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December 2015 Report

THE UCLA ANDERSON FORECAST FOR THE NATION AND CALIFORNIA

FORECASTS:2015 4th Quarter 2017 4th Quarter

64rd Year

UCLA Anderson Forecast

Director:Edward E. LeamerProfessor of Global Economics and Management and Chauncey J. Medberry Chair in Management

The UCLA Anderson Forecast Staff:Jerry Nickelsburg, Senior Economist, Adjunct Professor of Economics, UCLA Anderson School David Shulman, Senior EconomistWilliam Yu, EconomistPatricia Nomura, Economic Research and Managing EditorEydie Grossman, Director of Business Development George Lee, Publications and Marketing Manager

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This forecast was prepared based upon assumptions reflecting the Project’s judgements as of the date it bears. Actual results could vary materially from the forecast. Neither the UCLA Anderson Forecast nor The Regents of the University of California shall be held responsible as a consequence of any such variance. Unless approved by the UCLA Anderson Forecast, the publication or distribution of this forecast and the preparation, publication or distribution of any excerpts from this forecast are prohibited.

Published quarterly by the UCLA Anderson Forecast, a unit of UCLA Anderson School of Management.

Copyright 2015 by the Regents of the University of California.

The Quarterly Forecast:

“Will C-3PO Be Your Next Associate? The Traditional Office in the Age of Technology”

Upcoming Events:

Spring Quarterly Conference April 6, 2016Orange County Economic Outlook for 2015 April 20, 2016Summer Conference June 2016Fall Quarterly Conference September 2016UCLA Anderson Forecast/UC Hastings Joint Event September 2016Winter Quarterly Conference December 2016

December 2015 Report

THE UCLA ANDERSON FORECAST FOR THE NATION AND CALIFORNIA

Nation California

2016: “Full Employment” With 11Modest Inflation David Shulman

Charts 17Recent Evidence

Charts 22Forecast

Tables 31Short-Term

Tables 35Detailed

Will California's Expansion Stall as it 47Zeros in on Full Employment? Jerry Nickelsburg

Office-Using Unemployment Growth 55Across Cities, 2000 to 2015 William Yu

Charts 65Recent Evidence

Charts 70Forecast

Tables 77Summary

Tables 81Detailed

DECEMBER 2015 REPORT

THE UCLA ANDERSON FORECAST FOR THE NATION

2016: "Full Employment" With Modest Inflation

UCLA Anderson Forecast, December 2015 Nation–11

2016: "FULL EMPLOYMENT" WITH MODEST INFLATION

2016: “Full Employment” With Modest InflationDavid ShulmanSenior Economist, UCLA Anderson ForecastDecember 2015

With the unemployment rate at 5% reported for October, the economy is operating at or very close to the traditional definition of full employment. (See Figure 1). However, because the employment to population ratio of 59.3% is four percentage points below that recorded prior to the start of the financial crisis in 2006, for more than a few Americans the economy does not feel anywhere close to full employment. (See Figure 2). Nevertheless, employ-ment growth remains healthy with the economy generating jobs at a 200,000 a month clip that will bring with it further declines in the unemployment rate to 4.6% (See Figure 3).

Although GDP growth stalled in the third quarter at a tepid 2.1% annual rate, a mini-inventory cycle knocked 0.6% off the reported growth rate. The growth in real inven-tories declined from $113.5 billion in the second quarter to a more normal $90.2 billion in the third quarter. (See Figure 4, revised data not reflected in the chart) With the bulk of

201720152013201120092007

10%

9%

8%

7%

6%

5%

4%

(Percent)

Figure 1 Unemployment Rate 2007Q1- 2017Q4F

Sources: U.S. Bureau of Labor Statistics and UCLA Anderson Forecast

Figure 2 Employment to Population Ratio, 1948 – Oct 2015, Monthly Data, Percent

Sources: U.S Bureau of Labor Statistics via FRED.

12–Nation UCLA Anderson Forecast, December 2015


the inventory correction behind us, we anticipate that real GDP will grow at a 2.9% annual rate in the current quarter and grow at a 3.1% year-over-year pace in 2016, the high-est since 2005. (See Figure 5). The seemingly high 3.8% growth we are forecasting in the first quarter of 2016 is due to the temporary end of the “sequester” just agreed to by Congress that will trigger a surge in federal spending that quarter. Our preliminary view for 2017 is that growth will slow to 2.6% as a result of the tightening labor market and the move towards interest rate normalization. (See below)

Higher Wages and Inflation

The tightening labor market will bring with it the long-awaited increase in employee compensation. Instead of increasing at the 2010-2015 average of 2.1% a year, compensation is forecast to increase at a 3.5% and 4.2% rate in 2016 and 2017, respectively. (See Figure 6) Anecdotal evidence coming from the retail, construction, meat packing and professional services sectors indicate that wages are already rising well above what the official data is reporting.

Figure 3 Payroll Employment, 2007Q1 -2017Q4F, SAAR


201720152013201120092007

150

145

140

135

130

125

(Millions)

Figure 4 Real Change in Inventories, 2007Q1 -2017Q4F

Sources: U.S. Department of Commerce and UCLA Anderson Forecast

201720152013201120092007

$150

$100

$50

$0

$-50

$-100

$-150

$-200

$-250

(Billions of 2009$)

Figure 5 Real GDP Growth, 2007Q1-2017Q4


201720152013201120092007

6%

4%

2%

0%

-2%

-4%

-6%

-8%

-10%

(Percent Change, SAAR)

Figure 6 Employee Compensation per Hour, 2005Q1 -2017Q4F

Bureau of Labor Statistics and UCLA Anderson Forecast

2017201520132011200920072005

6%

5%

4%

3%

2%

1%

0%

-1%

(Total Compensation, %CHYA)



Adding to the cost pressures coming from the labor market, especially in the broadly defined services sector, it is our expectation that oil prices will begin to rebound in 2016 as domestic output from the very short-lived fracking wells is cut by about a million barrels a day and the intense budget pressures on OPEC and Russia lead to some degree of output restrictions. (See Figure 7) Further, as we have noted in the past, housing costs are already rising at a 3% pace coming from the continued tightness in the rental market.

As a result, inflation as measured by the Consumer Price Index (CPI) will ramp up to 2.1% in 2016 and 3.4% in 2017. (See Figure 8) Perhaps more important, the core CPI, which excludes food and energy is forecast to increase 2.3% and 2.6% in 2016 and 2017, respectively. The Fed is about to get the inflation it has been waiting for.

The Fed to Start Normalizing Interest Rates

Seven years ago this month, in response to the rapidly metastasizing financial crisis, the Federal Reserve embarked upon its zero interest rate policy and later adopted three massive programs of quantitative easing. With the financial emergency long over, the unemployment rate indicating near full-employment and the likelihood that inflation will soon approach its 2% target, we expect the Fed to begin normalizing interest rates by increasing the Federal Funds rate this month. Thereafter, we anticipate that the initial pace towards the normalization of policy will be gradual, but if we are correct about our outlook for inflation, the Fed will begin to speed up the process. Thus, we forecast that by the end of 2016 the federal funds rate will be about 1.5% and it will approximate 3.25% at the end of 2017. (See Figure 9)

Figure 7 Oil Price, West Texas Intermediate Crude, 2007Q1 – 2017Q4

Sources: Commodity Research Bureau and UCLA Anderson Forecast

201720152013201120092007

$140

$120

$100

$80

$60

$40

$20

(Dollars/Barrel)

Figure 8 Consumer Price Index vs. Core CPI, 2007Q1 - 2017Q4


201720152013201120092007

6%

4%

2%

0%

-2%

(Percent Change Year Ago)

Headline Core

Figure 9 Federal Funds vs. 10-Year U.S. Treasury Bonds, 2007Q1 -2017Q4

Sources: Federal Reserve Board and UCLA Anderson Forecast

201720152013201120092007

6%

5%

4%

3%

2%

1%

0%

-1%

(Rates)

Fed Funds 10-Yr. T-bonds



The Consumer in the Driver’s Seat

Driven by a strengthening labor market and an im-proved balance sheet, the consumer is once again playing its leading role in the economy. Real consumption spending is expected to increase by 3.2% this year and again in 2016. (See Figure 10) Don’t be all that concerned about the nega-tive headlines affecting such retail stalwarts as Macy’s and Nordstrom. The fact remains that the retail landscape has long shifted away from the traditional department stores to more innovative formats and more importantly, internet retailing.

Evidence of the robustness of consumer demand is coming from red hot automobile sales where is now appears that selling rates on the order of 18 million units might be the new normal. (See Figure 11) Further, as we noted last quarter, the new housing market is rapidly improving and we anticipate that housing starts will exceed 1.4 million units in both 2016 and 2017 compared to an estimated 1.13 million units this year. (See Figure 12) Indeed the fourth quarter of this year is forecast to come in at a 1.23 unit million annual rate. We also expect the housing baton to be passed from the white hot multi-family sector to the construction of single-family homes which remains well below prior levels of activity. If we are wrong here it will not be due to higher interest rates, but rather to a shortage of construction work-ers that is already hampering the delivery of new homes.

Nonresidential Construction: A Tale of Two Markets

Investment in nonresidential construction stalled in 2015. (See Figure 13) While growing in most categories, investment in mines and wells, almost all of it related to oil and gas drilling, collapsed under the weight of the 60% decline in oil prices. For example, from the 4Q2014 through

Figure 10 Real Consumption Spending, 2007Q1 -2017Q4F


201720152013201120092007

6%

4%

2%

0%

-2%

-4%

-6%

(Percent Change, SAAR)

Figure 11 Light Vehicle Sales, 2007Q1 – 2017Q4, In Millions of Units

Sources: BEA and UCLA Anderson Forecast

201720152013201120092007

20

18

16

14

12

10

8

(Millions of Units)

Figure 12 Housing Starts, 2007Q1 -2017Q4


201720152013201120092007

1600

1400

1200

1000

800

600

400

(Thousands of Units, SAAR)



the current quarter of this year, real investment in mines and wells will have declined from $137 billion to $70 billion, a decline of nearly 50%. (See Figure 14) On a purely arith-metic basis this decline whacked 0.4% off 2015 real GDP.

In contrast, commercial construction of office build-ings, shopping centers and warehouses is ramping up in response to growing demand for modern offices and the need to improve the retail supply chain. This investment is being funded by the flood of capital reaching for real estate

yields in a yield starved world. Since the low in the 1Q2011 to the third quarter of 2015, real investment in commercial construction has increased from $63 billion to $108 billion. (See Figure 15) Further, because this sector is still just ramp-ing up, we forecast real commercial construction spending to be $145 billion in 2017, still well below the $191 billion recorded in the long ago year of 2000.

Exports Remain the Big Risk

Already weak export growth has gotten weaker in recent quarters. (See Figure 16) American exporters are facing the twin challenges of weak foreign economies and a very strong dollar which is up 18% over the past year. (See Figure 17) Where earlier in the recovery real exports were growing at a 12% rate, we will now be lucky to achieve 4% growth. Because we believe that most of the global weak-ness is behind us, we anticipate that the foreign exchange value of the dollar will soon peak and then gradually decline. We would note that if we are wrong here and the global economy continues to weaken and the dollar continues to strengthen, our forecast of 3% growth in 2016 would be way over optimistic.

There are two other risks with respect to trade. With the leading contenders for both parties’ presidential nomina-tions opposed to the proposed Trans Pacific Partnership there is a very real possibility that the United States will turn down its first major trade deal since the 1930s. Although turning down the deal in the short run would not have an immedi-

Figure 13 Real Investment in Nonresidential Construction, 2007Q1 -2017Q4F


Figure 14 Real Investment in Mines and Wells, 2007Q1 -2017Q4F


201720152013201120092007

$550

$500

$450

$400

$350

$300

(Billions 2009$)

201720152013201120092007

$140

$120

$100

$80

$60

(Billions 2009$)

Figure 15 Real Investment in Commercial Structures, 2007Q1 -2017Q4


201720152013201120092007

$180

$160

$140

$120

$100

$80

$60

$40

(Billions 2009$)



ate impact on real GDP, it could nevertheless negatively impact the stock market and over the longer run seriously hamper exports as our Asian trading partners make sepa-rate deals among themselves and with China. Second, the mass migration crisis facing Europe along with the horrific acts of terrorism in Paris have the potential to break apart the Eurozone with unknown consequences for the global economy. Compared to immigration, the Greek crisis was a walk in the park for the European elite.

Defense Spending on the Rebound

As we have been arguing for over a year, the five year decline in real defense spending is over. Congress recently amended its “sequester” program to allow defense spending to increase. We have modeled in further increases in defense spending for 2017 to account for the increasingly danger-ous geopolitical environment. In our view this increase will not be a one-off event, but rather the start of a major trend. Meantime, we forecast that real defense purchases will increase by 2.9% and 2.4% in 2016 and 2017, respectively. (See Figure 18)

Conclusion

Continued job growth along with wage increases will power consumption in 2016 leading to the first year of greater than 3% growth in real GDP since 2005. Higher wages along with a modest rebound in oil prices and higher housing costs will push the inflation rate above 2% leading the Federal Reserve to embark on a gradual tightening cycle that will begin this month. Strength will be evidenced in housing and commercial construction along with a boom-ing automobile market. The collapse in oil-related capital spending will come to an end next year and defense spending will be increasing after five years of decline.

Figure 16 Real Exports of Goods and Services, 2007Q1- 2017Q4


Figure 17 Trade Weighted U.S. Dollar Exchange Rate with Major Currency Trading Partners, 2007Q1 -2017Q4

Sources: Federal Reserve Board and UCLA Anderson Forecast

201720152013201120092007

30%

20%

10%

0%

-10%

-20%

-30%

-40%

(Percent Change)

201720152013201120092007

1.25

1.20

1.15

1.10

1.05

1.00

0.95

0.90

0.85

(2009=1.00)

201720152013201120092007

8%

6%

4%

2%

0%

-2%

-4%

-6%

-8%

(Percent Change)

Figure 18 Real Defense Purchases, 2007 – 2017F, Annual Data




Charts

CHARTS – RECENT EVIDENCE


15141312111009080706050403

10

5

0

-5

-10

(% Change Year Ago)

Price InflationConsumer vs. Producers' Price Index

Jan. 2003 to Oct. 2015

Consumer Prices Producer Prices-Fin. Goods 151413121110090807060504030201

65432

10

-1

(Percent)

Interest Rates3-Mo. T-Bills vs. Long Gov't Bond Yields

Jan. 2001 to Oct. 2015

3-MonthLong Gov'ts

1514131211100908070605040302

14

12

10

8

6

4

2

(Mil. Units)

Automobile SalesJan. 2002 to Oct. 2015

CarsTrucks

1514131211100908070605040302

130

120

110

100

90

80

(Index 2004=100)

Composite Indexes of Economic IndicatorsJan. 2002 to Oct. 2015

LeadingCoincident



15141312111009080706050403

144000142000140000138000136000134000132000130000128000

(Thous.)

Total Nonfarm EmploymentJan. 2003 to Oct. 2015

151413121110090807060504

140

120

100

80

60

40

20

($/Barrel)

Crude Oil PriceWest Texas IntermediateJan. 2004 to Oct. 2015

15141312111009080706050403

10.0

9.1

8.1

7.2

6.3

5.4

4.4

3.5

(Percent)

Rate of UnemploymentJan. 2003 to Oct. 2015

15141312111009080706050403

400

350

300

250

200

150

100

(Bil. $)

Retail SalesJan. 2003 to Oct. 2015



15141312111009080706050403

2.5

2.0

1.5

1.0

0.5

0.0

(Mil. Units)

Housing StartsJan. 2003 to Oct. 2015

15141312111009080706050403

1400

1200

1000

800

600

400

200

(Thous.)

Single-Family New Home SalesJan. 2003 to Sept. 2015

15141312111009080706050403

0.950.900.850.800.750.700.650.60

130

120110

100

90

80

70

(Deutschmark/$) (Yen/$)

Japanese and European Exchange Rates

Jan. 2003 to Oct. 2015

Euro/U.S. $ (Left) Yen/U.S. $ (Right)15141312111009080706050403

76543210

-1

(Index Jan.'90 = 1.00)

U.S., Japanese and GermanStock Markets

Jan. 2003 to Oct. 2015

U.S. Japan Germany

CHARTS – FORECAST


2017201320092005200119971993

8

6

4

2

0

-2

-4

(4-Qtr. % Ch.)Real Disposable Income and Consumption

Consumption Disposable Income2017201520132011200920072005200320011999

10

8

6

4

2

0

(3-Yr. % Ch.)

Consumer Expenditures on Medical Services:Quantity % + Price % = Expenditure %

Quantity Price

2017201420112008200520021999199619931990

15

10

5

0

-5

(4-Qtr. % Ch.)Real Export and Import Growth

Exports Imports201720142011200820052002199919961993

6

5

4

3

2

1

0

(5-Yr. % Ch.)

Real GDP GrowthDeveloped World vs. U.S.

U.S. Developed World

CHARTS – FORECAST


2017201420112008200520021999199619931990

6

4

2

0

-2

-4

-6

(4-Qtr. % Ch.)Real GDP Growth

2017201420112008200520021999199619931990

18000

16000

14000

12000

10000

8000

(Bil. 2009 $)

Actual Real GDPVs. Potential Real GDP

Actual Real GDP Potential Real GDP

201720122007200219971992198719821977

10

8

6

4

2

0

(Percent)

Defense SpendingAs A Share of GDP

20172015201320112009200720052003200119991997

875421

-1-3-4

(% Ch. 12-Qtr. Mov. Avg.)

Real Purchases of Goods and Servicesby the Federal Government

CHARTS – FORECAST


20172014201120082005200219991996

0.8

0.6

0.4

0.2

0.0

-0.2

-0.4

(% of Real GDP)

Change in Real Business Inventories(3-yr. Moving Average)

20172014201120082005200219991996

30

20

10

0

-10

-20

(3-yr. % Ch.)

Real Investment-Equipment & SoftwareInfo. Processing Equip. vs. Other Equip.

Total Less Info. Equip. Information Processing Equip.

2017201420112008200520021999

14.514.013.513.012.512.011.511.0

50

48

46

44

42

40

38

(Percent) (Percent)

Nonres. Fixed Investment Share of Real GDP Vs.Equip. & Software Share of Bus. Fixed Invest.

Nonres. Fixed Investment ShareEquip. & Software Share/Nonres.Fixed

20172014201120082005200219991996

10

5

0

-5

-10

-15

(3-Yr. % Ch.)

Real Investment in Nonresidential StructuresTotal vs. Commercial Bldgs.

Total Commercial Bldgs.

CHARTS – FORECAST


2017201320092005200119971993

15141312111098

8

6

4

2

0

-2

(Invest. Share %) (4-Qtr. % Ch.)

Nonresidential Fixed Investment Share of Real GDPVs. Capital Stock Growth

Nonres. Fixed Investment Share Capital Stock Growth20172013200920052001199719931989

900

800

700

600

500

400

300

2.5

2.0

1.5

1.0

0.5

0.0

(Bil. 2009 $) (Mil. Units)

Real Investment in Residential StructuresVs. New Housing Starts

Real Investment (Left) Housing Starts (Rt.)

2017201220072002199719921987198219771972

3.02.52.01.51.00.50.0

-0.5

(10-Yr. % Ch.)

Real Hourly Wage CompensationVs. Productivity in Nonfarm Sector

Real Wage Productivity 20172013200920052001199719931989

2

0

-2

-4

-6

-8

-10

(Percent of GDP)Federal Surplus or Deficit

CHARTS – FORECAST


20172013200920052001199719931989

6

5

4

3

2

1

0

-1

(Percent of GDP)

Consumer Price Index Inflation

201720122007200219971992198719821977

100

80

60

40

20

0

(2009$/barrel)

Real Refiner's Cost of Crude Oil

20172013200920052001199719931989

1.61.41.21.00.80.60.40.20.0

(Indexed: 2005 = 1.00)

Real and Nominal Exchange RateIndustrial Countries Trade Weighted Average

Nominal Exchange Rate Real Exchange Rate201720102003199619891982197519681961

15

11

7

2

-2

(Percent)Treasury Yields Vs. CPI Inflation

Inflation 30-Year Bonds 90-Day Bills

CHARTS – FORECAST


201720102003199619891982197519681961

109876543

9590858075706560

(%) (100% - Capacity Util.)

