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Short-Term Energy and Winter Fuels Outlook

Release Date: October 7, 2014  |  Next Release Date: November 12, 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 4.6% from the first quarter of 2014, which reflects an upward revision of 0.4% from its previous estimate. Recent housing data have been mixed. The Census Bureau reported that new home sales in August rose 18% over July levels, and 33% over levels in August 2013. Existing home sales in August, however, fell by 1.8% from July according the National Association of Realtors. Census also reported that new orders for durable goods fell 18.2% from July to August, but rose 0.7% excluding transportation.

EIA used the September 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

Real GDP growth reaches 2.2% in 2014 and accelerates to 2.9% in 2015, similar to the forecast last month. Exports are expected to pick up in the latter half of 2014 relative to imports, but a strong dollar will slow these gains in 2015. Housing starts more than make up for this in 2015. Real disposable income grows by 2.5% in 2014, the same as last month, and total industrial production grows by 4.1% in 2014, up from 3.9% forecast last month. In 2015, these variables grow at 2.5% and 3.7%, respectively.

Expenditures

Private real fixed investment growth averages 5.5% and 7.4% in 2014 and 2015, respectively, led by industrial and transportation equipment in 2014 and a broad array of equipment categories in 2015. Real consumption expenditures grow at the same rate as real GDP in 2014 at 2.2%, but fall below the real GDP growth rate in 2015 at 2.6%. Durable goods expenditures drive consumption spending in both years. Export growth is 2.8% and 4.9% over the same two years, while import growth is 3.2% in 2014 and 4.2% in 2015. Total government expenditures fall by 0.4% in 2014, but increase by 0.5% in 2015.

U.S. Employment, Housing, and Prices

Projected growth in nonfarm employment averages 1.8% in 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 2015 is slower than projected last month and the declines in the unemployment rate are the same. Housing starts grow an average of 8.9% and 25.4% 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 16055 16524
percent change from prior year 2.3 2.2 2.2 2.9
Real Disposable Personal Income 11676 11651 11938 12240
percent change from prior year 3.0 -0.2 2.5 2.5
Real Personal Consumption Expenditures 10450 10700 10934 11223
Real Fixed Investment 2368 2479 2615 2808
Business Inventory Change 64.85 74.05 76.94 59.13
Employment (millions)
Non-Farm Employment 134.1 136.4 138.8 141.4
Commercial Employment 91.8 93.8 95.7 97.5
Production and Price Indexes
Manufacturing Production Index (2007=100) 95.1 97.9 101.6 105.6
percent change from prior year 4.4 2.9 3.9 3.9
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 2.09
Producer Price Index: Petroleum (1982=1.00) 3.07 2.95 2.86 2.82
GDP Implicit Price Deflator (2005=100) 105.2 106.7 108.4 110.4

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