Macro-Industrial Working Group 1: Preliminary ...€¦ · downward revision in growth. The U.S....

www.eia.gov U.S. Energy Information Administration Independent Statistics & Analysis

Macro-Industrial Working Group 1: Preliminary macroeconomic results

For Macro-Industrial Working Group December 3, 2015 | Washington, DC By Kay Smith, Macro Team Leader, Elizabeth Sendich, Russ Tarver, and Vipin Arora

DO NOT CITE OR DISTRIBUTE

Macro Team’s AEO2016 Briefing Plans • Review incorporation of completed AEO macroeconomic initiatives

– Revised commercial floorspace model using indices rather than levels so that EIA customers won’t have to incur extra data costs to compensate Dodge

– Enhancements of the industrial output model to incorporate additional detail of chemical, glass, and paper industries.

– The extension of the supply matrices allowing for changing patterns of industries meeting final demands throughout the projection period.

• Highlight upcoming initiatives – This year’s forecast on industry linkages through network analysis will inform future work on

analyzing supply matrices

– We plan on incorporating detailed industrial price movements which will come from the industrial model into the macro model’s incorporation of industrial wholesale prices.

• Short Description of Proposed Reference Case

Macro Analysis Team, MIWG1, December 3, 2015 2 DO NOT CITE OR DISTRIBUTE

Headline macro results

3 Macro Analysis Team, MIWG1, December 3, 2015 DO NOT CITE OR DISTRIBUTE

AEO2016’s GDP growth lower than last year’s projection, due to trade and productivity differences • Real GDP growth is 2.3% from 2014 to 2040, lower than AEO2015’s 2.4% growth as productivity

and export growth is 0.2% lower and 0.6%, respectively compared to AEO2015. – Foreign GDP growth of major trading partners and emerging countries is lower with emerging countries showing the largest

downward revision in growth. The U.S. dollar appreciates early and then depreciates removing most of the dollar’s impact on trade.

– Interest rates are lower as aggregate demand and supply shifted downwards with lower productivity gains. Commodity prices are also lower, contributing to lower emerging country growth prospects. Motor vehicle consumption and exports still show stronger growth compared to AEO2015, with capital goods (both investment and exports) shifting to lower expected growth. Consumption and income growth mirror the GDP growth, showing 0.1% lower growth in the upcoming projection.

– Growth in consumer prices are slightly higher

• The next 30 years will probably not be similar to the last 30 years. We expect slower GDP, disposable income and labor force growth, and higher export growth compared to the last 30 years. Projected productivity growth is 1.7 percent, about 0.3 percentage points lower than the previous 2.0% 30-year growth.

• Growth in productivity, population, and labor force explains most of long-run GDP growth.


Preliminary AEO2016 macroeconomic Reference Case shows slower growth compared to history

Source: AEO2016 preliminary runs

5 Macro Analysis Team, MIWG1, December 3, 2015

Previous 30 Year Growth Forecasted 26 Year Growth

Real GDP 2.6% 2.3%

Consumption 2.9% 2.4%

Investment 2.9% 2.9%

Government 1.6% 0.9%

Exports 5.9% 4.4%

Imports 5.4% 3.9%


AEO2016 projects slower growth due to trade and productivity



AEO2015 AEO2016

Real GDP 2.4% 2.3%

Consumption 2.4% 2.3%

Investment 2.9% 2.9%

Government 0.9% 0.9%

Exports 5.1% 4.4%

Imports 4.8% 3.9%

Real GDP: major trading partners 1.9% 1.8%

Real GDP: other trading partners 3.8% 3.5%

Output per hour in nonfarm business 2.0% 1.7%


average annual growth rate within period

GDP* led by trade and investment early, more even in the later half of the projection