Unemployment and Capacity Utilization Mfg.Postwar Business Cycles

Unemployment Rate Capacity Util. Mfg. Rate 2017201420112008200520021999199619931990

12

11

10

9

8

7

(Percent of GDP)Federal Transfers to Persons

20172013200920052001199719931989

3.5

3.0

2.5

2.0

1.5

(Percent of GDP)

Federal Transfers to PersonsFor Health Insurance

201720132009200520011997199319891985

2.5

2.0

1.5

1.0

0.5

0.0

18161412108642

(Mil. Units) (Percent)

U.S. Housing StartsVs. Mortgage Rate

Housing Starts Mortgage Rate

CHARTS – FORECAST


20172013200920052001199719931989

20

15

10

5

0

(Mil. Units)

U.S. Retail Sales ofAutomobiles and Light Trucks

Automobiles Light Trucks 20172013200920052001199719931989

5.5

5.0

4.5

4.0

3.5

3.0

2.5

2.0

(Percent of National Income)

Federal Net Interest Payments onNational Debt



Tables

FORECAST TABLES - SUMMARY


Table 1. Summary of the UCLA Anderson Forecast for the Nation 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Monetary Aggregates and GDP (% Ch.)Money Supply (M1) 0.2 -0.2 4.5 14.2 6.4 15.4 15.0 10.1 10.4 7.6 -0.1 -5.8Money Supply (M2) 5.3 6.2 6.8 8.1 2.5 7.3 8.6 6.7 6.2 5.9 4.0 2.1GDP Price Index 3.1 2.7 1.9 0.8 1.2 2.1 1.8 1.6 1.6 1.1 2.3 2.6Real GDP 2.7 1.8 -0.3 -2.8 2.5 1.6 2.2 1.5 2.4 2.5 3.1 2.6

Interest Rates (%) on:Federal Funds 5.0 5.0 1.9 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.9 2.690-day Treasury Bills 4.7 4.4 1.4 0.2 0.1 0.1 0.1 0.1 0.0 0.1 0.9 2.510-year Treasury Bonds 4.8 4.6 3.7 3.3 3.2 2.8 1.8 2.4 2.5 2.2 3.1 3.930-year Treasury Bonds 4.9 4.8 4.3 4.1 4.3 3.9 2.9 3.4 3.3 2.9 3.7 4.3Moody’s Corporate Aaa Bonds 5.6 5.6 5.6 5.3 4.9 4.6 3.7 4.2 4.2 3.9 4.8 5.630-yr Bond Less Inflation 2.2 2.3 1.2 4.1 2.6 1.5 1.0 2.1 1.9 2.6 1.9 1.6

Federal Fiscal PolicyDefense Purchases (% Ch.) Current $ 5.6 5.7 11.1 4.5 5.6 0.5 -2.3 -6.1 -2.5 -1.2 4.3 4.7 Constant $ 2.0 2.5 7.5 5.4 3.2 -2.3 -3.4 -6.7 -3.8 -1.3 2.9 2.4Other Expenditures (% Ch.) Transfers to Persons 6.6 6.4 12.9 13.0 8.9 -0.3 -1.1 2.0 4.2 5.0 4.6 5.3 Grants to S&L Gov’t -0.7 5.3 3.4 23.5 10.3 -6.5 -6.0 1.4 9.9 7.5 5.1 5.3

Billions of Current Dollars, Unified Budget Basis, Fiscal YearReceipts 2406.7 2567.7 2523.6 2104.4 2161.7 2302.5 2449.1 2774.0 3020.4 3248.7 3446.5 3620.5Outlays 2654.9 2729.2 2978.4 3520.1 3455.9 3599.3 3538.3 3454.2 3503.7 3687.6 3942.2 4095.1Surplus or Deficit (-) -248.2 -161.5 -454.8 -1415.7 -1294.2 -1296.8 -1089.2 -680.2 -483.4 -438.9 -495.7 -474.6

As Shares of GDP (%), NIPA BasisRevenues 18.3 18.4 17.5 15.5 16.3 16.6 16.7 18.9 18.8 19.1 19.1 19.1Expenditures 20.0 20.3 21.8 24.2 25.2 24.6 23.5 22.7 22.5 22.4 22.2 22.1 Defense Purchases 4.6 4.7 5.1 5.5 5.6 5.4 5.1 4.6 4.3 4.1 4.1 4.0 Transfers to Persons 11.4 11.6 12.9 14.9 15.6 15.0 14.2 14.1 14.1 14.3 14.2 14.2Surplus or Deficit (-) -1.6 -1.8 -4.3 -8.7 -8.9 -8.0 -6.7 -3.8 -3.6 -3.3 -3.1 -3.0

Details of Real GDP (% Ch.)Real GDP 2.7 1.8 -0.3 -2.8 2.5 1.6 2.2 1.5 2.4 2.5 3.1 2.6Final Sales 2.6 2.0 0.2 -2.0 1.1 1.7 2.1 1.5 2.4 2.4 3.3 2.7Consumption 3.0 2.2 -0.3 -1.6 1.9 2.3 1.5 1.7 2.7 3.2 3.2 2.9Nonres. Fixed Investment 7.1 5.9 -0.7 -15.6 2.5 7.7 9.0 3.0 6.2 3.3 6.4 5.5 Equipment 8.6 3.2 -6.9 -22.9 15.9 13.6 10.8 3.2 5.8 3.2 7.1 5.7 Intellectual Property 4.5 4.8 3.0 -1.4 1.9 3.5 3.9 3.8 5.2 6.4 5.2 3.5 Structures 7.2 12.7 6.1 -18.9 -16.4 2.3 12.9 1.6 8.1 -0.8 6.8 8.0Residential Construction -7.7 -19.0 -24.3 -21.4 -2.7 0.5 13.8 9.6 1.7 8.9 15.8 4.0Exports 9.0 9.3 5.7 -8.8 11.9 6.9 3.4 2.8 3.4 1.6 2.9 4.3Imports 6.3 2.5 -2.6 -13.7 12.7 5.5 2.2 1.1 3.8 5.3 6.5 6.0Federal Purchases 2.5 1.7 6.8 5.7 4.3 -2.7 -1.9 -5.7 -2.4 -0.4 3.5 0.9State & Local Purchases 0.9 1.5 0.3 1.6 -2.7 -3.3 -1.9 -1.0 0.6 1.5 1.2 1.3

Billions of 2009 DollarsReal GDP 14613.8 14873.8 14830.4 14418.8 14783.8 15020.6 15354.6 15583.3 15961.7 16354.6 16865.9 17304.9Final Sales 14542.2 14838.2 14864.1 14566.3 14725.6 14983.0 15300.0 15521.9 15893.6 16272.1 16813.9 17263.8Inventory Change 71.6 35.6 -33.7 -147.6 58.2 37.6 54.7 61.4 68.0 82.6 52.0 41.1



Table 2. Summary of the UCLA Anderson Forecast for the Nation 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Industrial Production and Resource UtilizationIndustrial Prod. (% Ch.) 2.2 2.5 -3.4 -11.3 5.6 3.0 2.8 1.9 3.7 1.3 1.9 3.1Capacity Util. Manuf. (%) 78.6 78.8 74.8 65.7 70.9 73.7 74.5 74.1 75.3 76.0 76.3 75.5Real Bus. Investment as % of Real GDP 18.2 17.5 16.4 14.0 13.9 14.6 15.6 16.1 16.5 16.8 17.7 18.1Nonfarm Employment (mil.) 136.4 137.9 137.2 131.2 130.3 131.8 134.1 136.4 139.0 141.9 144.6 146.3Unemployment Rate (%) 4.6 4.6 5.8 9.3 9.6 8.9 8.1 7.4 6.2 5.3 4.7 4.7

Inflation (% Ch.)Consumer Price Index 3.2 2.9 3.8 -0.3 1.6 3.1 2.1 1.5 1.6 0.1 2.1 3.4 Total less Food & Energy 2.5 2.3 2.3 1.7 1.0 1.7 2.1 1.8 1.7 1.8 2.3 2.6Consumption Chain Index 2.7 2.5 3.1 -0.1 1.7 2.5 1.9 1.4 1.4 0.3 1.8 2.7GDP Chain Index 3.1 2.7 1.9 0.8 1.2 2.1 1.8 1.6 1.6 1.1 2.3 2.6Producers Price Index 4.7 4.8 9.8 -8.7 6.8 8.8 0.5 0.6 0.9 -7.2 1.2 4.2

Factors Related to Inflation (% Ch.)Nonfarm Business Sector Total Compensation 3.9 4.3 2.7 1.1 1.9 2.2 2.7 1.1 2.7 2.2 3.5 4.2 Productivity 0.9 1.6 0.8 3.2 3.3 0.2 0.9 -0.0 0.7 0.8 1.3 1.3 Unit Labor Costs 3.0 2.7 2.0 -2.0 -1.3 2.1 1.7 1.1 2.0 1.4 2.1 2.8Farm Price Index -1.2 22.5 12.4 -16.5 12.2 23.6 3.2 1.4 1.1 -11.5 -2.1 -1.5Crude Oil Price ($/bbl) 66.1 72.3 99.6 61.7 79.4 95.1 94.2 98.0 93.0 49.4 56.1 70.6New Home Price ($1000) 243.1 243.7 230.4 214.5 221.2 224.3 242.1 265.1 283.8 297.8 305.3 307.0

Income, Consumption and Saving (% Ch.)Disposable Income 6.8 4.7 4.6 -0.5 2.7 5.0 5.1 -0.1 4.2 3.6 5.2 6.1Real Disposable Income 4.0 2.1 1.5 -0.4 1.0 2.5 3.1 -1.4 2.7 3.3 3.3 3.3Real Consumption 3.0 2.2 -0.3 -1.6 1.9 2.3 1.5 1.7 2.7 3.2 3.2 2.9Savings Rate (%) 3.3 3.0 4.9 6.1 5.6 6.1 7.6 4.8 4.8 4.8 4.9 5.4

Housing and Automobiles--millions of unitsHousing Starts 1.812 1.342 0.900 0.554 0.586 0.612 0.784 0.928 1.001 1.132 1.439 1.460Auto & Light Truck Sales 16.5 16.1 13.2 10.4 11.6 12.7 14.4 15.5 16.4 17.4 18.0 18.1

Corporate ProfitsBillions of Dollars Before Taxes 1851.4 1748.4 1382.5 1472.6 1840.7 1806.8 2130.8 2161.7 2207.8 2366.8 2571.0 2587.2 After Taxes 1378.1 1302.9 1073.3 1203.1 1470.2 1427.7 1683.2 1692.8 1693.9 1827.1 1992.6 2010.8Percent Change Before Taxes 12.0 -5.6 -20.9 6.5 25.0 -1.8 17.9 1.4 2.1 7.2 8.6 0.6 After Taxes 11.1 -5.5 -17.6 12.1 22.2 -2.9 17.9 0.6 0.1 7.9 9.1 0.9

International Trade FactorsNominalU.S. Dollar--% change Industrial Countries -1.5 -5.6 -4.5 4.3 -3.0 -5.9 3.7 3.3 3.3 16.1 2.0 -4.4 Developing Countries -2.5 -3.8 -2.6 7.2 -4.1 -3.5 2.0 -0.4 3.0 10.3 5.8 -0.3 Exports 12.8 12.8 10.7 -13.8 16.7 13.7 4.4 3.0 3.5 -3.2 3.7 7.2 Imports 10.7 6.0 7.6 -22.7 19.3 13.6 2.9 0.3 3.6 -3.0 3.2 9.1 Net Exports (bil. $) -771 -719 -723 -395 -513 -580 -566 -508 -530 -519 -525 -618RealU.S. Dollar--% change Industrial Countries -2.4 -6.4 -5.3 7.8 -0.5 -7.9 3.8 4.6 4.4 19.3 2.8 -5.8 Developing Countries -5.1 -7.4 -9.5 6.3 -5.2 -8.2 -0.5 -1.2 2.2 12.1 7.3 -1.1 Exports 9.0 9.3 5.7 -8.8 11.9 6.9 3.4 2.8 3.4 1.6 2.9 4.3 Imports 6.3 2.5 -2.6 -13.7 12.7 5.5 2.2 1.1 3.8 5.3 6.5 6.0 Net Exports (bil. ‘09$) -794 -713 -558 -395 -459 -459 -447 -417 -443 -544 -655 -730

FORECAST TABLES - QUARTERLY SUMMARY


Table 3. Quarterly Summary of the UCLA National Anderson Forecast for the Nation 2015:2 2015:3 2015:4 2016:1 2016:2 2016:3 2016:4 2017:1 2017:2 2017:3 2017:4

Monetary Aggregates and GDP (% Ch.)Money Supply (M1) 3.2 7.2 2.3 0.3 -3.7 -4.8 -5.3 -6.1 -6.4 -7.1 -6.1Money Supply (M2) 4.8 6.4 4.2 4.1 3.2 2.5 2.6 2.0 1.8 1.5 1.5GDP Price Index 2.1 1.2 2.1 2.5 2.8 2.5 2.9 2.6 2.6 2.5 2.4Real GDP 3.9 1.5 2.9 3.8 3.3 3.1 2.9 2.5 2.3 2.2 2.2

Interest Rates (%) on:Federal Funds 0.1 0.1 0.2 0.5 0.8 1.1 1.4 1.8 2.4 3.0 3.390-day Treasury Bills 0.0 0.0 0.1 0.5 0.7 1.0 1.3 1.7 2.2 2.8 3.110-year Treasury Bonds 2.2 2.2 2.3 2.7 3.0 3.3 3.5 3.8 4.0 4.0 3.830-year Treasury Bonds 2.9 3.0 3.0 3.4 3.6 3.9 4.0 4.2 4.4 4.4 4.2Moody’s Corporate Aaa Bonds 3.9 4.1 4.1 4.5 4.7 5.0 5.2 5.5 5.7 5.7 5.530-yr Bond Less Inflation 0.7 1.7 2.7 1.8 0.8 1.0 1.0 1.6 1.7 1.8 1.7

Federal Fiscal PolicyDefense Purchases (% Ch.) Current $ 0.6 -1.0 1.3 10.8 4.2 3.5 4.6 6.8 4.9 3.8 1.6 Constant $ 0.3 -1.4 0.8 8.3 2.7 2.0 2.6 3.0 2.9 1.8 -0.3Other Expenditures (% Ch.) Transfers to Persons 0.4 6.5 3.4 5.8 4.5 4.4 4.1 9.6 3.3 3.9 4.0 Grants to S&L Gov’t -3.9 15.4 2.6 3.6 6.1 5.4 5.4 5.9 5.0 4.5 4.1

Billions of Current Dollars, Unified Budget Basis, NSAReceipts 1027.1 801.8 795.1 753.5 1032.8 865.2 834.0 797.2 1079.7 909.6 873.6Outlays 904.0 924.3 967.1 1008.1 976.7 990.4 1003.9 1046.2 1015.6 1029.5 1039.6Surplus or Deficit (-) 123.1 -122.5 -172.0 -254.6 56.1 -125.2 -169.9 -249.0 64.1 -119.9 -166.0

As Shares of GDP (%), NIPA BasisRevenues 19.1 19.1 19.0 19.1 19.1 19.1 19.1 19.1 19.2 19.1 19.1Expenditures 22.4 22.6 22.3 22.3 22.2 22.1 22.0 22.2 22.2 22.1 22.1 Defense Purchases 4.1 4.1 4.1 4.1 4.1 4.1 4.0 4.1 4.1 4.0 4.0 Transfers to Persons 14.2 14.3 14.3 14.2 14.2 14.1 14.1 14.2 14.2 14.1 14.1Surplus or Deficit (-) -3.3 -3.5 -3.2 -3.2 -3.1 -3.0 -2.9 -3.1 -3.0 -3.0 -3.0

Details of Real GDP (% Ch.)Real GDP 3.9 1.5 2.9 3.8 3.3 3.1 2.9 2.5 2.3 2.2 2.2Final Sales 3.9 2.9 3.2 3.9 3.2 3.0 2.8 2.7 2.5 2.3 2.3Consumption 3.6 3.2 3.6 3.4 2.6 3.1 3.1 3.0 2.7 2.6 2.8Nonres. Fixed Investment 4.1 2.1 5.9 7.2 9.0 7.5 6.1 5.1 4.5 4.1 4.7 Equipment 0.3 5.3 9.1 7.6 8.4 7.1 5.6 5.8 4.8 4.7 5.2 Intellectual Property 8.3 1.8 5.7 6.0 5.7 4.8 3.8 3.6 2.6 2.4 2.8 Structures 6.2 -4.0 -0.5 8.4 15.2 12.4 10.2 5.8 6.3 5.1 6.1Residential Construction 9.4 6.1 14.6 26.3 21.3 8.3 5.5 3.5 -0.2 -0.9 0.9Exports 5.1 1.9 2.4 1.5 3.6 4.6 4.7 4.4 4.0 4.2 4.5Imports 3.0 1.8 6.2 8.3 8.0 7.5 7.0 6.2 4.4 4.6 4.3Federal Purchases 0.0 0.3 0.6 11.8 1.7 1.2 0.2 1.6 1.5 0.8 -3.2State & Local Purchases 4.3 2.6 0.8 0.4 1.0 1.0 1.3 1.2 1.6 1.5 1.1

Billions of 2009 DollarsReal GDP 16333.6 16394.2 16513.4 16669.5 16804.7 16934.4 17055.2 17159.2 17258.7 17353.2 17448.5Final Sales 16220.1 16337.4 16466.3 16624.5 16754.6 16879.7 16997.0 17109.5 17215.6 17314.6 17415.4Inventory Change 113.5 56.8 47.1 45.1 50.2 54.7 58.2 49.7 43.1 38.6 33.1

FORECAST TABLES - QUARTERLY SUMMARY


Table 4. Quarterly Summary of The UCLA National Anderson Forecast for the Nation 2015:2 2015:3 2015:4 2016:1 2016:2 2016:3 2016:4 2017:1 2017:2 2017:3 2017:4

Industrial Production and Resource UtilizationProduction--% change -2.4 1.9 -1.2 2.5 3.4 4.4 3.4 3.0 1.9 3.0 3.3Capacity Util. Manuf. (%) 75.9 76.1 76.0 76.2 76.3 76.4 76.2 75.9 75.5 75.4 75.3Real Bus. Investment as % of Real GDP 16.7 16.8 17.0 17.3 17.6 17.8 17.9 18.0 18.1 18.1 18.2Nonfarm Employment (mil.) 141.6 142.2 142.9 143.8 144.4 144.9 145.4 145.8 146.2 146.5 146.8Unemployment Rate (%) 5.4 5.2 4.9 4.8 4.8 4.7 4.6 4.6 4.6 4.9 4.8

Inflation--% changeConsumer Price Index 3.0 1.6 -0.6 1.8 3.3 3.8 3.9 3.1 3.4 3.2 3.1 Total less Food & Energy 2.5 1.7 1.6 2.4 2.7 2.9 2.8 2.6 2.6 2.5 2.5Consumption Deflator 2.2 1.2 0.4 1.6 2.8 2.9 3.0 2.6 2.7 2.6 2.5GDP Deflator 2.1 1.2 2.1 2.5 2.8 2.5 2.9 2.6 2.6 2.5 2.4Producers Price Index -0.2 -1.5 -6.6 4.1 4.9 4.3 4.7 3.7 4.0 4.9 3.2

Factors Related to Inflation--%changeNonfarm Business Sector Total Compensation 1.7 3.0 2.3 3.9 4.3 4.3 3.9 4.3 4.3 4.2 4.2 Productivity 3.5 1.6 0.7 1.2 1.5 1.2 0.9 1.2 1.4 2.0 1.6 Unit Labor Costs -1.8 1.4 1.6 2.7 2.7 3.0 2.9 3.0 2.9 2.2 2.6Farm Price Index -6.3 3.4 -12.2 5.2 -3.1 -2.1 -1.7 -1.4 -1.3 -0.6 -0.6Crude Oil Price ($/bbl) 58.0 46.4 44.5 48.7 53.5 58.8 63.6 66.1 68.9 72.1 75.4New Home Price ($1000) 289.8 294.1 314.4 314.0 306.7 302.2 298.2 304.2 312.1 305.6 306.0

