### Appendix D1 0-5

Economic Report to the Metro Council 2000-2030 Regional Forecast for the Portland-Vancouver Metropolitan Area (Data Resource Center, Metro, December 2002 final draft)

Please contact DEQ fora copy ofthis appendix

Marianne Fitzgerald Air Quality Division (503) 229-5946 fitzgerald.marianne@deq.state.or.us

Adopted 

### by the EQC 

### 02/22/07 

### 50

# ~


# ... o a. 

# cu

METRO People Places Open Spaces 

# Economic Report to the Metro Council

2000-2030 Regional Forecast
• Employment
• Population
• Housing
• Income for Portland-Vancouver Metropolitan Area

Released: March 2002 Revised: September 2002



# Proposed Final DRAFT

Mike Burton Executive Officer
Planning Department Andy Cotugno Director
Prepared by: Data Resource Center Dennis Vee Chief EconomistJ. N 

### Metro Planning that protects the nature of
ourregion

"It's betterto plan for growth than ignore it."
Planning is Metro's top job. Metro provides a regional forum where cities, counties and citizens
can resolve issues related to growth

­ things such as protecting streams and open spaces, transportation and land-use choices and increasing the region's recycling efforts. Open spaces, salmon runs and forests don't stop at city limits or county lines. Planning ahead for a healthy environment and stable economy supports livable communities now and protects the nature of our region for the future.

Metro serves 1.3 million people who live in Clackamas, Multnomah and Washington 

# - counties and the 

### 24 cities in the Portland metropolitan area. Metro provides transportation and land-use planning services garbage disposal and recycling and waste reduction programs.

Metro manages regional parks and greenspaces and the Oregon Zoo. It also oversees operation ofthe Oregon Convention Center, Civic Stadium, the Portland Center forthe Performing Arts and the Portland Metropolitan Exposition (Expo) Center, all managed by the Metropolitan Exposition-Recreation Commission.

For more information about Metro orto schedule a speakerfora community group, call (503) 797-1510 (public affairs) or (503) 797-1540 (council).



### Metro's web site: www.metro-region.org



# -

# Table of Contents

Executive Summary Introduction

....................................................................................................................... 1 SummaryRegional Forecast Tables: High, Mid & Low

................................................. 3 SummaryRegional Forecast, Region, UGB, and UGRNeed

.......................................... 4

2000-2030 RegionalForecast Introduction

....................................................................................................................... 5 ContextofthisForecast and PastRegional Forecasts

...................................................... 6 Policy and Economic Assumptions

.................................................................................. 6 Alternate RegionalForecasts

............................................................................................ 8 ForecastMethodology Summary

...................................................................................... 9 Report Organization

........................................................................................................ 10

2000-2030 Regional Forecast U.S. Economy in Review

................................................................................................ 13

Portland-Vancouver Economic Forecast

AlternateRegionalGrowth Scenarios National Forecast Overview

........................................................................................... 15 Global Setting

................................................................................................................. 17 Long-range U.S. Macroeconomic Outlook

......................................................................20

Recent Trends

................................................................................................................. 23 Regional Expectations

.................................................................................................... 24 Forecast Summary for the Portland-VancouverRegion

................................................. 25 Comparison ofPopulation and Employment Demand Projections

................................ 26 Regional Population Trends

............................................................................................ 26 IndustryDetails and Long-term Forecast Outlook

......................................................... 28

Introduction

..................................................................................................................... 35 Regional Growth Alternatives

........................................................................................ 35 U.S. Economic and Demographic SummaryDetails

...................................................... 40 EarlyRisks to the Regional Forecast

.............................................................................. 40
Appendix A: Regional EconomicForecast Details Table 1: Total Population ofSelected Metropolitan

Areas, Counties, States and U.S

................................................................................. A-I Table 2: Components ofPopulation Change for the Portland-Vancouver, OR-WA

Multnomah, Clackamas, Washington, Yamhill and Clark counties)

......................... A-2 Table 3: Population byAge for the Portland-Vancouver, OR-

### W A

.............................. A-3 Table 4: Households byAge ofHead for the Portland-Vancouver, OR-WA

...............A-4 Table 5: Employment for Portland-Vancouver, OR-WA and U.S

............................... A-5 Table 6: Total EmploymentPortland-Vancouver, OR-W A

......................................... A-9 Table 7: Wage and SalaryEmployment Portland-Vancouver, OR-WA

.................... A-tO Table 8: Total Employment for Yamhill County, OR

................................................ A-It Table 9: Wage and Salary Employment for Yamhill County, OR

............................. A-12

### Table 10: Personal Incomeby Major Source,**Portland~Vancouver, OR~WA**  

### ............ A-13 Table 11: Personal Income, Total and Per Capita, Portland-Vancouver, OR-W A

ConsumerPrice Index, All Earners

......................................................................... A-14 Table 12: Average Weeklyand Hourly Earnings, Average WorkHours Per Week,

Manufacturing Industries Only

................................................................................ A-IS Table 13: Residential Authorized Permits, Housing Price Statistics

...........................A-16 Table 14: Alternate Forecasts for Portland-Vancouver, OR-WA.

.............................. A-17 Table 6: Total EmploymentPortland-Vancouver, OR-WA

......................................... A-9 Table 7: Wage and Salary Employment Portland-Vancouver, OR-WA

.................... A-1O Table 8: Total Employmentfor Yamhill County, OR

................................................ A-II Table 15: EmploymentAssumptions

By StandardizedMetroscope Industry Classifications

............................................ A-25
Appendix B: U.S. EconomicForecastDetails DRI-WEFA,TheU.S. Economy, The2S-YearFocns, WinterIssue2002 Part 1 : Forecast Overview

.................................................................................................. 1 Part 2: TheFour Scenarios: The TrendProjection

......................................................... 11 Part 3: The Four Scenarios: The Optimistic and PessimisticProjections

....................... 35
(Note: DRI-WEFAproduces a fourth scenario known as the "cyclicalprojection". This scenario is not used in the production oftheMetroRegional Forecast)
AppendixC: ForecastReview Committees
AppendixD: ModelDocumentation Summary Paperdelivered atthe Pacific Northwest Regional Economic Conference, 1998 

# -

# Executive Summary 2000-2030 Regional Forecast

The National View: Winter 2002

• It's official- the U.S. is in arecession since March 2001, according to the private economicthink tank: National Bureau ofEconomic Research.

• There's little worry ofinflation. Interest rates are low; but so areconsumerconfidence and business activity. TheNational Association ofPurchasing Manager's Index (NAPM) still points to contraction. Low confidence and downbeat industrial output spell negative GDP growth for the U.S for the first partof2002.

• After a year, the recession may be comingto an end

... 1. Consumer confidence is on the rise

- but still under pre-recession levels 2. NAPM index is onthe rise too

- the level is presently near 50

- indicative ofpositive groV\rthjust around the comer 3. Surplus capacity utilization and industrial production are showing early signs ofacceleration 4. Very favorable interestrates for stimulating additional domestic investments which could lead to a recovery in computers and software production 5. Timely tax

### cuts priorto 9111 and huge federal spending are stimulating GDP

Favorable Economic Factors Unfavorable Economic Factors

• Early & deep interest rate cuts • Vulnerable capital goods cycle weak domestic
• Unusuallywell timed Federal spending initiatives investment outlook and tax cuts • Global recession
• Low fuel prices • Weak U.S. exports
• Decline in U.S, imports • Weak state & local budgets

• Steady housing demand • Poor business profits

• Strong consumer auto purchases •**Inv~lf\tofloa** ovOl'3toekoo 

### The Regional Perspective.

• Theregion is in its worst conditionin over a decade.

