Economic Outlook Lake County Chamber of Commerce William Strauss - - PowerPoint PPT Presentation

▶
economic outlook
SMART_READER_LITE
LIVE PREVIEW

Economic Outlook Lake County Chamber of Commerce William Strauss - - PowerPoint PPT Presentation

Feb 25, 2023 355 likes •890 views

Economic Outlook Lake County Chamber of Commerce William Strauss Mundelein, IL Senior Economist January 18, 2018 and Economic Advisor Federal Reserve Bank of Chicago What I said last year The outlook is for the U.S. economy to expand at

slide-1
SLIDE 1

Economic Outlook

William Strauss Senior Economist and Economic Advisor Federal Reserve Bank of Chicago Lake County Chamber of Commerce Mundelein, IL January 18, 2018

slide-2
SLIDE 2
  • The outlook is for the U.S. economy to expand at a

pace around trend in 2017

What I said last year

  • Employment growth is expected to slow with the

unemployment rate remaining below the natural rate

  • Disappearing slack in the economy will lead to a gradual

rising inflation rate

  • Light vehicle sales are anticipated to edge lower
  • The housing market is anticipated to continue to improve

through 2017

slide-3
SLIDE 3

GDP expanded by 2.3% over the past year

  • 10
  • 8
  • 6
  • 4
  • 2

2 4 6 8

1990'91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Real gross domestic product

percent

Quarterly change (saar) Percent change from a year earlier

slide-4
SLIDE 4
  • 5.0
  • 4.0
  • 3.0
  • 2.0
  • 1.0

0.0 1.0 2.0

1990 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00'01'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 Monthly

Chicago Fed National Activity Index

Three month average

The Chicago Fed National Activity Index 3-month has moved above zero

slide-5
SLIDE 5
  • 5
  • 4
  • 3
  • 2
  • 1

1 2

1990 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00'01'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 Midwest Economy Index (MEI)

Midwest Economy Index

Relative MEI

The Midwest economy is growing just above trend but a bit worse than the national economy

slide-6
SLIDE 6

The real value of the stock market has reached new highs

50 100 150 200 250 300 350 400 450

1990'91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Real S&P 500 stock index

Index: 1990 = 100

slide-7
SLIDE 7

The Federal Open Market Committee (FOMC) expects GDP to grow slightly above trend this year and then around trend in 2019 and 2020

  • 5
  • 4
  • 3
  • 2
  • 1

1 2 3 4 5 6

1990'91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Real gross domestic product

percent change from a yearearlier FOMC

FOMC Central Tendency (December 2017) 2017 2.4 – 2.5 2018 2.2 – 2.6 2019 1.9 – 2.3 2020 1.7 – 2.0 Longer run 1.8 – 1.9

slide-8
SLIDE 8

95 100 105 110 115 120 125 130 135 140 95 100 105 110 115 120 125 130 135 140

  • 8
  • 6
  • 4
  • 2

2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32

Business cycle recovery path

index - business cycle trough = 100

1981-82 2008-09 1974-75 quarters before trough quarters after trough

The path of the current recovery is restrained compared with past deep recession recovery cycles

average annualized growth: 4.3% average annualized growth: 4.3% average annualized growth: 2.2%

slide-9
SLIDE 9

While the probability of recession within the next 6 months has eased

10 20 30 40 50 60

1990 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06'07 '08'09 '10 '11 '12 '13 '14 '15 '16 '17

Probablility of a recession - two quarters ahead (Survey of Professional Forecasters)

percent

slide-10
SLIDE 10
  • 7
  • 6
  • 5
  • 4
  • 3
  • 2
  • 1

1 2 3 4

1990'91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Total employment

percent

Quarterly change (saar) Percent change from a year earlier

Employment increased by just over 2 million jobs in 2017

slide-11
SLIDE 11

Illinois’ employment growth is well below the national average

  • 10
  • 8
  • 6
  • 4
  • 2

2 4 6

1990 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 MI

Total employment

percent change from a year earlier

US IL IN IA WI

slide-12
SLIDE 12

3 4 5 6 7 8 9 10 11

1990 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00'01'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Unemployment rate