Income, Consumption and Saving--%changeDisposable Income 3.4 4.8 4.6 5.6 5.2 6.1 5.8 6.9 6.0 5.9 5.9Real Disposable Income 1.2 3.5 4.2 3.9 2.4 3.1 2.7 4.2 3.1 3.2 3.3Real Consumption 3.6 3.2 3.6 3.4 2.6 3.1 3.1 3.0 2.7 2.6 2.8Savings Rate (%) 4.6 4.7 4.9 5.0 4.9 5.0 4.9 5.2 5.3 5.5 5.6

Housing and Automobiles--millions of unitsHousing Starts 1.158 1.163 1.230 1.369 1.437 1.459 1.492 1.488 1.463 1.462 1.428Auto and Light Truck Sales 17.1 17.8 18.3 18.1 17.8 18.0 18.1 18.1 18.1 17.9 18.2

Corporate ProfitsBillions of Dollars Before Taxes 2393.7 2373.7 2447.5 2487.7 2565.9 2590.4 2639.9 2581.9 2598.4 2597.4 2571.1 After Taxes 1844.6 1827.6 1901.7 1929.3 1984.7 2006.2 2050.2 1998.9 2019.2 2021.1 2004.1Percent Change Before Taxes 27.6 -3.3 13.0 6.7 13.2 3.9 7.9 -8.5 2.6 -0.2 -4.0 After Taxes 27.9 -3.6 17.2 5.9 12.0 4.4 9.1 -9.7 4.1 0.4 -3.3

International TradeNominalU.S. Dollar--% change Industrial Countries 2.4 8.3 6.4 5.7 -5.0 -4.7 -2.1 -6.0 -4.5 -4.2 -4.2 Developing Countries 0.8 20.8 11.5 6.5 -0.9 -1.5 0.2 0.4 -0.4 -0.3 -0.6 Exports--% change 4.1 -2.5 -0.1 3.9 7.4 7.6 7.8 7.4 6.5 6.6 6.8 Imports--% change -1.4 -1.5 -5.6 3.9 9.1 10.9 9.7 9.8 7.9 7.7 7.7 Net Exports (bil. $) -519.3 -523.2 -483.8 -488.4 -508.6 -540.3 -563.1 -589.9 -609.2 -627.2 -644.5RealU.S. Dollar--% change Industrial Countries 6.2 12.7 8.9 6.3 -5.5 -6.8 -4.2 -7.6 -5.6 -4.6 -4.8 Developing Countries 3.1 24.5 14.0 8.0 0.1 -1.6 -0.3 -0.7 -1.7 -1.5 -1.9 Exports--% change 5.1 1.9 2.4 1.5 3.6 4.6 4.7 4.4 4.0 4.2 4.5 Imports--% change 3.0 1.8 6.2 8.3 8.0 7.5 7.0 6.2 4.4 4.6 4.3 Net Exports (bil. ‘09$) -534.6 -536.2 -563.8 -610.3 -644.9 -671.4 -695.1 -715.5 -725.3 -736.1 -743.0

FORECAST TABLES - DETAILED


Table 5. Part A. Gross Domestic Product 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Billions of Current DollarsGross Domestic Product 13855.9 14477.6 14718.6 14418.7 14964.4 15517.9 16155.3 16663.2 17348.1 17965.5 18963.0 19967.9Personal ConsumptionExpenditures 9304.0 9750.5 10013.6 9847.0 10202.2 10689.3 11050.6 11392.3 11865.9 12283.4 12913.0 13649.0 Durable Goods 1156.1 1184.6 1102.3 1023.3 1070.7 1125.3 1191.9 1237.8 1280.2 1333.7 1406.8 1485.0 Autos and Parts 394.9 400.6 339.6 317.1 342.0 363.5 395.8 416.7 440.2 463.9 495.5 532.4 Nondurable Goods 2079.7 2176.9 2273.4 2175.1 2292.1 2471.1 2547.2 2598.9 2668.2 2649.6 2769.9 2949.0 Services 6068.2 6388.9 6637.9 6648.5 6839.4 7092.8 7311.5 7555.5 7917.5 8300.2 8736.3 9215.0Gross Private DomesticInvestment 2680.7 2643.7 2424.8 1878.1 2100.8 2239.9 2511.7 2665.0 2860.0 3014.1 3257.2 3490.3 Residential 837.4 688.7 515.9 392.3 381.1 386.0 442.3 508.9 549.2 610.5 724.0 778.7 Nonres. Structures 415.6 496.9 552.4 438.2 362.0 381.6 448.0 462.1 507.0 501.2 546.1 612.6 Equipment 856.1 885.8 825.1 644.3 731.8 838.2 937.9 972.3 1036.7 1076.8 1151.9 1235.5 Intellectual Property 504.6 538.0 563.4 550.9 564.4 592.2 621.8 649.9 689.9 733.5 777.5 816.8 Change In Inv. 67.0 34.5 -32.0 -147.6 61.5 41.8 61.8 71.8 77.1 92.1 57.6 46.8

Net Exports -771.0 -718.6 -723.1 -395.5 -512.7 -580.0 -565.7 -508.4 -530.0 -519.5 -525.1 -617.7Exports 1476.3 1664.6 1841.9 1587.7 1852.3 2106.4 2198.2 2263.3 2341.9 2266.9 2350.3 2519.1Imports 2247.3 2383.2 2565.0 1983.2 2365.0 2686.4 2763.8 2771.7 2871.9 2786.4 2875.4 3136.8

Government Purchases 2642.2 2801.9 3003.2 3089.1 3174.0 3168.7 3158.6 3114.3 3152.1 3187.4 3317.9 3446.3 Federal 1002.0 1049.8 1155.6 1217.7 1303.9 1303.5 1292.5 1230.7 1219.9 1222.9 1284.0 1323.8 Defense 642.4 678.7 754.1 788.3 832.8 837.0 817.8 767.7 748.2 739.5 771.3 807.8 Other 359.6 371.1 401.5 429.4 471.1 466.5 474.7 463.0 471.6 483.4 512.7 516.0 State and Local 1640.2 1752.2 1847.6 1871.4 1870.2 1865.3 1866.0 1883.6 1932.3 1964.5 2033.9 2122.5

Billions of 2009 DollarsGross Domestic Product 14613.8 14873.8 14830.4 14418.8 14783.8 15020.6 15354.6 15583.3 15961.7 16354.6 16865.9 17304.9Personal ConsumptionExpenditures 9821.7 10041.6 10007.2 9847.0 10036.3 10263.5 10413.2 10590.4 10875.7 11224.5 11587.8 11922.0 Durable Goods 1091.5 1141.7 1083.2 1023.3 1085.7 1151.5 1236.2 1307.6 1384.1 1470.4 1566.7 1671.4 Autos & Parts 385.1 392.8 340.8 317.1 323.4 333.8 359.1 375.8 396.7 417.3 440.8 468.4 Nondurable Goods 2202.2 2239.3 2214.7 2175.1 2223.5 2263.2 2277.5 2319.8 2367.8 2431.8 2512.2 2571.2 Services 6526.6 6656.4 6708.6 6648.5 6727.6 6851.4 6908.1 6977.0 7144.6 7351.3 7549.1 7734.4Gross Private DomesticInvestment 2730.0 2644.1 2396.0 1878.1 2120.4 2230.4 2465.7 2577.3 2717.7 2845.8 3043.4 3186.7 Residential 806.6 654.8 497.7 392.3 382.4 384.5 436.5 478.0 486.4 529.5 612.2 636.7 Nonres. Structures 451.5 509.0 540.2 438.2 366.3 374.7 423.1 429.7 464.6 460.9 492.2 531.5 Equipment 870.8 898.3 836.1 644.3 746.7 847.9 939.2 969.5 1026.2 1059.3 1134.3 1199.1 Intellectual Property 517.5 542.4 558.8 550.9 561.3 581.3 603.8 626.9 659.5 701.5 738.0 764.0 Change In Inv. 71.6 35.6 -33.7 -147.6 58.2 37.6 54.7 61.4 68.0 82.6 52.0 41.1

Net Exports -794.3 -712.6 -557.8 -395.4 -458.8 -459.4 -447.1 -417.5 -442.5 -544.0 -655.4 -730.0Exports 1506.8 1646.4 1740.8 1587.7 1776.6 1898.3 1963.2 2018.1 2086.4 2119.1 2181.0 2275.7Imports 2301.0 2359.0 2298.6 1983.2 2235.4 2357.7 2410.2 2435.6 2528.9 2663.0 2836.4 3005.6

Government Purchases 2869.3 2914.4 2994.8 3089.1 3091.4 2997.4 2941.6 2854.9 2838.3 2859.6 2919.4 2952.1 Federal 1060.9 1078.7 1152.3 1217.7 1270.7 1236.4 1213.5 1144.1 1116.3 1112.1 1150.8 1160.6 Defense 678.8 695.6 748.1 788.3 813.5 795.0 768.2 716.6 689.1 679.8 699.8 716.5 Other 382.1 383.1 404.2 429.4 457.1 441.4 445.3 427.5 427.0 431.9 450.5 443.9 State and Local 1808.9 1836.2 1842.5 1871.4 1820.8 1761.0 1728.1 1710.2 1720.8 1746.1 1767.5 1790.3



Table 5. Part B. Gross Domestic Product 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Annual Rates of Change of Current Dollar GDP Components (%)Gross Domestic Product 5.8 4.5 1.7 -2.0 3.8 3.7 4.1 3.1 4.1 3.6 5.6 5.3Personal ConsumptionExpenditures 5.8 4.8 2.7 -1.7 3.6 4.8 3.4 3.1 4.2 3.5 5.1 5.7 Durable Goods 2.6 2.5 -7.0 -7.2 4.6 5.1 5.9 3.9 3.4 4.2 5.5 5.6 Autos and Parts -3.7 1.4 -15.2 -6.6 7.9 6.3 8.9 5.3 5.6 5.4 6.8 7.4 Nondurable Goods 6.5 4.7 4.4 -4.3 5.4 7.8 3.1 2.0 2.7 -0.7 4.5 6.5 Services 6.2 5.3 3.9 0.2 2.9 3.7 3.1 3.3 4.8 4.8 5.3 5.5Gross Private DomesticInvestment 6.1 -1.4 -8.3 -22.5 11.9 6.6 12.1 6.1 7.3 5.4 8.1 7.2 Residential -2.2 -17.8 -25.1 -24.0 -2.9 1.3 14.6 15.1 7.9 11.2 18.6 7.6 Nonres. Structures 20.2 19.6 11.2 -20.7 -17.4 5.4 17.4 3.1 9.7 -1.1 9.0 12.2 Equipment 8.3 3.5 -6.8 -21.9 13.6 14.5 11.9 3.7 6.6 3.9 7.0 7.3 Intellectual Property 6.2 6.6 4.7 -2.2 2.5 4.9 5.0 4.5 6.2 6.3 6.0 5.0

Exports 12.8 12.8 10.7 -13.8 16.7 13.7 4.4 3.0 3.5 -3.2 3.7 7.2Imports 10.7 6.0 7.6 -22.7 19.3 13.6 2.9 0.3 3.6 -3.0 3.2 9.1

Government Purchases 6.0 6.0 7.2 2.9 2.7 -0.2 -0.3 -1.4 1.2 1.1 4.1 3.9 Federal 5.9 4.8 10.1 5.4 7.1 -0.0 -0.8 -4.8 -0.9 0.2 5.0 3.1 Defense 5.6 5.7 11.1 4.5 5.6 0.5 -2.3 -6.1 -2.5 -1.2 4.3 4.7 Other 6.4 3.2 8.2 7.0 9.7 -1.0 1.8 -2.5 1.9 2.5 6.1 0.6 State and Local 6.0 6.8 5.4 1.3 -0.1 -0.3 0.0 0.9 2.6 1.7 3.5 4.4

Annual Rates of Change of Constant Dollar GDP Components (%)Gross Domestic Product 2.7 1.8 -0.3 -2.8 2.5 1.6 2.2 1.5 2.4 2.5 3.1 2.6Personal ConsumptionExpenditures 3.0 2.2 -0.3 -1.6 1.9 2.3 1.5 1.7 2.7 3.2 3.2 2.9 Durable Goods 4.3 4.6 -5.1 -5.5 6.1 6.1 7.4 5.8 5.9 6.2 6.5 6.7 Autos & Parts -3.7 2.0 -13.2 -7.0 2.0 3.2 7.6 4.6 5.6 5.2 5.6 6.3 Nondurable Goods 3.3 1.7 -1.1 -1.8 2.2 1.8 0.6 1.9 2.1 2.7 3.3 2.3 Services 2.7 2.0 0.8 -0.9 1.2 1.8 0.8 1.0 2.4 2.9 2.7 2.5Gross Private DomesticInvestment 2.1 -3.1 -9.4 -21.6 12.9 5.2 10.6 4.5 5.4 4.7 6.9 4.7 Residential -7.6 -18.8 -24.0 -21.2 -2.5 0.5 13.5 9.5 1.8 8.9 15.6 4.0 Nonres. Structures 7.2 12.7 6.1 -18.9 -16.4 2.3 12.9 1.6 8.1 -0.8 6.8 8.0 Equipment 8.6 3.2 -6.9 -22.9 15.9 13.6 10.8 3.2 5.8 3.2 7.1 5.7 Intellectual Property 4.5 4.8 3.0 -1.4 1.9 3.5 3.9 3.8 5.2 6.4 5.2 3.5

Exports 9.0 9.3 5.7 -8.8 11.9 6.9 3.4 2.8 3.4 1.6 2.9 4.3Imports 6.3 2.5 -2.6 -13.7 12.7 5.5 2.2 1.1 3.8 5.3 6.5 6.0

Government Purchases 1.5 1.6 2.8 3.1 0.1 -3.0 -1.9 -2.9 -0.6 0.8 2.1 1.1 Federal 2.5 1.7 6.8 5.7 4.3 -2.7 -1.9 -5.7 -2.4 -0.4 3.5 0.9 Defense 2.0 2.5 7.5 5.4 3.2 -2.3 -3.4 -6.7 -3.8 -1.3 2.9 2.4 Other 3.5 0.3 5.5 6.2 6.5 -3.4 0.9 -4.0 -0.1 1.1 4.3 -1.5 State and Local 0.9 1.5 0.3 1.6 -2.7 -3.3 -1.9 -1.0 0.6 1.5 1.2 1.3



Table 6. Employment 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Employment (Millions)Total 144.4 146.1 145.4 139.9 139.1 139.9 142.5 143.9 146.3 149.0 152.1 154.2 Nonagricultural 136.4 137.9 137.2 131.2 130.3 131.8 134.1 136.4 139.0 141.9 144.6 146.3 Natural Res. & Mining 0.7 0.7 0.8 0.7 0.7 0.8 0.8 0.9 0.9 0.8 0.8 0.8 Construction 7.7 7.6 7.2 6.0 5.5 5.5 5.6 5.9 6.1 6.4 6.7 7.2 Manufacturing 14.2 13.9 13.4 11.8 11.5 11.7 11.9 12.0 12.2 12.3 12.4 12.6 Trans. Warehous. Util 5.0 5.1 5.1 4.8 4.7 4.9 5.0 5.0 5.2 5.3 5.4 5.6 Trade 21.3 21.5 21.2 20.1 19.9 20.2 20.5 20.8 21.2 21.6 21.9 21.9 Financial Activities 8.4 8.3 8.2 7.8 7.7 7.7 7.8 7.9 8.0 8.1 8.1 8.0 Information 3.0 3.0 3.0 2.8 2.7 2.7 2.7 2.7 2.7 2.8 2.8 2.8 Professional & Busi. 17.6 17.9 17.7 16.6 16.7 17.3 17.9 18.5 19.1 19.8 20.7 21.3 Education & Health 18.1 18.6 19.2 19.5 19.9 20.2 20.7 21.1 21.5 22.0 22.6 22.8 Leisure & Hospitality 13.1 13.4 13.4 13.1 13.0 13.4 13.8 14.3 14.7 15.1 15.4 15.6 Other Services 5.4 5.5 5.5 5.4 5.3 5.4 5.4 5.5 5.6 5.6 5.6 5.5 Government 22.0 22.2 22.5 22.6 22.5 22.1 21.9 21.8 21.9 22.0 22.1 22.3 Federal 2.7 2.7 2.8 2.8 3.0 2.9 2.8 2.8 2.7 2.7 2.7 2.7 State & Local 19.2 19.5 19.7 19.7 19.5 19.2 19.1 19.1 19.1 19.2 19.4 19.6

Population and Labor Force (Millions)Population aged 16+ 234.2 237.0 239.6 242.2 244.7 247.1 249.5 251.9 254.2 256.6 259.3 261.9Labor Force 151.4 153.1 154.3 154.2 153.9 153.6 155.0 155.4 155.9 157.3 159.7 162.0Unemployment (%) 4.6 4.6 5.8 9.3 9.6 8.9 8.1 7.4 6.2 5.3 4.7 4.7

Table 7. Personal Income and Its Disposition 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Billions of Current DollarsPersonal Income 11394.0 12000.2 12502.2 12094.8 12477.1 13254.5 13915.1 14068.4 14694.2 15316.5 16124.6 17106.2Wages & Salaries 6057.4 6395.2 6531.9 6251.4 6377.5 6633.2 6930.3 7114.4 7477.8 7783.8 8226.5 8686.1Other Labor Income 997.6 1041.4 1075.1 1077.5 1114.6 1142.0 1165.3 1197.8 1224.0 1264.7 1315.7 1378.8Nonfarm Income 1017.7 941.1 979.5 937.6 986.7 1068.1 1179.8 1196.3 1268.5 1328.9 1425.8 1501.2Farm Income 36.0 38.1 47.0 35.5 46.0 75.6 61.6 88.8 78.1 62.3 58.6 56.5Rental Income 207.5 189.4 262.1 333.7 402.8 485.3 525.3 563.4 610.8 656.8 693.8 722.7Dividends 723.7 816.6 805.5 553.8 544.6 682.3 835.0 789.1 815.5 868.5 893.8 967.8Interest Income 1214.8 1350.1 1361.6 1264.3 1195.1 1231.6 1288.8 1271.4 1302.0 1320.0 1384.9 1553.7Transfer Payments 1614.6 1728.1 1956.6 2147.5 2324.7 2360.5 2366.4 2426.7 2529.2 2664.9 2794.6 2947.2Personal Contributions For Social Insurance 475.2 499.7 516.9 506.3 514.7 423.9 437.2 579.4 611.8 633.3 669.0 707.8

Personal Tax and Nontax Payments 1357.1 1493.2 1507.8 1152.3 1239.3 1453.2 1511.4 1672.8 1780.2 1936.8 2052.4 2172.5Disposable Income 10036.9 10507.0 10994.4 10942.5 11237.9 11801.4 12403.7 12395.6 12913.9 13379.7 14072.2 14933.7Consumption 9304.0 9750.5 10013.6 9847.0 10202.2 10689.3 11050.6 11392.3 11865.9 12283.4 12913.0 13649.0Interest 275.1 305.9 289.6 274.0 250.8 241.4 240.7 244.2 254.2 267.8 277.3 282.2Transfers To Foreigners 49.7 59.8 71.7 70.7 71.0 75.1 74.7 76.6 78.3 79.2 85.1 90.6Personal Saving 331.4 309.8 536.7 667.4 630.0 710.1 946.7 589.9 620.2 651.4 695.4 807.1

Personal Saving Rate(%) 3.3 3.0 4.9 6.1 5.6 6.1 7.6 4.8 4.8 4.8 4.9 5.4



Table 8. Personal Consumption Expenditures By Major Types 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Billions of Current DollarsPersonal Consumption 9304.0 9750.5 10013.6 9847.0 10202.2 10689.3 11050.6 11392.3 11865.9 12283.4 12913.0 13649.0 Durable Goods 1156.1 1184.6 1102.3 1023.3 1070.7 1125.3 1191.9 1237.8 1280.2 1333.7 1406.8 1485.0 Autos and Parts 394.9 400.6 339.6 317.1 342.0 363.5 395.8 416.7 440.2 463.9 495.5 532.4 Nondurable Goods 2079.7 2176.9 2273.4 2175.1 2292.1 2471.1 2547.2 2598.9 2668.2 2649.6 2769.9 2949.0 Services 6068.2 6388.9 6637.9 6648.5 6839.4 7092.8 7311.5 7555.5 7917.5 8300.2 8736.3 9215.0

