Economic Outlook March 212 Economic Policy Division
Real GDP Outlook Percent Change, Annual Rate 2 1 1 - -1 197 197 198 198 199 199 2 2 21
U.S. GDP Actual and Potential Quarterly, Q1 197 to Q4 211 Real GDP Trillion 2 Dollars Log Scale Forecast $4.2- $6.3- Actual Potential $11.- $7.7- $14.- $9.4- $.2-197 197 198 198 199 199 2 2 21 Potential GDP estimated by Congressional Budget Office
Personal Consumption Outlook Percent Change, Annual Rate 9 6 3-3 -6 Real Personal Consumption Expenditures -9 198 198 199 199 2 2 21 Percent Change 3 1. Trillion $ 7 6 4 Household Wealth -1. Real Disposable Income Per Capita -3 198 198 199 199 2 2 21 3 2 1 198 198 199 199 2 2 21
Household Balance Sheet Trillion $ 6 4 3 2 1 Household Assets Nonfinancial Assets Financial Assets Trillion $ 2 1 1 Household Liabilities 198 198 199 199 2 2 21 198 198 199 199 2 2 21 Percent of Disposable Personal Income 1 14 13 Consumer Debt Service 12 11 1 1991 1993 199 1997 1999 21 23 2 27 29 211
Net National Savings 7% 6% % 4% 3% 2% 1% % -1% -2% -3% percent of GDP Net National Savings Rate 198 198 199 199 2 2 21 percent of GDP 9% Savings Components 6% 3% % -3% -6% -9% -12% Government Household Corporate 198 198 199 199 2 2 21
Housing Market Trends Thous. of Units, SAAR 2 Thous. of Units, SAAR 14 Home Sales 7 2 1 1 Housing Starts 1999 21 23 2 27 29 211 12 1 8 6 New Home Sales (left axis) 4 Existing Home Sales (right axis) 2 1999 21 23 2 27 29 211 6 4 3 2 Sales Price, Thous. $ 28 24 2 Median Home Prices Thous. of Units, SAAR 7 New Homes (left axis) Existing Homes (right axis) Housing Inventory 4 3 16 12 Existing Homes New Homes 3 2 8 1999 21 23 2 27 29 211 1 1999 21 23 2 27 29 211 1
Housing Market Trends Dollars 8 7 6 4 3 Median Asking Rent 2 1 1998 2 22 24 26 28 21 2 18 16 14 12 1 Housing Affordability Index 8 1998 2 22 24 26 28 21 3 2 2 1 1 Percent, SA Mortgage Delinquency Rates 1998 2 22 24 26 28 21 Conventional Subprime: Total Past Due Conventional Prime: Total Past Due Percent, SA 4 3 2 1 Mortgage Foreclosure Rates 1998 2 22 24 26 28 21 All Loans Conventional Subprime
Percent Change, Annual Rate 4 Investment 3 2 1-1 -2-3 Real Private Investment in Equipment & Software -4 198 198 199 199 2 2 21 Percent Change, Annual Rate 4 3 2 1 - -1-2 -3 Real Private Investment - Structures -4 198 198 199 199 2 2 21 Billion Chained 2$, Annual Rate 1 12 9 6 3-3 -6-9 -12-1 Real Change in Private Inventories 198 198 199 199 2 2 21
Sector Indicators SA, 2=1 12 1 7 ATA Truck Tonnage Index 2 26 27 28 29 21 211 212 6 month moving average; thous. tons 1,4 1,2 1, 8 6 Boxboard Production 4 2 26 27 28 29 21 211 6 thous, 6-month moving average 4 Total Rail Carloadings 3 26 27 28 29 21 211 212
SAAR, Bil. Chn. 2$ U.S. Trade -1-2 -3-4 - -6-7 -8 Real Net Exports of Goods and Services 26 27 28 29 21 211 212 Exchange Rate (Major Currencies/US$) 11 1 9 8 7 U.S. Nominal Trade Weighted Exchange Rate 6 1991 1993 199 1997 1999 21 23 2 27 29 211
