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Short-Term Energy Outlook

Release Date: December 9, 2014  |  Next Release Date: January 13, 2015  |  Full Report    |   Text Only   |   All Tables   |   All Figures

U.S. Economic Assumptions

Recent Economic Indicators

The Bureau of Economic Analysis (BEA) reported that real gross domestic product (GDP) grew at an annualized rate of 3.9% from the second to third quarters. This was an upward revision from their earlier estimate of 3.5% growth because private inventory investment decreased less than previously estimated, and both personal consumption expenditures and nonresidential fixed investment increased more. Results from other economic data have been relatively positive as well. The Census Bureau reported that new home sales in October rose 0.7% over September 2014 levels, and 1.8% over October 2013 levels. Census also reported that new orders for durable goods rose 0.4% from August to September, but fell 0.9% excluding transportation. Real personal consumption expenditures rose 0.2% from September to October according to the BEA, and real personal disposable income rose 0.1% during this time.

EIA used the November 2014 version of the IHS/Global Insight macroeconomic model with EIA's energy price forecasts as model inputs to develop the economic projections in the STEO.

Production and Income

Real GDP growth reaches 2.2% in 2014 and rises to 2.4% in 2015, below the 2.3% and 2.7% forecast for 2014 and 2015 last month. Expected growth in 2014 is lower in this month's forecast because of less investment spending. Real GDP growth is lower in 2015 as a result of reduced exports-due to a stronger dollar and less demand from slower-growing economies. Real disposable income grows 2.7% in 2014, just above the 2.6% forecast last month, and total industrial production grows at 4% in 2014. In 2015 real disposable income grows at 2.4% and industrial production grows at 2.3%.

Expenditures

Private real fixed investment growth averages 4.9% and 5.3% in 2014 and 2015, respectively, led by industrial and transportation equipment in 2014 and by a broad array of equipment categories in 2015. Real consumption expenditures grow at 2.2% in 2014, the same rate as real GDP, but rise above the real GDP growth rate in 2015 to 2.5%. Durable goods expenditures drive consumption spending in both years. Export growth is 3.2% and 2.9% over 2014 and 2015, respectively, while import growth is 3.4% and 2.6% over the same two years. Total government expenditures fall by 0.2% in 2014, but increase by 0.2% in 2015.

U.S. Employment, Housing, and Prices

Projected growth in nonfarm employment averages 1.8% in both 2014 and 2015. This is accompanied by a gradually declining unemployment rate that reaches 5.7% at the end of 2015. The employment growth in 2014 and 2015 is the same as projected last month, while the decline in the unemployment rate has slowed. Housing starts grow at an average of 7.4% and 16.6% in 2014 and 2015, respectively. Both consumer and producer price indexes increase at a moderate pace, and wages continue to show modest gains.

U.S. Economic Assumptions
  2012 2013 2014 2015
Economic Output, Income, and Expenditures (billion chained 2009 dollars)
Real Gross Domestic Product 15369 15710 16052 16436
percent change from prior year 2.3 2.2 2.2 2.4
Real Disposable Personal Income 11676 11651 11962 12249
percent change from prior year 3.0 -0.2 2.7 2.4
Real Personal Consumption Expenditures 10450 10700 10938 11210
Real Fixed Investment 2368 2479 2601 2739
Business Inventory Change 64.85 74.05 72.26 45.22
Employment (millions)
Non-Farm Employment 134.1 136.4 138.8 141.3
Commercial Employment 91.8 93.8 95.8 97.8
Production and Price Indexes
Manufacturing Production Index (2007=100) 95.1 97.9 101.4 103.9
percent change from prior year 4.4 2.9 3.6 2.5
Consumer Price Index (1982-1984=1.00) 2.30 2.33 2.37 2.41
Producer Price Index: All Commodities (1982=1.00) 2.02 2.03 2.06 2.05
Producer Price Index: Petroleum (1982=1.00) 3.07 2.95 2.78 2.02
GDP Implicit Price Deflator (2005=100) 105.2 106.7 108.4 110.5

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