4 -6.2 -1.6 2.5 1.9 -1.6 9.1 1.4 2.2 2.8 -0.1 -0.7 0.6 2.2 -2.4 2.9 3.3 2.2 3.3

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

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

3.2 2.9 -0.7 1.8 -3.8 -0.4 3.7 2.3 -1.0 21.5 27.3 3.4 2.6 5.1 6.2 19.2 5.3 -0.9 3.4 3.6 4.0 4.4

3.2 2.8 -1.3 0.7 -4.5 0.8 3.1 2.3 -0.4 14.0 13.7 3.4 3.6 5.3 12.2 4.4 4.9 0.8 3.6 3.8 3.8 3.9

2.7 2.5 -1.8 -0.6 -4.4 1.0 3.0 3.7 -0.8 9.5 6.9 3.2 3.7 2.6 3.9 -1.3 5.1 2.0 3.8 2.5 2.1 3.7

2.0 3.3 -0.8 0.1 -3.7 2.8 5.0 4.5 -0.6 18.2 26.1 3.1 2.7 4.6 3.8 16.0 5.1 0.7 3.5 2.8 3.8 3.7

2.1 2.1 -0.5 1.0 -3.4 1.7 1.4 2.8 0.3 -5.2 -8.4 2.8 2.3 3.0 1.8 11.9 4.3 -0.5 2.2 2.7 2.7 2.9

1.9 1.7 -0.7 1.2 -3.7 1.1 1.1 1.5 0.1 -2.9 -1.8 2.3 2.4 -0.5 -0.7 -5.7 3.9 -1.2 1.8 2.5 2.2 2.8

2007

2008

Forecast 2009

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

Table 11. Personal Income and its Components

Table 11. Personal Income and its Components 1999

Personal Income 7802.4 Wages & Salaries 5357.1 Other Labor Income 562.4 Nonfarm Income 649.7 Farm Income 28.6 Rental income 147.4 Dividends 335.6 Interest Income 928.6 Transfer Payments 1022.1 Personal Social Insurance Tax 338.1

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

5.1 6.7 6.2 8.6 -2.0 7.3 -4.1 -0.5 4.4 6.6

2000

2001

8429.7 5782.7 609.9 705.7 22.7 150.3 376.1 1011.0 1084.1 359.2

8724.1 5942.1 642.7 752.2 19.7 167.4 369.0 1011.0 1193.9 374.5

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

2002

History 2003

2004

2005

2006

Personal Income Billions Current Dollars 8881.9 9163.6 9727.2 10301.1 10983.4 11659.5 6091.2 6325.4 6656.4 7029.7 7448.3 7874.2 745.1 815.6 868.5 927.7 970.7 1016.8 939.1 987.4 1006.4 757.8 782.1 874.3 10.6 29.2 37.4 30.8 19.4 36.2 153.0 133.0 118.4 42.9 54.6 65.4 397.2 422.6 537.1 598.9 696.3 792.5 936.1 914.1 895.1 1018.9 1100.2 1154.7 1286.2 1351.0 1422.5 1520.7 1612.5 1731.7 384.8 396.5 420.5 445.7 475.7 503.7

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

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

Growth Rates 6.1 5.9 5.2 5.6 6.5 6.8 11.8 7.4 32.5 -17.1 -10.4 -66.8 26.7 12.6 -2.1 13.8 5.3 6.9 6.0 6.0

6.6 6.0 4.6 5.2 -36.2 33.4 16.3 8.1 6.0 6.8

6.2 5.7 4.7 1.9 90.8 21.1 13.9 5.0 7.4 5.9

2010

12159.6 12621.3 13257.0 8172.2 8464.7 8846.0 1062.1 1101.3 1146.7 1028.3 1080.8 1131.6 30.6 25.5 24.7 83.0 93.6 99.9 865.5 893.7 906.2 1159.5 1194.5 1318.8 1862.0 1946.5 2057.4 524.2 543.1 570.1

