2014 Economic Forecast
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2014 Economic Forecast
Southern Oregon University Economic Forecasting Team
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Table of Contents
• How We Got Here• Forecast Methodology• Economic Sectors With Assumptions• Comparisons With Other Forecasts• Questions
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What is Economic Forecasting
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How We Got Here
Housing bubble
2008 Recession
Increased money
supply/ low interest
rates
Fiscal stimulus policies enacted
2009- Recession technically
ends
Increased income
inequality (Top 1%)
Weak economy/
poor confidence
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GDP 2007-2014
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Forecasting Model: Fairmodel• Determines interactions throughout economic sectors• Quantifies equations• Uses equations to explain interactions
Created by Dr. Ray Fair, Yale University
Forecast Methodology
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Economic Research
Model
Expert Judgment
Forecast
Process
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Economic Sectors
• Fiscal Policy• Monetary Policy• International Economic Factors• Consumer Spending• Business Investment • Housing• Employment
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• Government Spending/ Taxes Transfer Payments Rates
Decrease
• Government Shutdown Predicted 2015
• Congressional Paralysis
Federal Government Spending & Taxes
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Historical Data SOU Forecast
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• State & Local Spending = 20% of GDP• Balanced Budget (no deficit spending)• Surpluses + Increased Revenues => Increase in State and Local
Government Spending.
State & Local Governmental Spending
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Historical Data SOU Forecast
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Monetary Policy
• Loose Monetary Policy
• Fed Adjusts Money Supply
• Near 0% 3-month Treasury Bill Rates
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Historical Data SOU Forecast
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• Small Decrease In Oil Prices
International Economic Factors
• Stable Exchange Rates For the Near Future
• Slight Decrease Beginning in 2015
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Historical Data SOU Forecast
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Historical Data SOU forecast
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ConsumerConfidence
Increased Demand
Increased Production
More Jobs
Consumer Spending
• Low Consumer Confidence
• Slow Increase In Consumer Spending
• Consumption Follows GDP
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Historical Data SOU Forecast
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• Growing Investment
Business Investment
High Consumer Demand
Low Interest Rates
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Historical Data SOU Forecast
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• Large Surplus of Houses After Recession• Sluggish Market Growth Until 2014• Forecasted Increases Post 2014
Construction
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Historical Data SOU Forecast
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• Growing Employment• Continued Improvement in Labor Markets• Unemployment Rate Expected at 6.4%-2016
Employment
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Historical Data
SOU Forecast
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Summary
• Increasing Growth Rates in All Sectors
• Government Shutdown in 2015 Slows Growth, but Economy Will Rebound Quickly
• GDP Growth Increasing to an Average of 3% Annualy
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Historical Data
SOU Forecast
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Forecast Comparison
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Forecast Comparison
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Forecast Comparison
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o Emily Starbucko Wes Wadeo Jaeseok Leeo Kyudae Leeo Benjamin Bennetto Azhar Khano Stephanie Keaveneyo Andrei Bica
o Jordan Browne -Moore
o Brad Johnsono Alex Godvino William Howardo Nolan Fincher o Zachary Hesso Frederic Geiger
Forecast Team
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Questions?