Real GDP Growth Percent Change, Annual Rate 1. 1... -. -1. -1. Canada Mexico -2. -2. -3. 27 28 29 21 211 Percent Change, Year to Year 2 1 1 - -1 China India Japan -1 27 28 29 21 211 Percent Change, Annual Rate 3. 2. Spain Portugal 2. Italy Ireland 1. 1. Greece.. -. -1. -1. -2. 27 28 29 21 211 Percent Change, Annual Rate.. -. -1. UK -1. France -2. Germany 27 28 29 21 211 Source: Oxford Economics
Inflation (Consumer Price Index) Percent Change, Year to Year Percent Change, Year to Year 2 16 China India 12 Japan 8 4-4 27 28 29 21 211 Percent Change, Year to Year -2-4 Spain Portugal -6 Italy Ireland -8 Greece 27 28 29 21 211 Percent Change, Year to Year UK France 4 Germany 3 2 1-1 27 28 29 21 211 Source: Oxford Economics
Unemployment Rates Percent 9 8 7 6 4 3 Canada Mexico 2 1 27 28 29 21 211 Percent 9 8 7 6 4 3 China India 2 1 Japan 27 28 29 21 211 2 2 1 Spain Italy Greece Portugal Ireland PercentPercent 1 8 6 1 US 27 28 29 21 4 UK France 2 Germany 27 28 29 21 211 Source: Oxford Economics
Percent 1 9 8 7 6 4 3 2 Canada Mexico 1 27 28 29 21 211 Interest Rates (1 Year Government Bonds) Percent 1 9 8 7 6 4 China India Japan 3 2 1 27 28 29 21 211 3 3 Spain Portugal 2 Italy Ireland 2 Greece 1 1 27 28 29 21 211 Percent Percent 6 4 3 2 UK France 1 Germany 27 28 29 21 211 Source: Oxford Economics
Percent Change 1 Real GDP Growth of Top Trading Partners 12 9 6 3-3 World EU Canada China Mexico Japan Germany UK S. Korea Brazil Taiwan France NLD Saudi Arabia India Ven Singapore 21 211 212 Source: Oxford Economics, USCC Forecast
Billions $ 7 U.S. Bank Exposure to Europe 6 4 3 Public Sector Banks Non-bank Private Sector Derivatives and Other Exposures 2 1 France Germany Greece Ireland Italy Portugal Spain Source: Bank for International Settlements
Billions $ 3, 2, European Bank Exposure to Periphery 2, 1, Greece Ireland Italy Portugal Spain 1, All European Banks Belgium France Germany Switzerland UK Source: Bank for International Settlements
Labor Market Million 14 13 12 11 Total Nonfarm Jobs Million 1 14 13 12 11 Household Employment 1 1991 1993 199 1997 1999 21 23 2 27 29 211 1 1991 1993 199 1997 1999 21 23 2 27 29 211 SA, Thousands, 4-week Moving Average 7 6 4 3 Initial Unemployment Claims Percent 12 1 8 6 4 Unemployment Rate January: 8.3 percent 2 1991 1993 199 1997 1999 21 23 2 27 29 211 2 1991 1993 199 1997 1999 21 23 2 27 29 211
Labor Market Thousands 3 2 2 1 1 Marginally Attached Discouraged Workers 1994 1996 1998 2 22 24 26 28 21 212 Thousands 1, 8, Part-time for Economic Reasons 6, 4, 2, 198 198 199 199 2 2 21 SA, percent 68 66 64 Civilian Participation Rate Median Weeks Unemployed, SA 3 2 2 1 1 Duration of Unemployment 62 198 198 199 199 2 2 21 198 198 199 199 2 2 21
Labor Participation Rates (by age class, population shares) Percent 9 8 7 6 4 3 16 to 24 years 2 to 34 years 3 to 44 years 4 to 4 years years and over 16% 16.8% 16.4% 18.1% 32.7% December 27 June 211 January 212
Percent Change, 3-Month Annualized Rate 1 Inflation 1 - -1 Consumer Price Index -1 2 21 22 23 24 2 26 27 28 29 21 211 212 Percent Change, 3-Month Annualized Rate 1 8 6 Core Consumer Price Index 4 2 2 21 22 23 24 2 26 27 28 29 21 211