Source: AEO2016 preliminary runs; *all components given are real


2.5% 2.5% 2.2%

2.9% 2.6%

2.3%

5.4%

4.3% 3.7%

4.5% 4.7% 4.2%

2.1%

0.6%

1.1%

2.1%

3.8%

2.3%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

1995-2010 2014-2025 2025-2040

GDP consumption

imports exports

government

investment


-6%

-4%

-2%

0%

2%

4%

6%

2013-2040

2013-2020

2020-2025

2025-2030

2030-2035

2035-2040

difference between real export and import average annual growth rate within period

Net export growth led initially by industrial supplies, with later growth coming from capital and consumer goods



all goods

industrial supplies

capital goods consumer goods

services


annual growth rate

Long-run Growth has been declining slightly over past several AEO forecasts



2.4%

0.5%

1.9%

2.4%

0.7%

2.0% 2.3%

0.7%

1.7%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

Real GDP Labor Force Output per Hour in NonfarmBusiness

AEO2016 AEO2015 .

AEO2014 .


Comparisons with other Projections • More similarity in long run growth across projections compared to short run

forecasts

• Relatively fewer long-run growth comparisons available

• The administration and CBO forecasts are updated twice yearly, the OASDI forecast is updated annually, and other forecasts update their long run projections quarterly


annual percent change

Real GDP forecasts

Source: AEO2016 preliminary runs, various listed


0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

2012 2016 2020 2024 2028 2032 2036 2040

AEO2015 AEO2016CBO August 2015 Global Insight August 2015Oxford October 2015 OASDI Aug. 2015OMB July 2015


millions of units 2014 = 1.0

Macro Analysis Team, MIWG1, December 3, 2015

Proposed Reference Case projections that other NEMS models use


12

0.0

0.5

1.0

1.5

2.0

2.5

total housing starts

single family

multi family

mobile homes

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

Sales of new light duty

Population aged 16 and over


utility bond interest rate percent

wholesale machinery and equipment price index 1982 = 1.0

Macro Analysis Team, MIWG1, December 3, 2015

Most energy supply NEMS modules use interest rates, population and disposable income


13

2

4

6

8

10

12

14

16

AEO2016

AEO2015

00.20.40.60.8

11.21.41.61.8

2

AEO2016

AEO2015


Detailed Industrial Output results


Further details of Industrial Output model changes for AEO2016 • Historical data updates

– physical-to-dollar values

– sources

• Dynamic IO extended through forecast

• Improved methodology from IHS in response to our request

• A new view of the economy (macro review already presented)


0

0.5

1

1.5

2

2.5

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

indexed nonmetallic minerals shipments 1992 = 1.0

Nonmetallic minerals (NAICS 327) growth driven primarily by building material demand and consumption

Source: IHS, AEO2015, AEO2016 preliminary runs


IHS2016 AEO2016

AEO2015 IHS2015

minor historical revisions


0

0.5

1

1.5

2

2.5

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

indexed primary metals shipments 1992 = 1.0

Primary metals (NAICS 331) grow slower in mid-term due to increasing prices, grow long-term because of durables demand



IHS2016

AEO2016

AEO2015 IHS2015 historical revisions


0

0.5

1

1.5

2

2.5

3

3.5

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

indexed metal-based durables shipments 1992 = 1.0

Metal-based durables (NAICS 332-6) driven by U.S. consumers and exports but mildly affected by long-term price increases



IHS2016

AEO2016

AEO2015

IHS2015


0

0.5

1

1.5

2

2.5

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

indexed bulk chemicals shipments 1992 = 1.0

Bulk chemicals (NAICS 3251-3) benefit from feedstock price spread and strong mid-term export growth



IHS2016

AEO2016

AEO2015 IHS2015 minor historical revisions


0

0.2

0.4

0.6

0.8

1

1.2

1.4

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

indexed pulp and paper shipments 1992 = 1.0

Pulp and paper* (NAICS 322) flat, growing demand for packaging and consumer products matched by strong competition

Source: IHS, AEO2015, AEO2016 preliminary runs; *disaggregation was done so this is now the sum of 3 sub-industries


