GDP Forecast Summary

Staff GDP Forecast Summary
Real GDP Growth Forecasts

% Change (AR)
Projected real growth: about 2% (Q4/Q4) in 2016 and

1% in 2017.
Released
Data
-2
Continued drag from net exports.

Sluggish business fixed investment.
Slow productivity growth.
-3
2014
1.81.7
FRBNY Staff
0
May 2015
Vintages
-2
2015
2.0
Real Final Sales
-3
2015
2016
2017
2016
1.9
2.5
2017
1.7
12 Month % Change
6
2.0
2.1
1.5
1.0
Private
Service-Providing
Industries
Goods-Producing
Industries
1.9
12 Month % Change
6
2.0
1.6
-1
Aggregate Weekly Hours Worked

Percentage Points
3.0
1.5
Note: The blue band represents the top 10 and bottom 10 averages of the Blue Chip survey.
Source: FRBNY Staff, BEA, and Blue Chip Economic Indicators
Percentage Points
3.0
(Q4/Q4)
Real GDP
4
3
Negative:
2015
2016
2017
Blue Chip
-1
2.5
Solid income growth and private balance sheets.

Bulk of investment decline in energy sector likely behind us.
Somewhat stimulative fiscal policy.
GDP Growth Contributions: 2015-17
2.0
Near-term forecast below that presented at May 2015 EAP.

Similar to Blue Chip consensus for 2016; below it for 2017.
Outlook reflects countervailing factors.

Positive:
% Change (AR)
0.0
-0.5
-1.0
-1
1.0
0.5
0.30.4 0.3
0.4 0.5
0.2
0.2
0.0
0.0
-0.5
0.5
0.3
0.1
-0.2-0.1
-0.5
-0.8
-1.0
PCE
Res. Inv.
BFI
Inventory
Inv.
Source: FRBNY Staff and Bureau of Economic Analysis
NY Fed / Research & Statistics Group
-0.6
Gov. Exp. Net Exports
-1
2012
2013
2014
2015
2016
Source: Bureau of Labor Statistics
2016 Federal Reserve Bank of New York
Economic Advisory Panel / April 2016
Staff Unemployment Forecast Summary
Unemployment Rate Forecasts

Percent
Modestly above-potential growth leads to decline in

unemployment rate to around 4% by end of 2016,
with stable unemployment rate in 2017.
Below FRBNY forecast at May 2015 EAP.

Less rapid decline than Blue Chip consensus.
5
Factors underlying this forecast.
Percent
Population growth around 1.0%.

Productivity growth gradually rising back to assumed
trend rate of 1% NFBS-basis (1% GDP-basis) in 2017.
Participation rate rises slightly over 2016 and 2017.
Slight uptick in average weekly hours.
May 2015
Vintages
Released
Data
FRBNY Staff
Blue Chip
2014
2015
2016
2017
Note: The blue band represents the top 10 and bottom 10 averages of the Blue Chip survey.
Source: FRBNY Staff, BEA, and Blue Chip Economic Indicators
Productivity Growth: Nonfarm Business Sector
Compensation Growth: Nonfarm Business Sector
20-Qtr MA of 1 Quarter
% Change Annual Rate
4.5
4 Quarter % Change
9
20-Qtr MA of 1 Quarter
% Change Annual Rate
4.5
4
4
3.5
3
Output per
Hour
2.5
2
1.5
0
2000
2002
2004
2006
2008
2010
2012
2014
6
5
2.5
1.5
Compensation
per Hour
0.5
0.5
3.5
4 Quarter % Change
9
-1
2000
-1
2002
2004
2006
2008
2010
2012
2014
2016
2016
Note: Shading shows NBER recessions.
Overall PCE Inflation Forecasts
Staff Inflation Forecast Summary
% Change (AR)
% Change (AR)
As energy and import prices stabilize, inflation

anticipated to rise gradually toward FOMCs longer-run
goal.
FOMC Objective
Released
Data
PCE inflation projected to reach 2% in 2017.
FRBNY Staff
Underlying assumptions.
Well-anchored longer-run inflation expectations.

Continued downward pressure on goods prices from past
dollar appreciation.
Firming of global demand.
Dissipation of remaining slack by end of 2017.
May 2015
Vintage
-1
-1
-2
-2
-3
-3
2014
2015
2016
2017
Core PCE Inflation Forecasts
CPI Core Goods and Core Services Inflation
% Change (AR)
2.5
% Change (AR)
2.5
FOMC Objective
FRBNY Staff
2.0
1.5
Core Services
1.5
1.0
0.0
2014
12 Month % Change
5
4
2.0
Released
Data
0.5
12 Month % Change
5
1.0
May 2015
Vintage
0.5
2016
-1
-1
Core Goods
-2
0.0
2015
2017
-3
2000
-2
-3
2002
2004
2006
2008
2010
2012
2014
2016
Risks to FRBNY Staff Real Activity Outlook
Real GDP Growth Forecast Distribution

% Change Year to Year
Balance of risks slightly skewed to the downside in

2016, with greater downside risk in 2017.
10
Downside:
-2
-2
Financial conditions tighten more than expected.

