Budget & Economic Forecast
Council of Economic Advisors’ Statement
Minnesota’s Council of Economic Advisors (CEA) has reviewed Global Insight’s (GI’s)
projections for U.S. economic growth. They noted that since November, GI has slightly
raised their growth expectations for each year between 2013 and 2016 and left unchanged
their expectations for 2017. In November, GI’s baseline had incorporated the Bureau of
Economic Analysis’ (BEA’s) second estimate of third quarter 2013 real GDP growth of
2.8 percent (annual rate). The BEA has since revised that value sharply upward to 4.1
percent growth. In addition, BEA has now released an advance estimate of fourth quarter
2013 real GDP growth of 3.2 percent. That release accompanied a report of fourth quarter
growth in final sales of 2.8 percent, the fastest in nearly two years. Finally, passage in
December of the Bipartisan Budget Act of 2013 and in January of the 2014 Omnibus
Appropriations bill provide some relief from the federal spending sequester and all but
eliminate the threat of another government shutdown this year.
Global Insight’s baseline is similar to that of other macroeconomic forecasters. The Blue
Chip Consensus forecast of 2.9 percent growth in 2014 exceeds GI’s expectation of 2.7
percent. For 2015, GI expects 3.3 percent growth compared to 3.0 percent growth in the
Blue Chip Consensus forecast. Over 2014-2017, GI’s forecast follows a similar pattern to
that of the Congressional Budget Office (CBO), with growth accelerating in 2014 and
2015, staying roughly steady in 2016, and slowing in 2017.
U.S. Real GDP Forecast Scenarios
Annual Percent Change
0
1
2
3
4
5
4.5
4.1
3.8
3.3
2.7
1.8
1.1
3.4
3.1
2.7
2.3
3.7
Optimistic
Baseline
Pessimistic
February 2014
2014
Source: IHS Global Insight (GI)
Minnesota’s Council of Economic Advisors agreed that Global Insight’s expectations for
U.S. economic growth were reasonable, and the forecast risks are balanced between the
potential for faster growth and the threat of slower growth.
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2015
2016
2017