percent

The unemployment rate has fallen to 4.1%

slide-13
SLIDE 13

Illinois’ unemployment rate is well above the nation’s

2 4 6 8 10 12 14 16

1990 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 MI

Unemployment rate

percent

US IL IN IA WI

slide-14
SLIDE 14

The share of those unemployed more than 6 months remains significantly high

5 10 15 20 25 30 35 40 45 50

1950 '55 '60 '65 '70 '75 '80 '85 '90 '95 '00 '05 '10 '15

Unemployed for 27 weeks or more

percent

slide-15
SLIDE 15

Employees working part time for economic reasons is close to normal

1 2 3 4 5 6

1994'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Unemploymentrate - part-time workers for economic reasons (3 month moving average)

percent

slide-16
SLIDE 16

Wages and benefit costs continue to increase at a very slow rate, although it may finally be picking up some its pace

1 2 3 4 5 6 7 8

1990'91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Employment cost index

percent change from year ago

benefit costs wages and salaries

slide-17
SLIDE 17

3 4 5 6 7 8 9 10 11

1990'91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Unemployment rate

percent FOMC

The FOMC forecasts that the unemployment rate will be below the natural rate through 2020

FOMC Central Tendency (December 2017) 2018 3.7 – 4.0 2019 3.6 – 4.0 2020 3.6 – 4.2 Longer run 4.4 – 4.7

slide-18
SLIDE 18

Slow productivity growth helps explain why relatively strong employment growth has not translated into higher wages

  • 1

1 2 3 4 5

1950 '55 '60 '65 '70 '75 '80 '85 '90 '95 '00 '05 '10 '15

Productivty

percent change (20-qtr rate)

slide-19
SLIDE 19

A large part of the weakness in productivity growth has been the weak pace of investment, although it increased at a solid pace during 2017

  • 30
  • 20
  • 10

10 20

1990'91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Real private nonresidential fixed investment

percent

Quarterly change (saar) Percent change from a year earlier

slide-20
SLIDE 20

This may help explain the productivity growth improvement over the past year

  • 3
  • 2
  • 1

1 2 3 4 5 6 7 8

1950 '55 '60 '65 '70 '75 '80 '85 '90 '95 '00 '05 '10 '15

Productivty

percent change from a year earlier

slide-21
SLIDE 21
  • 2
  • 1

1 2 3 4 5 6

1990 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Personal consumption expenditure - chain price index

percent change from a year earlier

Inflation has been moving close to the Fed target of 2%

slide-22
SLIDE 22

20 40 60 80 100 120 140 160

1970 '75 '80 '85 '90 '95 '00 '05 '10 '15

Real West Texas Intermediate oil price

dollars per barrel, 2016 dollars

In large part inflation has been following the pattern of energy prices

slide-23
SLIDE 23

The rig count has been moving higher

500 1,000 1,500 2,000 2,500

1990 '91'92'93'94'95'96'97'98'99'00'01'02'03'04'05'06'07'08'09'10'11'12'13'14'15'16'17

U.S. rig count

slide-24
SLIDE 24

2 4 6 8 10 12 14 16

1994'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Real natural gas price

dollars per mmbtu, 2016 dollars

Natural gas prices remain low

slide-25
SLIDE 25

3 4 5 6 7 8 9 10

1960 '65 '70 '75 '80 '85 '90 '95 '00 '05 '10 '15

Energy goods and services expenditures as a share of total consumption

percent

Expenditures on energy are well below the historical average

3 4 5 6 7 8 9 10

1960 '65 '70 '75 '80 '85 '90 '95 '00 '05 '10 '15

Energy goods and services expenditures as a share of total consumption

percent

60s 70s 80s 90s 00s 1960-2017 10s

slide-26
SLIDE 26

1 2 3 4 5

1990 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Personal consumption expenditure - less food and energy - chain price index

percent change from a year earlier

Removing the volatile food and energy components from the PCE, “core” inflation remains low

slide-27
SLIDE 27

The FOMC anticipates that PCE inflation will be around its two percent target beginning this year