• The average number ofunemployedrose to near60,000 with peakunemploymentreaching 75,000 in November and December 2001.

• The manufacturing sector is in full retreat

- that's not goodnews for a region that has proportionally

more industrialjobsthan other areas ofthe country.

• Regional mainstays hightech, transportation equipment, machinery, metals, and food processors, are hurting. Quarterlyjob figures in manufacturing are off6 percentfrom over a year ago on a seasonalized annual basis.

• A weak Pacific Rim has also hurtregional exports. Japan is in its 3rd

### recession in a decade.

• Despite weak economic fundamentals, population and migration are still holding up well. Population

rose 1.5 percent last year, which is below historical norms, butthat figure is still high comparedwith growth inthe early halfofthe 1980's.



### When can we expect the Portland region to rebound?

• The good news is: Probably by mid-summer. But at the startthe reboundwill be slow

...so the region probably won't feel like its outofthe recession until the first quarter of2003.

• The U.S. should bewell on its way to a recovery, so theregion can count on a boost from higherU.S. business activity. High-tech will be on its way up, and that shouldhelp fuel regional growth.

• A mild recovery overseas

- especially in Japan

- will aid in bolstering exports and the regional economy, too.

# Executive Summary

- 

# continued
2000-2030 Regional Forecast

Regional Long-term Forecast Outlook: 2000 to 2030

• Regional forecast presumes policy neutral position. Policies in effect today will be in force in the future. Regulation ofthe land supply assumed to not restrict underlying market growth trends.

• Population growth in lasthalfof 1990'sgrew more rapidly than expected. Nearly 40,000 more residents by 2000than previous 1995-2020 Regional Forecastl

.



### • 20 year popUlation expectedto rise 1.6% A.P.R. as compared to 2.0 percent annual average since 1970.

• Population in 2022 expectedto hit 2.65 millionresidents living in the region. 5 county region expectedto reach 3 million mark by 2030. Populationtable (left) shows growth tapering offduring Population Avg. 

# • the forecast to 1.4 % peryearbetween 2010to 2030. change in 

### Growth

decade in decade Migrationrepresents one-halfoffuture popUlation growth. 

# • 1850-60 16,046 9.2% Despitemore people in this forecast, the number of 

# • households orthehousing unit needforecast is actually 1870-80 25,123 6.3% 30,000 lower thanthe previousregional forecast. 1880-90 69,510 8.5% 1890-00 39,891 2.8% Household size was revised upwards by Census. Future 

# • 1900-10 157,733 7.0% household sizes expectedtohold up higher than in 1910-20 71,192 2.0% previous forecast assumption. 1920-30 83,767 1.9% 

# -, Population growth helps fuel population-dependent 1930-40 50,538 1.0% 

# • industries reach 4 and 4.5 percent growth rates in mid­ 1940-50 210,702 3.4% 1990's. 10,{\ t;{\ 1 1 t; '2 '2 ") 1 ,0/_ 

### 1960-70 194,697 2.1% Employment growth in near term expected to rebound and 

# • 1970-80 248,584 2.1% as a result so too will population (see charts below). 1980-90 179,969 1.3% Long-run employmentprospects are expectedto be 1990-00 396,554 2.4% 

# • favorable for the region. Job growth expectedto exceed U.S. growth rates. 2010-20 337.200 J.4% 2020-30 384,200 1.4% 

# • Manufacturingjobsare expected to grow at an average of 0.8 percenta year fueled primarily byhigh tech developments. Nonmanufacturingjobs expectedto average 2.0 percenta year. Total is 1.9 percent average annual growth as compared to 3.0 percentduring the last 30 years. 

### Annual Growth Rate Charts
Regional Nonfarm Employment Regional Population.total

6.0% 8.0%
4.0"';' 4.0%
20% 2.0%
0,0% 0.0%
-2.0% -2.0%
-4.0% ·4.0% - -6.0% L

__...

______'--

____...._---' .6.0% '-----------''-------" 70 75 95 00 05 10 15 20 70 75 80 85 90 95 00 05 10 15 20 25

1 

### Source: Metro DataResource Center, 2015 Regional Forecast, January 1996


# -

2

# - Executive Summary

- 

# continued 2000-2030 Regional Forecast forVarious Geographies

Exhibit 1 

## 5-County Regional Forecast Tables (Multnomah, Clackamas, Washington, Yamhill and Clarkcounties)



## Total Employment Wage & SalaryJobs I 

## Self-Employed ! 

### (thousands) (thousands) (thousands) 

## High Mid Low High Mid Low High Mid Low 2000 1,210.2 1,210,2 1,210.2 • 958.0 958.0

. 958.0 252.2 252,2 252.2 

### 2005 1,344.3 1,314.2 1,290.0 1,068.5 1,043.5 1,023.9 275.9 270,7 266.1 

### 2010 1,518.3 1,477.2 I

## 1'431.0~7 1,138.0 315,9 308,5 293.0 

### 2015 1,677.3 1,625.2 • 1,525.7 321.6 1,273,1 1,209.3 355.7 • 352,0 316,5 

### 2020 1,873.4 1,788,9 1,609.1 1,459,8

## 1,387.7~ 413.6 401.2 341,3 

### 2025 2,115.9 1,972i 1,709.4 1,627,7 I 1,515,5 1,335,8 488,2 457,2 373,6 

### 2030 2,399.9 2,151, 1,814.2 1,823.8 

### I 1,641,5 1,406.0 576.1 510.1 408.2

. 

## Population,total I 

## Household, total Personal Income (thousands) (thousands) (million $ 

### 1996)
I 

## High i 

## Mid Low High! Mid i 

## Low High Mid • Low 2000 1,874.5 1,874.5 1,874,5 725.4 725.4 725.4 53,088 53,088 53,088 

### 2005 • 2,087.8 2,049.2 1,991.4 811,1 799.6 I 785,9 59,154 57,131 56,400

. 

### 2010 2,299,6 2,233.9 2,079.6 894,1 876,7 840,1 65,982 64,429 65,650 

### 2015 2,453.6 2,394.1 2,120,3 956.3 946,9 876.7 76,568 72,874 72,250 

### 2020 2,701.4 2,571.1 2,177.2 1,049.8 1021,6 915.1 90,101 84,819 76,714 

### 2025 3,026.2 2,768.2 2,275.2 1,171.6 1104.2 966.4 105,294 98,272 80,641 

### 2030 3,391,5 2.955,3 2,385,8 1,308,7 1178.8 1,022,6 123,614 110,939 82,264



## PerCapitaIncome Portland CPI Median HomePrice I ($1996) (1982-84=100) (nominal $ 

## High Mid Low High Mid Low High Mid Low .2000 28,320 28,320 28,320 178,0 

## I 178,0 178.0 166,000 166,000 166,000 •



### 2005 28,300 27,900 28,300 211.0 

## I 208.2 205.9 199,200 195,200 186,900 • 

### 2010 28,700 28,800 31,600 246.8 i 243.6 223.6 274,700 256,100 222,700

1 

### 2015 I 31,200 30,400 34,100 284.9

. 277,7 253.9 328,800 308,300 • 242,800



### 2020 33,400 33,000 35,200 , 335,9 

## I 314.4 298.3 403,500 365,000 252,500 

### 2025 34,800 35,500 35,400 400.1 

# I 356.8 355.1 520,700 434,800 273,200 

### 2030 36,400 37,500 34,500 481.4 • 406.0 425.5 • 682,300 510,600 301,200

TableNotes:

• Total employmentincludes wage 

### & salaryjobs, proprietors and other self-employed individuals.

• Personal income includes wages and salary, other labor income, transfer payments, dividends, interest and rent, farm and nonfarm proprietorsincome, and residents adjustment less social insurance contributions.

