Staff GDP Forecast Summary

Transcription

1 Staff GDP Forecast Summary Real growth: about ¾% (Q/Q) in 8 and ½% in 9. Forecast for 8 stronger than that presented at April 7 EAP. Forecasts for 8 and 9 similar to Blue Chip consensus. Outlook reflects overall strengthening in economic activity. Positives: U.S. economy entered 8 with greater momentum. Aggregate household balance sheet remains in very strong position. Fiscal policy will provide significant stimulus in 8 9, supporting consumption, investment, and government spending. Low inventories and rising home prices support residential investment. Global economic conditions generally solid. Negatives: Net exports expected to be a greater drag on growth.

2 Real GDP Growth Forecasts % Change (AR) % Change (AR) 6 6 Released Data Blue Chip FRBNY Staff - - April 7 Vintage Note: The blue band represents the top and bottom averages of the Blue Chip survey. Source: FRBNY Staff, BEA, and Blue Chip Economic Indicators -

3 GDP Growth Contributions: 7-9 Percentage Points. Percentage Points Real GDP.6.7. Real Final Sales PCE Res. Inv. BFI Gov. Exp. Net Exports... Source: Bureau of Economic Analysis and New York Fed Staff calculations

4 Change in Primary Federal Budget Balance % of GDP % of GDP Source: Congressional Budget Office

5 Personal Saving Rate and Household Wealth Personal Saving Rate (Percent) 98Q to Q 7Q (678.8,.6) 8 6 6Q to present Households Net Worth as a Percent of Disposable Income Source: Bureau of Economic Analysis and Federal Reserve Board Note: Fitted line is from 98Q to Q.

6 Single-family Home Prices and Inventory Level Month Percent Change Months Single Family Months House Price Index Supply (Left Axis) (Right Axis) Normal Range for Months Supply Source: CoreLogic, National Association of Realtors Note: Shading shows NBER recessions.

7 Single-family Housing Starts per Household Month Moving Average Month Moving Average... Dec 7 Value = Source: Census Bureau via Haver Analytics Note: Shading shows NBER recessions.

8 Surveys of Manufacturing Activity Index (+ = expansion) 6 Index (+ = expansion) 6 6 US 6 EU China Source: IHS Markit and Institute for Supply Management via Haver Analytics

9 Staff Unemployment Rate Forecast Summary Growth above potential contributes to unemployment rate of ¾% at end-8 and ½% at end-9. Projected path below that presented at April 7 EAP. Staff projection similar to Blue Chip consensus. Factors underlying this forecast. Population growth around %. Productivity growth picking up and rising slightly above assumed trend rate of ¼% NFBS-basis (% GDP-basis). Participation rate rises slowly but steadily over 8-9. Average weekly hours little changed from March level (.).

10 Unemployment Rate Forecasts Percent 7 Percent 7 6 Released Data April 7 Vintage 6 FRBNY Staff Blue Chip Note: The blue band represents the top and bottom averages of the Blue Chip survey. Source: FRBNY Staff, BEA, and Blue Chip Economic Indicators

11 Labor Force Participation Rate: Ages - Percent 9 Percent Men (Left Axis) Women (Right Axis) Source: Bureau of Labor Statistics Note: Shading shows NBER recessions.

12 Average Hourly Earnings -Month Change. -Month Change..... All Workers..... Production and Nonsupervisory Workers Source: Bureau of Labor Statistics via Haver Analytics.. Note: Shading shows NBER recessions.

13 Staff Inflation Forecast Summary Inflation anticipated to be modestly above FOMC s longer-run goal over forecast horizon. Total PCE inflation and core PCE inflation projected to be about ¼% in 8 and 9. Firming in core PCE inflation reflects dissipation of transitory factors from 7 and vanishing resource slack. Assumptions that underlie this projection. Well-anchored longer-run inflation expectations. Global demand maintains its solid growth. Downward pressure on goods prices from past dollar appreciation fades over forecast horizon.

