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United States Economic Outlook 2015-2016
Project LINK Meeting Hung-Yi Li 22-24 October 2014 UN DESA New York
Where are we now?
2
30
40
50
60
70
80
90
100
110
2006 2008 2010 2012 2014
ISM - ManuISM - NonManuNFIB OptimismConsumer Sentiment (Mich.)
Housing sector recovery: slowdown recently
3 0
500
1000
1500
2000
2500
Total
Single-unit
50
100
150
200
250
FHFA Index
C-S 20 CityIndex
But has improved balance sheet:
4 10000
15000
20000
25000
30000
50
100
150
200
250
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
Housing price
Real estate values
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
Real estate values
Household net worth
Employment expanding:
5 132000
134000
136000
138000
140000
142000
144000
146000
148000
58
59
60
61
62
63
64
65
66
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
Emp / population (%)
Employment
Longer perspective (1980~2014):
6 90000
100000
110000
120000
130000
140000
150000
54
56
58
60
62
64
66
1 61 121 181 241 301 361
with more take-home income:
7
134000
136000
138000
140000
142000
144000
146000
148000
4500
5000
5500
6000
6500
7000
7500
8000
1 5 9 13 17 21 25 29 33 37 41 45 49 53 57
Wage Income
Employment
But could be better if
8 1
2
3
4
5
3 5 7 9 11
Wag
e in
flat
ion
Unemployment rate
Pre-2008 Post-2008
9 40
41
42
43
44
45
46
47
48
4000
4500
5000
5500
6000
6500
7000
7500
8000
2000 2002 2004 2006 2008 2010 2012 2014
Wage income
% of GDP
Real trade deficit stable
10
-60,000
-50,000
-40,000
-30,000
-20,000
-10,000
0
10,000
2010 2011 2012 2013 2014
Total
Petroleum
Non-petroleum
Residual
Assumption:
• Assets purchasing ends in October 2014.
• Federal fund rate starts to increase in 2015Q3 and reach 2.75 % by the end of 2016.
• Fiscal policy remains restrictive, but less severe than in 2014.
• Real federal gov’t spending declines in 2015 and 2016.
• Debt ceiling will be increased after March 2015.
• US dollar remains strong in 2015 and 2016.
• Oil price decline gradually (~3%) till 2016. 11
Summary of outlook
12
2010 2011 2012 2013 2014 2015 2016
Private Consumption 1.9 2.3 1.8 2.4 2.3 2.8 3.3
Gov't Consumption 0.1 -2.7 -0.2 -2.0 0.0 0.0 0.3
Fixed Investment 1.1 3.6 5.6 3.1 3.9 5.4 6.8
Exports (G&S) 11.9 6.9 3.3 3.0 2.7 5.3 4.8
Imports (G&S) 12.7 5.5 2.3 1.1 3.5 5.1 5.7
GDP 2.5 1.6 2.3 2.2 2.1 2.8 3.4
CPI 1.6 3.2 2.0 1.4 1.9 1.6 1.6
Employment -0.6 0.6 1.8 1.0 1.6 1.9 1.8
Unemployment rate 9.6 8.9 8.1 7.4 6.3 5.8 5.5
Current account (Bil$) -449 -458 -440 -379 -421 -380 -419
Current account
($GDP) -3.0 -2.9 -2.7 -2.3 -2.4 -2.1 -2.2
Risks:
•Budget and debt ceiling issues: will them come back again?
• -> interaction with higher interest rate
•Up to now, financial market seems to be able to correct itself, but is there a limit for this capacity?
13
14
2.6
2.8
3.0
3.2
3.4
3.6
3.8
4.0
1400
1500
1600
1700
1800
1900
2000
2100
Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14
SP500 30-Y Yield
