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U.S. Economic Outlook A Relatively Fast Manufacturing Growth Pace Amid Modest Gains In The Overall Economy Presented by: Daniel J. Meckstroth, Ph.D. Vice.

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Presentation on theme: "U.S. Economic Outlook A Relatively Fast Manufacturing Growth Pace Amid Modest Gains In The Overall Economy Presented by: Daniel J. Meckstroth, Ph.D. Vice."— Presentation transcript:

1 U.S. Economic Outlook A Relatively Fast Manufacturing Growth Pace Amid Modest Gains In The Overall Economy Presented by: Daniel J. Meckstroth, Ph.D. Vice President and Chief Economist

2 U.S. Economic Surprise Index Source(s): Citigroup and Bloomberg Surprisingly Strong Late 2011 and Early 2012

3 The Growth in Manufacturing Production Greatly Exceeded the Growth in GDP in the First Quarter GDP and Manufacturing Growth F=Forecast Source(s): U.S. Bureau of Economic Analysis and Federal Reserve Board Percent Change at Annual Rate

4 Spending on Goods Is Driving Manufacturing Production GDP by Major Type of Product Source(s): U.S. Bureau of Economic Analysis

5 There Is Now Relatively Balanced Job Growth Job Growth By Industry Source(s): Bureau of Labor Statistics

6 Employment Growth Consumers Are Income Constrained Which Limits the Pace of the Economic Expansion Consumer After-Tax Income, Inflation- Adjusted Source(s): U.S. Bureau of Economic Analysis and U.S. Bureau of Labor Statistics and MAPI

7 GDP Expenditure Categories Inflation-Adjusted Percent Change (F)2013(F) Gross Domestic Product Total Consumption Durables Nondurables Services Nonresidential Fixed Investment Equipment & Software Information Processing Equipment Industrial Equipment Transportation Equipment Structures Residential Fixed Investment Exports Imports Federal Government State & Local Government MAPI Economic Forecast F=Forecast Source(s): MAPI, May 2012 Pent Up Demand For Consumer Durables, Strong Equipment Investment, Construction Recovery, Tempered By Gov’t Austerity and Net Exports

8 Economic Indicators Percent Change or Level as Specified (F)2013(F) Prices (% change) Consumer Prices Excl. Food & Energy Producer Prices, Finished Goods Energy ($) Imported Crude Oil ($ per barrel) $102.6$107.6$107.3 Natural Gas Wellhead Price ($mmbtu) $3.8$2.3$2.9 Other Key Measures Nonfarm Inventory Change (Billion 2005$) $44$73$58 Light Vehicle Sales (Million units) Housing Starts (Million units) Federal Surplus (NIPA, Billion $) -$1,183-$956-$714 Current Account Balance (Billion $) -$473-$513-$522 Labor Unemployment Rate (%) Payroll Employment (% change) Production (% change) Manufacturing (SIC Basis) Computers & Electronic Products Non-High Tech Manufacturing MAPI Economic Forecast F=Forecast Source(s): MAPI, May 2012 Low Inflation; Limited Progress on High Unemployment; Cheap Natural Gas, High but Stable Oil Prices; Massive but Shrinking, Federal Debt; and An Above Average Manufacturing Rebound

9 Oil Price Surge o Iran disrupts the Strait of Hormuz o Major supply disruption Financial Contagion From the Eurozone Sovereign Debt Crisis o Pressure building within Greece to leave the Euro o Interest rates rising in Spain and Italy Federal Fiscal Cliff and Debt Ceiling Showdown o January 1, 2013 Spending sequester kick in Bush tax cuts expire Temporary payroll tax cuts expire Emergency unemployment benefits expire o March, 2013 Debt ceiling must be raised Major Risks That Could Derail The Modest Growth in the U.S.


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