  • 2
  • 1

1 2 3 4 5 6

1990 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Personal consumption expenditure - chain price index

percent change from a year earlier FOMC

FOMC Central Tendency (December 2017) 2017 1.6 – 1.7 2018 1.7 – 1.9 2019 2.0 2020 2.0 – 2.1 Longer run 2.0

slide-28
SLIDE 28

1 2 3 4 5

1990 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Personal consumption expenditure - less food and energy - chain price index

percent change from a year earlier FOMC

The FOMC anticipates that “core” PCE inflation will get close to two percent this year

FOMC Central Tendency (December 2017) 2017 1.5 2018 1.7 – 1.9 2019 2.0 2020 2.0 – 2.1

slide-29
SLIDE 29

Inflation Exchange Rate Real GDP % change Against Interest Rates % change Annual US Dollar 3-Month Annual Consumer Prices End of Year End of Year 2017 2018 2019 2017 2018 2019 2018 2019 2018 2019 United States 1.8 2.7 2.4 2.1 2.1 2.2

  • 1.76

2.44 Canada 2.9 2.2 1.9 1.6 1.9 2.0 1.27 1.26 1.78 2.16 Mexico 2.1 2.1 2.4 5.9 4.2 3.8 19.01 18.66 6.51 5.42 Japan 1.6 1.4 1.1 0.5 0.8 1.1 112.8 111.8

  • 0.02
  • 0.01

South Korea 3.1 3.0 2.7 2.0 1.9 2.0 1,096 1,096 1.66 1.86 United Kingdom 1.5 1.4 1.3 2.7 2.5 2.2 1.34 1.35 0.70 0.95 Germany 2.4 2.3 1.9 1.7 1.7 1.8 1.20 1.22

  • 0.17

0.07 France 1.8 1.9 1.7 1.1 1.3 1.4 1.20 1.22

  • 0.17

0.07 Euro Zone 2.2 2.2 1.9 1.5 1.5 1.6 1.20 1.22

  • 0.17

0.07 Brazil 0.8 2.3 2.7 3.5 3.7 4.2 3.35 3.35 7.02 7.11 Russia 1.8 1.9 1.7 3.9 3.8 4.2 59.8 59.9 7.99 7.94 China 6.6 6.3 6.1 1.7 2.3 2.4 6.66 6.74 3.76 3.77 India 6.6 7.2 7.5 3.4 4.6 4.8 65.0 66.0 6.41 6.56 Blue Chip Economic Indicators Forecast January 10, 2018

Blue Chip International Consensus Forecasts

slide-30
SLIDE 30

Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Global 52.7 53.0 53.0 52.7 52.6 52.6 52.7 53.1 53.3 53.5 54.1 54.5 United States 55.0 54.2 53.3 52.8 52.7 52.0 53.3 52.8 53.1 54.6 53.9 55.1 Canada 53.5 54.7 55.5 55.9 55.1 54.7 55.5 54.6 55.0 54.3 54.4 54.7 Mexico 50.8 50.6 51.5 50.7 51.2 52.3 51.2 52.2 52.8 49.2 52.4 51.7 Eurozone 55.2 55.4 56.2 56.7 57.0 57.4 56.6 57.4 58.1 58.5 60.1 60.6 Germany 56.4 56.8 58.3 58.2 59.5 59.6 58.1 59.3 60.6 60.6 62.5 63.3 France 53.6 52.2 53.3 55.1 53.8 54.8 54.9 55.8 56.1 56.1 57.7 58.8 Italy 53.0 55.0 55.7 56.2 55.1 55.2 55.1 56.3 56.3 57.8 58.3 57.4 Spain 55.6 54.8 53.9 54.5 55.4 54.7 54.0 52.4 54.3 55.8 56.1 55.8 UK 55.7 54.5 54.2 57.3 56.7 54.2 55.3 56.7 56.0 56.3 58.2 56.3 Russia 54.7 52.5 52.4 50.8 52.4 50.3 52.7 51.6 51.9 51.1 51.5 52.0 Japan 52.7 53.3 52.4 52.7 53.1 52.4 52.1 52.2 52.9 52.8 53.6 54.0 China 51.0 51.7 51.2 50.3 49.6 50.4 51.1 51.6 51.0 51.0 50.8 51.5 India 50.4 50.7 52.5 52.5 51.6 50.9 47.9 51.2 51.2 50.3 52.6 54.7 Brazil 44.0 46.9 49.6 50.1 52.0 50.5 50.0 50.9 50.9 51.2 53.5 52.4

