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Short-Term Energy Outlook

Release Date: November 12, 2014  |  Next Release Date: December 9, 2014  |  Full Report    |   Text Only   |   All Tables   |   All Figures

U.S. Economic Assumptions

Recent Economic Indicators

Recent Economic Indicators. The U.S. Bureau of Economic Analysis (BEA) reported that third-quarter real gross domestic product (GDP) grew at an annualized rate of 3.5% from the second quarter of 2014. Third-quarter GDP rose primarily because of increased government expenditures and exports. Results from other economic data show mixed impacts on consumption and investment. The Census Bureau reported that new home sales in September rose by 0.2% over August 2014 levels, and by 17.0% over September 2013 levels. Census also reported that new orders for durable goods fell by 1.3% from August to September, and fell by 0.2% excluding transportation. Real personal consumption expenditures fell by 0.2% from August to September, according to BEA, although real personal disposable income was unchanged during this time.

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

Production and Income

Real GDP growth reaches 2.3% in 2014 and accelerates to 2.7% in 2015, above the 2.2% forecast last month for 2014, but below the 2.9% forecast last month for 2015. The combination of increased investment spending and higher exports is behind the stronger 2014 forecast. The projection for real GDP growth in 2015 has been lowered because of reduced expectations for growth in exports, resulting from a stronger dollar and less demand from slower-growing economies. Real disposable income grows by 2.6% in 2014, just above the 2.5% forecast last month, and total industrial production grows at 4.0% in 2014, just below the 4.1% forecast last month. In 2015, these economic indicators grow at 2.7% and 2.9%, respectively.

Expenditures

Private real fixed investment growth averages 5.5% and 6.9% in 2014 and 2015, respectively. Growth is led by industrial and transportation equipment in 2014 and by a broad array of equipment categories in 2015. Real consumption expenditures grow at the same rate as real GDP in 2014 and 2015, at 2.3% and 2.7%. Durable goods expenditures drive consumption spending in both years. Export growth is 3.1% and 3.6% over the same two years, while import growth is 3.3% in 2014 and 4.0% 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 5.6% at the end of 2015. The employment growth in 2015 is the same as projected last month, and the declines in the unemployment rate are slightly greater. Housing starts grow at an average of 7.2% and 19.6% 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 16066 16503
percent change from prior year 2.3 2.2 2.3 2.7
Real Disposable Personal Income 11676 11651 11956 12274
percent change from prior year 3.0 -0.2 2.6 2.7
Real Personal Consumption Expenditures 10450 10700 10943 11237
Real Fixed Investment 2368 2479 2616 2797
Business Inventory Change 64.85 74.05 77.61 52.26
Employment (millions)
Non-Farm Employment 134.1 136.4 138.8 141.4
Commercial Employment 91.8 93.8 95.8 97.7
Production and Price Indexes
Manufacturing Production Index (2007=100) 95.1 97.9 101.4 104.5
percent change from prior year 4.4 2.9 3.6 3.1
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 2.80 2.39
GDP Implicit Price Deflator (2005=100) 105.2 106.7 108.4 110.2

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