Billions of 2009 DollarsPersonal Consumption 9821.7 10041.6 10007.2 9847.0 10036.3 10263.5 10413.2 10590.4 10875.7 11224.5 11587.8 11922.0 Durable Goods 1091.5 1141.7 1083.2 1023.3 1085.7 1151.5 1236.2 1307.6 1384.1 1470.4 1566.7 1671.4 Autos and Parts 385.1 392.8 340.8 317.1 323.4 333.8 359.1 375.8 396.7 417.3 440.8 468.4 Nondurable Goods 2202.2 2239.3 2214.7 2175.1 2223.5 2263.2 2277.5 2319.8 2367.8 2431.8 2512.2 2571.2 Services 6526.6 6656.4 6708.6 6648.5 6727.6 6851.4 6908.1 6977.0 7144.6 7351.3 7549.1 7734.4

Annual Rates of Real GrowthPersonal Consumption 3.0 2.2 -0.3 -1.6 1.9 2.3 1.5 1.7 2.7 3.2 3.2 2.9 Durable Goods 4.3 4.6 -5.1 -5.5 6.1 6.1 7.4 5.8 5.9 6.2 6.5 6.7 Autos and Parts -3.7 2.0 -13.2 -7.0 2.0 3.2 7.6 4.6 5.6 5.2 5.6 6.3 Furniture 5.1 0.8 -4.6 -8.7 7.0 5.8 4.4 5.4 6.5 6.0 5.3 4.6 Other Durables 7.2 4.7 -3.3 -5.0 4.2 5.5 3.7 3.4 3.4 4.9 4.4 2.9 Nondurable Goods 3.3 1.7 -1.1 -1.8 2.2 1.8 0.6 1.9 2.1 2.7 3.3 2.3 Food and Beverages 3.1 1.3 -1.2 -1.5 2.1 1.1 0.1 1.0 0.5 0.2 1.9 1.6 Gasoline and Oil 0.4 -0.3 -3.9 -0.8 -0.1 -2.0 -0.9 1.5 0.5 3.2 3.9 -0.8 Fuel -6.6 1.1 -11.3 15.0 -7.9 -12.4 -10.7 5.2 3.6 4.8 0.6 1.1 Clothing and Shoes 3.5 2.0 -0.5 -4.9 5.3 3.9 1.1 1.4 1.4 3.6 3.3 2.3 Other Nondurables 4.9 2.7 0.4 -1.7 2.3 3.6 2.0 2.9 4.3 4.4 4.5 3.9 Services 2.7 2.0 0.8 -0.9 1.2 1.8 0.8 1.0 2.4 2.9 2.7 2.5 Housing 2.7 0.9 1.5 1.3 1.1 1.8 0.6 0.3 1.4 1.0 1.3 1.7 Transportation Serv. 0.2 1.0 -5.2 -9.8 -0.9 2.4 1.7 3.2 4.9 5.4 3.9 3.1 Health Care 2.3 2.5 2.3 1.8 1.3 2.5 2.2 1.0 2.7 4.8 3.5 3.6 Recreational Service 3.5 3.9 -0.8 -3.3 1.3 2.3 2.0 1.8 2.9 1.4 2.2 3.5 Food Svcs. Accom. 3.2 1.3 -1.0 -4.1 1.5 2.6 2.6 1.6 3.0 4.7 4.4 3.6 Financial Services 2.3 3.1 -0.7 -2.5 2.1 1.8 -5.5 1.1 1.2 1.9 3.3 1.1 Other Services 2.6 2.3 -0.7 -2.2 0.2 1.3 1.7 0.4 3.7 3.3 2.6 2.1

Table 9. Residential Construction and Housing Starts 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Housing Starts (Millions of Units)Housing Starts 1.812 1.342 0.900 0.554 0.586 0.612 0.784 0.928 1.001 1.132 1.439 1.460 Single-family 1.474 1.036 0.616 0.442 0.471 0.434 0.537 0.620 0.647 0.729 0.971 1.014 Multi-family 0.338 0.306 0.284 0.112 0.114 0.178 0.247 0.308 0.354 0.403 0.468 0.446

Residential Construction Expenditures (Billions of Dollars)Current Dollars 837.4 688.7 515.9 392.3 381.1 386.0 442.3 508.9 549.2 610.5 724.0 778.72009 Dollars 806.6 654.8 497.7 392.3 382.4 384.5 436.5 478.0 486.4 529.5 612.2 636.7 % Change -7.6 -18.8 -24.0 -21.2 -2.5 0.5 13.5 9.5 1.8 8.9 15.6 4.0

Related ConceptsTreas. Bill Rate 4.73 4.35 1.37 0.15 0.14 0.05 0.09 0.06 0.03 0.06 0.89 2.46Conventional 30-year Mortgage Rate 6.41 6.34 6.04 5.04 4.69 4.46 3.66 3.98 4.17 3.86 4.78 5.76Median Sales Price of New Homes (Thous $) 243.1 243.7 230.4 214.5 221.2 224.3 242.1 265.1 283.8 297.8 305.3 307.0Real Disp. Income 10036.9 10507.0 10994.4 10942.5 11237.9 11801.4 12403.7 12395.6 12913.9 13379.7 14072.2 14933.7 % Change 4.0 2.1 1.5 -0.4 1.0 2.5 3.1 -1.4 2.7 3.3 3.3 3.3



Table 10. Nonresidential Fixed Investment and Inventories 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Billions of Current DollarsNonres. Fixed Investment 1776.3 1920.6 1941.0 1633.4 1658.2 1812.1 2007.7 2084.3 2233.7 2311.5 2475.6 2664.8 Equipment 856.1 885.8 825.1 644.3 731.8 838.2 937.9 972.3 1036.7 1076.8 1151.9 1235.5 Intellectual Property 504.6 538.0 563.4 550.9 564.4 592.2 621.8 649.9 689.9 733.5 777.5 816.8 Nonresidential Structures 415.6 496.9 552.4 438.2 362.0 381.6 448.0 462.1 507.0 501.2 546.1 612.6 Buildings 244.8 293.9 317.5 249.1 173.7 170.2 191.6 203.8 232.5 293.6 340.6 379.9 Commercial 128.4 150.7 148.9 95.4 64.7 66.8 75.6 84.2 103.1 117.4 134.0 166.9 Industrial 32.3 40.2 52.8 56.3 39.8 39.0 45.8 48.8 56.1 88.0 105.5 98.3 Other Buildings 84.2 103.0 115.8 97.4 69.2 64.5 70.2 70.7 73.3 88.2 101.1 114.6 Utilities 63.6 89.6 104.6 104.3 93.3 90.7 112.2 108.9 117.1 106.3 112.0 114.3 Mining Exploration 96.0 102.2 117.0 75.0 86.2 112.3 134.1 137.7 144.4 88.4 79.4 101.6 Other 11.1 11.2 13.3 9.9 8.9 8.4 10.1 11.7 13.0 12.9 14.1 16.8

Billions of 2009 DollarsNonres. Fixed Investment 1839.6 1948.4 1934.5 1633.5 1673.8 1802.3 1964.2 2023.8 2148.3 2218.9 2361.4 2492.0 Equipment 870.8 898.3 836.1 644.3 746.7 847.9 939.2 969.5 1026.2 1059.3 1134.3 1199.1 Intellectual Property 517.5 542.4 558.8 550.9 561.3 581.3 603.8 626.9 659.5 701.5 738.0 764.0 Nonresidential Structures 451.5 509.0 540.2 438.2 366.3 374.7 423.1 429.7 464.6 460.9 492.2 531.5 Buildings 268.7 305.2 317.9 249.1 179.3 172.3 188.8 196.1 216.5 268.1 301.8 323.5 Commercial 144.3 159.9 151.7 95.4 66.6 67.3 73.9 80.6 96.1 107.3 120.2 145.3 Industrial 36.5 43.1 53.8 56.3 40.8 39.1 44.9 46.8 52.0 79.8 90.6 79.4 Other Buildings 88.5 102.6 112.8 97.4 71.9 65.9 70.0 68.6 68.2 80.7 90.8 99.8 Utilities 70.0 94.3 103.6 104.3 89.8 82.8 99.1 95.1 101.0 90.7 92.5 89.3 Mining Exploration 99.5 97.9 105.0 75.0 87.8 110.9 123.8 126.7 135.0 88.5 83.4 105.9 Other 10.8 10.6 12.6 9.9 9.2 8.6 10.1 11.3 11.9 11.5 12.0 13.5

Percent Change in Real Nonresidential Fixed InvestmentNonres. Fixed Investment 7.1 5.9 -0.7 -15.6 2.5 7.7 9.0 3.0 6.2 3.3 6.4 5.5 Equipment 8.6 3.2 -6.9 -22.9 15.9 13.6 10.8 3.2 5.8 3.2 7.1 5.7 Intellectual Property 4.5 4.8 3.0 -1.4 1.9 3.5 3.9 3.8 5.2 6.4 5.2 3.5 Nonresidential Structures 7.2 12.7 6.1 -18.9 -16.4 2.3 12.9 1.6 8.1 -0.8 6.8 8.0 Buildings 7.2 13.6 4.2 -21.7 -28.0 -3.9 9.6 3.8 10.4 23.8 12.6 7.2 Commercial 4.9 10.8 -5.2 -37.1 -30.2 0.9 9.8 9.1 19.3 11.7 12.0 20.9 Industrial 6.6 18.2 24.8 4.6 -27.5 -4.2 14.8 4.2 11.2 53.4 13.5 -12.3 Other Buildings 11.0 16.0 9.9 -13.7 -26.2 -8.3 6.2 -2.0 -0.6 18.2 12.5 9.9 Utilities 7.9 34.6 9.9 0.7 -13.9 -7.8 19.8 -4.1 6.2 -10.1 2.0 -3.5 Mining Exploration 8.0 -1.6 7.3 -28.6 17.1 26.4 11.7 2.3 6.5 -34.5 -5.7 27.0 Other 0.8 -1.4 18.0 -21.3 -7.4 -5.9 17.4 11.4 5.6 -3.8 4.4 12.8

Related ConceptsAnnual Growth-Price Deflator For: Producers Dur. Equip. -0.3 0.3 0.1 1.3 -2.0 0.9 1.0 0.4 0.7 0.6 -0.1 1.5 Structures 12.2 6.1 4.8 -2.2 -1.2 3.0 4.0 1.6 1.5 -0.4 2.0 3.9Moody’s AAA Rate(%) 5.6 5.6 5.6 5.3 4.9 4.6 3.7 4.2 4.2 3.9 4.8 5.6Capacity Utilization in Manufacturing(%) 78.6 78.8 74.8 65.7 70.9 73.7 74.5 74.1 75.3 76.0 76.3 75.5Final Sales(Bil. 2009 $) 14542.2 14838.2 14864.1 14566.3 14725.6 14983.0 15300.0 15521.9 15893.6 16272.1 16813.9 17263.8

Change in Business InventoriesCurrent Dollars 67.0 34.5 -32.0 -147.6 61.5 41.8 61.8 71.8 77.1 92.1 57.6 46.82009 Dollars 71.6 35.6 -33.7 -147.6 58.2 37.6 54.7 61.4 68.0 82.6 52.0 41.1



Table 11. Federal Government Receipts and Expenditures 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Billions of Current Dollars Unified Budget Basis, Fiscal YearReceipts 2406.7 2567.7 2523.6 2104.4 2161.7 2302.5 2449.1 2774.0 3020.4 3248.7 3446.5 3620.5Outlays 2654.9 2729.2 2978.4 3520.1 3455.9 3599.3 3538.3 3454.2 3503.7 3687.6 3942.2 4095.1Surplus or Deficit (-) -248.2 -161.5 -454.8 -1415.7 -1294.2 -1296.8 -1089.2 -680.2 -483.4 -438.9 -495.7 -474.6 National Income & Products Accounts Basis, Calendar YearCurrent Receipts 2537.8 2667.2 2579.5 2238.4 2443.3 2574.1 2699.1 3141.3 3265.2 3426.6 3621.2 3818.2 Current Tax Receipts 1563.4 1642.4 1520.7 1171.1 1352.7 1553.8 1661.2 1825.0 1974.4 2132.9 2257.9 2372.5 Personal Current Taxes 1054.6 1169.7 1174.3 864.5 941.6 1129.1 1164.7 1300.6 1396.9 1527.4 1616.0 1710.4 Taxes - Corporate Income 395.0 362.8 233.6 200.4 298.7 299.4 363.1 379.3 417.9 438.6 469.6 468.3 Taxes - Production/Imports 99.2 94.6 94.0 91.4 96.8 108.6 115.1 125.8 137.8 141.9 151.0 170.8 Contributions for Soc. Ins. 905.7 947.3 974.4 950.8 970.9 904.0 938.2 1093.4 1145.2 1183.5 1250.3 1322.7 Income Receipts on Assets 28.9 33.4 33.9 48.5 54.6 56.4 52.6 163.2 74.8 55.0 60.5 64.0 Current Transfer Receipts 37.9 42.1 49.7 67.2 68.2 67.1 56.1 71.1 80.6 63.6 66.2 70.5 Surplus of Gov’t. Enterprises 1.8 2.0 0.8 0.7 -3.1 -7.1 -8.9 -11.3 -9.7 -8.5 -13.7 -11.5

Current Expenditures 2764.8 2932.8 3213.5 3487.2 3772.0 3818.2 3789.1 3782.2 3896.7 4024.1 4201.9 4420.0 Consumption Expenditures 763.9 798.3 879.8 933.7 1003.9 1006.1 1007.8 961.3 955.3 959.6 999.0 1027.0 Defense 500.3 526.1 582.8 613.3 653.2 662.3 653.9 614.4 599.8 595.4 617.2 638.8 Nondefense 263.6 272.3 297.0 320.4 350.7 343.8 353.9 346.9 355.5 364.1 381.8 388.1 Transfer Payments 1577.4 1678.8 1896.1 2142.9 2333.2 2327.0 2300.8 2346.0 2444.0 2567.2 2684.8 2828.2 Government Social Benefits 1189.2 1264.2 1464.6 1616.2 1757.9 1779.9 1783.6 1823.2 1877.3 1961.7 2051.6 2163.4 To the Rest of the World 12.5 13.3 15.5 16.0 16.5 17.1 18.0 18.9 19.5 20.3 21.4 22.3 Grants-in-Aid To S&L Governments 340.8 359.0 371.0 458.1 505.3 472.5 444.0 450.1 494.8 531.9 559.1 588.6 To the Rest of the World 35.0 42.3 45.1 52.7 53.5 57.6 55.3 53.9 52.3 53.2 52.7 53.9 Interest Payments 372.4 408.2 388.0 353.6 380.6 425.7 422.9 416.1 440.1 439.5 460.0 505.9 Subsidies 51.1 47.5 49.6 56.9 54.3 59.5 57.6 58.9 57.4 57.9 58.1 58.9

Surplus or Deficit (-) -227.0 -265.6 -634.0 -1248.8 -1328.7 -1244.2 -1090.1 -641.0 -631.5 -597.6 -580.8 -601.8

Table 12. State and Local Government Receipts and Expenditures 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Billions of Current DollarsReceipts 1254.5 1321.3 1328.9 1268.1 1305.7 1368.3 1416.1 1479.8 1517.5 1567.3 1646.9 1737.7 As Share of GDP 9.1 9.1 9.0 8.8 8.7 8.8 8.8 8.9 8.7 8.7 8.7 8.7Personal Tax and Nontax Receipts 302.5 323.5 333.5 287.8 297.6 324.1 346.7 372.2 383.3 409.4 436.4 462.0Corporate Profits 59.2 57.9 47.4 45.6 47.7 50.2 52.5 55.5 58.3 62.2 68.4 66.4Indirect Business Tax and Nontax Accruals 892.7 940.0 947.9 934.8 960.4 994.0 1016.9 1052.2 1075.9 1095.7 1142.1 1209.3Contributions For Social Insurance 21.5 18.9 18.7 18.6 18.2 18.2 18.1 18.6 18.9 18.8 19.4 20.5Federal Grants-In-Aid 340.8 359.0 371.0 458.1 505.3 472.5 444.0 450.1 494.8 531.9 559.1 588.6

Expenditures 1850.3 1973.3 2074.1 2191.2 2235.9 2246.4 2277.9 2323.6 2392.7 2464.4 2557.1 2667.6 As Share of GDP 13.4 13.6 14.1 15.2 14.9 14.5 14.1 13.9 13.8 13.7 13.5 13.4Purchases 1640.2 1752.2 1847.6 1871.4 1870.2 1865.3 1866.0 1883.6 1932.3 1964.5 2033.9 2122.5Transfer Payments 403.9 433.3 455.4 492.6 523.8 530.4 540.0 562.3 609.9 659.9 696.5 735.2Interest Received 25.4 17.3 36.0 114.3 123.0 125.9 141.4 142.1 122.6 127.8 123.5 118.6Net Subsidies 11.5 25.6 25.0 22.8 21.4 17.9 10.8 7.9 9.1 8.5 6.7 4.7Dividends Received 2.1 2.2 2.6 2.2 2.3 2.7 3.3 3.7 3.8 4.3 4.2 4.2Net Wage Accruals

Surplus Or Deficit -39.4 -72.7 -165.1 -271.9 -237.3 -215.9 -220.8 -187.1 -167.7 -151.6 -129.2 -109.4



Table 13. U.S. Exports and Imports of Goods and Services 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Billions of Current Dollars Net Exports-Goods & Serv. -771.0 -718.6 -723.1 -395.5 -512.7 -580.0 -565.7 -508.4 -530.0 -519.5 -525.1 -617.7 Current Account Balance -806.7 -718.6 -690.8 -384.0 -442.0 -460.4 -449.7 -376.8 -389.5 -439.5 -439.0 -465.4 Merchandise Balance -850.1 -837.3 -850.6 -525.2 -670.2 -777.9 -779.8 -741.0 -770.5 -766.3 -786.4 -884.3

Exports-Goods & Services 1476.3 1664.6 1841.9 1587.7 1852.3 2106.4 2198.2 2263.3 2341.9 2266.9 2350.3 2519.1 Merchandise 1049.6 1166.4 1298.8 1065.1 1279.6 1466.9 1526.0 1560.9 1618.0 1517.3 1552.3 1660.6 Food, Feeds & Beverages 66.0 84.3 108.3 93.9 107.7 126.2 133.0 136.2 143.8 128.1 130.6 138.5 Industrial Supplies 279.1 316.3 386.9 293.5 388.6 485.3 483.2 492.3 500.0 428.6 461.7 525.6 Motor Vehicles & Parts 107.3 121.3 121.5 81.7 112.0 133.0 146.2 152.7 159.7 153.7 171.1 188.4 Capital Goods, Ex. MVP 339.5 360.0 383.7 316.7 375.9 413.8 433.1 429.5 438.2 422.2 412.0 428.8 Computer Equipment 47.6 45.5 43.9 37.7 43.8 48.5 49.2 48.1 48.8 46.6 45.1 48.5 Other 291.9 314.5 339.8 279.0 332.1 365.4 383.9 381.4 389.5 375.6 366.9 380.3 Consumer Goods, Ex. MVP 129.0 145.9 161.2 149.3 164.9 174.7 181.0 188.4 198.3 196.8 191.4 190.7 Other 64.2 65.7 63.3 55.2 58.6 53.4 55.1 56.9 64.9 70.4 69.8 69.5 Services 426.7 498.2 543.1 522.6 572.7 639.5 672.2 702.3 723.9 749.6 798.0 858.5