4.3 3.8 4.5 2.2 -10.7 28.7 9.3 0.5 7.5 4.1

3.8 3.6 3.7 5.1 -12.5 12.9 3.3 3.0 4.6 3.6

5.0 4.5 4.1 4.7 -2.7 6.7 1.4 10.4 5.7 5.0

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

Table 12. Personal Consumption Expenditures (Current Dollars)

2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4

2010Q1 2010Q2 2010Q3 2010Q4

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

9785.7 1081.6 418.6 66.4 437.5 195.5 2846.3 372.4 24.0 341.9 1342.4 765.6

Consumer Expenditures by Type Billions Current Dollars 9936.6 10046.9 10178.1 10325.9 10375.4 10426.4 10499.3 10604.8 10711.8 10831.4 10950.2 11091.7 11231.4 1082.5 1065.1 1061.6 1080.2 1063.8 1040.5 1045.5 1049.2 1065.1 1080.2 1094.7 1114.0 1128.6 393.2 401.7 417.1 414.4 412.8 414.8 408.3 395.9 392.8 396.2 406.5 414.6 422.4 69.4 71.5 66.8 66.5 67.5 68.3 68.3 67.9 68.6 70.4 72.7 74.1 75.5 428.0 445.4 441.3 426.6 423.6 435.1 424.8 415.5 425.1 438.5 452.9 460.3 463.8 195.3 199.5 194.3 194.2 194.7 199.6 199.6 197.6 195.5 197.2 201.2 204.5 207.2 2904.5 2941.6 2979.5 3016.6 3020.6 3034.2 3042.0 3074.3 3097.6 3123.5 3152.3 3184.6 3218.1 376.9 383.7 370.0 370.2 370.3 377.9 373.5 370.8 372.9 380.7 387.0 392.2 396.5 26.3 26.2 27.3 29.3 30.7 29.3 28.1 27.0 26.4 26.2 26.1 26.1 26.1 380.7 376.9 369.1 389.7 402.8 402.2 388.2 388.0 375.0 378.2 377.9 376.9 377.9 1368.2 1382.6 1400.9 1422.7 1437.0 1449.4 1464.1 1479.3 1493.5 1507.0 1521.0 1535.7 1550.4 811.0 829.7 769.9 769.9 774.8 784.5 793.9 799.0 803.7 818.9 840.2 853.7 867.2

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

8302.2 1241.9 601.0 227.9 442.3 201.0 2396.8 413.7 12.4 183.2 1115.0 690.2

8349.1 1248.1 607.7 238.6 445.4 198.9 2404.2 409.9 12.7 182.1 1126.4 689.9

8369.1 1228.7 606.3 239.3 432.1 196.6 2396.3 410.6 12.4 181.7 1124.8 684.1

8405.3 1225.6 608.8 247.6 429.7 194.4 2398.9 411.8 12.3 183.0 1124.7 683.8

Consumer Expenditures by Type Billions 2000 Dollars 8466.6 8466.6 8462.1 8496.3 8539.2 8592.5 1249.1 1231.9 1206.9 1214.1 1219.7 1240.2 605.9 617.6 613.2 599.4 599.9 616.2 292.8 257.7 265.4 271.3 281.7 305.8 427.9 440.3 428.7 418.4 426.6 437.0 192.0 198.2 197.7 195.1 192.6 193.5 2410.6 2411.0 2410.1 2422.0 2435.9 2449.2 417.3 420.1 414.3 410.9 412.9 421.5 12.0 12.0 12.0 11.8 12.0 12.1 185.8 181.6 181.0 180.9 184.2 187.0 1130.7 1133.7 1136.3 1141.9 1148.8 1155.2 689.1 686.7 689.7 689.0 687.9 691.0

