Economic Outlook March 2015 Economic Policy Division U.S. GDP - PowerPoint PPT Presentation

Economic Outlook March 2015 Economic Policy Division

U.S. GDP Actual and Potential Quarterly, Q1 1980 to Q4 2015 Real GDP Trillion 2009 Dollars Log Scale Forecast $18.0 $15.0 Actual $12.5 Potential $9.0 $6.5 1980 1985 1990 1995 2000 2005 2010 Potential GDP estimated by Congressional Budget Office

U.S. GDP: Estimates of Potential (Real $2013 dollars)

U.S. Potential GDP (Real $2009 dollars) % Change 4.0 3.5 3.0 Forecast 2.5 2.0 1.5 1.0 0.5 0.0 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 Potential GDP estimated by Congressional Budget Office

Real GDP Outlook Percent Change, Annual Rate 10 5 0 -5 -10 1980 1985 1990 1995 2000 2005 2010 2015

Personal Consumption Outlook Percent Change, Annual Rate 9 6 3 0 -3 Real Personal Consumption -6 Expenditures -9 1980 1985 1990 1995 2000 2005 2010 2015

Real Disposable per Capita Personal Income $ 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 1980 1985 1990

Household Net Worth Trillion $ 90 Household Wealth 80 70 60 50 40 30 20 10 1980 1985 1990 1995 2000 2005 2010

Household Balance Sheet Trillion $ 100 90 Total Assets 80 70 Nonfinancial Assets 60 Household Assets Financial Assets 50 40 30 20 10 0 1980 1985 1990 1995 2000 2005 2010 Trillion $ 20 Household Liabilities 15 10 5 0 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Domestic Bank Lending Consumer Credit Outstanding Billions $ 3,500 3,200 2,900 2,600 2,300 2,000 2007 2008 2009 2010 2011 2012 2013 2014 Residential Real Estate Loans Consumer Revolving Loans Billions $ Billions $ 1,200 1,600 900 1,300 600 2007 2008 2009 2010 2011 2012 2013 2014 2007 2008 2009 2010 2011 2012 2013 2014

Consumer Confidence 150 130 University of Michigan Consumer Sentiment 110 Conference Board Consumer Confidence 90 70 50 30 10 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 ‐ 10

Real Business Fixed Investment Percent Change, Annual Rate 20 10 0 ‐ 10 ‐ 20 ‐ 30 1990 1995 2000 2005 2010 2015

Investment Drivers Industrial Production Percent of Capacity 120 110 100 90 80 70 60 50 40 1980 1985 1990 1995 2000 2005 2010 Percent of Capacity Percent of Capacity 2 90 Inventory-to 1.9 85 Sales-Ratio 1.8 1.7 80 1.6 1.5 75 Capacity 1.4 70 Utilization 1.3 1.2 65 1.1 1 60 1980 1985 1990 1995 2000 2005 2010 2015 1980 1985 1990 1995 2000 2005 2010 2015

Sector Indicators 6 month moving average; thous. tons SA, 2000=100 140 1,400 ATA Truck Tonnage Index 1,300 120 1,200 1,100 100 1,000 Boxboard Production 900 800 80 2006 2007 2008 2009 2010 2011 2012 2013 2014 2006 2007 2008 2009 2010 2011 2012 2013 2014 thous, 6-month moving average $ Bil, 3-month moving average 600 Monthly Leasing and 12 Finance Index 10 500 8 6 Total Rail Carloadings 400 4 2 0 300 2006 2007 2008 2009 2010 2011 2012 2013 2014 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Domestic Bank Lending Billions $ 1,000 C&I Loans at Commercial Banks 900 800 700 small large 600 500 400 300 200 100 0 2007 2008 2009 2010 2011 2012 2013 2014

Business Confidence 70 ISM Manufacturing Index 65 60 55 50 45 40 35 30 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Oil Thousands of Barrels per Day 9,000 8,000 7,000 6,000 5,000 US Crude Oil Production 4,000 3,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 $/ Barrel 160 140 Spot Oil Prices: West Texas Intermediate 120 100 80 60 40 20 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Natural Gas Trillion Cubic Feet 30 27 US Natural Gas Production 24 21 18 15 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 $/ Barrel Natural Gas Prices: Henry Hub 14 12 10 8 6 4 2 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Labor Market Million Million 150 150 Total Nonfarm Jobs Household Employment 140 140 130 130 120 120 110 110 100 100 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 SA, Thousands, 4-week Moving Average Percent 700 18 Unemployment Rate 16 February 5.5% 600 Initial Unemployment 14 Claims 12 500 10 400 8 6 300 4 Unemployment Rate U ‐ 6 2 200 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Labor Market Thousands Part-time for Economic Reasons Thousands 10,000 3000 Marginally 2500 8,000 Attached 2000 6,000 1500 4,000 1000 Discouraged Workers 2,000 500 0 0 1980 1985 1990 1995 2000 2005 2010 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Median Weeks Unemployed, SA SA, percent 30 68 25 Duration of Unemployment 20 66 Civilian Participation 15 Rate 10 64 5 62 0 1980 1985 1990 1995 2000 2005 2010 2015 1980 1985 1990 1995 2000 2005 2010 2015