Imports-Goods & Services 2247.3 2383.2 2565.0 1983.2 2365.0 2686.4 2763.8 2771.7 2871.9 2786.4 2875.4 3136.8 Merchandise 1899.7 2003.8 2149.4 1590.3 1949.8 2244.7 2305.8 2301.9 2388.5 2283.6 2338.7 2544.9 Foods, Feeds & Beverage 76.1 83.0 90.4 82.9 92.5 108.3 111.1 116.0 126.7 128.9 121.6 127.3 Petroleum & Products 316.7 346.7 476.1 267.7 353.6 462.1 434.3 387.8 350.9 191.7 204.2 265.6 Indus Supplies Ex. Petr 293.5 297.9 318.7 196.6 249.4 292.7 288.8 291.2 316.0 293.5 303.8 323.0 Motor Vehicles & Parts 256.0 258.5 233.2 159.2 225.6 255.2 298.5 309.6 328.5 346.8 350.4 371.7 Capital Goods, Ex. MVP 394.1 414.6 423.2 343.4 419.1 477.9 511.6 510.9 542.6 551.9 567.3 613.9 Computer Equipment 101.6 105.5 101.2 94.2 117.3 119.7 122.3 121.2 121.7 121.4 119.3 122.5 Other 292.5 309.2 322.0 249.2 301.9 358.2 389.4 389.7 420.9 430.5 448.1 491.4 Consumer Goods, Ex. MVP 447.6 479.8 485.7 429.9 485.1 515.9 518.8 534.0 559.4 599.7 604.9 634.5 Other 87.2 88.8 86.5 80.0 93.1 97.1 102.4 105.5 111.3 116.2 130.2 151.4 Services 347.6 379.4 415.6 392.9 415.2 441.6 458.0 469.8 483.4 502.8 536.7 591.9

Billions of 2009 Dollars Net Exports-Goods & Serv. -794.3 -712.6 -557.8 -395.4 -458.8 -459.4 -447.1 -417.5 -442.5 -544.0 -655.4 -730.0 Exports-Goods & Services 1506.8 1646.4 1740.8 1587.7 1776.6 1898.3 1963.2 2018.1 2086.4 2119.1 2181.0 2275.7 Imports-Goods & Services 2301.0 2359.0 2298.6 1983.2 2235.4 2357.7 2410.2 2435.6 2528.9 2663.0 2836.4 3005.6

Exports and Imports -- % ChangeCurrent Dollars Exports 12.8 12.8 10.7 -13.8 16.7 13.7 4.4 3.0 3.5 -3.2 3.7 7.2 Imports 10.7 6.0 7.6 -22.7 19.3 13.6 2.9 0.3 3.6 -3.0 3.2 9.1Constant Dollars Exports 9.0 9.3 5.7 -8.8 11.9 6.9 3.4 2.8 3.4 1.6 2.9 4.3 Imports 6.3 2.5 -2.6 -13.7 12.7 5.5 2.2 1.1 3.8 5.3 6.5 6.0

Production Indicators - % ChangeU.S. Industrial Production 2.2 2.5 -3.4 -11.3 5.6 3.0 2.8 1.9 3.7 1.3 1.9 3.1Real GDP -- Industrial Countries 2.8 2.6 0.7 -3.4 2.9 2.2 1.2 0.9 1.8 1.5 1.5 2.0Real GDP -- Developing Countries 6.7 6.6 3.8 0.1 7.4 5.5 4.2 3.8 3.4 2.9 2.7 3.4

Price IndicatorsPrice Deflators (% Ch) Exports 3.4 3.2 4.6 -5.5 4.3 6.4 0.9 0.2 0.1 -4.7 0.7 2.7 Imports 4.1 3.4 10.5 -10.4 5.8 7.7 0.6 -0.8 -0.2 -7.9 -3.1 3.0

Crude Oil Prices ($/barrel) 66.1 72.3 99.6 61.7 79.4 95.1 94.2 98.0 93.0 49.4 56.1 70.6Real U.S. Dollar Ex. Rate-Indust. Countries 1.05 0.98 0.93 1.00 0.99 0.92 0.95 1.00 1.04 1.24 1.27 1.20 %Change -2.4 -6.4 -5.3 7.8 -0.5 -7.9 3.8 4.6 4.4 19.3 2.8 -5.8 Ex. Rate-Dev. Countries 1.12 1.04 0.94 1.00 0.95 0.87 0.87 0.86 0.87 0.98 1.05 1.04 %Change -5.1 -7.4 -9.5 6.3 -5.2 -8.2 -0.5 -1.2 2.2 12.1 7.3 -1.1



Table 14. Price Indexes for GDP and Other Inflation Indicators (Percent Change) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Implicit Price DeflatorsGDP 3.1 2.7 1.9 0.8 1.2 2.1 1.8 1.6 1.6 1.1 2.3 2.6

Consumption 2.7 2.5 3.1 -0.1 1.7 2.5 1.9 1.4 1.4 0.3 1.8 2.7 Durables -1.6 -2.0 -1.9 -1.7 -1.4 -0.9 -1.3 -1.8 -2.3 -1.9 -1.0 -1.1 Motor Vehicles 0.1 -0.6 -2.3 0.3 5.7 3.0 1.2 0.6 0.1 0.2 1.1 1.1 Furniture -0.5 -0.8 -0.7 -0.4 -4.2 -1.6 -0.3 -2.0 -3.5 -2.1 -0.8 -0.8 Other Durables 1.5 2.6 3.3 1.1 0.4 3.2 0.6 -0.2 -1.6 -2.3 -0.2 1.2

Nondurables 3.1 2.9 5.6 -2.6 3.1 5.9 2.4 0.2 0.6 -3.3 1.2 4.0 Food 1.7 3.9 6.1 1.2 0.3 4.0 2.3 1.0 1.9 1.2 2.3 2.9 Clothing & Shoes -0.4 -0.9 -0.8 0.9 -0.7 1.8 3.4 1.0 0.3 -1.0 0.1 0.5 Gasoline 12.9 8.3 18.0 -27.2 18.1 26.4 3.4 -2.6 -3.6 -27.1 -1.7 18.3 Fuel 13.7 6.9 35.6 -31.5 17.0 27.2 1.3 -1.2 -0.1 -28.7 -3.5 13.2 Motor Vehicle Fuel 12.8 8.4 16.6 -26.8 18.2 26.3 3.6 -2.7 -3.8 -26.9 -1.5 18.7

Services 3.4 3.2 3.1 1.1 1.7 1.8 2.2 2.3 2.3 1.9 2.5 3.0 Housing 3.5 3.6 2.7 1.8 0.1 1.3 2.1 2.5 2.7 3.1 3.4 3.0 Utilities 8.0 3.1 7.8 -2.2 1.3 1.7 -0.2 3.2 4.2 -0.5 0.0 3.5 Electricity 12.1 3.9 6.4 3.0 0.2 1.7 -0.0 2.1 3.6 0.5 -1.2 3.7 Natural Gas 2.4 -1.2 13.8 -21.9 -2.0 -3.0 -9.9 4.7 7.1 -11.4 -2.8 2.6 Water & Sanit. 4.9 5.1 5.9 6.1 6.3 5.2 5.6 4.5 3.7 4.7 4.1 3.7 Health Care 3.0 3.7 2.7 2.7 2.5 1.8 1.8 1.5 1.1 0.7 1.8 2.3 Transportation 4.1 2.3 5.3 3.1 2.0 2.7 1.9 1.3 1.2 0.4 2.1 2.9 Recreation 3.4 2.8 3.1 1.2 1.1 1.7 2.7 1.7 1.9 1.6 2.5 3.0 Food & Accomm. 3.4 3.9 3.9 2.2 1.3 2.5 2.8 2.1 2.6 2.7 2.5 3.0 Financial & Insur. 2.7 2.9 1.1 -4.4 4.0 2.4 4.9 5.0 4.1 3.1 3.3 4.4 Other Services 4.0 3.1 4.6 2.8 3.0 2.5 2.5 2.6 2.2 1.7 2.4 3.1

Investment Deflators: Nonresidential 2.9 2.1 1.8 -0.3 -0.9 1.5 1.7 0.8 1.0 0.2 0.6 2.0 Structures 12.2 6.1 4.8 -2.2 -1.2 3.0 4.0 1.6 1.5 -0.4 2.0 3.9 Equipment -0.3 0.3 0.1 1.3 -2.0 0.9 1.0 0.4 0.7 0.6 -0.1 1.5 Intellectual Prop. 1.6 1.7 1.7 -0.8 0.5 1.3 1.1 0.7 0.9 -0.1 0.8 1.5 Residential 5.8 1.3 -1.5 -3.5 -0.4 0.8 0.9 5.1 6.1 2.1 2.6 3.4

Government Purchases 4.4 4.4 4.3 -0.3 2.7 3.0 1.6 1.6 1.8 0.4 2.0 2.7 Federal 3.3 3.0 3.0 -0.3 2.6 2.7 1.0 1.0 1.6 0.6 1.5 2.2 State & Local 5.0 5.2 5.1 -0.3 2.7 3.1 1.9 2.0 1.9 0.2 2.3 3.0

Exports 3.4 3.2 4.6 -5.5 4.3 6.4 0.9 0.2 0.1 -4.7 0.7 2.7Imports 4.1 3.4 10.5 -10.4 5.8 7.7 0.6 -0.8 -0.2 -7.9 -3.1 3.0

Other Inflation Related IndicatorsConsumer Price Index All Urban 3.2 2.9 3.8 -0.3 1.6 3.1 2.1 1.5 1.6 0.1 2.1 3.4Producers Price Index 4.7 4.8 9.8 -8.7 6.8 8.8 0.5 0.6 0.9 -7.2 1.2 4.2

Nonfarm Sector IndicatorsTotal Compensation 3.9 4.3 2.7 1.1 1.9 2.2 2.7 1.1 2.7 2.2 3.5 4.2Productivity 0.9 1.6 0.8 3.2 3.3 0.2 0.9 -0.0 0.7 0.8 1.3 1.3Unit Labor Costs 3.0 2.7 2.0 -2.0 -1.3 2.1 1.7 1.1 2.0 1.4 2.1 2.8

Crude Oil Prices (dollars/barrel)West Texas Intermediate 66.10 72.28 99.61 61.69 79.41 95.07 94.21 97.96 92.97 49.40 56.15 70.62



Table 15. Producers Price Indexes 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Annual Percent ChangeAll Commodities 4.7 4.8 9.8 -8.7 6.8 8.8 0.5 0.6 0.9 -7.2 1.2 4.2Industrial Commodities 5.4 3.8 9.8 -9.0 7.0 8.0 0.0 0.4 0.6 -7.5 1.4 4.7Textiles & Apparel 1.4 1.0 2.4 0.5 1.7 7.6 0.3 0.8 1.5 -0.9 1.3 1.2Fuels 6.6 6.6 20.5 -25.8 17.1 16.0 -1.8 -0.2 -1.0 -23.7 1.5 11.4Chemicals 7.2 4.4 14.3 -6.5 7.5 11.5 0.5 0.9 0.6 -5.1 3.1 4.9Rubber & Plastics 6.9 0.8 7.0 -0.4 3.3 7.1 2.3 1.1 0.6 -1.5 0.9 2.7Lumber & Wood -1.1 -1.0 -0.6 -4.4 5.4 1.1 3.5 6.5 4.3 -0.9 4.5 1.9Pulp & Paper 3.6 3.4 4.6 -0.5 5.0 3.5 -0.4 1.9 0.7 -0.6 1.5 2.8Metals & Products 12.9 6.5 10.1 -12.2 11.1 8.8 -2.7 -2.9 0.7 -6.4 -1.5 3.5Equipment 2.0 0.9 1.9 1.2 -0.1 1.3 1.1 0.7 0.8 0.5 0.5 1.4Trans. Equipment 1.1 1.6 2.3 2.3 0.7 1.7 2.2 1.2 1.4 1.5 1.4 1.9

Farm -1.2 22.5 12.4 -16.5 12.2 23.6 3.2 1.4 1.1 -11.5 -2.1 -1.5Processed Foods & Feeds 0.4 7.3 9.3 -2.4 3.4 8.4 3.9 1.5 3.9 -3.0 0.9 2.1

By Stage of ProcessingCrude Materials 1.4 12.2 21.5 -30.5 21.2 17.5 -3.2 2.1 1.1 -23.3 1.7 5.6Intermediate Materials 6.4 4.0 10.3 -8.2 6.4 8.9 0.5 0.0 0.5 -6.8 0.1 3.5Finished Goods 2.9 3.9 6.4 -2.6 4.2 6.0 1.9 1.2 1.9 -3.2 1.6 3.7Consumers 3.4 4.5 7.4 -3.8 5.5 7.5 2.0 1.4 2.1 -4.7 1.8 4.3Producers 1.5 1.9 2.9 1.8 0.4 1.5 1.9 0.9 1.4 1.3 1.1 1.8

Table 16. Money, Interest Rates and Corporate Profits 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Billions of DollarsMoney Supply (M1) 1374.8 1372.6 1434.4 1637.7 1742.2 2010.0 2311.9 2545.5 2810.6 3023.5 3020.4 2844.6Money Supply (M2) 6844.5 7266.3 7762.5 8389.6 8599.1 9227.9 10017.8 10692.7 11352.0 12023.8 12499.4 12763.5

Percent ChangeMoney Supply (M1) 0.2 -0.2 4.5 14.2 6.4 15.4 15.0 10.1 10.4 7.6 -0.1 -5.8Money Supply (M2) 5.3 6.2 6.8 8.1 2.5 7.3 8.6 6.7 6.2 5.9 4.0 2.1

Interest Rates (Percent) Short-term Rates 3-Month Treas. Bills 4.73 4.35 1.37 0.15 0.14 0.05 0.09 0.06 0.03 0.06 0.89 2.46 Prime Bank Loans 7.96 8.05 5.09 3.25 3.25 3.25 3.25 3.25 3.25 3.26 3.95 5.61

U.S. Government Bond Yields 5 Year Maturity 4.75 4.43 2.80 2.19 1.93 1.52 0.76 1.17 1.64 1.53 2.29 3.35 10 Year Maturity 4.79 4.63 3.67 3.26 3.21 2.79 1.80 2.35 2.54 2.15 3.13 3.90 30 Year Maturity 4.87 4.84 4.28 4.07 4.25 3.91 2.92 3.45 3.34 2.86 3.72 4.31

State and Local Governments Bond Yields Domestic Municipal Bonds 4.41 4.39 4.85 4.62 4.29 4.51 3.73 4.26 4.25 3.68 4.76 5.45

Corporate Bond Yields Moodys AAA Corp. Bonds 5.59 5.56 5.63 5.31 4.94 4.64 3.67 4.24 4.16 3.91 4.82 5.59

Conventional Mortgage Rate 6.41 6.34 6.04 5.04 4.69 4.46 3.66 3.98 4.17 3.86 4.78 5.76

Corporate Profits (Billions of Dollars)Profits Before Taxes 1851.43 1748.43 1382.45 1472.58 1840.68 1806.80 2130.82 2161.65 2207.77 2366.78 2570.96 2587.18Inventory Valuation Adj. -35.68 -39.50 -36.95 6.68 -41.03 -68.30 -14.20 3.23 -2.98 46.23 -38.32 -40.94Profits After Taxes 1378.08 1302.88 1073.33 1203.13 1470.15 1427.70 1683.18 1692.75 1693.93 1827.10 1992.61 2010.83


THE UCLA ANDERSON FORECAST FOR CALIFORNIA

Will California's Expansion Stall as it Zeros in on Full Employment?

Office-Using Employment Growth Across CIties, 2000 to 2015

UCLA Anderson Forecast, December 2015 California–47

WILL CALIFORNIA'S EMPLOYMENT STALL AS IT ZEROS IN ON FULL EMPLOYMENT?

Will California's Expansion Stall as it Zeros in on Full Employment?Jerry NickelsburgSenior Economist, UCLA Anderson ForecastAdjunct Professor of Economics, UCLA Anderson SchoolDecember 2015

The California economy has been humming along with rates of growth in excess of the U.S. and with employ-ment growth pushing the unemployment rate, now at 5.8%, towards a full employment (around 5%). In previous Cali-fornia reports we have argued that once full employment is reached, and we expect that to happen months rather than years from now, that growth will be dependent on increases in the size of the workforce, increases that will be limited primarily by population growth. Population growth itself is limited as the high price of housing relative to the rest of the U.S. discourages some who might otherwise migrate to the Golden State and encourages some who are here to migrate elsewhere.1

In this report we review the economic data for Califor-nia from the past three months for signs of continued strength or weakness and indications of what the coming two years might bring. The short answer is that there is nothing in the data we examine to suggest a near-term stalling or decline in the growth of employment and income in California.

The indicators that will be examined in this report are trade in goods through California’s ports, international arriv-als at LAX and SFO, state government finances, residential construction and employment. These cover the sectors which differentiate the State from the U.S. average forecast.

Goods Shipment Through The Ports

California’s major seaports (Los Angeles, Long Beach and Oakland) got off to a rocky start in 2015 with the con-tinuation of a drawn out labor dispute. The two sides agreed to terms in February and since then the total volume of goods shipped through the ports has trended up (Chart 1). As of September, port activity was at historically high levels and equal to the previous 2007 peak. Broken down by imports and exports, we find (Chart 2) that imports are carrying the day. Imports are now at record levels while exports have declined since late 2013. The reason for the decline is the slowing of economic growth in three of the key trading partners of California; Canada, China and Japan.

1 Jerry Nickelsburg, “When will California Reach It’s Potential (Employment)?” UCLA Anderson Forecast, June 2015.Jerry Nickelsburg, “California Housing: Will It Ever Be Affordable?” UCLA Anderson Forecast, September 2015.

48–California UCLA Anderson Forecast, December 2015

WILL CALIFORNIA'S EXPANSION STALL AS IT ZEROS IN ON FULL EMPLOYMENT?

0

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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California Seaport Traffic(000 TEU's, SA)

Import By Sea Exports By Sea

Chart 1

Sources: Port of Los Angeles, Port of Long Beach, Port of Oakland, Anderson Forecast

Chart 2

Sources: Port of Los Angeles, Port of Long Beach, Port of Oakland, Anderson Forecast



Looking forward, the U.S. forecast is for continued growth in consumption and therefore more demand for manufactured goods from the industrial centers of Asia. Thus the trend in imports is expected to continue. We expect the Japanese and Canadian economies to improve while the Chinese economy will probably experience some dif-ficulty in the coming two years.2 Nevertheless, the decline in exports should at worst level off and logistics activity surrounding the ports ought to continue to grow.

International air cargo, the transport of high value and time sensitive goods, has increased over the past year. The tonnage exported is up (September over September) by 1.5% and tonnage imported is up 9.4%. More recently tonnage has slipped from earlier in the year though we have no evidence that the last few months represents a trend (Chart 3).

For the regional airports of Ontario, San Jose Mineta, Long Beach, and San Diego Lindberg cargo volumes (in-

bound plus outbound) have been growing at double-digit rates over the period September 2014 to September 2015. Oakland, and John Wayne airport volumes grew in the low single-digits and cargo shipments through Bob Hope Air-port in Burbank declined. On balance, cargo growth in the regional airports, perhaps in large part reflecting package shipment to consumers engaged in e-commerce, have been solid and do not reflect any near term weakness in consump-tion in California.

International Arrivals

International passenger arrivals at LAX and SFO have reached record heights over the past year. Arrivals at LAX are up by over 20% and at SFO by over 25%. This has occurred in spite of a stronger dollar and is reflected in the strength of job growth in the leisure and hospitality sector. With a forecast for a slightly weaker dollar and improvement in the European, Canadian and Japanese economies it is

2 For international forecasts see: http://www.imf.org/external/pubs/ft/weo/2015/update/02/

Chart 3

Sources: LAWA, SFO, and Anderson Forecast

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expected that these numbers will form a new base for inter-national tourism growth over the forecast horizon. However, as pointed out in the national forecast, if the recent events in France and elsewhere engender a less robust demand for international tourism, then the recent gains could erode.3

State Finances

The important indicators from State finance are in-come tax receipts, an indicator of income earned and sales tax receipts, an indicator of consumption and the demand for wholesale and retail services.

For sales taxes there has been a shallow upward trend. The level of sales tax receipts adjusted for inflation is still

below the pre-recession peak even though sales tax rates have increased (Chart 5). However, residential construction and the outfitting of new homes is historically a substantial contributor to sales tax receipts. The shallow upward trend is expected to continue with increased consumption in the com-ing two years and a gradual rise in residential construction.

