Robinson Digital Marketing & Data Analytics. United States 2018 Economic Forecast Report

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1 Robinson Digital Marketing & Data Analytics United States 2018 Economic Forecast Report December 12, 2017 Edition Robinson Digital Marketing & Data Analytics Amos B Robinson, Principal, Digital Marketing & Data Analytics We Create Dramatic Sales & Profit Growth Amos B Robinson All Rights Reserved.

2 Economic Overview In this forecast we look at the United States economy from several perspectives. We construct our 2018 forecast by looking through the lenses of Big Business, Small-Business, Manufacturing, Non-Manufacturing (Service Industry), Financial markets, Global Petroleum Market, the U.S. Consumer, Employment Outlook and the Real Estate Market Economic Forecast As we look at the economy through these various lenses, we see an economy that is accelerating as we enter We also see Consumer Confidence at a 17 year high. Robinson Analytics United States Economic Model currently points to 2018 GDP growth in the range of 2.24% to 2.65%. (This is higher than our September report forecast of 1.9 to 2.58%). So the growth rate target is higher than our current 2017 forecast of 2.4% and higher than the US growth rate of 2016 at 1.5%. So we are projecting potential growth faster than 2017, and definitely faster than In other words, growth should accelerate. Should the tax cut bill pass in the Congress and the President sign it, it will definitely be a tailwind to the economy as we head into Since our economy has been expanding for such a long time now, we are starting to hear talk of the U.S. next recession. Robinson Analytics is putting the probability of a recession in the fourth quarter of 2018 at 28.6% under current economic conditions. RobinsonAnalytics.com

3 Big Business Jamie Dimon, Chairman and Chief Executive Officer of JPMorgan Chase & Co. and Chairman of Business Roundtable said, The U.S. economy is strong, and business leaders are increasingly confident in continued economic growth, marked especially by their plans for additional capital investment. This business confidence rests on the pro-growth economic agenda of policymakers. To continue this momentum, it is critical that we enact pro-growth tax reform that will level the playing field for U.S. business to be globally competitive. Getting the right economic policies in place will provide the certainty necessary to allow our country to thrive, creating more jobs, more opportunity and wealth creation for hard-working American families. The Business Roundtable (Business Roundtable CEO members lead companies with $7 trillion in annual revenues and nearly 16 million employees) Q4 CEO Economic Outlook Index a composite of CEO projections for sales and plans for capital spending and hiring over the next six months increased to 96.8 for the fourth quarter of 2017, up from 94.5 in the third quarter. The Index reached its highest level since the first quarter of 2012 (96.9). The Index has significantly exceeded its historical average of 80.3 for four quarters in a row and remains well above 50, suggesting that CEOs continue to expect the U.S. economy to expand at a healthy pace. CEO plans for capital investment rose to their highest level since the second quarter of Expectations for sales picked up by 5.1 points. Hiring plans dipped 4.5 points from Q3, but remain near their highest level in four years. In their first GDP estimate for 2018, CEOs project 2.5 percent GDP growth for the year. Responding to a question asked every fourth quarter, the business leaders identified labor costs as the greatest cost pressure facing their company (31 percent). This was the first time in six years that regulatory costs (26 percent) were not the top cost pressure. Joshua Bolten, Business Roundtable President & CEO added, The easing of cost pressures tied to regulation has contributed to continued confidence in the economy. More progress toward smarter regulation coupled with enactment of pro-growth tax reform this year will keep building on U.S. economic momentum.

4 Small Business Not since the roaring Reagan economy has small business optimism been as high as it was in November, according to the National Federation of Independent Business (NFIB) Index of Small Business Optimism, released today. We haven t seen this kind of optimism in 34 years, and we ve seen it only once in the 44 years that NFIB has been conducting this research, said NFIB President and CEO Juanita Duggan. Small business owners are exuberant about the economy, and they are ready to lead the U.S. economy in a period of robust growth. The Index gained 3.7 points in November, a sharp increase over what was already a near-record performance the previous month. Eight of 10 components posted gains, including a stunning and rare 16-point gain in Expected Better Business Conditions and a 13-point jump in Sales Expectations. This is the second-highest reading in the 44-year history of the Index, said NFIB Chief Economist Bill Dunkelberg. The NFIB indicators clearly anticipate further upticks in economic growth, perhaps pushing up toward four percent GDP growth for the fourth quarter. This is a dramatically different picture than owners presented during the weak recovery. The change in the management team in Washington has dramatically improved expectations, he continued. Job Creation plans increased six points last month, providing more evidence of a strong labor market. The number of owners who said it s a Good Time to Expand rose four points; Inventory Plans increased by three points; Inventory Satisfaction increased by three points; and Actual Earnings Trend moved up two points. Job creation faded, but hiring plans soared, primarily in construction, manufacturing, and professional services, said Dunkelberg. Finding qualified workers has been a persistent problem all year for small business owners, a reliable sign of growing economy. Last month, it was the second most important problem facing small business owners. Only taxes polled higher. Small business owners are paying very close attention to what is happening in Washington, said Duggan. They continue to list taxes as their number-one problem, but they now have clear expectations that Congress and the President will address that problem.