• Portland CPI isthe BureauofLabor Statistics all itemsurban consumer price indexfor thePortlandVancouver metropolitan area
• Median Home Price derived from RMLS median sales price statistics

3

# Executive Summary

- continued 

# 2000-2030 Regional Forecast for Various Geographies

Exhibit 2 

### 4-County Forecast Table (Multnomah, Clackamas, Washington, and Clark counties)

Total Employment Total Population TotalHousehold 2000 1,172,900 1,789,460 696,669 

### 2005 1,273,400 1,956,300 759,600 

### 2010 1,433,100 2,134,300 832,800 

### 2015 1,577,300 2,287,000 899,600 

### 2020 1,736,900 2,455,700 970,500 

### 2025 1,916,000 2,643,700 1,049,000 

### 2030 2,089,800 2,821,000 1,118,900 

### TableNotes:

• Total employment includes wage and salary plus proprietors. Excludes military employment.

Exhibit 3 

### Metro UGB Forecast Table (datatables include Multnomah, Clackamas, Washington, and Clark county)

Total Employment 1/ 

### TotalPopulation 21 

### Total Household 31 

### 2000 953,134 1,305,574 520,395 

### 2005 1,028,500 1,419,000 563,200 

### 2010 1,148,300 1,540,000 613,000 

### 2015 1,256,500 1,643,800 658,400 

### 2020 1,376,200 1,758,500 706,700 

### 2025 1,510,500 1,886,300 i 760,000 

### 2030 1,640,900 2,006,900 807,600 

### TableNotes (source: Metro Urban Growth Report, August 2002): A captureraterepresents a Metro policy determination to accommodatewiththeMetro CGB a fraction of expected regional growth. There are two pertinent capturerates assumed in the UGR: 1) households (housing units) and 2) employment Gobs). Thenumerator represents thenumber ofhouseholds orjobsin theMetro CGB.Thedenominator represents a four-county total. Theratio isthe capture rate for the future. 1. 

### Assumes a 75 percentjobcapturerate 2. Assumes a 68 percentpopulation capturerate 3. Assumes a 68 percenthousehold capture rate

Exhibit 4 

### Metro UGB Employment, Population and Household Demand Table

Total Employment Total Population Total Household 2000 953,134 1,305,574 520,395 

### 20221/2 1,428,134 1,821,300 732,600 

### Change 475,000 515,700 212,200 

### TableNotes: "Change" values have been rounded

• Figures in Exhibit 4 are interpolated from the forecast data shown in Exhibit 3.

• Thetotal employment figures include self-employed and also do notyet subtract outthe effects of redevelopment and infill. (An adjusted change without self-employedtotals 355,000jobs.)

4

# 2000-2030 Regional Forecast

Introduction

Purpose. 

## In orderto maintain a sound and vibrant regional economy, planning for future land needs is essential. State law mandates thatUrban GrowthBoundaries (UGB) in Oregon

are periodicallyupdated, andthe inventory ofbuildable residential land inside UGB's are replenished up to a 20 year supply at the time ofperiodic review. And as a matter of general practice, Metro also maintains an inventoryofup to 20 years ofindustrial and commercial land at its periodic review ofthe Metro UGB. The basis for future land need and demand is derived from a regional forecast ofemploymentand household change.

Theregional forecast is, in part, the supporting evidence for Metro'sUGB decision which is due to be finalized in December 2002. Thisdemand, represented bythe current regional forecast, providesthetechnical information for a baseline estimate ofa 20year need for both residential and employment land 2

. 

### Metro is now in the process of completing its studies and analyses for its 2002-2022 periodic review UGB decision3•


### The Metroregional forecast presents the technical underpinnings for estimates offuture employment and future residential land need. National economic assumptions drive a regional forecast that is derived from a regional economic model ofthe PortlandVancouverregion. Overallregional control totals for aggregate demand for employment land are derived from sector-by-sector employment forecasts. Commercial and industrial land demand (need) are derived from sector level employment forecasts and by projections ofemployment density and floor-to-area-ratios (FAR) for each sector 4•


### Future residential land demand (need) is determined from housing unit forecasts created from the Metro regional forecast. Future regional population is estimated using an agecohortmodel, withthe final result a forecast ofpopulation byage. U.S. Census "middleseries" age-specificbirth and age-specific mortalityrates are the initial basis for projectingnatural population growth. These age-specific rates are benchmarkedto regional vital statistics datato create composite regional**a~e-specific** 

### birth and death rates used in estimatingnatural increases in regional population

.The migration component is

2 

### Additional high and low growth scenarios for the region will accompany this baseline forecast to cover a range ofuncertainty in the forecast.

3

### Additional information is needed from othertasks underperiodic review to make a final determination of UGB land need, e.g., alternatives analysis, Metroscope data on capturerates and refill rates, policy inputs with respect to matters ofurban form, regional transportation plan assumptions.

4 

### FARprojections and employment density assumptions are derived by Metro's othereconomic model Metroscope. In fact, Metroscope is a comprehensive land use allocation model thatinteracts with Metro's regional transportation model as well asthe regional economicmodel.
5

### Regional birth and death rates fluctuate a tad from year-to-year. We chose as initial rates a set of compositerates that minimized the difference between actual and model fitted births and deaths between 1990 and 2000. We adjusted thenational fertility and mortality assumptionsto correspond to regional



### 5

### estimated netofin- and outflows and is linkedtothe employment forecast. The completed populationforecast is then convertedto an estimate ofthe number of households and dwellingunits. A vacancyrate of5percent is assumed for convertingthe number ofhouseholdsto dwelling units.



### The Context ofthis Forecast and Past Regional Forecasts. The last officially adoptedregional forecast and growth allocationwas completed in 1995 andthe results published in a two volume set: 

### The 2015RegionalForecast, and 

### The 2015 RegionalForecastand Urban DevelopmentPatterns, January 1996 and February 1996, respectively. This EconomicReportupdates the first ofthese documents.

A regional forecast was prepared in December2000 and presentedto the Metro Council. That forecast was never officially adopted and remains as an "unpublished report".6

This Report summarizes ourrecent review ofthePortland-Vancouvermetropolitan area
as ofFebruary 2002. Thisreview includes development ofa newregional economic forecast consistent with a winter2002, long-term U.S macroeconomic outlook. TheU.S. outlookis prepared byDRl-WEFA. The RegionalForecast is the soleresponsibility of Metro and not WEFA.

Theregional forecast is developedbyMetro Staffusing an econometric model ofthe five countyregional area (Multnomah, Clackamas, Washington, Yamhill in Oregon and Clark county Washington). The forecast results are reviewed by a panel ofregional economic observers and peerreviewers. Comments from professionalreviewers are factored into consideration in the final draft oftheRegional Forecast. 

## Policy and Economic Assumptions. No economic forecast can beprepared free ofpolicy assumptions. Implicitlywe maintain

anassumption ofstatus quo for regional and statepolicies. 