The personal income tax receipts are a bit more dif-ficult to decipher, as they are confounded with the high-income earner Prop 30 surcharge.4 Nevertheless, there is a solid upward trend in income tax revenues strongly suggesting income and state GDP are increasing (Chart 6). This is consistent with U.S. Bureau of Economic Research data (which occurs with a one year lag) and is expected to continue over the forecast horizon.

3 See David Shulman, “Full Employment,” UCLA Anderson Forecast, December 20154 For commentary on the proposal to extend the surcharge and what it might do to the California forecast see: Jerry Nickelsburg, “The Unintended

Consequences of Extending Proposition 30,” Zocalo Public Forum, November 2015.

Chart 4

Sources: LAWA, SFO, and Anderson Forecast

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Chart 5

Sources: California Department of Finance, US Bureau of Labor Statistics, Anderson Forecast

Chart 6

Sources: California Department of Finance, US Bureau of Labor Statistics, Anderson Forecast

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Residential Construction

In response to low vacancy rates and increasing rents, residential construction continues to grow in California. The number of new housing units permitted increased over the last three months to levels last seen at the end of the 1990s (Chart 7). The mix remains dominated by multi-family housing continuing a trend evident since the end of the Great Recession. Both our forecast and the results of the Allen Matkins/UCLA Anderson Forecast commercial real estate survey are consistent with continued improvement in construction over the next three years.5

Employment

California employment gains continue to impress. Over the last three months non-farm payroll employment growth has exceeded the U.S. by 1.0 percentage point and by 0.9 percentage points over the past year. This has resulted in the unemployment rate falling to 5.8%. These gains are now widespread (see Chart 8) and have taken the state to new employment heights; 5.2% above the previous peak. Though we expect growth rates to slow as the state moves closer to full employment in 2016, the fundamentals that have been driving the Golden State’s employment remain in place and no particular weakness or imbalance has appeared.

Chart 7

Sources: U.S. Bureau of The Census, Anderson Forecast

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5 The results of the December Allen Matkins UCLA Anderson Forecast Commercial Real Estate Survey including survey results for retail markets in California will be available mid-January 2016.



The Forecast

The current forecast is for continued steady gains in employment through 2017. The increase in US growth rates will continue to fuel the local economy. What this means is a steady decrease in the unemployment rate in California over the next two years. We expect California’s unemploy-ment rate to be insignificantly different from the U.S. rate at 4.9% by the end of the forecast period.

Our estimate for the 2015 total employment growth is 2.6%, and for 2016 and 2017 the forecast is for 2.1% and 1.4%. Payrolls will grow more at about the same rate over the forecast horizon. Real personal income growth is estimated to be 4.3% in 2015 and forecast to be 3.4% and 3.2% in 2016 and 2017 respectively.

Chart 8

Sources: California EDD, Anderson Forecast

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California Regional Job Gain (Oct. 2014 to Oct. 2015, SA)


OFFICE-USING EMPLOYMENT GROWTH ACROSS CITIES, 2000 TO 2015

Office-Using Employment Growth Across Cities, 2000 to 2015 William YuEconomist, UCLA Anderson ForecastDecember 2015

In this report, we will discuss the growth of office-using employment across metropolitan areas in the U.S. from 2000 to 2015. Office-using employment includes three major sectors: (1) information, (2) financial activities, and (3) professional and business services. Of course, some ofthe jobs in these sectors are not located at offices1, and some office-using jobs are not in these three sectors2. Neverthe-less, we believe that a significant portion of office jobs arerepresented in these three sectors. Table 1 shows the sub-sectors of these three sectors in the U.S. in September 2015. The professional and business services sector accounts for64% of office-using employment3, followed by the financialactivities sector with 26% and the information sector with9%. Table 2 displays Los Angeles County’s numbers, witha notably larger information sector (19%) due to its beingthe hub of the entertainment industry.

So why are we focusing on office-using employment here? Figure 1 provides the answer: office-using sectors have the highest salaries for their employees. Figure 1 shows the annual average 2014 salaries of sector employees in L.A. County and in the U.S. as a whole. For L.A., the information sector pays $105,000 on average, followed by the financial sector at $93,590, the professional & business services sector at $70,070, while manufacturing pays $61,000, construction $57,430, trade, transportation and utilities $45,940, educa-tion & health $42,740, and leisure & hospitality $34,490. The total average is $56,660. Looking at those numbers, it’s clear that the growth of office-using sectors is crucial to a city’s prosperity because of the high purchasing power of those employed in them.

1 Forinstance,inTable1,Servicestobuildinganddwellings,i.e.janitorialservices,(7%ofoffice-usingemployment),andwastemanagementandremediationservices,arenotemployedatoffices.

2 Forinstance,inthehealthservicessector,theambulatoryhealthcareservices,suchasofficesofphysicians,officeofdentists,officesofotherhealthpractitioners,areusuallyemployedatspecializedoffices.



2015/9 Employment (Thous.)

% of total employment

Employment growth 2000 to 2015

Employment growth 2007 to 2015

Total Office-using Employment 30,814 100% 11% 5%

Information 2,801 9% -21% -7%

Publishing industries, except Internet 718 2% -29% -20%Motion picture and sound recording industries 391 1% 2% 2%Broadcasting, except Internet 288 1% -14% -10%Telecommunications 864 3% -36% -16%Data processing, hosting and related services 300 1% -4% 12%Other information services 240 1% 61% 85%

Financial Activities 8,156 26% 5% -2%

Credit intermediation and related activities 2,576 8% 0% -8%Securities, commodity, investments, funds and trusts 907 3% 11% 0%Insurance carriers and related activities 2,560 8% 8% 6%Real estate 1,525 5% 16% 2%Rental and leasing services 547 2% -17% -14%Lessors of nonfinancial intangible assets 23 0% -16% -17%

Professional & Business Services 19,857 64% 21% 10%

Professional and technical services 8,698 28% 33% 11%Legal services 1,125 4% 6% -4%Accounting and bookkeeping services 1,015 3% 18% 5%Architectural and engineering services 1,428 5% 18% -1%Specialized design services 138 0% 8% -4%Computer systems design and related services 1,890 6% 57% 33%Management and technical consulting services 1,315 4% 105% 32%Scientific research and development services 655 2% 30% 7%Advertising and related services 496 2% 2% 5%Other professional and technical services 636 2% 40% 10%

Management of companies and enterprises 2,232 7% 25% 17%

Administrative and waste services 8,927 29% 10% 7%Office administrative services 480 2% 83% 20%Facilities support services 135 0% 42% -1%Employment services 3,589 12% -5% 5%Business support services 916 3% 18% 11%Travel arrangement and reservation services 200 1% -32% -12%Investigation and security services 891 3% 29% 12%Services to buildings and dwellings 2,006 7% 28% 8%Other support services 310 1% 3% -4%Waste management and remediation services 399 1% 29% 11%

Table 1 Office-Using Employment in the U.S. in September 2015

Source: Bureau of Labor Statistics



Employment % of total employment

Growth from 2000 to 2015

SS-NACIS Total Office-using Employment 1,028,400 100%50-000000 Information 194,600 18.9% -21%50-511000 Publishing Industries (except Internet) 14,500 1.4% -40%50-511100 Newspaper, Periodical, Book & Directory Publishers 7,800 0.8% -55%50-512000 Motion Picture & Sound Recording 117,700 11.4% -16%50-515000 Broadcasting (except Internet) 21,300 2.1% 8%50-515100 Radio & Television Broadcasting 16,700 1.6% 23%50-515200 Cable & Other Subscription Programming 4,600 0.4% -25%50-517000 Telecommunications 24,400 2.4% -38%50-518000 Data Processing, Hosting & Related Services 5,900 0.6% -39%55-000000 Financial Activities 208,200 20.2% -7%55-520000 Finance & Insurance 130,500 12.7% -12%55-522000 Credit Intermediation & Related Activities 62,200 6.0% -6%55-522100 Depository Credit Intermediation 40,200 3.9% -14%55-522200 Nondepository Credit Intermediation 11,800 1.1% -5%55-522300 Activities Related to Credit Intermediation 10,200 1.0% 42%55-523000 Securities, Commodity Contracts & Investments 25,100 2.4% 1%55-524000 Insurance Carriers & Related 43,100 4.2% -22%55-524100 Insurance Carriers 18,600 1.8% -36%55-524200 Agencies, Broker, & Other Insurance Related Act 24,500 2.4% -5%55-530000 Real Estate & Rental & Leasing 77,700 7.6% 5%55-531000 Real Estate 58,400 5.7% 19%55-531100 Lessors of Real Estate 17,100 1.7% -16%55-531200 Offices of Real Estate Agents & Brokers 12,600 1.2% 20%55-531300 Activities Related to Real Estate 28,700 2.8% 58%55-539999 Real Estate and Rental and Leasing - Residual 19,300 1.9% -23%60-000000 Professional & Business Services 625,600 60.8% 4%60-540000 Professional, Scientific & Technical Services 288,500 28.1% 26%60-541100 Legal Services 49,400 4.8% 6%60-541200 Accounting, Tax Preparation & Bookkeeping Services 41,700 4.1% 26%60-541300 Architectural, Engineering & Related Services 37,700 3.7% 27%60-541500 Computer Systems Design & Related Services 29,400 2.9% 5%60-541600 Management, Scientific & Technical Consulting Services 58,900 5.7% 138%60-541700 Scientific Research & Development Services 17,600 1.7% 31%60-541800 Advertising & Related Services 25,800 2.5% 0%60-550000 Management of Companies & Enterprises 60,800 5.9% -30%60-560000 Administrative & Support & Waste Services 276,300 26.9% -2%60-561000 Administrative & Support Services 267,200 26.0% -3%60-561300 Employment Services 115,600 11.2% -15%60-561400 Business Support Services 16,000 1.6% -11%60-561500 Travel Arrangement & Reservation Services 8,300 0.8% -38%60-561600 Investigation & Security Services 52,900 5.1% 25%60-561700 Services to Buildings & Dwellings 41,500 4.0% 2%

Table 2 Office-Using Employment in Los Angeles County in September 2015

Source: California Empoyment Development Department



Total Employment Growth Across Cities

Figure 2 displays the total nonfarm payroll employ-ment, seasonally adjusted, from December 2007, the pre-Great Recession peak, to September 2015 (orange bar) and from January 2000 to September 2015 (blue-dash bar) for 33 metropolitan statistical areas (MSAs), including L.A. County and Orange County. In the last eight years, we can see that Austin, San Antonio, Houston, San Jose (Silicon Valley), and Dallas are leading in terms of job growth. Going back to 2000, we can see Austin, Riverside (Inland

Empire), Las Vegas, and Houston are doing the best overall at creating jobs.

In contrast, Detroit, Cleveland, Chicago, and St. Louis

are not successfully creating jobs in this period. L.A. has seen 2% job growth from 2007 to 2015 and 6% since 2000. It is worth noting that for L.A. the top two job growth sec-tors during these periods are education and health services and leisure and hospitality. As shown in Figure 1, these two sectors have the lowest wages.

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Figure 1. Annual Salaries by Sector in Los Angeles County and the U.S. in 2014

Source: Quarterly Census of Employment and Wages



Office-Using Employment Growth Across Cities

So how are L.A. and other cities faring for office-using jobs during these periods? The short answer for L.A. is not well. Figure 3 presents the office-using job growth from 2007 to 2015 and 2000 to 2015 for major metros in the U.S. During the post-Great Recession period, 2007 to 2015, Austin (at 34%), San Jose (32%), San Antonio (20%), San Francisco

(19%), and Dallas (16%) have seen robust office-using job growth4. In contrast, Sacramento (-4%), Philadelphia (-2%), L.A. (-3%) and Cleveland (-3%) still have not recovered to their pre-Great Recession peaks in 2007. If we look at the period of 2000 to 2015, L.A. (at -3%), Cleveland (-6%), and Detroit (-8%) are the only three areas with negative office-using job growth.

Figure 2. Total Nonfarm Payroll Employment Growth Rate, 2007 to 2015 and 2000 to 2015


-15% -5% 5% 15% 25% 35% 45%Detroit

ClevelandChicagoSt. Louis

PhiladelphiaPittsburghSan JoseCincinnati

Los Angeles CountyBoston

Kansas CityNew York

San FranciscoMinneapolis

TampaBaltimoreColumbus

Orange CountyAtlanta

PortlandSeattle

SacramentoDenver

MiamiSan Diego

Washington DCDallas

PhoenixOrlando

San AntonioHouston

Las VegasRiverside

Austin

2007 to 20152000 to 2015

4 There are many oil industry related companies’ headquarters in Texas metros, such as Houston and Dallas. Those employment in headquarters are infactoffice-usingemployment.ButtheyarecategorizedbyBureauofLaborStatisticsintheminingsector.



Figure 3. Office-Using Employment Growth Rate, 2007 to 2015 and 2000 to 2015


-10% 0% 10% 20% 30% 40% 50% 60%Detroit

ClevelandLos Angeles County

New YorkChicago

PhiladelphiaSacramento

BostonDenver

Kansas CitySt. Louise

MinneapolisOrange CountySan Francisco

TampaAtlanta

San DiegoPittsburghSan Jose

Washington DCPortland

SeattleCincinnatiBaltimoreColumbus

PhoenixMiamiDallas

HoustonOrlando

San AntonioRiverside

Las VegasAustin

2007 to 20152000 to 2015

-50 0 50 100 150 200Detroit

ClevelandLos Angeles County

SacramentoPhiladelphiaKansas City

ChicagoSt. Louise

DenverNew YorkPittsburgh

BostonTampa

Orange CountySan Diego

PortlandCincinnati

MinneapolisColumbusSan JoseBaltimore

Las VegasRiverside

San FranciscoSan Antonio

OrlandoSeattleAtlantaAustin

PhoenixMiami

Washington DCHouston

Dallas

2007 to 2015

2000 to 2015

Figure 4. Office-Using Employment Growth, 2007 to 2015 and 2000 to 2015, (Thous. Jobs)




Figure 4 shows the office-using job growth during the two periods. From 2007 to 2015, Dallas created 125,000 office-using jobs, San Francisco created 109,000, and San Jose, 82,000 jobs. From 2000 to 2015, the cities with the most office jobs created are Dallas (207K), Houston (156K), Washington DC (143K), Miami (137K), and Phoenix (105K). On the other hand, L.A. lost 27,000 office-using jobs from 2007 to 2015. Detroit, despite being the biggest office-job loser between 2000 and 2015, has seen 26,000 new office jobs since 2007.

Figure 5 illustrates the dynamics (percentage change

since January 2000) of office-using employment across 12 major metros. We can see Austin is the off-the-chart leader in job growth. San Jose and San Francisco have the most dramatic swing of office-using jobs, while L.A.’s jobs are less volatile. The Bay Area lost a tremendous number of jobs after the dot-com bubble burst but have regained their vibrancy due to the recent high-tech boom.

Information Sector Employment Growth Across Cities

Figure 6 shows the information sector employment

growth during the periods 2007 to 2015 and 2000 to 2015. We see that San Jose, San Francisco, Austin, Seattle, and Phoenix have the highest job growth in the information sec-tor in the 2007 to 2015 period. It is shocking to see that most of the cities (30 out of 34) have lost information sector jobs over the 2000 to 2015 period, but it also seems inevitable since the progress of information technology has eliminated and replaced many human jobs in the publishing, newspaper, and telecommunication sectors also detailed in Table 1.

Financial Activities Sector Employment Growth Across Cities

Figure 7 shows the financial activities sector employ-ment growth during the periods 2007 to 2015 and 2000 to

Figure 5. Office-Using Employment Percentage Change Since 2000


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Figure 6 Information Sector Employment Growth Rate, 2007 to 2015 and 2000 to 2015


Figure 7 Financial Sector Employment Growth Rate, 2007 to 2015 and 2000 to 2015


-50% -30% -10% 10% 30% 50% 70% 90% 110% 130%Kansas City

Orange CountyDenver

ClevelandBaltimore

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Los Angeles CountyMiami

New YorkAtlanta

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San AntonioPortlandOrlando

AustinSeattle

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-20% -10% 0% 10% 20% 30% 40% 50% 60%San Francisco

ChicagoClevelandNew York

SacramentoLos Angeles County

BostonPhiladelphia

DetroitColumbus

SeattleSan Diego

PortlandDenver

BaltimoreWashington DC

PittsburghSan Jose

AtlantaHouston

MiamiMinneapolisKansas City

Las VegasTampa

St. LouisCincinnati

Orange CountyRiverside

OrlandoDallas

PhoenixAustin

San Antonio

2007 to 2015

2000 to 2015



had higher growth than other cities. Although L.A. has had positive growth in this sector, it is ranked in the bottom four in terms of growth rate between 2000 and 2015.

Anderson Forecast senior economist, David Shul-man, predicted the office space demand trend nationwide, in which he suggested that the technology sector employment would be strong, and the financial activities employment would be weak in his 2012 article, “An Uneasy Look at Office Space Demand” at UCLA Economic Letter.5 In retrospect, what he predicted has proven correct.

2015. Low-cost cities, such as San Antonio, Austin, Phoenix, Dallas, and Orlando have been doing well over the past 16 years. In contrast, traditional financial centers such as San Francisco, New York, Chicago, Los Angeles, and Boston have all lost jobs, mostly after the financial crisis of 2007.

Professional and Business Services Sector Employment Growth Across Cities

Figure 8 shows the professional and business services sector employment growth during the periods 2007 to 2015 and 2000 to 2015. Most cities have seen positive job growth in this sector over the past 16 years. From 2007 to 2015, Austin, San Francisco, San Jose, Dallas, and Portland have

3 See http://www.anderson.ucla.edu/Documents/areas/ctr/ziman/UCLA%20Economic%20Letter_Shulman_12-17-12.pdf

Figure 8. Professional and Business Services Employment Growth Rate, 2007 to 2015 and 2000 to 2015


-10% 0% 10% 20% 30% 40% 50% 60% 70% 80%Detroit

ClevelandSan Jose

Los Angeles CountySt. Louis

New YorkChicago

PhiladelphiaBoston

Orange CountyMinneapolisSacramento

AtlantaTampa

San DiegoSeattleDenvor

PhoenixSan Francisco

Kansas CityPittsburghCincinnati

PortlandWashington DC

BaltimoreOrlando

ColumbusSan Antonio

DallasMiami

HoustonRiverside

AustinLas Vegas

2007 to 20152000 to 2015



Conclusions

In summary, we can see a disparity in office-using employment across cities in the last eight years (as shown in Figure 3). Some of the most dynamic growth comes out of San Jose and San Francisco, fueled by the recent high-tech boom. However, if history is any guide (see Figure 5), the Bay Area tends to have volatile employment cycle due to the boom-bust cycles of the high-tech industry.

Another set of interesting numbers comes from Texas. Austin, San Antonio, Dallas, and Houston are all seeing robust office-using employment growth. It seems not a co-incidence that they are all in the same state. There are three possible reasons for their high growth rate: (1) the oil boom, (2) the low cost of living, or (3) the friendly environment for

business. But now that the oil industry’s strength is waning due to plunging oil prices, we will soon be able to tell how much the Lone Star State’s cities past success depended on the oil boom.

The three biggest cities in the country – New York, Los Angeles, and Chicago – have seen lower growth in office-using employment over the past 8 and 16 years compared to most other major cities in the U.S. One of the reasons is that these three cities, which are major financial centers, lost a significant number of jobs during the financial crisis.

Due to the higher wages of the sector, office-using employment has become the backbone of city economies in the U.S. The resilience of these sectors will help cities to achieve shared prosperity in the 21st century.



Charts



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California Employment (6-mo. moving avg.)Jan. 2003 to Oct. 2015 (Thous.)

Wage & Salary Emp. (Left) HH Survey Emp. (Right) 1513110907050301999795

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California Unemployment RateJan. 1995 to Oct. 2015

1413121110090807060504030201

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Taxable Sales in California2001:1Q to 2014:2Q

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Indexed 1985 = 100

Source: Conference Board

Indexes of Consumer Attitudes--Pacific AreaJan. 2002 to Oct. 2015

Consumer Confidence Present Expectations



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California New Car RegistrationsJan. 2004 to Sept. 2015

(3-mo. moving avg.)