5 Manufacturing Manufacturing expanded in November as the PMI registered 58.2 percent, a decrease of 0.5 percentage point from the October reading of 58.7 percent. "This indicates growth in manufacturing for the 15th consecutive month led by expansion in new orders and production, offset by supplier delivery improvement and declines in raw material inventory," says Fiore. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting. A PMI above 43.3 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the November PMI indicates growth for the 102nd consecutive month in the overall economy and the 15th straight month of growth in the manufacturing sector. Fiore says, "The past relationship between the PMI and the overall economy indicates that the average PMI for January through November (57.4 percent) corresponds to a 4.5 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI for November (58.2 percent) is annualized, it corresponds to a 4.7 percent increase in real GDP annually." Non-Manufacturing In November, the NMI registered 57.4 percent, 2.7 percentage points lower than the 60.1 percent registered in October, indicating continued growth in the nonmanufacturing sector for the 95th consecutive month. A reading above 50 percent indicates the non-manufacturing sector economy is generally expanding; below 50 percent indicates the non-manufacturing sector is generally contracting. An NMI above 48.9 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the November NMI indicates growth for the 100th consecutive month in the overall economy, and indicates expansion in the non-manufacturing sector for the 95th consecutive month. Nieves says, "The past relationship between the NMI and the overall economy indicates that the NMI for November (57.4 percent) corresponds to a 3.3 percent increase in real gross domestic product (GDP) on an annualized basis."

6 Financial Markets The financial markets (Standard and Poors 500 Index) are up for the year and hitting all time highs. This has especially been so since the presidential election has come to a close last year. Since November of 2016, the stock market has added over 5 trillion in value. The financial markets are a leading indicator of the economy and are currently projecting continued growth over the next 6 to 9 months. So the financial markets are telling us that the economy will continue expanding into 2018.

7 Global Petroleum Market United States Energy Information Administration is forecasting world-wide consumption will grow from million barrels a day in 2016 to (98.46 in September report) barrels a day in That is a forecast of 1.35% (1.10% in September report) growth over That is an improvement from our September report but is slightly slower growth than 2016 which currently comes in at 1.72% (1.56% in September report). The Agencies estimated growth in consumption for 2018 over 2017 comes in at 1.69%. This signals faster growth in the World Economy in 2018 versus So estimates for oil consumption is projected to grow in 2017 less than 2016 but signals a world economy that is growing in When you look at the United States energy markets, you see a different picture. Energy consumption grew.82% in 2016 and is projected to grow.81% (1.78% in September report) The agency is projecting consumption growth of 2.07% in This is more than a doubling of the growth rate from 2017 to That signals an economy that is growing significantly faster in 2018 than Based on the energy markets, the USEIA, is projecting that the World Economy will grow at a rate of 3.0% (2.8% in September report) in 2018 and the United States economy will grow 2.3% (2.2% in September report) in 2018.

8 United States Consumers Every since the November 2016 election, the Consumers in the United States have been expressing record levels of enthusiasm about the economy. This 17 year high has continued in through November of this year. However, we are starting to see the expectations index, which forecast economic activity 6 months out, to moderate slightly. We are still at decade highs, but there has been some slight moderation in the expectations index. See graph below.

9 United States Employment Outlook In the January-March 2018 period, 21 percent of U.S. employers expect to add to payrolls, while 5 percent anticipate a decrease in staffing levels. A further 71 percent of employers expect no change in workforce size, according to Manpower. Once the data is adjusted to allow for seasonal variation, the Net Employment Outlook for the U.S. is +19% the strongest reported in the past decade. Nationwide, hiring prospects are 2 percentage points stronger when compared with the final quarter of 2017, and employers report an increase of 3 percentage points in comparison with this time one year ago.

10 Realtor.com 2018 National Housing Forecast Inventory constraints that have fueled a sharp rise in home prices and made it difficult for buyers to gain a foothold in the market will begin to ease next year as part of broad and continued market improvements. The easing of the inventory shortage, which is expected to result in more manageable increases in home prices and a modest acceleration of home sales, is being predicted based on developments first detected by realtor.com late this summer. The annual forecast, which is among the industry s bellwethers in tracking and analyzing major trends in the housing market, also foresees an increase in millennial mortgages and strong sales growth in Southern markets. The wildcard in 2018 will be the impact of tax reform legislation currently being debated in Congress. Next year will set the stage for a significant inflection point in the housing shortage. Inventory increases will be felt in higher priced segments after spring home buying season, which we expect to take hold and begin to provide relief for buyers and drive sales growth in 2019 and beyond.

11 About Robinson Digital Marketing & Data Analytics Contact Amos to set up a complimentary discussion session about how Robinson Analytics can help you accelerate your sales and profit growth. About This Report Services: Customer and Business Intelligence We construct research projects on your customer base and business to gather the critical insights that you need to improve your ability to acquire new customers, retain existing customers and minimize those customers who choose to leave your firm. We have several micro-economic models which we use as a framework to gain those critical insights that will help you achieve superior sales and profits. Consulting We work with your leadership to focus on the opportunity or problem area to move your sales and profit performance. The areas we provide support in, include: Marketing Insight Marketing Segmentation Competitive Analysis Business Strategy Business Operations Product and Service Analytics Price Analytics Distribution Analytics Promotion Analytics Sales Analytics People Analytics Research-based Development Coaching Digital Marketing Report Fee: $ Guidance around how to best target your website to maximize its ability to bring in leads for your business and support your existing customers. We use Google Analytics to measure the effectiveness of your website and online marketing efforts. Which results in greater lead generation. We provide guidance on how you can construct your website and take efforts to maximize the opportunity for your customers and potential customers to find you. Assistance with marketing your business via Social Media to impact your business results Insights in leveraging the second most popular search engine on the internet with Video Marketing. Learn and get assistance about how you can use Marketing to market your business most effectively. Guidance about what type of Content do you need to be develop to maximize the use of your Digital Assets. We help you to access your customer and prospects via Mobile Marketing Contact Amos to set up a complimentary discussion session about how Robinson Analytics can help you accelerate your sales and profit growth.

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