Fifteenth Annual automotive outlook symposium T H U R S D A Y J U - PowerPoint PPT Presentation

Fifteenth Annual automotive outlook symposium T H U R S D A Y J U N E 5 / F R I D A Y J U N E 6 / 2 0 0 8 Consensus Forecast for 2008 & 2009 William A. Strauss Senior Economist and Economic Advisor Federal Reserve Bank of Chicago

2007 Automotive Outlook Symposium Forecast Winners Overall Arun Raha - Swiss Re America Holding Corporation GDP current dollars Steve Graham - FTR Associates Jack Kleinhenz - Kleinhenz & Associates Jim Stansell - Michigan House Fiscal Agency GDP price index, Chain-type Jack Kleinhenz - Kleinhenz & Associates Ken Mayland - ClearView Economics, LLC Real GDP, chained dollars Jack Kleinhenz - Kleinhenz & Associates Ken Mayland - ClearView Economics, LLC Arun Raha - Swiss Re America Holding Corporation Personal consumption expenditures Rick Kaglic - Eaton Corp. Bob Schnorbus - J.D. Power & Associates Richard Yamarone - Argus Research Corp. Business fixed investment Rick Kaglic - Eaton Corp. Residential investment Jack Bishop Jr - Kingsbury Intenational Ltd. Change in private inventories Evert Van Der Heide - Calvin College Net exports Roman Pobaruyev - Snap-on, Inc. Government consumption expenditures and gross investment Charles Chesbrough - CSM Worldwide Jack Kleinhenz - Kleinhenz & Associates Ken Mayland - ClearView Economics, LLC Industrial production Carl Tannenbaum - LaSalle Banks/ABN AMRO Chris Varvares - Macroeconomic Advisers Car & light truck sales Rick Kaglic - Eaton Corp. Housing starts William Hickey - Detroit Edison Roman Pobaruyev - Snap-on, Inc. Maria Sowa - Ford Motor Company Oil Price Jim Stansell - Michigan House Fiscal Agency Unemployment rate Jack Bishop Jr - Kingsbury Intenational Ltd. Charles Chesbrough - CSM Worldwide Ken Mayland - ClearView Economics, LLC Keith Schwer - UNLV John Silvia - Wachovia Corporation Richard Yamarone - Argus Research Corp. Inflation rate (CPI) Steve Graham - FTR Associates Keith Schwer - UNLV Jim Stansell - Michigan House Fiscal Agency Carl Tannenbaum - LaSalle Banks/ABN AMRO Treasury constant maturity one-year rate William Hickey - Detroit Edison Bob Schnorbus - J.D. Power & Associates Evert Van Der Heide - Calvin College Treasury constant maturity ten-year rate Charles Chesbrough - CSM Worldwide Robert DiCianni- Mittal Steel USA Rick Kaglic - Eaton Corp. Ken Mayland - ClearView Economics, LLC Laura Spingola - Trade Resources Ltd. J.P. Morgan trade weighted OECD dollar Ken Mayland - ClearView Economics, LLC Roman Pobaruyev - Snap-on, Inc.

Table 1 - Median forecast of GDP and related items 2007 2008 2009 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 GDP, current dollars* 5.1% 4.0% 5.3% 3.2% 3.6% 5.0% 5.1% 5.1% 5.3% 5.1% 5.4% GDP price index, chain-type* 2.6% 2.6% 2.3% 2.6% 3.2% 2.9% 2.5% 2.6% 2.3% 2.2% 2.2% Real GDP, chained dollars* 2.5% 1.2% 2.9% 0.6% 0.4% 2.1% 1.5% 2.5% 3.1% 2.8% 3.2% Personal consumption expenditures* 2.6% 1.1% 2.2% 1.0% 0.8% 1.9% 1.2% 1.9% 2.4% 2.4% 2.5% Business fixed investment* 7.1% -0.3% 2.7% -2.5% -1.8% 0.5% 2.6% 1.6% 3.3% 3.1% 4.0% Residential investment* -18.6% -16.3% 5.6% -26.6% -21.0% -14.5% -3.9% 2.0% 5.0% 8.6% 8.6% Change in private inventories (billions of constant dollars)** -$18.3 $1.8 $8.2 $24.2 -$3.0 $4.7 $8.2 $13.0 $15.0 $20.1 $24.2 Net exports of goods and services (billions of constant dollars)** -$503.2 -$462.5 -$435.0 -$495.9 -$484.9 -$476.3 -$462.5 -$455.0 -$450.0 -$443.8 -$435.0 Government consumption expenditures and gross investment* 2.3% 1.7% 1.6% 2.0% 1.4% 1.8% 1.8% 1.7% 1.6% 1.3% 1.6% Industrial production* 2.2% 0.7% 3.0% 0.0% -0.7% 1.8% 2.5% 2.5% 3.0% 3.1% 3.1% Car & light truck sales (millions - calendar year including imports)*** 16.1 15.2 15.6 15.2 15.0 15.2 15.2 15.3 15.5 15.6 15.9 Housing starts (millions)*** 1.34 0.97 1.06 1.04 0.95 0.93 0.96 0.99 1.05 1.08 1.09 Oil price (dollars per barrel of West Texas Intermediate)** $90.85 $106.93 $104.62 $97.95 $118.00 $113.75 $106.93 $105.45 $108.47 $105.00 $104.62 Unemployment rate** 4.8% 5.4% 5.3% 4.9% 5.1% 5.3% 5.4% 5.5% 5.4% 5.3% 5.3% Inflation rate (consumer price index)* 4.0% 3.9% 2.8% 4.3% 4.0% 4.0% 3.3% 3.1% 2.8% 2.8% 2.7% Treasury constant maturity 1-year rate** 3.62% 2.03% 2.90% 2.10% 1.93% 2.01% 2.03% 2.20% 2.30% 2.70% 2.90% Treasury constant maturity 10-year rate** 4.26% 3.92% 4.50% 3.66% 3.74% 3.85% 3.92% 4.16% 4.25% 4.40% 4.50% J.P. Morgan trade weighted OECD dollar* -7.1% -2.2% 0.5% -7.2% -1.0% 0.0% 0.0% 0.4% 0.3% 0.7% 0.5% * Annual: Q4 over Q4 Quarterly: Quarter to Quarter change, annual rate **Annuals are Q4 value ***Annuals are yearly average 1 Federal Reserve Bank of Chicago - Fifteenth Annual Automotive Outlook Symposium June 6, 2008