Manufacturers’ Purchasing Managers Indexes

slide-31
SLIDE 31

Over the past couple of years, the real trade-weighted dollar increased by nearly 22%, but since early 2017 it has fallen over 6%

80 85 90 95 100 105 110 115

1990 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00'01'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Trade-weighted exchange value of the U.S. dollar (real)

index: March 1973=100

slide-32
SLIDE 32

62 64 66 68 70 72 74 76

1965 '70 '75 '80 '85 '90 '95 '00 '05 '10 '15 United States

Homeownership rate

percent

Midwest

The forecast calls for a continuation

  • f the very gradual recovery in housing

500 1,000 1,500 2,000 2,500

1980 '85 '90 '95 '00 '05 '10 '15

Housing starts

thousands

Blue Chip Housing Starts Forecast (thousands) Actual Forecast 2017 2018 2019 1,207 1,274 1,332

slide-33
SLIDE 33

Manufacturing output is increasing after being unchanged for the past couple of years

  • 25
  • 20
  • 15
  • 10
  • 5

5 10 15

1990 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06'07 '08'09 '10 '11 '12 '13 '14 '15 '16 '17

Industrial production - manufacturing

percent

Quarterly change (saar) Percent change from a year earlier

slide-34
SLIDE 34

62 64 66 68 70 72 74 76 78 80 82 84 86

1990 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00'01'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Capacity utilization - manufacturing

percent

Capacity utilization has been moving higher over the past year, but is still below full utilization

slide-35
SLIDE 35

The Midwest Economy Index’s manufacturing component is well above its trend and doing relatively better than the nation

  • 2.0
  • 1.5
  • 1.0
  • 0.5

0.0 0.5 1.0

1990 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00'01'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 Midwest Economy Index (MEI)

Midwest Economy Index: Manufacturing

Relative MEI

slide-36
SLIDE 36

After setting a record in 2016, light vehicles sales fell by 1.4%, although it finished the year on a strong note

8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

1990 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00'01'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Light vehicle sales

millions of units (saar)

slide-37
SLIDE 37

2017 light truck sales were 5.0% higher, while passenger car sales are 11.4% lower

3 4 5 6 7 8 9 10 11 12 13

1990 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00'01'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Passenger car and light truck sales

millions of units (saar)

light trucks passenger cars

slide-38
SLIDE 38

Light truck market share set a record high in December

30 35 40 45 50 55 60 65 70

1990 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00'01'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Light truck share of light vehicle market sales

percent

slide-39
SLIDE 39

Alternative powered vehicles (including hybrids) are a very small fraction of total vehicle sales

10 20 30 40 50 60 70 80 90 100

1990 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00'01'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Power-Type

percent of total sales

Alternative Gasoline and Diesel

slide-40
SLIDE 40

Alternative powered vehicles (including hybrids) market share remains very low

1 2 3 4 5

1990 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00'01'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Alternative Powered Vehicles

percent of total sales

slide-41
SLIDE 41

Vehicle sales are anticipated to decline this year and edge lower next year

10 11 12 13 14 15 16 17 18

1980 '85 '90 '95 '00 '05 '10 '15

Vehicle sales

millions of units

Blue Chip Light-Vehicle Sales Forecast Actual Forecast 2017 2018 2019 17.1 17.0 16.7

slide-42
SLIDE 42

Current 3 Month Moving Average Growth is: Above Trend and Accerating Above Trend and Decelerating Below Trend and Accelerating Below Trend and Decelerating Contracting but Improving Contracting and Deteriorating 2012 2013 2014 2015 2016 2017 Manufacturing 1.0% Wood Products 3.6% Nonmetallic Mineral Products 2.9% Primary Metals