8652.0 1260.0 630.8 319.5 442.5 195.3 2462.9 424.7 12.0 187.7 1161.4 695.1

8710.4 1279.4 644.4 333.7 448.8 196.7 2476.9 428.4 12.0 188.2 1168.3 698.9

8784.4 1304.4 663.6 349.3 455.0 199.4 2494.6 433.8 12.1 188.8 1175.2 705.0

8855.4 1323.9 682.4 365.6 457.2 201.7 2511.4 438.2 12.1 189.4 1182.3 710.9

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

2.8 4.4 10.4 25.5 -5.3 11.6 2.2 6.1 -20.6 0.8 1.3 3.2

2.3 2.0 4.4 18.7 2.8 -4.2 1.2 -3.7 10.8 -2.3 4.1 -0.1

1.0 -6.2 -0.9 1.1 -12.0 -4.7 -1.3 0.6 -11.4 -0.9 -0.5 -3.4

1.7 -1.0 1.7 13.9 -2.2 -4.5 0.4 1.2 -3.1 2.8 -0.1 -0.2

Real Consumer Expenditures Annual Growth Rate 2.9 0.0 -0.2 1.6 2.0 2.5 7.7 -5.5 -8.1 2.4 1.9 6.7 5.7 -2.8 -9.0 0.3 4.0 6.8 16.4 12.0 8.8 15.4 15.8 17.7 9.9 -10.6 -9.6 7.8 1.2 8.5 8.0 -1.2 -5.2 -5.1 -1.3 3.2 2.0 0.1 -0.1 2.0 2.3 2.2 8.1 -5.5 -3.3 2.0 4.3 4.1 -7.2 -2.7 -5.4 6.7 1.0 1.3 -3.2 -1.3 -0.2 7.4 3.3 2.6 2.2 1.1 0.9 1.9 2.4 2.2 1.7 1.8 -0.4 -0.7 0.7 1.1

2.8 6.4 9.4 17.9 5.0 3.8 2.2 3.0 -0.8 1.5 2.2 2.4

2.7 6.2 8.7 17.8 5.7 2.8 2.3 3.5 -0.2 1.1 2.4 2.2

3.4 7.8 11.9 18.7 5.5 5.6 2.8 5.0 1.1 1.3 2.4 3.5

3.2 6.0 11.3 18.7 1.9 4.5 2.7 4.1 0.1 1.2 2.4 3.3

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

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

1999

2000

2001

6282.5 817.6 293.9 40.4 370.8 132.1 1804.8 286.3 11.9 137.9 873.1 495.6

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

2002

2003

Forecast 2004

2005

2006

2007

2008

2009

2010

Consumer Expenditures by Type Billions Current Dollars 7350.7 923.9 323.1 44.6 429.3 149.7 2079.6 303.5 14.2 164.5 1001.9 595.5

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

8707.8 1023.9 378.2 56.5 444.9 176.4 2516.2 341.7 21.1 280.7 1183.8 688.8

9224.5 1048.9 404.1 61.4 434.2 184.5 2688.0 357.2 21.6 318.6 1259.3 731.4

9734.2 1078.2 416.1 65.5 441.2 191.9 2833.2 370.5 25.1 339.1 1336.4 762.2

10231.6 10560.6 11026.2 1067.7 1050.1 1104.4 412.6 394.5 411.3 67.7 69.1 73.4 427.5 426.8 455.6 197.0 196.4 203.1 2989.6 3062.0 3169.6 373.0 375.3 389.9 29.3 26.5 26.1 395.7 380.5 377.4 1410.8 1471.6 1528.5 780.8 808.2 847.7

Consumer Expenditures by Type Billions 2000 Dollars 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