Slower global growth has larger spillover to U.S. growth.
-4
-4
Major risks
Upside:
Underlying fundamentals for consumer spending and

housing are stronger than expected.
Global growth strengthens and dollar declines, with less
net export drag than expected.
Risks to FRBNY Staff Inflation Outlook
Upside:
Resource slack may be lower than currently estimated.

More modest effect of dollar appreciation on domestic
prices.
Possible reversal of past several years slowdown in health
care price inflation.
Downside:
Stronger global disinflationary pressures emerge.

Inflation expectations becoming unanchored on downside
because of persistent low inflation environment.
-6
2012
-6
2013
2014
2015
2016
2017
2018
Core PCE Inflation Forecast Distribution
Risks roughly balanced in 2016, and slightly skewed to

the downside in 2017.
10

4

4
-1
-1
-2
2012
-2
2013
2014
2015
2016
2017
2018
Productivity: Low-Growth Regime Probabilities

Percent
100
80
REFERENCE SLIDES
Low Growth = 1.27%

High Growth = 2.96%
80
60
60
40
40
20
20
Source: Authors Calculations
Percent
100
Note: Retrospective assessments

in real time (up to March 2016)
FRBNY Forecast Details

2015 Q4
2016 Q1
2016 Q2
Summary
Actual
01/20
03/04
04/14
01/20
03/04
Real GDP
1.4
2.1
1.8
0.3
2.1
2.3
Total PCE Deflator
0.3
0.0
-0.2
0.2
1.6
1.1
Core PCE Deflator
1.3
1.3
1.7
2.0
1.3
1.4
Nonfarm Business Sec tor
Output
1.0
2.6
2.2
0.2
2.6
2.8
Hours
3.2
1.6
2.2
1.9
1.3
1.7
Productivity Growth
-2.2
1.0
0.0
-1.8
1.3
1.1
Compensation
1.1
3.0
2.9
2.7
3.2
3.0
Unit Labor Costs
3.3
2.0
2.9
4.4
1.9
1.9
Real GDP Grow th Contributions**
Final Sales to Domestic Purchasers
1.7
3.5
3.1
1.0
3.2
3.5
Private
1.7
3.2
2.8
0.8
2.9
3.2
1.8
2.2
0.8
1.8
2.0
Consumption
1.7
BFI: Equipment
-0.1
0.4
0.2
-0.3
0.4
0.4
BFI: Nonresidential Structures
-0.1
0.1
-0.1
-0.2
0.1
0.1
BFI: Intellectural Property Products
0.0
0.2
0.2
0.2
0.3
0.2
Residential Investment
0.3
0.6
0.3
0.3
0.4
0.5
Government
0.0
0.3
0.3
0.2
0.3
0.3
Federal
0.2
0.1
0.0
-0.1
0.1
0.2
State and Local
-0.1
0.2
0.3
0.3
0.2
0.1
Inventory Investment
-0.2
-0.2
-0.5
-0.1
0.1
-0.1
Net Exports
-0.1
-1.1
-0.8
-0.6
-1.2
-1.1
Exports
-0.3
-0.3
-0.4
-0.3
0.0
0.0
Imports
0.1
-0.8
-0.3
-0.4
-1.2
-1.1
Real GDP Components' Grow th Rates
Final Sales to Domestic Purchasers
1.7
3.4
3.0
1.0
3.1
3.5
Consumption
2.4
2.7
3.2
1.2
2.6
3.0
BFI: Equipment
-2.1
6.0
4.0
-5.5
6.0
6.0
BFI: Nonresidential Structures
-5.1
4.0
-5.0
-7.0
4.0
4.0
BFI: Intellectural Property Products
-0.1
6.0
6.0
5.0
6.0
6.0
Residential Investment
10.1
20.8
8.2
8.7
12.9
14.3
Government: Federal
2.3
2.0
0.0
-1.5
2.0
2.4
Government: State and Local
-1.2
1.4
2.5
2.6
1.4
1.4
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
-2.0
-2.7
-3.6
-2.1
0.2
0.3
Imports
-0.7
5.4
2.3
2.6
8.2
8.1
Labor Market
Nonfarm Payroll Employment
240
162
352
226
141
177
Unemployment Rate***
4.9
4.9
4.9
4.9
4.8
5.0
Inc ome
Real Disposable Personal Income
2.3
2.2
4.7
2.9
2.4
3.6
Personal Saving Rate***
5.0
5.3
5.4
5.3
5.2
5.5
*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 Q4 of
Blue and italic text indicate released data; darker colors indicate the most recent forecast.
2016 Q4/Q4
2015 Q4/Q4
2017 Q4/Q4
04/14
2.5
0.8
1.5
Ac tual
2.0
0.5
1.4
01/20
2.0
1.3
1.4
03/04
2.1
1.0
1.5
04/14
1.9
1.1
1.7
01/20
1.7
1.8
1.7
03/04
1.7
1.9
1.8
04/14
1.7
1.9
1.9
3.1
1.1
2.0
2.8
0.8
2.1
1.6
0.5
2.6
2.1
2.4
1.4
1.0
3.3
2.3
2.6
1.7
0.8
3.2
2.3
2.3
1.6
0.6
3.0
2.3
2.0
1.1
1.0
3.7
2.7
2.1
1.0
1.1
3.3
2.2
2.1
1.3
0.8
3.4
2.6
3.6
3.2
2.2
0.2
0.1
0.2
0.5
0.3
0.2
0.2
-0.6
-0.5
0.1
-0.6
2.5
2.3
1.8
0.2
-0.1
0.1
0.3
0.2
0.1
0.1
0.0
-0.5
-0.1
-0.5
3.2
2.9
1.7
0.3
0.1
0.2
0.4
0.3
0.1
0.2
0.0
-1.1
-0.1
-1.1
3.3
3.0
2.0
0.4
0.1
0.2
0.3
0.3
0.1
0.2
-0.2
-1.1
-0.1
-1.0
2.8
2.5
1.7
0.2
0.0
0.2
0.4
0.3
0.1
0.2
-0.2
-0.8
0.0
-0.8
2.4
2.3
1.5
0.2
0.1
0.2
0.3
0.0
0.0
0.1
0.0
-0.7
0.2
-0.8
2.5
2.4
1.5
0.2
0.1
0.1
0.4
0.0
0.0
0.1
-0.1
-0.7
0.2
-0.9
2.5
2.4
1.6
0.2
0.1
0.1
0.3
0.1
0.0
0.1
-0.1
-0.6
0.2
-0.8
3.5
3.2
4.0
2.0
6.0
16.1
2.4
1.5
n/a
n/a
0.7
3.8
2.5
2.7
2.5
-3.5
3.6
9.4
0.9
1.2
n/a
n/a
-0.6
2.9
3.1
2.5
5.7
4.0
5.7
13.4
2.0
1.4
n/a
n/a
-0.7
7.2
3.3
2.9
6.5
3.1
5.7
10.0
1.8
1.7
n/a
n/a
-0.8
6.6
2.8
2.5
3.0
1.1
5.5
10.5
1.4
1.7
n/a
n/a
-0.1
5.1
2.3
2.2
3.5
3.5
3.5
9.1
-0.5
0.7
n/a
n/a
1.7
5.6
2.4
2.2
4.0
4.0
3.5
9.8
-0.5
0.7
n/a
n/a
1.8
5.9
2.4
2.3
4.0
4.0
3.5
8.8
-0.5
0.8
n/a
n/a
1.6
5.5
197
5.0
231
5.0
152
4.8
207
4.7
205
4.8
129
4.8
116
4.7
142
4.8
4.0
5.5
2.3
5.0
1.8
4.9
2.7
5.6
3.0
5.5
1.4
4.3
1.8
5.5
2.1
5.5
the listed year.