### In terms ofeconomic assumptions, the DRl-WEFAU.S. forecast sets theoveralltone ofanticipated macroeconomic conditions for the next 20 yearperiod. The Metro regional forecast implicitly adopts these assumptions for theMetroregion for its next 20 year growth cycle7•


### Before estimating future employment and population increases, a set ofoverarching conditions are presumedto bepre-set assumptions for theregion and the U.S. These assumptions are often overlooked, butare fundamental tothe forecast. Forexample, the

differences in these rates. These differences were not large, butwe felt it was reasonable to make the adjustments in orderto betterreplicate regional trends.

6 

### .Y!etro DataResource Center, Economic Reportto the Metro Council 2000-2025, December 2000

7 

### Although business cycles are not dead and there have been at least 10 downturns in the Metro region, the currentregional forecast playsoutthepresentrecession and attempts to forecast regional gro\\1h at its longrun expected growth rate. Inthe near term, population and economic growth in the region is slow or negative. Subsequently, as the U.S. economy emerges from the current 2001-2 recession, the region is expectedto do so as well, but with a one-quarterlag. Therecovery will initially show about a year ortwo ofabove average gro\\1h rates as the region climbs out ofrecession, but after this initial growth peak, the regional forecast gradually tapers offto the region's long-run average growth path. Thisgrowth path is determined by the national forecast obtained from DRI-WEFA as well as demographic trends. 

# ­

6

### regional forecast assumes that Americans are free to go where theyplease without undue restrictions (this has implications on migration trends and business start ups), that Americans are protected bythe U.S. Constitution and the rule oflaw (this implies that people and businesses can reasonablyexpect certain behavior from others and can plan for the future onthisbasis), thatAmerica's fundamental economic system continuesto be based on a system offree enterprise (this presupposes a sense ofeconomic stability and conditions as opposedto a socialist regimethathas a different set ofeconomic implications), thatAmericans havetherightto the pursuit ofhappiness. These fundamentals weholdto be true in theregional forecast as well as the U.S. forecast. Additional macroeconomic assumptions with respect to fiscal policy, monetarypolicy, and so forth are also explicitly folded into the national forecast. And, in the course of assumingthe national forecast, these national assumptions become implicit policies for the region too.

Attheregional level we assume a policy-neutral set ofconditions overthe course ofthe next 20 years. In other words, thepoliciesthat are in force todayare presumed tobe similarin the future. Intermsofregional planning for the UGB, this means that future regional land usepolicies are assumed to be more ofthe same. In otherwords, future policies will have similar impacttothat which exists today.

Theregion in the past, and arguably in thepresent, has enjoyed land demand and supply conditionsthatprettymuch do not suffer from peculiareconomic distortions. Additionally, the forecast presumesthatthe market for all goods and services in the region is no more constrainedthanthat oftherest ofthe nation. Whatthis translates into for theregional forecast is thatregardless offuture policies, theregional markets (whether for labor, land or goods and services) in the Metro region are able to determine market equilibriums, andthe condition ofthese markets are competitive with other cities

onthe west coast. In short, the regional forecast presumes future policieswill do no harm to observable economic trends8• 

### The State's periodic reviewprocess and Metro code are intendedto provide periodic replenishment ofthe available land inventorybybalancing thedesire for economic vitality with land and environmental conservation.

The economictrends for the region are based inpart onpast economic relationships, clusters, inter-industry linkages and the outlook for thenation. Our attemptsto peerinto a mist-shrouded future are based onthese assumptions. The economic relationships betweenthe U.S. economy, world economy andregional economy are intertwined and implicitlyincluded in the regional forecast by virtue ofthe economic equations formulated in the regional economic model. Economic clustersthat exist in the region are also considered. Inter-industry linkages, that is therelationships amongdifferent sectors ofthe region, are folded into the calculations ofthe regional forecast byinter-industry demand variables (behaves as an input-output parameteramong industry sectors).

Thefuture forecast for theregion is based on an outlook ofglobal andnational conditions that are expectedto materialize overthe next 20 years, as well as economic relationships

g 

### Policiestoday may encourage economic trends such as economic development. Otherpoliciestoday may tend to redirect ordampen economic growth, but are in place

### to mitigate externalities that an open and competitivemarketmay not have themechanisms 

### to properly control, such as environmental externalities.



### 7

# - that have formed overthe past decades. The set ofU.S. and worldwide assumptions derive from the DRI-WEFA U.S. forecast. To highlight, the regional outlook includes these most recent updates:

• U.S. Census 2000 population data (updated from 1991-99 Portland State University intercensal estimates)

• Newimmigration trend information for the 1990's

• Updated demographic assumptions offuture households, migration, birth and death rates

• Revised employmentdata from the state employment departments

• New and revised U.S. BureauofEconomic Analysis income and wage data

• 9111 economic impacts

• Macroeconomic recession assumptions from DRI-WEFA

• Global macroeconomic and industry detailed growth assumptions from DRI-WEFA

TheDRI-WEFAnational forecast is atrended forecast. This means U.S Gross Domestic Product adjusted) 

### that afterthe currentrecession is 8,0% ,....----------"'-r---'-------, 

### played out for the U.S., an 6.0% 

### expected growth rate is assumed by DRI-WEFA that presumably models an,average growth path which bisectsthepeaks and valleys associated with recessions 

# - and a business cycle. The chart (right) ofreal U.S. GDP from DRI-WEFA exemplifiesthe trended approach ofthe national and regional forecast.



### Alternate Regional Forecasts. Threeregional population andjob growth scenarios are packagedtogether in this regional outlookreport. Thisreport includes a baseline (mid-growth scenario), high (optimistic scenario) and low (pessimistic scenario) growth projections. A baseline growth forecast is prepared first. Thisbaselineregional forecast represents a middle growth scenario and is representative ofthe region'smost likely economic and populationtrends. The baseline regional forecast is characterized byplaying outthe currentbusiness cycle and with regional growth tapering offin later years. Future growth beyondthis point assumes a trend projectionbased on "averaging out" peak growth periods with future downturns in orderto model the region's fundamental economic growth path.

The baseline assumes thatthe economy suffers no majormishaps betweennow and the end ofthe forecast horizon in 2030. Thebaseline scenario isbased on economic and demographic characteristicsthatrepresents neither an extremelyhigh or low set of assumptions. This trended scenario assumesthe absence ofmajoreconomic disruptions. Such disruptions include large oil price shocks, unanticipated policy swings, or excessivelyrapid changes in supply or demand.



# -

8

### Separate high and low regional growth scenarios are prepared for the region. These alternative growth forecasts are constructedbased onrespective high and low growth national forecasts taken from DRl-WEFA'snational model ofU.S. growth. Additionally,

more optimistic orpessimistic regional demographic parameters are assumed in coordinationwith the corresponding alternate growth scenario. Forexample, thehigh growth regional scenario assumes greatermigration rates thanthe baseline or low growth scenario. The high and low growth regional forecasts produced in conjunctionwiththe baseline provides an alternate range ofgrowthprojectionsthatthe region could achieve giventherange ofassumptions. The alternative forecasts bracket growth andoffers a differenttimeline for when a certain level ofgrowth couldbe achieved given each setof assumptions.