14 Overall PCE Inflation Forecast % Change (AR) % Change (AR) 6 6 Released Data FOMC Objective FRBNY Staff - - April 7 Vintage Source: FRBNY Staff and Bureau of Economic Analysis

15 Core PCE Inflation Forecast % Change (AR) % Change (AR). FOMC Objective... FRBNY Staff..... Released Data April 7 Vintage Source: FRBNY Staff and Bureau of Economic Analysis

16 PCE Inflation: Overall and Core 6-Month Moving Average (annual rate) 6-Month Moving Average (annual rate) Total PCE FOMC Objective Core PCE Source: Bureau of Economic Analysis via Haver Analytics Note: Shading shows NBER recessions.

17 PCE Inflation: Core Goods and Core Services Month % Change Month % Change - - Core Services Core Goods Source: Bureau of Labor Statistics Note: Shading shows NBER recessions.

18 Risks to FRBNY Staff Real Activity Outlook Risks to staff growth forecast are roughly balanced. Major risks Upside: Fiscal package of tax cuts and government spending increases provide more stimulus than we anticipate. Downside: Trade frictions or an escalation of geopolitical risks leads to a pull back in private spending. Uncertainty around outlook has declined over the past year.

19 Real GDP Growth Forecast Distribution % Change Year to Year % Change Year to Year Mode Mean Released Data Source: New York Fed staff

20 Risks to FRBNY Staff Inflation Outlook Risks to staff inflation forecast are skewed modestly to the upside. Upside: Fiscal-stimulus-induced boost to aggregate demand pushes inflation higher more quickly than anticipated. Downside: A realization of downside real risks would damp inflation and inflation expectations. Uncertainty around inflation outlook less than a year ago.

21 Core PCE Inflation Forecast Distribution % Change Year to Year % Change Year to Year - Mode Mean Released Data Source: New York Fed staff

22 REFERENCE SLIDES

23 Transition Into Delinquency (9+ Days) by Loan Type Percent of Balance Percent of Balance 8 Student Loan 8 6 Mortgage 6 Credit Card Auto Loan :Q :Q :Q 6:Q 7:Q 8:Q 9:Q :Q :Q :Q :Q :Q :Q 6:Q 7:Q Source: New York Fed Consumer Credit Panel/Equifax HE Revolving Note: Quarter Moving Sum Student loan data are not reported prior to due to uneven reporting

24 Real Value of New Single-family Homes Sold Thousands $, MMA Thousands $, MMA Q Forecast:. 8 //99 // // // // 8 Source: Census Bureau via Haver Analytics Note: Shading shows NBER recessions.

25 Staff Forecast Details 7 Q 8 Q 8 Q 7 Q/Q 8 Q/Q 9 Q/Q Summary Actual / / Ac tual / / A Real GDP Total PCE Deflator Core PCE Deflator Nonfarm Business Sector Output Hours Productivity Growth Compensation Unit Labor Costs Real GDP Growth Contributions** Final Sales to Domestic Purchasers Private Consumption BFI: Equipment BFI: Nonresidential Structures BFI: Intellectural Property Products Residential Investment Government Federal State and Local Inventory Investment Net Exports Exports Imports Real GDP Components' Growth Rates Final Sales to Domestic Purchasers Consumption BFI: Equipment BFI: Nonresidential Structures BFI: Intellectural Property Products Residential Investment Government: Federal Government: State and Local Inventory Investment n/a n/a n/a n/a n/a n/a Net Exports n/a n/a n/a n/a n/a n/a Exports Imports Labor Market Nonfarm Payroll Employment (Average per Month, Thousands) Unemployment Rate*** Inc ome Real Disposable Personal Income *End-of-period value **Grow th contributions may not sum to total due to rounding. ***Quarterly values are the average rate for the quarter. Yearly values are the average rate for Q of the listed year. Blue and italic text indicate released data; darker colors indicate the most recent forecast.