6438.6 804.5 280.7 32.9 372.4 130.3 1876.6 282.7 16.4 176.3 893.6 508.6

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

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

7803.6 1137.4 492.2 150.3 451.3 183.5 2255.4 372.6 13.2 186.1 1050.0 639.1

8044.1 1180.5 550.9 188.6 437.3 190.9 2337.6 391.1 12.0 186.8 1091.8 666.2

8277.8 1235.4 593.6 221.7 446.9 197.0 2392.8 409.0 13.1 183.1 1117.0 686.6

8426.9 1233.8 611.5 252.5 432.7 196.7 2404.2 414.2 12.2 181.8 1128.5 686.1

8522.5 1220.2 605.4 287.9 427.5 193.3 2429.3 415.6 12.0 184.5 1145.5 689.2

8750.6 1291.9 655.3 342.0 450.9 198.3 2486.4 431.3 12.1 188.5 1171.8 702.5

1.8 -0.1 3.0 14.0 -3.2 -0.1 0.5 1.3 -6.8 -0.7 1.0 -0.1

1.1 -1.1 -1.0 14.0 -1.2 -1.7 1.0 0.4 -1.5 1.5 1.5 0.5

2.7 5.9 8.2 18.8 5.5 2.6 2.4 3.8 0.7 2.2 2.3 1.9

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

U.S. Forecast

5.1 11.8 14.7 50.9 10.2 11.4 4.6 7.5 2.3 3.5 3.2 5.7

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

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

3.2 4.9 10.6 26.9 0.1 5.9 3.6 6.2 -9.0 -0.3 4.0 3.4

3.1 3.8 12.0 25.5 -2.9 4.0 3.6 5.0 -9.4 0.4 4.0 4.2

2.9 4.7 7.8 17.5 2.2 3.2 2.4 4.6 9.3 -2.0 2.3 3.1

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

Business Fixed Investment

2006

2007

2008

Forecast 2009

2010

1066.3 787.1 279.2 180.6 97.0 17.8 65.8 54.6 35.6

Billions Current Dollars 1077.4 1154.5 1272.1 1397.7 800.2 856.3 937.5 992.6 277.2 298.2 334.6 405.1 203.2 236.6 174.7 188.4 91.7 101.1 109.5 124.8 16.7 18.5 23.3 26.8 66.2 68.9 70.4 85.0 49.2 44.7 47.0 54.1 45.7 55.7 73.7 105.4

1481.8 1009.7 472.1 278.4 143.5 29.4 105.5 66.1 118.0

1514.8 1022.5 492.3 287.2 137.4 34.7 115.1 73.0 120.8

1504.2 1046.8 457.4 255.6 112.6 32.6 110.4 72.6 115.7

1546.6 1096.7 449.9 271.2 117.1 39.8 114.3 72.0 93.2

874.2 306.1 208.4 114.2 28.5 65.6 65.6 52.8 32.0

820.2 253.8 170.0 91.2 16.7 62.1 62.1 51.8 24.5

Billions 2000 Dollars 991.8 1050.6 843.1 905.1 243.5 246.7 247.8 268.6 160.3 163.1 161.9 174.9 83.9 86.9 85.9 90.2 15.4 16.2 19.0 20.4 61.0 60.0 56.9 64.3 61.0 60.0 56.9 64.3 45.6 38.8 38.0 41.0 29.0 33.3 35.1 39.8

1064.5 303.4 195.5 98.3 21.5 75.8 73.9 48.3 45.6

1076.5 311.7 196.7 91.8 24.5 81.1 75.9 51.0 48.1

1095.2 288.7 171.6 74.1 21.7 76.6 75.5 48.8 49.0

1151.8 279.8 176.9 75.0 25.4 77.2 76.3 47.1 40.7

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

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

6.0 1.7 16.5 17.8 15.2 9.9 24.1 22.0 12.0

2.3 1.3 4.6 3.4 -4.2 18.6 9.6 11.0 2.6

-0.7 2.4 -7.1 -10.9 -17.9 -5.7 -4.1 -0.5 -4.1

2.8 4.8 -1.6 6.2 4.3 22.0 3.6 -0.9 -19.4

1999

2000

2001

2002

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

1133.9 851.7 282.2 207.6 109.1 32.6 65.8 44.5 20.6

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

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

840.2 293.2 216.6 113.5 33.9 69.2 69.2 45.9 21.3

918.9 313.2 222.8 121.3 31.8 69.7 69.7 51.5 27.2

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

7.7 9.6 2.6 2.3 9.2 -19.4 5.4 12.6 -11.9

8.7 7.9 10.9 7.4 11.2 -1.9 6.0 15.8 31.9

History 2003

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

2004

2005

Annual Growth Rate 7.1 10.2 7.0 9.5 7.6 12.2 7.8 8.0 10.2 8.4 10.4 27.2 4.0 2.3 -8.9 5.2 21.8 32.2