Boththe optimistic andpessimistic growth scenarios have been constructed in a waythat

assumes economic and demographic factors onthe extreme ends ofthe spectrum. In the

case oftheoptimistic scenario, demographic factors were adjusted to reflect faster population growth parameters than the baseline assumption set. Economic factors were assumedto change more rapidlythan 

## in the baselinetrend projection. Output is projected to climb much faster and economic variables exhibitmorerapid growth.
Conversely, the pessimistic scenario switchesthe demographic factors to a slower setting. Forexample, birth rates are lower, life expectancy is lower, and net migration is much less thanthe baseline. Economic variables were resetto weaker settings. Productivity and output are assumedto increase at a slower ratethan eitherthe baseline and theoptimistic scenario.

In terms ofthe economic growth path that eventuallymightmaterialize, wecharacterize the range between thehigh and low scenarios as approximately accounting for 90 percent ofall possible outcomes. Therefore, there is only a 10 percent chance ofgrowth exceedingorunderperforming beyondthe growth bands oftherespective optimistic and pessimistic scenarios.

Forecast Methodology Summary. The Metro Regional Forecast is preparedusing a state-of-the-arteconometric model with

over 100 endogenous equations and 200 exogenous and identity/accounting equations and variables. Stochastic behavioral equations describe each significant industry category inthe manufacturing and nonmanufacturing sectors. Income equations for everymajor income category are modeled. Wage equations for aggregate groupings ofindustries project future wage rates. Inter-industry linkages between different parts ofthe regional economy are expressedwith feedbacks and interactions thatrepresent the mixofregional economicrelationships and growthpatterns. The equations for employment, income, wages and population are compiledtogether to describethe growthrate anticipated for the Portland-Vancouver areaeconomy. Specifically, inter-industrydemand variables (IDV) are employed in each employment equationto reflect the implicit input-output associations which exist among each regional industry. Industries with significanttraded demand, typically sectors in manufacturing

9

### and sometraded-sector nonmanufacturing classifications (e.g., transportation & 

### warehousing and creative services) include additional industrydemand drivers, for example, variablesthat proxy specified industry-level national demand. Non-traded industries, typically classified 

## in nonmanufacturing sectors, include demand variables triggered by growth in population and incomerelated variables. Productivity assumptions and projected wage rate increases are employed in each industry employment equationto reflect the labor force and price variations that co-determine employment demand from the factor input side. Employmentequations representthe heart ofthe Metro Regional Economic Model and describe 

## inthe greatest possible detail the structure oftheregional economy.
Population change is estimated byfive-year age groups. A cohort-componentmethod of projecting future populationchanges in the region is employed. Population statistics are projected for individual five-year age cohorts. The Metro Regional Economic Model includes estimates offertility and the number ofbirths. Mortalityrates are also assumed and the number ofdeaths in each age cohort is estimated in each forecast year. The differeI!ce betweenbirths and deaths from these projectionsrepresentsthe expected natural increase 

## in the regional population. Adding 

## in a forecast ofmigration (net of inflows and outflows ofresidents) by age cohort, we are able to arrive at an estimate of population in future years. A net-migration forecast isprepared using a stochastic equation which modelsthe relationship identified between migration and relative economie growth comparisons. Essentially, migration levels increase when economic growth in theregion increase on a relative basis significantly faster than the economies of California, Washington and the U.S. population growth inthe region is tied directly into the Regional Forecastbythe amount ofmigration and the ability ofthe region to draw in migrants based on the strength ofregional economic growth.

Future growth assumptions also include economic growth projections for the U.S. andthe global economy. National variables include components ofgross domestic product (consumption and investmenttrends), fiscal and monetaryvariables, exchange rates, inflation, productivity, housing variables, and labor force data. These future year growth expectations providethe backdrop for Metro's Regional EconomicForecast.


### Report Organization. The regional forecast begins in year 2002 through 2030. Year 2001 datathrough the 3rd 

### quarterrepresents the last actual datapoint withthe 4th 

### quarter still a preliminary estimate. The geographic coverage ofthe Regional Forecast is a five-county PortlandVancouver metropolitan area that includes Multnomah, Clackamas, Washington and Yamhill counties in Oregonplus Clark county, Washington. Forpurposes ofcomparison and additional geographic coverage, less detailed "satellite models" also forecast individuallythe employment, income, and population for Columbia, Yamhill, and the Salem MSA (Marion andPolk counties). These othercountyprojections are separate from the detailed Portland-VancouverMSA (five counties). Subtractingthe Yamhill county forecast from the five-county Regional Forecast, an officially adopted Regional Forecastwithjustthe four-county areais employed for Urban Growth reporting purposes.

10

### The U.S. economic forecast and most other assumptions in this report are basedon data released through the month ofOctober 2001. Regional and national statisticswhich are usuallytabulated on a monthly orquarterly frequency have been seasonally adjusted usingthe CensusX-II method. U.S. historical data are also throughthe 3rd 

### quarter.
Regional income datawhich comes annuallyfrom the U.S. BureauofEconomic Analysis (BEA) reflect historical data through 1999. Monthlycurrent employment statistics (CES) from the State ofOregon include datathrough October 2001. Annual population statistics

are updatedto 2001 basedon Census 2000 enumerations and countypopUlation estimates derived from Portland State University, Center for Population Research and Census (CPRC) and Washington State Office ofFinancial Management (OFM). Other historical data series (e.g., selfemployment, wages andcomponents ofpersonal income) used in this report are at least through 1999.

Detailed statistical information describing the baseline regional forecast is tabulated in the Appendix ofthis report. Themain text ofthis report provides a summarydescription ofthe assumptions, results and conclusions contained in the baseline regional forecast.

Details ofthehigh and low growth regional forecast scenarios are also included in the Appendixwhich comparesthethree alternative forecast scenarios for selected economic variables.

DRI-WEFA's detailed explanation ofits U.S. long-term economic outlook is also found in the Appendix ofthis report. A briefdescription ofthe DRI-WEFA U.S. forecast is incorporated intothe main text ofthe report. Additional forecast tables are included in the appendix which offermore detailed information aboutthe U.S. macroeconomictrend and the optimistic and pessimisticnational scenarios. Excerpts ofthe DRI-

### WEFA 25-year focus ofthe U.S. economyis included.

Additional forecast yearsbeyond 2030 were prepared aspart ofthis regional forecast, but thereliability oftheseprojections is significantlydiminished from the prioryear projections. The later forecast years, beyond 2030, were developed as a convenience for extreme long-range facilityplanning efforts andto address questions about potential future growth patterns in 2040 and 2060.

11

# -. Economic Report
Metro Council
2000-2030

Portland-Vancouver Metropolitan Area Economic 

# & Demographic Projections

• Employment
• Population & Households
• Income 

# &Wages

The Regional Forecast information contained herein is based on 

# ­ U.S. macroeconomic assumption obtained from DRI-WEFA from its winter 2002 U.S. Economy economic outlook. The U.S. economic outlook includes DRI-WEFA's estimate of the effects from September 11th 

### on U.S. growth. The DRI-WEFA U.S. outlook is provided to Metro as is. The Regional Forecast is then developed based on the assumptions in the WEFA U.S. Outlook and Metro'S econometric model (MARIO

- Metro Area Region IntegratedIndustry Outlook model). MARIO translates the national assumptions through a modeled economic structure ofthe PortlandVancouver OR-WA metropolitan area to produce the 2000-2030 Regional Forecast. The Regional Forecast is then reviewed by an independent panel of regional forecasters. demographers. city planners and economic observers. The Metro Data Resource Center bears responsibility for the content ofthe Regional Forecast. All information is based on data sources believed to be accurate and reliable; however, users are cautioned that economic conditions may change and unforeseen circumstances may materially impact the accuracy ofthe Regional Forecast in future years.