  • 0.8%

Fabricated Metal Products 0.5% Machinery

  • 0.4%

Computer and Electronic Components 2.4% Electrical Eqpt, Appliances & Components 1.3% Motor Vehicles and Parts 4.7% Aerospace & Misc. Transport Equip 0.4% Furniture and Related Products 0.5% Miscellaneous Durable Goods

  • 1.4%

Food, Beverages, and Tobacco 1.5% Textile and Product Mills 1.4% Apparel and Leather Goods

  • 5.5%

Paper

  • 1.0%

Printing and Related Support Activities

  • 0.3%

Chemicals 0.3% Petroleum and Coal Products 0.4% Plastics and Rubber Products 1.1%

The industrial sector output growth has been improving over the past several months

Manufacturing Industries Activity Chart

Growth (3-month moving average) compared with the most recent 5-year trend

slide-43
SLIDE 43

30 35 40 45 50 55 60 65 70

1990 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00'01'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 Chicago

Purchasing managers' index - composite

net percent reporting increases

United States

The supply managers’ composite index has surged over the past year

slide-44
SLIDE 44

Industrial production is forecast to improve at a pace slightly below its historical rate this year

  • 25
  • 20
  • 15
  • 10
  • 5

5 10

2000 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19

Total industrial production

percent

Quarterly change (saar) Percent change from a year earlier Q4-2017 Blue Chip IP Forecast Actual Forecast 2017 2018 2019 3.5 2.2 2.3

slide-45
SLIDE 45

2 4 6 8 10 12 14 16 18

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Credit spreads between Corporate High Yield and Corporate Aaa

percent

Credit spreads between Corporate High Yield securities and Corporate Aaa securities remains very low

slide-46
SLIDE 46

The yield curve remains well above zero

  • 1

1 2 3 4

1990 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00'01'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Yield curve - 10-year Treasury note yield minus 3-month Treasury bill yield

percent

slide-47
SLIDE 47

Blue Chip expects the yield curve to continue to flatten through next year, but not invert

  • 1

1 2 3 4

2000 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19

10-year T-Note to 3-month T-Bill spread

percent

Q4 -2017

percent

Blue Chip Forecast

slide-48
SLIDE 48

1 2 3 4 5 6 7 8 9

1990 '91 '92 '93'94'95'96 '97 '98 '99 '00 '01 '02'03'04 '05 '06 '07 '08 '09'10'11'12 '13 '14 '15 '16 '17

Fed Funds rate

percent

The Federal Reserve increased the Federal Funds rate by 1.25% since December 2015

slide-49
SLIDE 49

1 2 3 4 5 6 7 8 9

1990'91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Target Federal Funds Rate

percent FOMC

The Federal Funds Rate is expected to be around the neutral rate by the end of 2019

FOMC Central Tendency (December 2017) 2018 1.9 – 2.4 2019 2.4 – 3.1 2020 2.6 – 3.1 Longer run 2.8 – 3.0

slide-50
SLIDE 50

500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500

Assets of the Federal Reserve

Billions of dollars

Term Auction Credit

Securities Held Outright

Central Bank Swaps Maiden Lane II & III Commercial Paper Facility

2007 2008 2009

Term Asset-Backed Securities Loan Facility AIG Support Maiden Lane

2010 2011 2012 2013 2014 2015 2016 2017

The Fed’s balance sheet has remained flat for several years and the Fed began reducing it in October 2017

slide-51
SLIDE 51
  • The outlook is for the U.S. economy to expand at a pace

somewhat above trend in 2018 and around trend in 2019 and 2020

Summary

  • Employment is expected to rise moderately with the

unemployment rate remaining little changed and very low

  • Inflation is forecast rise to the Fed’s Inflation target this year
  • Vehicle sales are anticipated to edge lower this year
  • Manufacturing output is expected to increase at a rate

just below trend in 2018

  • Housing is predicted to improve at a modest pace
slide-52
SLIDE 52

www.chicagofed.org www.federalreserve.gov