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Staff GDP Forecast Summary

Real GDP Growth Forecasts

Projected real growth: about 2% (Q4/Q4) in 2016 and

Continued drag from net exports.

Real Final Sales

Aggregate Weekly Hours Worked

Solid income growth and private balance sheets.

GDP Growth Contributions: 2015-17

Near-term forecast below that presented at May 2015 EAP.

Outlook reflects countervailing factors.

Source: FRBNY Staff and Bureau of Economic Analysis

NY Fed / Research & Statistics Group

Gov. Exp. Net Exports

Source: Bureau of Labor Statistics

2016 Federal Reserve Bank of New York

Economic Advisory Panel / April 2016

Staff Unemployment Forecast Summary

Unemployment Rate Forecasts

Modestly above-potential growth leads to decline in

Below FRBNY forecast at May 2015 EAP.

Factors underlying this forecast.

Population growth around 1.0%.

Productivity Growth: Nonfarm Business Sector

Compensation Growth: Nonfarm Business Sector

NY Fed / Research & Statistics Group

Source: Bureau of Labor Statistics

Note: Shading shows NBER recessions.

Source: Bureau of Labor Statistics

2016 Federal Reserve Bank of New York

Note: Shading shows NBER recessions.

Economic Advisory Panel / April 2016

Overall PCE Inflation Forecasts

Staff Inflation Forecast Summary

As energy and import prices stabilize, inflation

PCE inflation projected to reach 2% in 2017.

Well-anchored longer-run inflation expectations.

Source: FRBNY Staff and Bureau of Economic Analysis

Core PCE Inflation Forecasts

CPI Core Goods and Core Services Inflation

Source: FRBNY Staff and Bureau of Economic Analysis

NY Fed / Research & Statistics Group

Source: Bureau of Labor Statistics

2016 Federal Reserve Bank of New York

Note: Shading shows NBER recessions.

Economic Advisory Panel / April 2016

Risks to FRBNY Staff Real Activity Outlook

Real GDP Growth Forecast Distribution

Balance of risks slightly skewed to the downside in

Financial conditions tighten more than expected.

Underlying fundamentals for consumer spending and

Risks to FRBNY Staff Inflation Outlook

Resource slack may be lower than currently estimated.

Stronger global disinflationary pressures emerge.

NY Fed / Research & Statistics Group

Core PCE Inflation Forecast Distribution

Risks roughly balanced in 2016, and slightly skewed to

% Change Year to Year

% Change Year to Year

% Change Year to Year