### METRO



## -.

# - 2000-2030 Regional Forecast

U.S. Economy in Review. 

### It's official!

- the National Bureau ofEconomic Research (NBER) lastNovember determinedthat the U.S. economypeaked in business activity in March 2001. With that announcemene, the current U.S. recession began and the longest uninterrupted expansion sinceWorld WarII ended**~""'-----Gross** 

### Domestic**Product--~----** 

### 1 (InflaUon adjusted) 10.0%**.,------------------~** 8.0%

-­ 6.0%
4.0%
2.0%

-2.0% .,,1

________________.......J 98q1 99q1 OOql 01q1 02ql 03q1 04ql


### exactly 10 years after it had begun (March 1991). Inflation-adjusted GDP estimates finally confirm the NBER's declaration. Inthe fourth quarterof 2001, real GDP in the U.S. fell 1.3 percent. Signs ofa slowdown were appearing long before. Producers began cuttingproduction in

. 2000Q4. Investments in domestic plant and equipment began declining in 2001Ql. Employment cuts soon followed as one after another economic driver stalled. Weak consumer confidence and fears ofmoreunemploymentcaused consumers to retrench as consumption fell to 1.0 percent growth in the fourth quarter.
Everyrecession in the U.S. starts out differentlyand this one has been no different. The primaryreason for the decline in U.S. output can betraced to the steep deceleration in manufacturing and investment spending.

• Steep draw-downs in retail Manufacturing Employment Durable 

### and industrial inventories combined with cutbacks in industrial production

• Severe fall-offs in capital investments

• Strugglingeconomies in Japan, Canada andMexico hit U.S. shoresjustas the nation's own domestic

9 

### The Business-Cycle Peak ofMarch 2001,Business Cycle Dating Committee, NBER, Nov. 26, 2001. The NBERbases its recession detennination on industrial production, employment, real income, and wholesaleretail trade activity when as a groupthese indicators show "significantdecline". 9Bq1 Investment in Information Processing Equip. (lnllatlon adjusted)

99ql OOql 01q1 02q1 03ql 04q1



### industries beganto decline

13

# -.

Now a worldwide recession and Japan in its third recession in 10yearshave severely hampered U.S. exports. A relatively strong U.S. dollar has nothelped U.S. exports, which have fallen more steeplythan imports.

The impact ofthisrecession has been uneven across different geographic regions ofthe countryand industry sectors. The PacificNorthwest has been hitthe hardestbythis recession. Employment in nonmanufacturing sectors has held steadywith onlynarrow declines in manyindustries. Oregon'sunemployment rate (7.3%) isthe worst in the U.S.

U.S. unemployment in total has risen only modestly sincethe recession to 5.8 percent from 4.0 percent a year ago. The manufacturing sector hasenduredthe brunt ofthe currentrecession. On an annualized basis, U.S. manufacturingjobsfe116.3 percent inthe last quarter. High-technologymanufacturing employment is down almost 10 percent. Transportation equipment is offnearly 6 percent. Forthemostpart, durable producers are hurting much more than nondurable manufacturers.

Unlikeprevious recessions, many other national variablesremain in good standing. Interest rates have been falling as the Federal Reserve (FED) and Chairman Alan Greenspan had attempted to stave offtherecession with earlier cuts in interest rates. Since mid-2000, there have been 11 consecutive interestrate cuts. Morerecently, the FED has signaled a change in its interestrate bias to a neutralposition

- neither expecting to cut norraise rates in the immediate future.
Along with a favorable interestrate climate, inflation has remained in check for much of the latter decade thanks to a balanced budget and an acceleration 

## in productivity. Low real energypriceshave also aided in taming inflation.



## FavorableEconomic Factors UnfavorableEconomic Factors

• Early & deep interestrate cuts • Vulnerable capital goods cycle

• Unusuallywell-timedFederal spending • Globalrecession initiatives and taxcuts • Steep drop 

## inU.S. exports

• Low fuel prices • Weak state & 

### local budgets

• Decline in U.S. imports • Poor businessprofits

• Steadyhousing demand • Inventory draw downs

• Strong consumer auto purchases
Housing demand and consumerpurchases ofautomobiles

- now a strength

- could easily become a negative factor. Higherhousing prices could easilytilt U.S. housing production down. And autopurchases couldbe at risk ifconsumers decidetonot buy asmany cars
as rebate incentives evaporate.

Onthe other hand, businesses will soon have to restock store shelves andbolstertheir inventories as economic spiritsbeginto lift. Inventory growthwould accelerate GDP.

14

### National Forecast Overview. The main question for mosteveryone has been "whencan we expectthe

# u.s. economyto rebound?". Estimates bymosteconomic observers believe a tum-around could begin as
soon as the start ofsummer, while others think 

### itmight not happen until early autumn. Most recessions have, on average, a peakto trough timeline ofbetween 12 and 15 months. Ifindeed the U.S. economyfell into recession in March 2001, the U.S. should begin climbing out ofits doldrums in the next few months-whichwouldplacethe recovery in about June 2002.
Monetaryconditions are in placefor a recovery, butthere are concernsthatthe rebound couldbe weakerthan normal and slowerto develop. However, overthe long-run, U.S. economic growth is expected tobe robust

- more in line with growth during the 1990's than the low growth, low productivity, high interest, and inflationary 1970's and 80's. A couple offactors will tend to undercut a sharp recovery in the nearterm.

• Housing starts and sales have remained at relativelyhigh levels, so expectations are mild for a strong run-up in additional housing starts. Low interest rates help, butthe FED is unlikelyto cut any deeper anytime soon.
• U.S. domestic auto saleshaveremained relatively strong throughout the downturn. Price rebates have stimulated strongdemand despitethe recession. A sharp rise in auto purchases in late-2001mayrestrain auto sales growth in the nearfuture,justas a recoveryisbeginning.

Federal Reserve Funds Ra1& Target (percent) 7.0,..-----------------­

6.0
5.0
4.0
3.0

2.0

1.0
0.01/00 3/00 5/00 7/00 9100 11/00 1/01 3101 5/01 7101 9101 11101 1102

U.S. Business Inventories (inllation adjusted •$billions)**1~,-~--------------------** 100 75·

01 99 01 00 01 01 01 02 01 03 01 04 

### As a consequence, thesetwo large sectors ofthe economy are not expected to offermuch bounce to
an earlyrecovery. The U.S. will have to lookto other sectors ofthe economy for leadership duringthe recovery.

And so

...once again, consumers will have to step itup in orderto boost U.S. GDP. Nascent signs are emergingto suggestthe consumers
are ready and willing, butthere are worries thathigh consumer debt levels mayhamper a stronger recovery.

Consumerswillhave to lead, before conditions ripen enough for producersto gain the confidence to gear up production.

15

### A couple ofotherfactors favor a recovery in the near future. The first was the "economic stimulus" inthe fall of2001. Though this 

## "taxrebate"was not initiallybilled as aneconomic stimulus, the refunds came at a very serendipitous time in the business cycle. For all intents and purposes, its timing and'sizehas acted as a positive stimulus.