9.9 5.9 21.0 16.4 13.9 14.7 20.8 15.2 43.4

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

2007

2008

Forecast 2009

2010

2016.2 994.5 164.7 85.8 717.5

Federal Government Receipts and Expenditures 1853.2 1879.9 2008.9 2243.4 2495.8 2688.1 830.5 774.5 797.4 932.4 1053.2 1168.3 150.5 197.8 250.3 319.8 373.1 388.1 87.3 89.7 94.6 99.0 98.6 100.1 734.3 758.9 805.2 849.3 901.7 957.7

2772.6 1220.6 370.1 101.3 1001.3

2890.5 1269.3 382.7 104.5 1051.4

3046.8 1361.8 384.8 108.1 1105.5

612.9 392.6 220.3 1131.4 838.7 14.0 14.0 276.1 240.2 53.1 46.7

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

1032.4 708.3 324.1 1769.7 1343.6 30.6 30.6 391.5 296.6 48.4 -264.5

1055.5 720.4 335.1 1852.7 1403.9 31.6 31.6 413.0 315.5 49.1 -270.1

1072.0 721.9 350.0 1928.9 1457.7 32.6 32.6 434.3 313.9 49.5 -204.1

342.4 60.4 945.8 26.9 391.5 404.2

363.1 62.0 985.1 27.8 413.0 424.5

387.9 61.6 1023.6 28.9 434.3 442.6

1791.3 456.2 22.7 10.2 2.7 0.0 0.0 -11.7

1850.7 487.0 23.2 9.2 2.8 0.0 0.0 2.9

1909.8 516.8 26.8 8.4 2.8 0.0 0.0 16.7

1999

2000

2001

Receipts 1891.2 Personal Tax and Nontax Receipts 893.0 Corp. Profits Tax Accruals 213.0 Indirect Business Tax and Nontax Accruals 83.9 Contributions for Social Insurance 651.7

2053.9 999.1 219.5 87.8 691.7

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 (-)

555.8 360.6 195.2 986.1 735.7 15.2 15.2 232.9 264.7 44.1 103.6

578.8 370.3 208.5 1038.1 770.0 18.3 18.3 247.3 263.2 46.1 189.5

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

214.5 35.8 590.2 9.8 232.9 232.9

236.6 35.6 621.1 11.0 247.3 247.3

1065.0 252.4 -3.8 -10.0 1.8 0.0 0.0 50.4

1142.8 271.7 -4.5 -7.1 1.9 0.0 0.0 50.0

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

32

U.S. Forecast

History 2002 2003

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

2004

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

2005

878.5 588.7 289.8 1479.1 1079.3 35.6 35.6 361.2 238.4 62.9 -318.3

2006

932.5 624.3 308.2 1576.1 1184.6 29.7 29.7 358.6 260.5 52.6 -220.1

977.6 662.3 315.3 1685.3 1273.1 31.2 30.8 377.4 288.3 49.1 -206.4

State and Local Government Receipts and Expenditures 242.7 221.3 226.6 249.0 276.7 301.2 322.5 30.2 32.2 35.3 43.0 56.7 62.5 64.5 769.2 822.6 868.8 911.4 642.8 675.5 717.5 13.7 15.8 19.8 23.6 25.5 26.0 26.0 276.1 304.6 338.5 349.1 361.2 358.6 377.4 276.1 304.6 338.5 349.1 361.2 358.6 379.8 1212.8 305.2 5.2 3.6 2.0 0.0 0.0 4.8

1281.5 332.0 16.5 -1.6 2.0 0.0 0.0 -34.2

1336.0 353.0 24.8 0.7 2.2 0.0 0.0 -20.4

1391.3 383.8 24.1 3.4 2.4 0.0 0.0 1.6

1485.0 403.8 21.4 10.7 2.5 0.0 0.0 15.2

1590.5 400.8 21.6 11.1 2.6 0.0 0.0 24.6

1709.8 431.7 23.1 12.4 2.7 0.0 0.0 -1.5

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

U.S. U.S. Exports and Imports of Imports Goods and of Services 1999

2000

2001

2002

History 2003

Net Exports Goods & Services -260.5 Current Account -301.6 Exports - Goods & Services 991.3 -347.8 Merchandise Balance Food, Feed & Beverage 45.98 Industrial Supplies Excl Petroleum 142.4 Motor Vehicles & Parts 75.3 Capital Goods, Excl. MVP 311.3 Computer Equipment 46.8 Other 211.6 Consumer Goods, Excl. MVP 80.9 Other Consumer 41.4 Services 294.1