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100

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(Thous.)

New One-Family Houses SoldWestern Region

Jan. 2003 to Sept. 2015

(3-mo. moving average)

151311090705030199979593918987

600

500

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300

200

100

(Thous. $)

Source: California Association of Realtors

California Existing-Home Prices1987:Q1 to 2015Q3

151413121110090807060504

700

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(Thous.)

Source: California Association of Realtors

California Existing-Home SalesJan. 2004 to Oct. 2015



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(Mil. $)

Building Permit ValuationsTotal Nonresidential

Jan. 2003 to Sept. 2015

3-mo. moving avg.15141312111009080706050403

250

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(Thous.)

New Residential Units ThroughCalifornia Building Permits

Jan. 2003 to Sept. 2015

Single-Unit Multi-Unit

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California Construction EmploymentJan. 2003 to Oct. 2015

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(Thous.) (Thous.)

California Employment by SectorJan. 2003 to Oct. 2015

Goods Producing (Left) Services (Right)

CHARTS – FORECAST


201720112005199919931987198119751969

15

10

5

0

-5

-10

(% Change Year Ago)

Real Personal IncomeCalifornia versus U.S.

California U.S.201720112005199919931987198119751969

86420

-2-4-6-8

(% Change Year Ago)

Nonfarm EmploymentCalifornia versus U.S.

California U.S.

2017201120051999199319871981197519691963

14

12

10

8

6

4

2

(Percent)

Rates of UnemploymentCalifornia versus U.S.

California U.S.2017201120051999199319871981197519691963

15

10

5

0

-5

-10

(3-Yr. % Ch.)

California Employment versusReal Personal Income

Nonfarm Emp. Real Personal Income

CHARTS – FORECAST


2017201120051999199319871981197519691963

20

15

10

5

0

-5

(4-Qtr Percent Change)California Consumer Price Inflation

California U.S.

2017201220072002199719921987

24000220002000018000160001400012000100008000

(Thous)

California Nonfarm EmploymentHistory & Forecast

Vs. 2.3% Trend from 1990:3

6.5 Million Jobs Below Trendby Year 2017

History & Forecast 2.3% Trend Line201720112005199919931987198119751969

13

12

11

10

9

8

(Percent)

California Share of U.S.Employment and Population

Emp Population

201720112005199919931987198119751969

20

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(% Change Year Ago)Real California Taxable Sales

CHARTS – FORECAST


2017201120051999199319871981197519691963

500400300200100

0-100-200-300

(Thous.)

California Net Natural Increase andNet Inmigration

Immigration Natural Increase

20172011200519991993198719811975

52

50

48

46

44

42

40

(Percent)

Gross Labor Force Participation RateLabor Force/Total Population

California U.S.2017201120051999199319871981197519691963

40

35

30

25

20

15

(Ca. Mil.; U.S. 10 Mil.)Population of California vs. U.S.

California U.S.

201720112005199919931987198119751969

3.0

2.5

2.0

1.5

1.0

0.5

0.0

(4-Qtr Percent Change)Growth in Population

CHARTS – FORECAST


20172011200519991993198719811975

400

300

200

100

0

(Thous. Units)

New Residential Units ThroughCalifornia Building Permits

Single-Unit Multi-Unit

2017201220072002199719921987

1000

900

800

700

600

500

400

(Thous.)

California Employmentin Construction

201720122007200219971992198719821977

40

35

30

25

20

15

10

5

(Bil. 2009 $)

Real Value of NonresidentialConstruction in California

201720112005199919931987198119751969

350

300

250

200

150

100

50

0

(Thous. $)U.S. Median Price of Single-Family Homes

CHARTS – FORECAST


201720152013201120092007200520032001

1900

1800

1700

1600

1500

1400

1300

1200

(Thous.)

California Employmentin Manufacturing

201720152013201120092007200520032001

2500

2400

2300

2200

2100

(Thous.)

California Employmentin Trade

201720152013201120092007200520032001

600

550

500

450

400

(Thous.)

California Employmentin Information

201720152013201120092007200520032001

2800

2600

2400

2200

2000

1800

1600

1400

(Thous.)

California Employmentin Education and Health Services

CHARTS – FORECAST


201720152013201120092007200520032001

2300

2250

2200

2150

2100

2050

(Thous.)

California Employmentin State and Local Government

201720152013201120092007200520032001

300

290

280

270

260

250

240

230

(Thous.)

California Employmentin Federal Government

201720152013201120092007200520032001

2800

2600

2400

2200

2000

1800

(Thous.)

California Employmentin Professional & Business Services

201720152013201120092007200520032001

950

900

850

800

750

700

(Thous.)

California Employmentin Financial Activities



Tables



Table 1. Summary of the UCLA Forecast for California 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Personal Income, Taxable Sales, and Price Inflation (%Change)Personal Income (Bil.$) 1565.3 1602.7 1537.1 1583.4 1691.0 1812.3 1849.5 1939.5 2048.1 2168.7 2304.3 Calif. (% Ch) 4.2 2.4 -4.1 3.0 6.8 7.2 2.1 4.9 5.6 5.9 6.3 U.S.(% Ch) 5.3 4.2 -3.3 3.2 6.2 5.0 1.1 4.4 4.2 5.3 6.1Pers. Income (Bil. 2009$) 1605.7 1601.9 1537.1 1563.5 1636.8 1716.4 1728.1 1783.1 1859.2 1923.2 1985.4 Calif. (% Ch) 1.3 -0.2 -4.0 1.7 4.7 4.9 0.7 3.2 4.3 3.4 3.2 U.S. (% Ch) 2.7 1.1 -3.2 1.5 3.7 3.0 -0.3 3.0 3.9 3.4 3.3Taxable Sales (Bil.$) 561.3 532.4 456.6 477.0 520.2 558.1 586.6 614.1 641.1 670.4 699.2 (% Ch) 0.3 -5.2 -14.2 4.5 9.1 7.3 5.1 4.7 4.4 4.6 4.3 (Bil. 2009$) 575.8 532.1 456.6 471.0 503.5 528.6 548.1 564.5 582.0 594.5 602.5 (% Ch) -2.5 -7.6 -14.2 3.2 6.9 5.0 3.7 3.0 3.1 2.2 1.3Consumer Prices (% Ch) 3.3 3.4 -0.3 1.3 2.6 2.2 1.4 1.8 1.4 2.9 3.5

Employment and Labor Force (Household Survey, % Change)Employment 0.9 -0.5 -4.0 -0.5 1.0 2.2 2.5 2.2 2.6 2.1 1.4Labor Force 1.4 1.7 0.1 0.5 0.3 0.7 0.8 0.9 1.1 1.0 1.0Unemployment Rate (%) 5.4 7.5 11.2 12.1 11.6 10.2 8.8 7.5 6.2 5.2 4.9 U.S. 4.6 5.8 9.3 9.6 8.9 8.1 7.4 6.2 5.3 4.7 4.7 Total Nonfarm Nonfarm Employment (Payroll Survey, % Change) Calif. 0.8 -1.1 -5.7 -1.1 1.0 2.4 3.2 3.1 3.0 2.3 1.6 U.S. 1.1 -0.6 -4.3 -0.7 1.2 1.7 1.7 1.9 2.1 1.9 1.2Construction -4.4 -11.7 -20.9 -10.2 0.2 5.1 8.0 6.0 6.7 3.1 1.3Manufacturing -1.7 -2.6 -10.0 -3.1 0.5 0.4 0.1 1.1 0.3 1.1 1.1 Nondurable Goods -1.1 -2.0 -8.1 -2.5 -0.4 0.4 0.4 0.5 -0.9 1.1 1.1 Durable Goods -2.0 -3.0 -11.2 -3.4 1.0 0.4 -0.1 1.4 1.0 1.1 1.2Trans. Warehousing & Util 2.3 -0.5 -6.0 -1.8 1.7 2.8 3.2 3.9 3.7 2.2 1.4Trade 1.1 -2.5 -7.5 -0.3 2.0 1.9 1.9 2.6 2.5 1.6 1.2Information 1.1 1.1 -7.3 -2.8 0.4 1.0 3.1 2.1 3.4 2.9 2.1Financial Activities -3.4 -6.1 -7.0 -2.9 0.2 1.5 1.2 0.2 1.6 1.3 1.3Professional Busi. Serv. 1.1 -1.2 -7.9 0.6 2.8 5.1 4.4 3.9 5.4 4.3 2.8Edu. & Health Serv. 3.8 4.0 2.7 0.6 1.4 4.2 7.0 3.8 3.2 2.6 1.6Leisure & Hospitality 2.7 0.8 -4.4 -0.1 2.3 4.1 4.8 4.8 3.8 2.6 1.8Other Services 1.0 -0.2 -4.9 -0.3 1.8 2.2 2.3 4.5 1.9 1.9 1.8Federal Gov’t -0.6 0.5 1.1 6.8 -4.9 -1.8 -2.0 -1.3 0.2 0.8 0.8State & Local Gov’t 2.0 1.0 -1.9 -2.2 -1.4 -1.1 0.1 1.9 1.5 1.1 0.6

Nonfarm Employment (Payroll Survey, Thous.)Total Nonfarm 15414 15246 14378 14215 14364 14712 15181 15644 16116 16486 16745Construction 893 788 624 560 561 590 637 675 720 742 752Manufacturing 1465 1427 1284 1244 1250 1255 1256 1270 1273 1287 1302 Nondurable Goods 536 526 483 471 469 471 473 475 471 476 482 Durable Goods 929 901 801 773 781 784 783 794 802 811 821Trans. Warehousing & Util 508 505 475 466 474 487 503 522 541 553 561Trade 2405 2345 2168 2162 2204 2247 2290 2349 2407 2445 2475Information 471 476 441 429 431 435 449 458 474 487 498Financial Activities 897 842 783 760 762 774 783 784 797 807 817Professional Busi. Serv. 2268 2241 2064 2077 2135 2242 2341 2433 2564 2676 2751Edu. & Health Serv. 1913 1990 2044 2056 2084 2172 2325 2414 2491 2556 2596Leisure & Hospitality 1560 1573 1503 1502 1536 1599 1676 1757 1824 1872 1906Other Services 512.1 511.3 486.2 485.0 493.7 504.8 516.6 539.7 550.0 560.6 570.5Federal Gov’t 247.1 248.4 251.2 268.3 255.2 250.5 245.5 242.2 242.8 244.8 246.6State & Local Gov’t 2247.9 2271.0 2228.2 2179.8 2149.4 2125.7 2128.5 2168.7 2202.0 2226.1 2240.2

Population and MigrationNet Inmigration(Thous) -24 -25 -89 -51 -11 39 45 92 95 129 146Population (Thous) 36551 36859 37100 37334 37583 37869 38163 38489 38821 39170 39538 (% Ch) 0.8 0.8 0.7 0.6 0.7 0.8 0.8 0.9 0.9 0.9 0.9

Construction ActivityResidential Building Permits (Thous. Un.) 106.5 60.8 33.2 43.0 44.9 56.7 78.0 82.3 102.3 118.1 122.4Nonres.Permits (Mil.’09$) 23172 18817 10895 11301 12808 13818 20272 21249 22509 24221 25398



Table 2. Quarterly Summary of the UCLA Forecast for California 2015:1 2015:2 2015:3 2015:4 2016:1 2016:2 2016:3 2016:4 2017:1 2017:2 2017:3 2017:4

Personal Income, Taxable Sales, and Price Inflation (%Change)Personal Income (Bil.$) 2007.9 2032.6 2063.9 2088.0 2119.3 2152.0 2184.9 2218.6 2255.8 2288.9 2320.3 2352.3 Calif.(% Ch) 6.9 5.0 6.3 4.7 6.1 6.3 6.3 6.3 6.9 6.0 5.6 5.6 U.S. (% Ch) 3.4 3.8 4.6 4.9 5.8 5.3 5.9 5.9 6.8 6.1 5.6 5.8Pers. Income (Bil. 2009$) 1839.7 1848.3 1865.4 1883.3 1900.8 1916.0 1931.0 1945.2 1964.2 1979.2 1991.9 2006.4 Calif.(% Ch) 7.1 1.9 3.7 3.9 3.8 3.2 3.2 3.0 4.0 3.1 2.6 2.9 U.S. (% Ch) 5.4 1.5 3.3 4.5 4.1 2.5 2.9 2.8 4.1 3.3 3.0 3.2Taxable Sales (Bil. $) 630.6 637.2 644.7 651.9 659.1 666.6 674.1 681.7 688.7 695.5 702.8 710.1 (% Ch) 4.2 4.3 4.8 4.6 4.4 4.7 4.6 4.5 4.2 4.0 4.2 4.2 (Bil. 2009$) 577.7 579.4 582.7 588.0 591.1 593.6 595.8 597.7 599.6 601.4 603.3 605.7 (%Ch) 4.4 1.2 2.3 3.7 2.1 1.7 1.5 1.3 1.3 1.2 1.3 1.6Consumer Prices (% Ch) -0.3 3.8 2.6 1.3 2.9 3.4 3.9 4.0 3.2 3.5 3.3 3.1

Employment and Labor Force (Household Survey, % Change)Employment 2.8 3.2 1.5 2.4 2.1 2.1 1.9 1.7 1.4 1.3 0.9 0.9Labor Force 0.8 1.5 0.4 1.0 1.2 1.0 1.0 1.1 1.0 1.1 1.1 1.0Unemployment Rate (%) 6.7 6.3 6.1 5.8 5.6 5.3 5.1 5.0 4.9 4.8 4.8 4.9 U.S. 5.6 5.4 5.2 4.9 4.8 4.8 4.7 4.6 4.6 4.6 4.9 4.8 Total Nonfarm Nonfarm Employment (Payroll Survey, % Change) Calif. 3.5 2.4 3.1 2.4 2.2 2.2 2.0 1.8 1.6 1.5 1.0 0.9 U.S. 2.2 1.7 1.7 2.0 2.4 1.7 1.3 1.5 1.2 0.9 0.8 1.0Construction 9.4 6.8 4.4 4.4 2.2 2.1 1.8 1.5 1.1 1.0 1.0 0.8Manufacturing 0.3 0.8 -0.8 1.4 1.5 1.4 1.3 1.5 1.0 1.0 0.8 1.1 Nondurable Goods 0.1 0.2 -0.2 1.6 1.3 1.7 1.0 1.0 0.9 0.9 1.4 2.2 Durable Goods 0.4 1.1 -1.2 1.3 1.6 1.3 1.4 1.8 1.1 1.1 0.5 0.5Trans. Warehousing & Util. 2.5 0.1 4.7 2.4 2.2 2.1 1.4 1.3 1.4 1.4 1.5 1.3Trade 2.8 2.6 1.9 1.1 1.5 1.7 1.6 1.3 1.3 1.1 0.7 0.6Information 4.4 4.0 2.4 3.2 2.7 3.0 2.6 2.6 2.1 2.1 1.1 1.1Financial Activities 4.9 -2.0 1.0 1.3 1.7 1.7 1.6 1.5 1.1 1.1 1.1 1.0Professional Busi. Serv. 6.5 6.4 4.6 4.1 4.4 4.3 4.0 3.3 2.8 2.5 1.4 1.3Edu. & Health Serv. 3.0 3.6 4.0 2.8 2.4 2.3 2.0 1.8 1.7 1.5 0.7 0.7Leisure & Hospitality 5.6 0.8 5.5 2.9 2.1 2.1 2.2 2.1 1.9 1.7 1.4 1.1Other Services 3.0 -2.9 2.3 2.7 2.3 2.3 1.6 1.7 1.8 1.8 1.7 1.8Federal Gov’t -1.3 2.0 0.5 0.8 0.8 0.8 0.7 0.8 0.9 1.0 0.5 -0.1State and Local Gov’t 0.3 0.7 2.7 1.3 0.9 0.8 0.6 0.6 0.7 0.7 0.5 0.5

Nonfarm Employment (Payroll Survey, Thous.)Total Nonfarm 15960 16054 16177 16273 16362 16450 16531 16603 16669 16730 16771 16809Construction 706 717 725 733 737 741 744 747 749 751 753 754Manufacturing 1272 1274 1272 1276 1281 1285 1289 1294 1298 1301 1303 1307 Nondurable Goods 471 471 470 472 474 476 477 478 479 480 482 485 Durable Goods 801 804 801 804 807 809 812 816 818 820 821 822Trans. Warehousing & Util. 538 538 544 547 550 553 555 556 558 560 563 564Trade 2388 2403 2415 2421 2431 2441 2450 2459 2466 2473 2478 2482Information 468 473 475 479 482 486 489 492 495 497 498 500Financial Activities 798 794 796 799 802 805 809 812 814 816 818 820Professional Busi. Serv. 2514 2553 2582 2608 2636 2664 2691 2712 2731 2748 2758 2767Edu. & Health Serv. 2457.7 2479.4 2504.0 2521.4 2536.1 2550.6 2563.2 2574.7 2585.6 2595.1 2599.6 2604.0Leisure & Hospitality 1806.2 1809.8 1834.1 1847.2 1856.9 1866.7 1876.9 1886.9 1895.6 1903.7 1910.1 1915.6Other Services 550.6 546.6 549.6 553.3 556.5 559.7 561.9 564.3 566.7 569.2 571.7 574.2Federal Gov’t 242 243 243 244 244 245 245 245 246 247 247 247State and Local Gov’t 2190 2194 2208 2216 2221 2225 2228 2231 2235 2239 2242 2245

Population and MigrationNet Inmigration(Thous) 81.8 91.8 99.5 108.1 117.6 125.9 133.9 137.2 140.5 144.6 148.4 151.5Population (Thous) 38695 38778 38863 38949 39036 39124 39214 39305 39397 39490 39584 39680 (% Ch) 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 1.0 1.0 1.0

Construction ActivityResidential Building Permits (Thous. Units) 106.0 100.3 100.0 102.7 111.2 118.2 119.7 123.2 122.4 124.6 121.7 120.9Nonres.Permits (Mil. ‘09$) 21694 21506 23498 23338 23515 23819 24447 25103 25371 25434 25439 25347



Table 3. Personal Income, Taxable Sales, Construction and Population in California 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Aggregates (Bil $)Personal Income 1565.3 1602.7 1537.1 1583.4 1691.0 1812.3 1849.5 1939.5 2048.1 2168.7 2304.3Disposable Income 1350.0 1401.8 1375.8 1410.5 1488.7 1593.6 1597.7 1674.5 1761.3 1855.6 1966.9 (Bil 2009$)Personal Income 1605.7 1601.9 1537.1 1563.5 1636.8 1716.4 1728.1 1783.1 1859.2 1923.2 1985.4Disposable Income 1384.8 1401.0 1375.8 1392.8 1440.9 1509.3 1492.8 1539.9 1595.1 1645.6 1694.7 (Nominal %Ch)Personal Income 4.2 2.4 -4.1 3.0 6.8 7.2 2.1 4.9 5.6 5.9 6.3Disposable Income 3.5 3.8 -1.9 2.5 5.5 7.0 0.3 4.8 5.2 5.4 6.0 (Real %Ch)Personal Income 1.3 -0.2 -4.0 1.7 4.7 4.9 0.7 3.2 4.3 3.4 3.2Disposable Income 0.6 1.2 -1.8 1.2 3.5 4.7 -1.1 3.2 3.6 3.2 3.0

Components of Personal Income (Bil $)Personal Income 1565.3 1602.7 1537.1 1583.4 1691.0 1812.3 1849.5 1939.5 2048.1 2168.7 2304.3 Wages & Salaries 834.4 842.9 799.3 814.5 848.5 903.7 933.9 991.2 1049.9 1106.0 1167.1 Other Labor Income 200.6 204.7 197.1 202.9 218.5 220.4 230.7 235.0 245.8 264.4 288.0 Farm 7.5 5.0 5.8 6.3 9.3 10.0 12.1 12.0 12.4 20.2 29.7 Other Income 453.1 458.6 416.5 416.2 462.1 527.5 532.6 557.6 585.5 616.9 653.7 Transfer Payments 192.8 218.2 241.1 266.9 268.7 271.6 282.0 293.7 313.6 332.9 348.9 Social Insurance 122.7 124.9 121.0 121.5 114.1 118.7 139.6 147.6 156.7 169.3 180.6

Taxable Sales NominalLevel (Bil $) 561.3 532.4 456.6 477.0 520.2 558.1 586.6 614.1 641.1 670.4 699.2 %Ch 0.3 -5.2 -14.2 4.5 9.1 7.3 5.1 4.7 4.4 4.6 4.3 RealLevel (Bil. 2009$) 575.8 532.1 456.6 471.0 503.5 528.6 548.1 564.5 582.0 594.5 602.5 %Ch -2.5 -7.6 -14.2 3.2 6.9 5.0 3.7 3.0 3.1 2.2 1.3

New Automobile Sales (Mil Un.)New Registrations 1.68 1.34 0.99 1.11 1.21 1.52 1.68 1.80 1.97 2.03 2.04U.S. Sales 16.09 13.19 10.40 11.55 12.74 14.44 15.53 16.44 17.45 17.97 18.09

Construction Activity Residential Building Permits (Thous.)Total 106.5 60.8 33.2 43.0 44.9 56.7 78.0 82.3 102.3 118.1 122.4 Single-Family 66.2 31.6 24.0 25.0 22.3 27.3 36.4 37.3 44.7 55.1 57.4 Multi-family 40.3 29.2 9.2 18.0 22.6 29.4 41.6 44.9 57.6 63.0 65.0 Nonresidential Permit ValuationNominal (Mil. $) 22621.9 19188.2 10898.6 11170.3 13051.8 14632.5 21803.0 23188.1 24474.9 26871.0 29267.1 %Ch 7.0 -15.2 -43.2 2.5 16.8 12.1 49.0 6.4 5.5 9.8 8.9Real (Mil. 2009$) 23171.7 18817.4 10895.0 11300.5 12807.7 13817.9 20271.9 21249.0 22509.1 24220.8 25397.7 %Ch 0.9 -18.8 -42.1 3.7 13.3 7.9 46.7 4.8 5.9 7.6 4.9

Population (Thous.)Net Inmigration -24.2 -25.3 -88.8 -51.2 -11.1 39.0 45.0 92.0 95.3 128.6 146.2Net Natural Increase 329.9 328.9 309.8 283.0 272.0 258.0 252.0 243.0 240.9 227.2 229.0Population 36550.6 36859.2 37099.8 37333.5 37582.9 37869.3 38163.2 38488.5 38821.2 39169.6 39537.7

REGIONAL MODELING GROUP

UCLA Anderson Forecast, December 2015 Regional Modeling Group–83

The Los Angeles Department of Water and Power (DWP), established at the beginning of the century is the largest municipally-owned utility in the nation. It exists under and by virtue of the Charter of the City of Los Angeles enacted in 1925.

