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.
Real GDP Growth Forecasts % Change (AR) % Change (AR) 6 6 Released Data Blue Chip FRBNY Staff - - April 7 Vintage - - - 6 7 8 9 Note: The blue band represents the top and bottom averages of the Blue Chip survey. Source: FRBNY Staff, BEA, and Blue Chip Economic Indicators -
GDP Growth Contributions: 7-9 Percentage Points. Percentage Points...6.7 7 8 7 8 9 Real GDP.6.7. Real Final Sales.9.6.. 9..8.8........... PCE Res. Inv. BFI Gov. Exp. Net Exports... Source: Bureau of Economic Analysis and New York Fed Staff calculations
Change in Primary Federal Budget Balance % of GDP % of GDP........... 8 9 Source: Congressional Budget Office.........
Personal Saving Rate and Household Wealth Personal Saving Rate (Percent) 98Q to Q 7Q (678.8,.6) 8 6 6Q to present 6 6 7 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.
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 9 8 7 6-6 8 6 8 Source: CoreLogic, National Association of Realtors Note: Shading shows NBER recessions.
Single-family Housing Starts per Household Month Moving Average Month Moving Average... Dec 7 Value =.7... 96 97 98 99 Source: Census Bureau via Haver Analytics Note: Shading shows NBER recessions.
Surveys of Manufacturing Activity Index (+ = expansion) 6 Index (+ = expansion) 6 6 US 6 EU China 6 7 8 Source: IHS Markit and Institute for Supply Management via Haver Analytics
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 (.).
Unemployment Rate Forecasts Percent 7 Percent 7 6 Released Data April 7 Vintage 6 FRBNY Staff Blue Chip 6 7 8 9 Note: The blue band represents the top and bottom averages of the Blue Chip survey. Source: FRBNY Staff, BEA, and Blue Chip Economic Indicators
Labor Force Participation Rate: Ages - Percent 9 Percent 78 9 9 Men (Left Axis) 77 76 9 Women (Right Axis) 7 89 7 88 7 87 99 997 6 9 8 7 Source: Bureau of Labor Statistics Note: Shading shows NBER recessions.
Average Hourly Earnings -Month Change. -Month Change..... All Workers..... Production and Nonsupervisory Workers. 8 6 8 Source: Bureau of Labor Statistics via Haver Analytics.. Note: Shading shows NBER recessions.
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.
Overall PCE Inflation Forecast % Change (AR) % Change (AR) 6 6 Released Data FOMC Objective FRBNY Staff - - April 7 Vintage - - - 6 7 8 9 - Source: FRBNY Staff and Bureau of Economic Analysis
Core PCE Inflation Forecast % Change (AR) % Change (AR). FOMC Objective... FRBNY Staff..... Released Data April 7 Vintage.. 6 7 8 9. Source: FRBNY Staff and Bureau of Economic Analysis
PCE Inflation: Overall and Core 6-Month Moving Average (annual rate) 6-Month Moving Average (annual rate) Total PCE FOMC Objective Core PCE - - - - - - - - 6 8 6 8 Source: Bureau of Economic Analysis via Haver Analytics Note: Shading shows NBER recessions.
PCE Inflation: Core Goods and Core Services Month % Change Month % Change - - Core Services Core Goods - - - - 6 8 6 8 Source: Bureau of Labor Statistics Note: Shading shows NBER recessions.
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.
Real GDP Growth Forecast Distribution % Change Year to Year % Change Year to Year 8 6 - - Mode Mean Released Data 8 6 - - -6 6 7 8 9-6 Source: New York Fed staff
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.
Core PCE Inflation Forecast Distribution % Change Year to Year % Change Year to Year - Mode Mean Released Data - - 6 7 8 9 - Source: New York Fed staff
REFERENCE SLIDES
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
Real Value of New Single-family Homes Sold Thousands $, MMA Thousands $, MMA 8 8 6 6 8 Q Forecast:. 8 //99 // // // // 8 Source: Census Bureau via Haver Analytics Note: Shading shows NBER recessions.
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.9.9.8.6.7. Total PCE Deflator.7.8..7.. Core PCE Deflator.9..... Nonfarm Business Sector Output...... Hours.....8.6 Productivity Growth...... Compensation....9..6 Unit Labor Costs..8..7.8. Real GDP Growth Contributions** Final Sales to Domestic Purchasers.6.8...8.8 Private...8.8.. Consumption.8.9.9..6.7 BFI: Equipment.6.7.6... BFI: Nonresidential Structures...... BFI: Intellectural Property Products...... Residential Investment...... Government. -..... Federal. -..... State and Local...... Inventory Investment -..9 -. -... Net Exports -. -.8. -. -. -. Exports.8.7..6.. Imports -. -. -. -.7 -.8 -.7 Real GDP Components' Growth Rates Final Sales to Domestic Purchasers..8..9.7.7 Consumption...7.8.. BFI: Equipment..8. 8.9 8.9. BFI: Nonresidential Structures 6. 6..... BFI: Intellectural Property Products.9...9.. Residential Investment.8...6.9. Government: Federal. -..8... Government: State and Local.9.6.... 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 7..9....6 Imports....7..8 Labor Market Nonfarm Payroll Employment 8 7 8 89 (Average per Month, Thousands) Unemployment Rate***...9..7. Inc ome Real Disposable Personal Income...8.8..6 *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.