-379.5 -417.4 1096.3 -454.7 47.85 166.7 80.4 357.0 55.5 253.4 89.4 43.1 312.0

-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 -459.6 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 1251.8 Merchandise 1045.5 Food, Feed & Beverage 43.6 Petroleum & Products 67.8 Industrial Supplies Excl Petroleum 147.9 Motor Vehicles & Parts 179.0 Capital Goods, Excl. MVP 295.7 Computer Equipment 81.5 Other 190.5 Consumer Goods, Excl. MVP 242.1 Other Consumer 69.5 Services 206.3

1475.8 1243.5 46.0 120.2 172.8 195.9 347.0 89.8 230.9 282.0 79.6 232.3

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

-296.2 1008.2 1304.5

-379.5 1096.3 1475.8

3.7 12.1 4.3 11.4

10.6 18.0 8.8 13.2

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

2006

2007

2008

Forecast 2009

2010

-499.4 -522.1 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 -714.6 -762.0 -640.2 -754.8 -811.5 1182.4 1309.4 1467.6 -669.6 -787.1 -838.3 56.55 58.95 65.93 199.5 227.5 267.3 89.2 98.6 107.2 331.4 362.4 413.9 42.8 45.5 47.6 238.7 256.0 291.2 116.1 130.0 103.3 38.4 43.6 46.2 364.1 402.4 437.1

-708.0 -738.6 1643.0 -815.4 84.75 303.4 121.0 447.3 43.1 316.2 146.6 50.0 490.1

-756.1 -748.3 1881.4 -886.3 112.15 371.2 128.1 492.5 44.8 346.7 168.5 56.4 552.4

-651.0 -695.7 2057.7 -814.8 99.18 394.5 144.4 565.0 47.5 388.8 191.8 61.2 601.7

-611.1 -700.5 2224.3 -796.0 97.19 412.4 160.5 621.7 49.8 422.8 218.2 65.8 648.5

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 2024.0 2229.6 1499.5 1702.0 1880.4 62.1 68.1 75.0 180.5 251.9 302.4 225.1 264.8 290.1 228.2 239.5 256.7 343.6 379.3 418.3 88.6 93.3 101.4 230.7 260.3 288.5 377.2 411.5 446.1 82.9 87.0 91.9 298.3 322.0 349.2

2351.0 1979.4 81.7 330.7 291.5 258.9 445.0 104.2 306.4 478.1 93.6 371.6

2637.5 2229.2 91.0 493.7 322.5 264.9 470.9 108.2 323.9 488.1 98.0 408.4

2708.7 2283.4 95.1 475.9 340.0 278.6 496.6 112.5 337.0 494.3 102.9 425.3

2835.3 2383.9 96.5 462.3 355.9 302.0 523.6 120.9 350.2 530.2 113.4 451.4

-399.1 1036.7 1435.8

-471.4 1013.3 1484.6

Billions 2000 Dollars -518.9 -593.8 -618.0 -624.5 1026.1 1126.1 1203.4 1304.1 1545.0 1720.0 1821.5 1928.6

-555.6 1409.9 1965.5

-455.2 1527.2 1982.5

-369.7 1653.4 2023.1

-356.8 1779.0 2135.9

-5.6 -4.9 -5.3 -2.6

-2.3 2.6 -2.0 3.5

Exports & Imports % Change 3.5 13.6 10.7 12.1 7.8 16.7 12.6 10.3 1.3 9.8 6.9 8.4 4.1 11.3 5.9 5.9

11.9 5.4 8.1 1.9

14.6 12.2 8.4 0.9

9.4 2.7 8.3 2.1

8.1 4.7 7.6 5.6

2004

2005

Institute for Economic Competitiveness

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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