Employment-Population Ratio Percent 66 64 62 60 58 56 54 52 1980 1985 1990 1995 2000 2005 2010

Interest Rate Spreads Yield Spread Percent 10-Year Treasury – 3 month Treasury 4.0 3.0 2.0 1.0 0.0 ‐ 1.0 ‐ 2.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Percent 3.5 Risk Spread 4 TED Spread 3.0 Moody's Seasoned Baa 3 3-Month LIBOR Minus Corporate Bond Yield Minus 2.5 3-Month Treasury Moody's Seasoned Aaa 2.0 2 Corporate Bond Yield 1.5 1 1.0 0 0.5 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2000 2001 2003 2005 2008 2010 2012 2014

Fed Policy Billions $ 4,500 Bank Assets and Liabilities 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Jan Apr. July Oct. Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan 2008 2009 2010 2011 2012 2013 2014 2015 Excess Federal Reserve Assets Money Supply (M1)

U.S. Trade SAAR, Bil. Chn. 2000$ 0 ‐ 100 ‐ 200 ‐ 300 ‐ 400 ‐ 500 ‐ 600 Real Net Exports of Goods ‐ 700 and Services ‐ 800 ‐ 900 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Exchange Rate (Major Currencies/US$) 115 105 95 85 U.S. Nominal Trade Weighted 75 Exchange Rate 65 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Eurozone Growth and Jobs Percent Change, Annual Rate Real GDP 6.0 4.0 2.0 0.0 ‐ 2.0 ‐ 4.0 ‐ 6.0 ‐ 8.0 ‐ 10.0 ‐ 12.0 2009 2010 2011 2012 2013 2014 Percent Change, Year to Percent 3.5 14.0 3.0 2.5 Unemployment Rates 12.0 2.0 Inflation: 1.5 10.0 Eurozone CPI 1.0 0.5 8.0 0.0 ‐ 0.5 ‐ 1.0 6.0 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014 Source: Oxford Economics

Eurozone Monetary Policy Percent Refinancing Operations 3.5 ECB Monetary Policy Actions 3.0 Marginal Lending Rate 2.5 Deposit Rate 2.0 1.5 1.0 0.5 0.0 ‐ 0.5 2009 2010 2011 2012 2013 2014 Source: Oxford Economics

European Growth Percent Change, Annual Rate Real GDP 10.0 8.0 6.0 France Germany 4.0 Italy Spain 2.0 0.0 ‐ 2.0 ‐ 4.0 ‐ 6.0 2010 2011 2012 2013 2014 Source: Oxford Economics

United Kingdom Growth and Jobs Percent Change, Annual Rate Real GDP 6.0 4.0 2.0 0.0 ‐ 2.0 ‐ 4.0 ‐ 6.0 ‐ 8.0 ‐ 10.0 ‐ 12.0 2009 2010 2011 2012 2013 2014 Percent 6 Unemployment Rates 4 2 2009 2010 2011 2012 2013 2014 Source: Oxford Economics

Emerging Markets Percent Change, Year to Year Real GDP 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Mexico China India Brazil South Africa Russia ‐ 2.0 2010 2011 2012 2013 2014 Source: Oxford Economics

CBO’s Baseline Deficit (January 2015) Budget Deficit Billions $ 500 0 ‐ 500 ‐ 1000 ‐ 1500 ‐ 2000 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 Percent of GDP Deficit to GDP 5 0 ‐ 5 ‐ 10 ‐ 15 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025

Government Baseline Outside Debt (January 2015) Billions $ 25,000 20,000 Debt 15,000 10,000 5,000 0 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 Percent of GDP 90 80 Debt to GDP 70 60 50 40 30 20 10 0 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025

Government Revenues and Outlays ( percent of GDP) 30 Forecast 25 20 15 Revenues (%GDP) Outlays (%GDP) 10 5 0 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 Source: CBO Baseline (January 2015)

Government Outlays FY 2000 FY 2025 FY 2014 (% of total) (% of total) (% of total) 22.9% 13.5% 6.5% 33.6% 12.5% 34.4% 59.8% 63.6% 53.2% Total Outlays: $1.8 trillion Total Outlays: $3.5 trillion Total Outlays: $5.9 trillion Source: CBO Baseline (January 2015) Discretionary Entitlements Net Interest