4Q Economic Forecast Survey Highlights

Published on October 19, 2016 by David Simpson, CFA

SCM’s Quarterly Consensus Survey, conducted at the beginning of the fourth quarter. It found real GDP forecast consensus slide further to 1.7 percent for 2016 and 2.3 for 2017. The continued below average GDP growth is disappointing. On the other hand, chances of recession are still low due to strong consumer spending and solid labor markets.

Production

Industrial production is expected to dip –0.8 percent in 2016 and 2.0 percent in 2017. Capacity utilization estimates trended slightly lower to 75.6 percent for 2016 and 76.6 percent for 2017, not helpful to capital spending on Tech products.

Positive housing trends remain in place. Starts are set at 1.2 million units for 2016, and may rise to 1.3 million units in 2017. Unemployment rate forecasts held steady at 4.8 percent in 2016 and should be 4.6 percent in 2017, giving a boost to the recovering housing market and, along with plummeting gas prices, buoying auto sales.

Inflation

Inflation expectations remain low, held down by soft energy prices and restrained global demand. Below average money supply turnover should keep a lid on prices near term. Continued easy monetary policy is contingent on low inflation. One more interest rate hike is expected in 2016.

CPI estimates dipped to 1.4 percent for 2016 and 2.3 percent for 2017. Other indices, such as GDP Price Deflator and Personal Consumption Expenditures (PCE), show a similar path, trending toward continued moderate inflation.

Interest Rates

The yield curve will elevate but retain a flat shape in 2016, with T-bill rates rising to 0.53 percent and 0.8 percent in 2017. Ten-year Treasury yield expectations are 1.7 percent in 2016 and 2.0 percent in 2017.

3Q Forecast Survey Summary

Published on July 19, 2016August 2, 2016 by David Simpson, CFA

SCM’s Quarterly Consensus Survey, conducted at the beginning of the third quarter, saw real GDP forecast consensus slide further to 2.2 percent for 2016 and 2.3 for 2017. The continued below average GDP growth is disappointing but chances of recession are still low due to strong consumer spending and solid labor markets.

Industrial production is expected to rise 0.1 percent in 2016 and 2.0 percent in 2017. Capacity utilization estimates trended slightly lower to 76.2 percent for 2016 and 76.7 percent for 2017, spurring capital spending on Tech products.

CPI estimates dipped to 1.3 percent for 2016 and 2.2 percent for 2017. Other indices, such as GDP Price Deflator and Personal Consumption Expenditures (PCE), show a similar path, trending toward continued moderate inflation.

The yield curve will elevate but retain a flat shape in 2016, with T-bill rates rising to 0.5 percent and 1.1 percent in 2017. Ten-year Treasury yield expectations are 2.0 percent in 2016 and 2.4 percent in 2017.

SCM Forecast Survey Summary

Series Name	15 Ann	16 Ann	17 Ann
Nominal GDP	17953.50	18554.75	19348.75
Nominal GDP Chg %	3.46	3.66	4.25
Real GDP	16433.66	16805.33	17222.00
Real GDP Chg %	2.44	2.18	2.34
Industrial Prod Index	107.30	106.00	108.10
Industrial Prod %	1.45	0.12	2.00
Capacity Utilization	77.90	76.15	76.70
Housing Starts	1.11	1.19	1.29
Total Vehicle Sales	17.43	17.33	17.06
Real Disposable Inc	12219.00	12572.00	12861.00
Real Dispos Inc Chg %	3.43	2.93	2.30
Unemployment Rate	5.10	4.80	4.56
Corporate Profits	1538.70	1424.10	1498.00
Corp Profits Chg %	-0.70	2.45	1.70
Consumer Price Index	237.05	240.60	245.95
CPI Chg %	0.24	1.26	2.24
GDP Price Index	109.63	111.03	113.05
GDP Price Deflator	1.02	1.45	1.90
Personal Consump Exp	109.30	111.00	113.00
PCE Chg %	0.58	1.20	1.94
PPI Chg %	-0.90	0.60	2.20
Crude Oil WTI	48.70	37.00	45.15
Prime Rate	3.32	3.60	4.20
Fed Funds Target	0.20	0.49	1.01
Treasury Bill	0.06	0.45	1.11
LIBOR 3 mo	0.31	0.69	1.12
2 Yr Treasury Note	0.69	0.71	1.14
5 Yr Treasury Note	1.52	1.13	1.43
10 Yr Treasury Bond	2.16	2.04	2.39
Aaa Corp Yields	3.91	3.95	4.27
Baa Corp Yields	4.99	5.16	5.50

Sources: BMO Capital, Congressional Budget Office, Federal Reserve, PNC Economics and Wells Fargo

3Q Economic Forecast Survey

Published on July 19, 2016August 2, 2016 by David Simpson, CFA

The following is a more detailed quarterly version of the annumal US forecast survey published above.

