experts discuss gdp
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GDP & YOUR BUSINESS
M A R K D O M S Under Secretary for Economic Affairs
Department of Commerce
B E T H A N N B O V I N O U.S. Chief Economist
Standard & Poor’s Rating Services
J A N U A R Y 3 0 , 2 0 1 5
Highlights of U.S. Economic
Growth in 2014
Mark Doms Under Secretary for Economic Affairs
Department of Commerce
• GDP growth for 2014 came in at 2.4 percent, the highest rate of growth since 2010.
• Most domesFc industries have been posFng gains in 2014.
Gross Domes)c Product
-‐0.3
-‐2.8
2.5
1.62.3 2.2 2.4
-‐4.0
-‐3.0
-‐2.0
-‐1.0
0.0
1.0
2.0
3.0
2008 2009 2010 2011 2012 2013 2014
Percent, year-‐over-‐year
Source: BEA
Real GDP Growth
• The U.S. economy was bolstered by the consumer in 2014, with real consumer spending increasing 2.5 percent. Like the job market data, consumer spending picked up speed in 2014, especially in the second half.
• Real disposable income rose 2.4 percent in 2014. • Several measures of consumer senFment have been increasing of late. In January, Michigan’s consumer
senFment index reached its highest level since 2004 and the Conference Board’s consumer confidence index hit its highest level since 2007.
• New car and truck sales in 2014 reached 16.4 million, the highest level since 2006.
Consumer Spending
-‐0.3
-‐1.6
1.92.3
1.8
2.4 2.5
-‐2.0-‐1.5-‐1.0-‐0.50.00.51.01.52.02.53.0
2008 2009 2010 2011 2012 2013 2014
Percent, year-‐over-‐year
Source: BEA
Real Personal Consumption Expenditure Growth
• DomesFc fixed investment has also recovered since the recession, with 2014 growth driven by increases in nonresidenFal structures and equipment.
• Investment grew in most categories.
Investment
-‐6.9
-‐22.9
15.913.6
6.8 4.6 6.3
-‐30-‐25-‐20-‐15-‐10-‐505
101520
2008 2009 2010 2011 2012 2013 2014
Percent, year-‐over-‐year
Source: BEA
Real Private Investment: Equipment Growth
• Another reason the U.S. economy is improving is that government spending has become less of a drag. • ReducFons in government expenditures reduced real GDP growth between -‐0.3 p.p. and -‐0.7 p.p between 2011
and 2013. In 2014, government expenditures had an almost negligible effect on GDP growth. • Real government expenditures have been bolstered by state and local governments, which have experienced 7
consecuFve quarters of growth compared to the same quarter in the previous year. The federal government, conversely, has experienced negaFve growth in 14 of the last 16 quarters when compared to the same quarter previous year.
Government Expenditures
2.83.1
0.1
-‐3.0
-‐1.4-‐2.0
-‐0.2
-‐4
-‐3
-‐2
-‐1
0
1
2
3
4
2008 2009 2010 2011 2012 2013 2014
Percent, year-‐over-‐year
Source: BEA
Real Government Growth
• Despite a slowdown in the global economy outside of the U.S. and an appreciaFng dollar, exports conFnue to boost U.S. economic growth. In 2014, real exports increased 3.1 percent. Nominal exports (not adjusted for price changes) increased 3.2 percent.
Exports
5.7
-‐8.8
11.9
6.9
3.3 3.0 3.1
-‐15
-‐10
-‐5
0
5
10
15
2008 2009 2010 2011 2012 2013 2014
Percent, year-‐over-‐year
Source: BEA
Real Exports Growth
Permission to reprint or distribute any content from this presentaFon requires the prior wri]en approval of Standard & Poor’s. Copyright © 2013 by Standard & Poor’s Financial Services LLC. All rights reserved.
Economic Outlook 2015: Are We There Yet?
Beth Ann Bovino Chief U.S. Economist Jan. 27, 2015 Data as of Nov 15, 2014
Growth Momentum Has Picked Up A Notch
2.3
-‐9
-‐7
-‐5
-‐3
-‐1
1
3
5
I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV
2007 2008 2009 2010 2010 2011 2012 2013 2014 2015
quarterly real GDP growth (annualized) recovery average
%
Source: U.S. Department of Commerce, Bureau of Economic Analysis and S&P CalculaFons. Note: 4Q 2014 and beyond are S&P forecasts.
-6%-5%-4%-3%-2%-1%0%1%2%3%4%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
2005 2007 2009 2011 2013 2015
Nonresidential construction Nonfarm employment (RHS)
(4-quarter percent change)
Stronger Employment Helps Construc)on
Source: Bureau of Labor Statistics, Bureau of Economic Analysis, S&P Economics projections
-20
-10
0
10
20
30
0
500
1,000
1,500
2,000
2,500
1992 1995 1998 2001 2004 2007 2010 2013
Starts (1000) Home prices (%chya, right)
Housing Bounces Back, Despite Dips
• Recovering from an historic drop Source: S&P/Case-‐Shiller, March 2014; Census Bureau
60
65
70
75
80
85
-30%
-20%
-10%
0%
10%
20%
2000 2002 2004 2006 2008 2010 2012 2014
Business equipment (real, left scale) Capacity Utilization, mfg (Right)
Manufacturing Returns to U.S.
12
Source: Federal Reserve; Bureau of Economic Analysis; Standard & Poor’s RaFngs Services ProjecFons
– Cheap energy a]racts manufacturers
– Equipment producFon largely recovered
– Capacity uFlizaFon has improved
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M A R K D O M S Under Secretary for Economic Affairs
Department of Commerce
B E T H A N N B O V I N O U.S. Chief Economist
Standard & Poor’s Rating Services
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