National

The quarterly U.S. forecast of June 2018 was used as the basis for this long-run projection. As shown in the Table below, that forecast showed real GDP growth averaging 2.8% over the period 2018-2021. Employment was expected to rise at a 1.3% rate, while consumer inflation averaged 2.4%.  Over the period 2022 to 2039, real GDP growth is below the near-term performance. It is very slightly above that in our previous projection (February 2018). Our projection of employment growth, while better than February, is far lower than that in the short-run forecast. In the latter employment growth is elevated by tax cut and federal spending stimulus.  The long-run growth in both output and employment are in line with our assumptions about long-run potential. Inflation is relatively low in the near-term and in line with the Federal Reserve target for the long-run.

Control Forecast: Average Annual Percent Change for Selected U.S. Variables

Variable	2018-2021	2022-2039
Real GDP	2.8%	2.4%
Total Establish. Employment	1.3%	0.8%
Consumption Deflator	2.4%	2.0%

Indiana

The Indiana long run projection uses our June 2018 short-run control forecast as its basis.  The resulting long-run projections for employment (covering 2022-2039) are quite close to our February 2018 projection. By the end of 2021 (the short-run horizon) our forecast has the Indiana economy fully recovered from the 2008-2009 recession.  The long-run projection thereafter reflects our assumptions about labor force growth and productivity, which remain essentially the same as in February.

For the projection of the industry gross state product variables (GSP), we used the GSP historical data released in July 2018 which covers the period 1997 to 2016. Productivity is defined as the ratio of GSP to total employment in an industry. Projections of productivity together with projected sectoral employment levels are used to calculate GSP.  When combined with employment growth the result is GSP growth in this projection that is a little higher than our previous projection. 

The average growth rate of total Gross State Product over 2018-2039 is projected to be 2.31% per year. Over the same period total Indiana employment is projected to grow at a 0.61% rate, with employment in manufacturing falling at a 0.62% rate, and in non-manufacturing growing at a 0.82% rate.

Control Forecast: Average Annual Percent Change for Selected Indiana Variables

Variable	2018-2021	2022-2039
Gross State Product	1.8%	2.3%
Total Employment	1.0%	0.6%
Real Personal Income	1.5%	1.7%