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Short-Term Energy Outlook

Release Date: September 9, 2014  |  Next Release Date: October 7, 2014  |  Full Report    |   Text Only   |   All Tables   |   All Figures

U.S. Economic Assumptions

Recent Economic Indicators

Economic growth improved substantially in the second quarter of 2014. The U.S. Bureau of Economic Analysis (BEA) reported that second quarter real gross domestic product (GDP) grew at an annualized rate of 4.2% from the first quarter of 2014, which reflects an upward revision of 0.2% from its previous estimate. Second quarter growth was associated with increases in private inventory investment and exports, along with greater state and local government spending and higher nonresidential fixed investment.

The U.S. Bureau of Labor Statistics (BLS) reported that the four-week moving average of initial unemployment insurance claims for the week ending August 30 was 302,750, an increase of 3,000 from the previous week's moving average.

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

Production and Income

Forecast real GDP growth in 2014 was revised upwards from an average 1.7% in last month's STEO to 2.1%. For 2014, the increase reflects the upward revision in real GDP growth in the second quarter of 2014. Real disposable income grows by 2.5% in 2014, down from the 3.1% forecast last month. In 2015, both real GDP and disposable income increase by 2.8%. Total industrial production grows at 3.9% in 2014 and 3.4% in 2015. Growth in industrial production in the manufacturing sector averages 3.5% in both 2014 and 2015.

Expenditures

Private real fixed investment growth averages 4.8% and 7.3% 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 faster than real GDP in 2014 at 2.3%, but fall below the real GDP growth rate in 2015 at 2.7%. Durable goods expenditures drive consumption spending in both years. Export growth is 2.7% and 5.4% over the same two years, while import growth is 3.5% in 2014 and 4.9% in 2015. Total government expenditures fall 0.4% in 2014, but increase by 0.3% in 2015.

U.S. Employment, Housing, and Prices

Projected growth in nonfarm employment averages 1.8% in 2014 and 1.9% in 2015. This is accompanied by a gradually declining unemployment rate that reaches 5.7% at the end of 2015. Housing starts grow an average of 11.4% and 26.8% 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 16041 16498
percent change from prior year 2.3 2.2 2.1 2.8
Real Disposable Personal Income 11676 11651 11939 12270
percent change from prior year 3.0 -0.2 2.5 2.8
Real Personal Consumption Expenditures 10450 10700 10943 11242
Real Fixed Investment 2368 2479 2598 2787
Business Inventory Change 64.85 74.05 82.33 55.57
Employment (millions)
Non-Farm Employment 134.1 136.4 138.9 141.5
Commercial Employment 91.8 93.8 95.7 97.7
Production and Price Indexes
Manufacturing Production Index (2007=100) 95.1 97.9 101.3 104.9
percent change from prior year 4.4 2.9 3.5 3.5
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 2.07 2.08
Producer Price Index: Petroleum (1982=1.00) 3.07 2.95 2.88 2.84
GDP Implicit Price Deflator (2005=100) 105.2 106.7 108.4 110.4

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