With a work force in excess of 9,000, the DWP provides water and electricity to some 3.5 million residents and businesses in a 464-square-mile area.

DWP’s operations are financed solely by the sale of water and electric services. Capital funds are raised through the sale of bonds. No tax support is received.

A five-member Board of Water and Power Commissioners establishes policy for the DWP. The Board members are appointed by the Mayor and confirmed by the City Council for five-year terms.

REGIONAL MODELING GROUP

84–Regional Modeling Group UCLA Anderson Forecast, December 2015

The Los Angeles County Metropolitan Transportation Authority (Metro) is unique among the nation’s transportation agencies. It serves as transportation planner and coordinator, designer, builder and operator for one of the country’s largest, most populous counties. More than 9 million people – one-third of California’s residents – live, work, and play within its 1,433-square-mile service area.

Besides operating over 2,000 coaches in the Metro Bus fleet, Metro also designed, built and now operates over 73 miles of Metro Rail service. The Metro Rail system currently consists of 62 stations and several more are in the planning and/or design stage.

In addition to operating its own services Metro funds 16 municipal bus operators and funds a wide array of transportation projects including bikeways and pedestrian facilities, local road and highway improvements, goods movement, and the popular Freeway Patrol and Call Boxes.

Recognizing that no one form of transit can solve urban congestion problems, Metro’s multimodal approach uses a variety of transportation alternatives to meet the needs of the highly diverse population in the region.

Metro’s Mission is to insure the continuous improvement of an efficient and effective transportation system for Los Angeles County. In support of this mission, our team members provide expertise and leadership based on their distinct roles: operating transit system elements for which the agency has delivery responsibility, planning the countywide transportation system in cooperation with other agencies, managing the construction and engineering of transportation system components and delivering timely support services to the Metro organization.

Metro was created in the state legislature by Assembly Bill 152 in May 1992. This bill merged the Los Angeles County Transportation Commission (LACTC) and the Southern California Rapid Transit District (RTD) to become the Los Angeles County Metropolitan Transportation Authority. The merger became effective on April 1, 1993.

Metro is governed by a 13-member Board of Directors comprised of: the five Los Angeles County Supervisors, the Mayor of Los Angeles, three Los Angeles mayor-appointed members, four city council members representing the other 87 cities in Los Angeles County and one non-voting member is appointed by the Governor of California.

SEMINAR MEMBERS

UCLA Anderson Forecast, December 2015 Seminar Members–85

The Legislature and Governor created the California Research Bureau (CRB) within the California State Library in the 1991 Budget Act. The bureau provides objective, nonpartisan, timely, and confidential research to the Governor’s Office, members of both houses of the Legislature, and other state constitutional officers. The Bureau provides these clients with research, policy assistance through written reports and other documents, consultations, seminars, and other training and assistance in preparing legislative proposals. The Bureau has five branches: Environmental and Natural Resources; Education and Human Services; Economics; General Law and Government; and Information Services. It maintains a small office at the State Capitol in Room 5210 to make reference services conveniently available.

The nonpartisan Legislative Analyst's Office (LAO) has been providing fiscal and policy advice to the California Legislature for more than 65 years. It is particularly well known for its fiscal and programmatic expertise and nonpartisan analyses relating to the state budget, including making recommendations for operating programs in the most effective and cost-efficient manner possible. Its responsibilities also include making economic and demographic forecasts for California, and fiscal forecasts for state government revenues and expenditures. It also prepares fiscal analyses for all propositions that appear on the California statewide ballot, including bond measures.

For more information about the LAO, please visit our website at www.lao.ca.gov or call us at 916-445-4656.

SEMINAR MEMBERS

86–Seminar Members UCLA Anderson Forecast, December 2015

The Los Angeles Magazine has named Hermosa an "outstanding coastal town" praising many of our businesses and shops. From traditional Surf and Turf to more exotic cuisines, from Comedy to Jazz, Hermosa Beach has many fine dining and entertainment places from which to choose. Our hotel and lodging facilities offer breath taking ocean views and all the comforts of home which are surrounded by a Mecca of restaurants, upscale shops and tourist delights. Come to Hermosa Beach, relax and enjoy the warmth of our hospitality.

City of Hermosa Beach

The State of California’s Department of Finance is responsible for submitting to the State’s fiscal year budget to the Governor in January of each year. The Department is part of the State’s Executive Branch and part of the Governor’s Administration. The Director of Finance is appointed by the Governor and is his chief fiscal advisor. The Director sits as a member of the Governor’s cabinet and senior staff. Principal functions include:

Establish appropriate fiscal policies to carry out the Administration’s Programs.

Prepare, enact and administer the State’s Annual Financial Plan.

Analyze legislation which has a fiscal impact.

Develop and maintain the California State Accounting and Reporting System (CALSTARS).

Monitor/audit expenditures by State departments to ensure compliance with approved standards and policies.

Develop economic forecasts and revenue estimates.

Develop population and enrollment estimates and projections.

Review expenditures on data processing activities of departments.

In addition, the Department of Finance interacts with the Legislature through various reporting requirements, by presenting and defending the Governor’s Budget and in the legislature.

The Department interacts with other State departments on a daily basis on terms of administering the budget, reviewing fiscal proposals, establishing accounting systems, auditing department expenditures and communicating the Governor’s fiscal policy to departments.

SEMINAR MEMBERS

UCLA Anderson Forecast, December 2015 Seminar Members–87

Health Net, Inc. is among the nation’s largest publicly traded managed health care companies. Its mission is to help people be healthy, secure and comfortable. The company’s health plans and government contracts subsidiaries provide health benefits to approximately 6.7 million individuals across the country through group, individual, Medicare, Medicaid and TRICARE and Veterans Affairs programs. Health Net’s behavioral health subsidiary, MHN, provides mental health benefits to approximately 7.0 million individuals in all 50 states. The company’s subsidiaries also offer managed health care products related to prescription drugs, and offer managed health care product coordination for multi-region employers and administrative services for medical groups and self-funded benefits programs.

The Employment Development Department’s Labor Market Information Division (LMID) regularly collects, analyzes, and publishes information about California’s labor market, which has approximately 1,068,000 employers covered by Unemployment Insurance and a civilian labor force of approximately 16.6 million. In addition to employment and unemployment data, LMID provides economic development and planning information; industry and occupational characteristics, trends, and wage information; and social and demographic information. Most of these data are available for the state and counties. Some data are available for other geographic regions a well.

In addition to basic labor market information, the LMID provides technical assistance, training seminars for data users, and standard and customized reports for state and sub-state geographic areas. Labor market information is available electronically and in print.

For more information, visit our website at www.calmis.ca.gov or call 916-262-2162.

SEMINAR MEMBERS

88–Seminar Members UCLA Anderson Forecast, December 2015

The energy industry is changing rapidly and dramatically. As global competition transforms the way companies do business, energy issues are no longer simply local, or even national. At the same time, its clear that the importance of providing reliable local service has never been more important.

Our heritage at Southern California Edison is based on reliability. For more than 100 years we have provided high-quality, reliable electric service to more than 4.2 million business and residential customers over a 50,000 square mile service area in coastal, central, and southern California.

Of course, recent changes in the California’s electric industry have affected us as well. In 1997, as part of the restructuring of the electric industry in our state, SCE sold its 12 fossil fuel generating stations and overhauled nearly every aspect of its business to prepare for the changing environment. While we still own and operate hydro and nuclear power facilities that serve our area, our main role is that of power transmission and distribution. The power needed for our customers is largely purchased from the California Power Exchange and provided by SCE to our customers without a price markup.

At SCE we want you to know that even in times of change, we retain our proven commitment to service, reliability, innovation, and the community.

Celebrating its 150th anniversary in 2014, the Irvine Company is one of America’s most respected and diversified real estate companies. The Company is renowned for its investment properties across coastal California and its stewardship and master planning of The Irvine Ranch in Orange County, California.

The Irvine Company’s property portfolio exceeds 105 million square feet and includes 500 office buildings, 41 retail centers, 130 apartment communities, five marinas, three hotels, and three golf courses, primarily in Orange County, with one-third of the Company’s investment properties in Los Angeles, San Diego, Silicon Valley and Chicago.

As master planner of the historic Irvine Ranch, the Irvine Company plans and brings to life balanced, sustainable communities with a full range of housing, job and retail centers, schools, recreation and permanently preserved open spaces. Nearly 60% of the 93,000-acre Irvine Ranch — or 55,000 acres — has been preserved in perpetuity as parklands and open space.

Donald Bren is Chairman of the Irvine Company. He has been deeply involved in California real estate as a master planner, master builder and long-term investor for more than 50 years. He oversees a Board of Directors that includes some of the nation’s most accomplished and respected business leaders and former public officials.

UCLA Anderson Forecast, December 2015 Sponsors-89

90-Sponsors UCLA Anderson Forecast, December 2015

MEMBERS

UCLA Anderson Forecast, December 2015 Members - 91

Corporate 6

California Energy CommissionThe California Endowment

Corporate 4

ADPCFA Society Los AngelesCity National Bank - CosciaCity of Los AngelesHomeStreet BankIBIS World, Inc.IS AssociatesMedPOINT Management, Inc.Southern California Association of Governments

Corporate 3

Ameron InternationalCitizens Business BankCity of El SegundoCity of Manhattan BeachCity of Santa MonicaHanmi BankKia Motors America, Inc.Los Angeles Police Federal Credit UnionMcMaster-Carr Supply CompanyMetropolitan Water DistrictMitsubishi Cement Corp.Pacific Western BankPepperdine UniversityRPAState Farm Insurance Co.The Newhall Land and Farming CompanyUnified Grocers, Inc.WCIRBWinreal Operating Co.

Individual Member

ALGAlliance BernsteinAustrian Trade CommissionBay Area EconomicsBBCN BankBrand Management IncBRE Properties, INCCal RecycleCalifornia Air Resources BoardCalifornia Association Of RealtorsCalifornia Department of TransportationCalifornia Public Utilities CommissionCalifornia State Board of EqualizationCalifornia State Polytechnic University, PomonaCalifornia State University, SacramentoCalifornia Steel Industries, IncCathay BankChartwell Capital SolutionsChicago TitleChu & Waters, LLPCity of CarlsbadCity of Garden GroveCity Of SacramentoCity of San DiegoCity of San JoseCity of Santa ClaraCity of TorranceCity of Torrance - Kenneth FlewellynCommunity BankConsulate General of JapanCounty of San DiegoCTBC Bank USADesmond, Marcello & AmsterEast West BankFDIC

MEMBERS

92 - Members UCLA Anderson Forecast, December 2015

Goodwin Procter LLPGranite Rock CompanyHarold Davidson & Associates Inc.Heritage Bank of CommerceHR and A Advisors, Inc.JETRO, Los AngelesKinecta Federal Credit UnionKPMGLehigh Southwest Cement CompanyLloyd Management CorporationLogix Federal Credit UnionLondre Marketing Consultants, LLCLos Angeles Public Library - Business Economics DeptMaynard Consulting ServicesNewland Real Estate GroupNorthern California Power AgencyOrange County Executive Office - BudgetOrange County Transportation Authority 2PG&EPreferred Employers Insurance CompanyRBC Capital Markets

Redwood Credit UnionSan Diego Gas & Electric Co.School Services of California Inc.SMUDStanford UniversityState Compensation Insurance FundState of Hawaii - Department of TaxationSully-Miller Contracting CoThe Aerospace CorporationThe Olson CompanyUnited Methodist F.C.U.University of California Library, BerkeleyUniversity of California San DiegoUniversity of CincinnatiUniversity of RichmondUSS-POSCO IndustriesVulcan MaterialsVulcan Materials CompanyWarland InvestmentsWells Fargo SecuritiesYork University Libraries

SPEAKERS

UCLA Anderson Forecast, December 2015 Speakers–93

Edward E. Leamer is the Chauncey J. Medberry Professor of Management, Professor of Economics and Professor of Statistics at UCLA. He received a B.A. degree in mathematics from Princeton University and a Ph.D. degree in economics and an M.A. degree in mathematics from the University of Michigan. After serving as Assistant and Associate Professor at Harvard University he joined the University of California at Los Angeles in 1975 as Professor of Economics and served as Chair from 1983 to 1987.

In 1990 he moved to the Anderson Graduate School of Management and was appointed to the Chauncey J. Medberry Chair. Professor Leamer is a Fellow of the American Academy of Arts and Sciences, and a Fellow of the Econometric Society. He is a Research Associate of the National Bureau of Economic Research and a visiting scholar at the International Monetary Fund and the Board of Governors of the Federal Reserve System. Dr. Leamer has published over 100 articles and 4 books . This research has been supported by continuous grants for over 25 years from the National Science Foundation, the Sloan Foundation and the Russell Sage Foundation. His research papers in econometrics have been collected in Sturdy Econometrics, published in the Edward Elgar Series of Economists of the 20th Century. His research in international economics and econometric methodology has been discussed in a chapter written by Herman Leonard and Keith Maskus in New Horizons in Economic Thought: Appraisals of Leading Economists. Recent research interests of Professor Leamer include the North American Free Trade Agreement, the dismantling of the Swedish welfare state, the economic integration of Eastern Europe, Taiwan and the Mainland, and the impact of globalization on the U.S. economy.

Edward E. LeamerDirector

David ShulmanSenior Economist

David Shulman is currently managing member of his own LLC and engages in educational and charitable ac-tivities, including being a Distinguished Visiting Professor at Baruch College and a Visiting Professor at the Univer-sity of Wisconsin. Dr. Shulman is currently a member of NAREIT’s Real Estate Investment Advisory Council. He blogs at Shulmaven.blogspot.com. Shulman received a bachelor’s degree from Baruch College in 1965, an MBA in 1966 from the Graduate School of Management at UCLA; and his Ph.D. in 1975 with a specialization in Finance.

From 1986 to 1997, Dr. Shulman was employed by Sa-lomon Brothers Inc. in various capacities. He was their director of real estate research from 1987 to 1991 and be-came Chief Equity Strategist from 1992 to 1997. As Chief Equity Strategist, he was responsible for developing the firms overall equity market view and maintaining their list of recommended stocks. Dr. Shulman was widely quoted in print and electronic media and he coined the terms “Gold-ilocks Economy” and “New Paradigm Economy.” In 1991, he was named a Managing Director; and in 1990, he won the First Annual Graaskamp Award for Excellence in real estate research from the Pension Real Estate Association.

In March 2005, Dr. Shulman retired from Lehman Broth-ers, where he was Managing Director and head Real Estate Investment Trust Analyst. Before joining Lehman Brothers in 2000, he was a member and Senior Vice President at Ulysses Management LLC from 1998-1999, an Investment Manager of a private investment partnership and an offshore corporation, whose invest-ment capital approximated $1 billion at the end of 1999.

SPEAKERS

94–Speakers UCLA Anderson Forecast, December 2015

Jerry NickelsburgSenior Economist

Jerry Nickelsburg joined the UCLA Anderson Forecast in 2006 as an economist. At the Anderson Forecast he plays a key role in the economic modeling and forecasting of the Los Angeles, Southern California and California economies. He has conducted special studies into the future of manufacturing in Los Angeles, the distribution of income, the economic impact of the writer’s strike, the aerospace industry, the undocumented construction and manufacturing labor force, the ports of Los Angeles and Long Beach and the garment industry, focusing on the development of new data and the application of economic theory and statistical methods to sectoral issues. He is a regular presenter at the Los Angeles Mayor’s Economic Conference and has been cited in the national and local media including the Financial Times, New York Times, Los Angeles Times, Reuters, Variety, CNBC, NBC, PBS, and L.A. Business Journal.

He received his Ph.D. in economics from the University of Minnesota in 1980 specializing in monetary economics and econometrics. He was formerly a professor of Economics at the University of Southern California and has held executive positions with McDonnell Douglas, Flight Safety International, and Flight Safety Boeing during a fifteen year span in the aviation business.

From 2000 to 2006, he was the Managing Principal of Deep Blue Economics, a consulting firm he founded. He held a position with the Federal Reserve Board of Governors developing forecasting tools, and has advised banks, investors and financial institutions. He has been the recipient of the Korda Fellowship, USC Outstanding Teacher, India Chamber of Commerce Jubilee Lecturer and is a Fulbright Scholar. He has published over 40 articles on monetary economics, econometrics, aviation economics, and industrial organization.

William YuEconomist

William Yu joined the UCLA Anderson Forecast in 2011 as an economist. At Forecast he focuses on the economic modeling and forecasting of Los Angeles and other regional economies in California. He also conducts research and forecast on Asian emerging economies, especially China, and their impacts on the US economy. His research interests include a wide range of economic and financial issues, such as time series econometrics, stock, bond and commodity price dynamics, public health, human capital, higher education, and economic sustainability. He has published over a dozen research articles in Journal of Forecasting, International Journal of Forecasting, Journal of International Money and Finance, Journal of Health Care Finance, Journal of Education Finance, Economic Affairs, and Global Economic Review, etc. He has also served as a reviewer for various journals, such as Journal of Money, Credit, and Banking, Journal of Banking and Finance, Japan and the World Economy, and Energy Journal, etc.

He received his bachelor’s degree in finance from National Taiwan University in 1995 and was an analyst in Fubon Financial Holding in Taipei from 1997 to 2000. In 2006, he received his Ph.D. degree in economics from the University of Washington where he was also an economics instructor and won two distinguished teaching awards. In 2006, he worked for the Frank Russell Investment Group for Treasury and corporate yields modeling and forecasting. From 2006 to 2011, he served as an assistant and an associate professor of economics at Winona State University where he taught courses including international economics, forecasting methods, intermediate macroeconomics, introductory macroeconomics, money and banking, and Asian economies.