IHS2016

AEO2016 AEO2015

IHS2015


15

17

19

21

23

25

27

29

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

million persons

Total industrial employment is higher in AEO2016 driven primarily by reduced productivity path



IHS2016

AEO2016

AEO2015

IHS2015


For more information

Kay Smith | 6-1132 | [email protected]

Elizabeth Sendich | 6-7145 | [email protected]


mailto:[email protected]?subject=AEO2016%20Preliminary%20Industrial%20Results

mailto:[email protected]

Appendix


0

0.5

1

1.5

2

2.5

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

indexed shipments 1992 = 1.0

Total industrial output* is above the last AEO but below this year’s IHS baseline

Source: IHS, AEO2015, AEO2016 preliminary runs; *includes agriculture (NAICS 11), construction (NAICS 23), mining (NAICS 21), and manufacturing (NAICS 33-31)


2014-40 CAGRs 1.93% 1.95% 1.88% 1.79%

IHS2016 AEO2016

AEO2015 IHS2015


0

0.5

1

1.5

2

2.5

3

3.5

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

indexed shipments 1992 = 1.0

Service sector (NAICS 42-92) is nearly 83% of the economy so reductions in output have a large effect on total output



IHS2016

AEO2016 AEO2015 IHS2015

historical revisions as well


0

1

2

3

4

5

6

7

2005 2010 2015 2020 2025 2030 2035 2040

indexed price 1982 = 1.0

EIA energy prices differ from IHS



NG

electricity

crude

EIA IHS


0

20

40

60

80

100

120

50100150200250300350400450500

2005 2010 2015 2020 2025 2030 2035 2040

naphtha price cents/gallon

ethane price cents/gallon

Energy feedstock prices diverge



EIA IHS


1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2005 2010 2015 2020 2025 2030 2035 2040

indexed price 1982 = 1.0

Commodity prices also important to industrial producers, as consumers and for competitiveness



metals

MBD

paper EIA IHS


0

0.5

1

1.5

2

2.5

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

indexed construction output 1992 = 1.0

Construction (NAICS 23) includes growth in infrastructure, commercial buildings, and homes



IHS2016

AEO2016

AEO2015 IHS2015


0.5

0.7

0.9

1.1

1.3

1.5

1.7

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

indexed agriculture shipments 1992 = 1.0

Agriculture (NAICS 11)



IHS2016

AEO2016

AEO2015 IHS2015


0

0.5

1

1.5

2

2.5

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

indexed iron and steel shipments 1992 = 1.0

Iron and steel (NAICS 3311-2)



IHS2016

AEO2016

AEO2015

IHS2015


0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

indexed aluminum shipments 1992 = 1.0

Aluminum (NAICS 3313)



IHS2016

AEO2016

AEO2015

IHS2015


00.20.40.60.8

11.21.41.61.8

2

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

indexed cement shipments 1992 = 1.0

Cement (NAICS 32731)



IHS2016 AEO2016

AEO2015 IHS2015


0

0.5

1

1.5

2

2.5

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

indexed glass shipments 1992 = 1.0

Glass (NAICS 3272)



IHS2016

AEO2016

AEO2015 IHS2015


0

0.5

1

1.5

2

2.5

3

3.5

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

indexed organic chemicals shipments 1992 = 1.0

Organic chemicals (NAICS 32511,9)



IHS2016

AEO2016

AEO2015 IHS2015


0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

indexed agricultural chemicals shipments 1992 = 1.0

Agricultural chemicals (NAICS 3253)



IHS2016 AEO2016

AEO2015

IHS2015


0

0.5

1

1.5

2

2.5

3

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

indexed other chemicals shipments 1992 = 1.0

Other chemicals (NAICS 3254-9)



IHS2016

AEO2016

AEO2015

IHS2015


Macro-Industrial Working Group 1: Preliminary ...€¦ · downward revision in growth. The U.S....

Documents

Transcript of Macro-Industrial Working Group 1: Preliminary ...€¦ · downward revision in growth. The U.S....