$/gallon $. $4. $3. $2. $1. Oil, Gas, and Diesel Prices $. 2 21 22 23 24 2 26 27 28 29 21 211 212 $/barrel $16. $14. $12. $1. $8. $6. $4. $2. $. Source: EIA, Dept of Energy Gas Diesel WTI (Right Axis) 1967 = 1 6 4 Spot Market Price Index: All Commodities 1967 = 1 12 1 8 Spot Market Price Index: Metals 3 6 2 4 1 2 2 22 24 26 28 21 212 2 22 24 26 28 21 212
Interest Rates & Spreads Percent 8. 7. 6.. 4. 3. 2. 1. 1-Year Treasury Note Yield 3-Month Treasury Note Yield. 1997 1998 1999 2 21 22 23 24 2 26 27 28 29 21 211 212 Percent 4 3 2 1 TED Spread 3-Month LIBOR Minus 3- Month Treasury 3. 3. 2. 2. 1. 1. Risk Spread Moody's Seasoned Baa Corporate Bond Yield Minus Moody's Seasoned Aaa Corporate Bond Yield 23 24 2 26 27 28 29 21 211. 1997 1998 2 22 24 27 29 211
Fed Policy Billions $ 3, Bank Assets and Liabilities 2, 2, 1, 1, Jan 28 Apr. July Oct. Jan 29 Apr Jul Oct Jan 21 Apr Jul Oct Jan 211 Apr Jul Oct Jan 212 Excess Required Federal Reserve Assets Money Supply (M1)
Domestic Bank Lending Billions $ 9 C&I Loans at Commercial Banks 8 7 6 4 3 2 1 Large Small 2 26 27 28 29 21 211 212 Billions $ 1,8 Consumer Credit Outstanding 1,6 1,4 1,2 1, 8 6 Revolving 4 2 Nonrevolving 2 26 27 28 29 21 211 Billions $ 6 4 3 2 1 1 8 6 4 2 Home Equity Loans Large Small 2 26 27 28 29 21 211 212 Percent 12 Delinquency Rates at Commercial Banks C&I Loans Credit Cards Residential Real Estate Commercial Real Estate 2 26 27 28 29 21 211
CBO s Baseline Deficit (January 212) Billions $ Budget Deficit - -1, -1, -2, 198 1982 1984 1986 1988 199 1992 1994 1996 1998 2 22 24 26 28 21 212 214 216 218 22 222 Percent of GDP Deficit to GDP - -1-1 198 1982 1984 1986 1988 199 1992 1994 1996 1998 2 22 24 26 28 21 212 214 216 218 22 222
Alternative Deficit Forecasts Billions $ 4 Budget Deficit Forecast 2-2 -4-6 -8-1, -1,2-1,4-1,6 CBO Baseline CBO Alternative Fiscal Scenario President's Budget 198 1982 1984 1986 1988 199 1992 1994 1996 1998 2 22 24 26 28 21 212 214 216 218 22 222 Percent of GDP 4 2-2 -4-6 -8-1 Deficit to GDP CBO Baseline CBO Alternative Fiscal Scenario President's Budget Forecast -12 198 1982 1984 1986 1988 199 1992 1994 1996 1998 2 22 24 26 28 21 212 214 216 218 22 222
Government Baseline Debt (CBO s Baseline January 212) Billions $ 2, Debt 1, 1,, 198 1982 1984 1986 1988 199 1992 1994 1996 1998 2 22 24 26 28 21 212 214 216 218 22 222 Percent of GDP 8 Debt to GDP 6 4 2 198 1982 1984 1986 1988 199 1992 1994 1996 1998 2 22 24 26 28 21 212 214 216 218 22 222
Alternative Debt Forecasts Billions $ 2, CBO Baseline Forecast 2, 1, 1,, Debt CBO Alternative Fiscal Scenario President's Budget 198 1982 1984 1986 1988 199 1992 1994 1996 1998 2 22 24 26 28 21 212 214 216 218 22 222 Percent 1 9 8 7 6 4 3 2 1 Debt to GDP Forecast CBO's Baseline Projection Alternative Fiscal Scenario President's Budget 198 1982 1984 1986 1988 199 1992 1994 1996 1998 2 22 24 26 28 21 212 214 216 218 22 222
Government Revenues and Outlays ( percent of GDP) 3 2 Forecast 2 1 Revenues (%GDP) Outlays (%GDP) 1 198 198 199 199 2 2 21 21 22 Source: CBO Baseline (January 212)