Second, in hindsight it is clear producers and retailers saw a recession in the makingin late Consumer Expenditures

8.0% ,.-----..!:.:.:.:.:.::.::..:.::...::.:=:::..::!..------......,

6.0%

2.0%

0.0% ,..,.----_

01 01 01 01 Q1 01 01 98 00 01 02 03 04



### 2000. Inventory accumulationbegan slowing in 2000, and by2001 everyone was slashing inventories. Aswe begin2002, manufacturers and retailers alike will have to rebuild theirdepleted inventories, which should add an additional bump ofabout Y:z 

### percentto domestic GDP growth. Strongerconsumerdemand inthe second quarter will provide all the signal needed to boost inventories.

The U.S. macroeconomic forecast Industrial Production

-t()tal 

### predicts consumer spendingwill bounce back inthe second quarter of2002 and accelerate to 4.1 percent bythe 2003 

## Q1. 

# .­ Investments in fixed plant and
: 

### equipmentwill lagbehind consumption byanother quarter before accelerating up to 11 percent 01 01 01 01 01 01 98 99 00 01 02 03 

### bythe end of2003.

A one quarter lag in nonresidential fixed investments is further reflected in industrial production, where output will not ramp up until the third quarter of2002. Industrial productionpeaks in 2003 before settling into a trend growth pathbetween 2 and 3 percent growth peryear.

CI: nO/. 4.0% 2.0% 0.0% • ..,_,.,......._,.... ·2.0%

-6.0% -6.0% ""--_

.....

_____.

___

## =-

_____....

__......d 0', 04



### Consumer confidence will be a key indicator ofwhere the U.S. economy is inthebusiness cycle. Consumer confidence hitbottom in September with the terrorist attacks on New York and Washington D.C. Since Octoberthe University ofMichigan consumer sentiment index has been steadilyrising, with arelatively large percentagejump inDecember2001.

1699 U.S. Nonfarm Employment (millions)

00 03 

### As this index continues to rise, and with expectations for employment gainsjustoverthe horizon, the U.S. recovery should begin tobe felt as
soon as summer arrives. However, 

## itmay still be a long wait perhaps 2003

- before a completethawing andthe U.S. economyreturnsto
warmer conditions. Economic conditions surelywill begin to improve, butemployment growth won't likelyreturn to anywhere nearpre-recession levels until mid-2003.

Global Setting. World trade is importantto the U.S. economy. U.S exports currently contribute about 12 percentto the total Gross Domestic Product. Overthe long-haul, the national forecast calls for exportsto grow faster than other components ofGDP. By2030 the share ofexportsto U.S. GDP rises above 22 percent. International trade verymuch is expectedto favor the U.S

.. U.S. Foreign Exchange Rate Index (trade weighted to 18 largesttrading partners)**100,---------------~~-·~----------~---** 140

100
80 60
40
20
o



### TheU.S. carries a significant Share ofExports/GOP 

### current account deficit, due to its

own exportdeficit. However, due to the strength ofthe U.S. economy and the confidencethis generates with respecttothe rest ofthe world, the value ofthe U.S. dollar is expected remain relatively strong. Thistendsto dampen exports, butnot by an inordinate amount, and exports are still expected to grow. Therest ofthe world will continue to expand and to drive up demand for U.S. goods, especially services. Inthe long-run, a flat or somewhat declining exchange rate will tend to help U.S. manufacturers exporttheir goods to the world.

25% ,---...------------------,-.------...------,

20%

15%

10%

5%

-



### 17

### DRI-WEFA World Economy Forecast. This section reprintedJromDRi-WEFA GlobalForecast, February2002.

ORI-WEFA World MarketOverview Recovery is in the air, at least in North America and Europe. Parts ofAsia will follow along, but much ofthe region is struggling with the consequences ofnotfollowing through on economic reforms. The region also has its share ofpolitical crises, many related to the war on terrorism. China, Russia, and most ofthe other former states ofthe Soviet Union continue unscathed from the high-tech collapse that pushed Europe and North America into recession. Japan and much of Latin America will continue to struggle with largely domestic political and economic problems. 

### Projected Growth Rates of Real 

### GOP

(Percent) Average 2001 2002 2003 2004·06 United States 1,1 1.0 4.0**~** Canada 1.4 1.1 3,9 3.3 Japan -0.4 -1.1 1.8 2.1 W. European Big 4 (a) 1,6 1.3 3.2 2,5 Mexico -0.3 1,8 4.6 5.6 S. American 7 (b) 0,6 -0.4 2,7 4.0 Middle-Income Asia (c) 5.4 5.5 6,5 6.8 World 1.4 1.4 3,7 3.4

a. France, Germany, Italy, and the United Kingdom. b. Argentina, Brazil, Chile, Columbia, Ecuador, Peru, and Venezuela.
c. China, India, Indonesia, Malaysia, Philippines, Thailand,

Fiji, Maldives, Papua New Guinea, and Vanuatu.

Canada: Turning Around. The Canadian economy is probably now in the early stages of recovery from a mild recession. While recent indicators have been decidedly mixed, the first quarterof2002, unlike the previous two quarters, is expected to show slight positive growth. Fiscal and monetary policies will be supplementary to the recovering U.S. economy as drivers of recovery in Canada. While the interest rate reductions of2001 will provide stimulus overthe next few quarters, the reductions have not been as significant in Canada as in the United States. It will probably be the third quarter before growth will be back up to potential, and 2005 before the output gap is eliminated, The Canadian economy is expected to grow 1.1 % in 2002 and 3,9% in 2003.

Eurozone: Gaining Confidence. There are increasing signs that Eurozone economic activity is beginning to pick up gradually. Nevertheless, GOP may have contracted modestly in the fourth quarter of 2001, following minimal growth in the previous two quarters, as the negative economic repercussions ofthe September 11 terrorist attacks on the United States had an increased impact. Even before the attacks, the slowdowns in the U.S, economy, in particular, and elsewhere in the global economy had already had a substantial dampening effect on Eurozone activity, Following the terrorist attacks, the slowdowns in the manufacturing and service sectors intenSified, while business and consumer confidence weakened further. Encouragingly, though, the latest data are generally showing modest improvement, and confidence is growing, showing thatthe downturn has bottomed out. Indeed, the service sector now appears to be expanding again. On the assumption thatthe U.S, economy starts to recover in early 2002, we believe Eurozone activity should pick up modestly as the first halfof2002 progresses, Growth should gain increasing momentum in the second half, supported by low inflation and interest rates, modest real wage increases, and some fiscal stimulus in several countries. Inventories have also been reduced Significantly. Even so, Eurozone GOP growth will be limited to 1,3% in 2002, after an estimated 1.6% expansion in 2001. Growth is then projected to accelerate to 3.0% in 2003.

Mexico: Both Victim and BenefiCiary of Spillover. The Mexican economy suffered a sharp deterioration in 2001, primarily the result ofadverse external conditions. The U,S. recession buffeted Mexico's exporting sector, which had been the one ofthe country's most dynamic. Meanwhile, declining oil prices also hurt, as the government found itself unable to increase fiscal spending to stimulate the faltering economy, In addition to negative external factors, Congress approved only a partial fiscal reform thatwill not give the government the extra resources it needs. We do not expect any ofthe aforementioned factors to improve significantly in the first halfof2002, and somewill remain negative through theentire year. Nevertheless, the recovery ofthe U.S. economy in the second halfof 2002will allow the Mexican economy-and especially its exporting sector-to rebOUnd. As a result, GOP should expand 2.0% in 2002, a clear improvement from the 0.4% contraction in 2001.



