U.S. Economic Assumptions and Energy-Related Carbon Dioxide Emissions
Recent Economic Indicators.Real gross domestic product (GDP) increased at an annual rate of 4.2% in the second quarter of 2018 and 3.4% in the third quarter, according to recent estimates released by the Bureau of Economic Analysis.
Production, Income, and Employment.EIA used the December 2018 version of the IHS Markit macroeconomic model with EIA's energy price forecasts as model inputs to develop the economic forecasts in STEO.
Using the IHS Markit model, EIA forecasts real GDP to grow by 2.7% in 2019 and by 2.0% in 2020, compared with 2.9% growth in 2018. Total industrial production is forecast to increase 3.2 % in 2019 and 1.7 % in 2020— down from 3.9% growth in 2018. Nonfarm employment, which grew by an estimated 1.6% in 2018, is forecast to increase by 1.5% in 2019 and by 1.1% in 2020.
Expenditures.Using the IHS Markit model, EIA forecasts private real fixed investment to grow by 3.0% in 2019 and by 3.8% in 2019, compared with 5.2% growth estimated for 2018. Real consumption expenditures, which grew by an estimated 2.7% in 2018, are forecast to grow by 3.0% in 2019 and by 2.6% in 2020.
Using the IHS Markit model, EIA forecasts U.S. exports to grow by 3.9% in 2019 and by 4.7% in 2020, compared with 4.1% growth in 2018. Imports are forecast to grow by 6.4% in 2019 and by 7.1% in 2020, compared with 4.8% growth in 2018. Total government expenditures are forecast to increase by 2.6% in 2019 and by 0.9% in 2020, compared with an increase of 1.7% in 2018.
Energy-Related Carbon Dioxide Emissions.After increasing by 2.8% in 2018, EIA forecasts that energy-related carbon dioxide (CO2) emissions will decrease by 1.2% in 2019 and further decrease by 0.8% in 2020. Energy-related CO2 emissions are sensitive to changes in weather, economic growth, energy prices, and fuel mix. In 2018 the winter was colder and the summer hotter than in 2017, and the economy grew by almost 3%—contributing to higher CO2 emissions. As forecast weather is closer to normal and economic growth moderates, emissions are forecast to decline. Also, the change in fuel mix for electricity generation helps to dampen CO2 emissions growth in 2019 and 2020.
