National
The quarterly U.S. forecast of June 2016 was used as the basis for this long-run projection. As shown in the Table below, that forecast showed real GDP growth averaging 2.6% over the period 2016-2019. Employment was expected to rise at a 1.2% rate, while consumer inflation averaged 1.9%. Over the period 2020 to 2037, real GDP growth is above the near-term performance. It is just slightly below that in our previous projection (February 2016). Our projection of employment growth, while similar to February, is far lower than that in the short-run forecast. In the latter employment growth is elevated by the final stage of recovery from the 2008-2009 recession. The long-run growth in both output and employment are in line with our assumptions about long-run potential. Inflation is low in both the near-term (due partly to decline in energy prices) and in line with the Federal Reserve target for the long-run.
Control Forecast: Average Annual Percent Change for Selected U.S. Variables
Variable |
2016-2019 |
2020-2037 |
|---|---|---|
| Real GDP |
|
|
| Total Establish. Employment |
|
|
| Consumption Deflator |
|
|
Indiana
The Indiana long run projection uses our June 2016 short-run control forecast as its basis. The resulting long-run projections for employment (covering 2020-2037) are quite close to our February 2016 projection. By the end of 2019 (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 2016 which covers the period 1997 to 2014. 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 lower than our previous projection.
The average growth rate of total Gross State Product over 2016-2037 is projected to be 2.47% per year. Over the same period total Indiana employment is projected to grow at a 0.63% rate, with employment in manufacturing falling at a 0.66% rate, and in non-manufacturing growing at a 0.86% rate.