Table 2 - Mean forecast of GDP and related items 2007 2008 2009 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 GDP, current dollars* 5.1% 3.9% 5.1% 3.2% 3.4% 4.6% 4.4% 5.0% 5.2% 5.0% 5.2% GDP price index, chain-type* 2.6% 2.9% 2.6% 2.6% 3.2% 2.9% 2.7% 2.9% 2.5% 2.4% 2.7% Real GDP, chained dollars* 2.5% 1.1% 2.9% 0.6% 0.2% 2.0% 1.8% 2.4% 3.0% 3.1% 3.3% Personal consumption expenditures* 2.6% 1.0% 2.3% 1.0% 0.4% 1.8% 1.0% 1.8% 2.4% 2.4% 2.6% Business fixed investment* 7.1% -1.4% 2.7% -2.5% -2.9% -0.4% 0.8% 0.3% 3.1% 3.5% 4.1% Residential investment* -18.6% -16.4% 7.2% -26.6% -20.8% -11.2% -3.8% 2.4% 5.8% 10.9% 10.9% Change in private inventories (billions of constant dollars)** -$18.3 $1.8 $7.6 $18.4 -$4.1 $2.2 $7.6 $11.8 $12.4 $14.8 $18.4 Net exports of goods and services (billions of constant dollars)** -$503.2 -$461.0 -$439.1 -$495.9 -$484.6 -$475.1 -$461.0 -$451.1 -$443.2 -$439.6 -$439.1 Government consumption expenditures and gross investment* 2.3% 2.2% 1.7% 2.0% 3.9% 1.7% 1.8% 0.9% 1.9% 2.0% 2.2% Industrial production* 2.2% 0.9% 3.8% 0.0% -1.4% 2.4% 2.7% 3.5% 4.4% 3.3% 4.1% Car & light truck sales (millions - calendar year including imports)*** 16.1 15.2 15.6 15.2 15.0 15.2 15.2 15.4 15.5 15.6 15.7 Housing starts (millions)*** 1.34 0.97 1.05 1.04 0.95 0.94 0.96 0.99 1.03 1.07 1.10 Oil price (dollars per barrel of West Texas Intermediate)** $90.85 $110.17 $105.74 $97.95 $115.87 $113.26 $110.17 $106.87 $107.31 $107.27 $105.74 Unemployment rate** 4.8% 5.5% 5.5% 4.9% 5.2% 5.4% 5.5% 5.6% 5.6% 5.6% 5.5% Inflation rate (consumer price index)* 4.0% 3.9% 3.3% 4.3% 3.9% 4.0% 3.5% 3.5% 3.3% 3.2% 3.2% Treasury constant maturity 1-year rate** 3.62% 2.08% 2.94% 2.10% 1.91% 1.99% 2.08% 2.33% 2.51% 2.72% 2.94% Treasury constant maturity 10-year rate** 4.26% 3.93% 4.42% 3.66% 3.70% 3.80% 3.93% 4.13% 4.25% 4.33% 4.42% J.P. Morgan trade weighted OECD dollar* -7.1% -2.1% 0.6% -7.2% -1.1% -0.1% -0.1% 0.3% 0.4% 0.9% 0.8% * Annual: Q4 over Q4 Quarterly: Quarter to Quarter change, annual rate **Annuals are Q4 value ***Annuals are yearly average 2 Federal Reserve Bank of Chicago - Fifteenth Annual Automotive Outlook Symposium June 6, 2008

Figure 1 - Forecast of GDP and related items Real GDP, chained dollars percent change, annual rate 8 6 4 2 0 -2 -4 1994 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 3 Federal Reserve Bank of Chicago - Fifteenth Annual Automotive Outlook Symposium June 6, 2008

Figure 2 - Forecast of GDP and related items GDP, current dollars Personal consumption expenditures percent change, annual rate percent change, annual rate 12 8 10 6 8 4 6 2 4 0 2 -2 0 -4 1994 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 1994 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 1994 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 1994 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 Business fixed investment Residential investment percent change, annual rate percent change, annual rate 25 35 20 25 15 15 10 5 5 0 -5 -5 -15 -10 -25 -15 -20 -35 1994 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 1994 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 4 Federal Reserve Bank of Chicago - Fifteenth Annual Automotive Outlook Symposium June 6, 2008

Figure 3 - Forecast of GDP and related items Change in business inventories Net exports of goods and services billions of constant dollars billions of constant dollars 0 150 -100 100 -200 50 -300 -400 0 -500 -50 -600 -100 -700 1994'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 1994 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 Government consumption Industrial production percent change, annual rate percent change, annual rate 12 10 10 8 8 6 6 4 4 2 2 0 0 -2 -2 -4 -4 -6 -6 1994 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 1994 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 5 Federal Reserve Bank of Chicago - Fifteenth Annual Automotive Outlook Symposium June 6, 2008