US Forecast Consensus

Series Name	Q1 16	Q2 16	Q3 16	Q4 16	Q1 17	Q2 17	Q3 17	Q4 17	15 Ann	16 Ann	17 Ann
Nominal GDP	18297.00	18481.75	18676.50	18881.00	19005.50	19217.00	19451.00	19641.00	17953.50	18554.75	19348.75
Nominal GDP Chg %	2.72	4.36	4.44	4.30	4.33	4.20	4.15	4.05	3.46	3.66	4.25
Real GDP	16590.66	16696.66	16836.00	16914.33	16872.00	16973.00			16433.66	16805.33	17222.00
Real GDP Chg %	1.86	2.70	2.52	2.52	2.13	2.15	2.05	1.95	2.44	2.18	2.34
Industrial Prod Index	105.35	105.70	106.25	106.70	105.60	106.20			107.30	106.00	108.10
Industrial Prod %	-0.12	0.32	1.97	2.30	2.45	2.20	2.25	2.30	1.45	0.12	2.00
Capacity Utilization	76.10	76.05	76.15	76.30	75.90	76.20	76.60	76.80	77.90	76.15	76.70
Housing Starts	1.13	1.16	1.20	1.23	1.28	1.31	1.32	1.59	1.11	1.19	1.29
Total Vehicle Sales	17.30	17.43	17.33	17.26	16.90	16.80	16.75	16.70	17.43	17.33	17.06
Real Disposable Inc	12466.00	12538.00	12607.00	12677.00					12219.00	12572.00	12861.00
Real Dispos Inc Chg %	3.53	2.76	2.56	2.50	2.25	2.30	2.25	2.30	3.43	2.93	2.30
Unemployment Rate	4.96	4.30	4.26	4.18	4.66	4.60	4.55	4.50	5.10	4.80	4.56
Corporate Profits	1513.00	1415.10	1432.50	1440.90	1466.40	1495.40			1538.70	1424.10	1498.00
Corp Profits Chg %	0.05	1.45	1.60	4.20	4.65	1.40	1.50	1.50	-0.70	2.45	1.70
Consumer Price Index	238.90	239.95	241.20	242.50					237.05	240.60	245.95
CPI Chg %	0.44	1.82	1.96	2.10	2.06	2.00	1.95	1.85	0.24	1.26	2.24
GDP Price Index	108.43	110.77	111.22	111.69	112.40	112.98			109.63	111.03	113.05
GDP Price Deflator	1.00	1.47	1.75	1.82	2.20	2.00	2.00	1.90	1.02	1.45	1.90
Personal Consump Exp	110.30	110.70	111.25	111.70					109.30	111.00	113.00
PCE Chg %	0.90	1.42	1.60	1.76	2.06	1.96	2.00	1.95	0.58	1.20	1.94
PPI Chg %	-0.10	0.00	0.60	1.70	2.20	2.30	2.20	2.20	-0.90	0.60	2.20
Crude Oil WTI	31.90	37.65	38.45	39.95	49.30	51.00	54.00	57.70	48.70	37.00	45.15
Prime Rate	3.50	3.52	3.62	3.77	3.75	4.00	4.00	4.25	3.32	3.60	4.20
Fed Funds Target	0.41	0.43	0.49	0.62	0.69	0.85	0.94	1.10	0.20	0.49	1.01
Treasury Bill	0.29	0.37	0.48	0.66	0.62	0.80	0.79	0.96	0.06	0.45	1.11
LIBOR 3 mo	0.62	0.64	0.68	0.84	0.92	1.08	1.16	1.33	0.31	0.69	1.12
2 Yr Treasury Note	0.73	0.58	0.67	0.85	0.90	1.13	1.17	1.36	0.69	0.71	1.14
5 Yr Treasury Note	1.21	1.01	1.08	1.21	1.25	1.40	1.49	1.56	1.52	1.13	1.43
10 Yr Treasury Bond	2.05	2.02	2.07	2.17	1.85	1.94	1.76	1.82	2.16	2.04	2.39
Aaa Corp Yields	3.93	3.75	3.90	4.10	4.19	4.30			3.91	3.95	4.27
Baa Corp Yields	5.31	5.00	5.15	5.25	5.42	5.48			4.99	5.16	5.50

Sources: BMO Capital, Congressional Budget Office, Federal Reserve, PNC Economics and Wells Fargo.

SCM Forecast Survey Q2 2016

Published on April 22, 2016May 24, 2016 by David Simpson, CFA

rptForecastAnnual