# -

18

### DRI-WEFA Forecast Summary ofthe U.S. Economy. 

### This section reprintedfrom DRI-WEFA Us. Executive Summary, January 2002.

2001:2 2001:32001:4 2002:1 2002:2 2002:3 2000 2001 2002 2003 2004 2005
Composition of Real GOP (Annual percent change) Gross Domestic Product 0.3 -1.3 -0.9 -0.2 1.7 3.0 4.1 1.0 0.6 3.7 3.7 3.0

Final Sales 0.7 -0.5 -0.8 -2.2 1.0 2.8 4.3 2.0 0.0 3.4 3.7 3.1 Gross National Product 0.3 -1.3 -0.8 0.2 1.9 3.1 4.1 1.1 0.8 3.4 3.4 3.0

Total Consumption 2.5 1.0 2.2 -1.9 2.7 3.6 4.8 2.8 1.4 3.7 3.3 2.9

Durable Goods 7.0 0.9 19.4 -24.6 6.7 5.1 9.5 5.6 -1.0 7.6 5.0 2.9 Nondurable Goods 0.3 0.6 -1.8 0.8 2.0 4.2 4.7 1.5 1.1 3.6 3.4 2.9 Services 2.8 1.2 0.9 2.0 2.3 3.0 4.0 2.9 2.0 3.0 2.9 2.9 Nomes. Fixed Investment -14.6 -8.5 -8.9 -4.2 -4.9 2.9 9.9 -2.8 -5.2 5.5 8.5 6.1

Equipment and Software -15.4 -8.8 -6.1 -2.9 -3.8 6.5 11.1 -4.5 -3.7 8.3 10.5 7.7 Computers -30.3 -26.8 3.1 4.6 9.6 8.4 39.1 -2.2 -1.0 16.3 19.1 20.0 Software -3.7 4.3 2.3 6.9 10.7 9.7 12.1 2.8 6.3 10.6 10.6 10.7 Communications Equipment -41.2 -25.8 -2.5 -2.4 -3.9 9.8 28.7 -18.4 -7.8 5.2 8.9 8.0 Light Vehicles -2.6 -17.1 7.9 -6.9 -17.8 8.1 0.6 -7.7 -4.8 8.9 7.4 2.7 Other -12.6 -4.1 -15.0 -7.4 -8.4 3.5 4.5 -3.8 -7.2 6.3 10.2 5.5 Private Nomes. Structures -12.2 -7.5 -16.2 -7.9 -7.8 -6.4 6.2 2.2 -9.4 -2.3 2.6 1.2

Buildings and Other -19.1 -0.8 -19.3 -6.1 -3.6 -5.2 5.1 -2.0 -8.5 -2.5 3.8 1.3 ReSidential Fixed Investment 5.9 2.4 -2.7 -7.8 -3.2 0.4 0.8 1.6 -2.3 0.5 0.7 1.8 Exports -11.9 -18.8 -21.7 -8.4 -1.3 4.7 9.5 -5.3 -9.0 9.2 9.7 8.1 Imports -8.4 -13.0 -6.0 -1.5 6.3 9.5 13.4 -2.6 -1.2 8.1 6.7 5.5 Federal Govemment 1.8 3.6 3.8 6.2 7.6 5.3 1.7 2.2 5.0 3.0 2.0 1.4 State and Local Governments 6.6 -1.3 2.5 2.4 2.6 3.0 3.2 3.6 2.2 1.7 1.7 1.7

Source: U.S. Economic Outlook, DRI-WEFA, January 2002 

# -. The approaching new year is a good time to look at what may go right in the economic arena during 2002. One sector worth looking at is high technology. Spending on high-tech equipment ran out ofcontrol in 2000, and we project only a slow recovery in 2002. The good news isthat, even at its low, high-tech spending will still account for 47% oftotal spending on equipment and software and 4% ofGDP. This direct spending-still much higherthan in most other countries and higherthan in the United States until the late-1990s boom-will continue to crank out productivity gains. A lot of recent (and future) innovations from Web access, e-commerce, and medical/biotech, for example, are free orpriced below
user value. That is bad news for innovator profits, and for "real" growth (which does not capture ideas), but the innovations generate a nice consumer surplus for users that in many cases also boosts productivity. Cyclically, housing is much stronger now than during the average recession, and the inventory correction will be over sooner because it started sooner. We estimate that reversal of the inventory shrinkage will add 0.6 percentage point to GDP growth in 2002. Travel is already showing some early rebound, with dining out, sporting events, and flying all showing gains. As people make more reasonable risk calculations, consumer spending will rise further from today's depressed levelS. Leisure industry employment could show an early turnaround, beating overall employment, which generally lags.

The federal government's boost to the economy is large and unusually well-timed. The large tax cuts voted before September 11 have now been enhanced by billions in new spending. The failure of Congress to enact a stimulus bill will do little to hold back the recovery. While the parties' contending bills would have provided some temporary income support to the unemployed, the added growth would be small, and unnecessary, in our baseline forecast.

The interest rate cuts began early, and rates are now down to extremely low levels. Inflation seems neither too hot nortoo cold, meaning it is low enough for undistorted economic decisions and financial market confidence, but high enough to ease relative price adjustments. Adding it all up, the U.S. economy is not out ofthe bUSiness cycletrough just yet, with the new year expected to bring a third consecutive quarterly decline in real GDP. By year-end 2002, though, real GDP should be forging ahead at a 4% annualized rate.



### 19

### Long-range U.S. Macroeconomic Outlook. Recessions make up onlya small "blip" in economictrends. Therehave been 10 recessions since World WarII. On average, U.S. recessions have lasted between 12 to 15 months, withthemost severe lasting as long as 18 months. Evenwith recessions sprinkled overthe last 55 years, real GDP rose an average of3.5 percent a year. Despite fears ofglobal terrorism and thetragic aftermath of

### 9111, the currentrecession will have very little impact overthe long-run. The U.S. economy is expectedtobounce back:, perhaps a little more tired andmore cautious, buteventually 

### itwill have vigor and vitality to similarbeforethe recession.

A recession, although hurtful to selected segments ofthe economythatbearthe bruntof its force, is not always a bad thing. Recessions serve toroot outweakfirms and sagging industries. Theyweed outpoorbusinesspractices andreveal ill-conceivedbusiness ventures. 

### Inthe end, it leavesthe economy stronger and better able to forge ahead, populated withhealthier companies.



### In peering into a hazy longrange horizon necessary for regional planning, it is useful to view economic and population forecasting not in terms of'Didthe forecast accurately predict all growth?', butrather, tothink instead aboutwhen we might achieve a certain level ofgrowth, plus orminus 2 or 3 years. Thisturns forecasting on a different axis, and allows planningto proceed, without gettingdiverted by questions aboutthe "right number". Planningmaybeviewed as the accommodation ofgrowth upto a certain range, with policiesthat speed into implementation sooner when growth is faster and growth management strategies deferredwhenthe economy is growing more slowly.

The current U.S. recession is expectedtobottom-out in the 2nd 

### or 3rd 

### quarter of2002. U.S. Gross Domestic Product (GDP) is anticipated to accelerate through 2003-04, before moderating andtapering offto amore sustainable long runrate absent ofany additional business cycles. The DRI-WEFA national forecast calls for long-term inflation adjusted U.S. GDPto settle into an annual gro\\'1h rate ofbetween 3.0 and 3.5 percent.

The fundamental underpinnings for the long run growth path ofthe U.S. depend on the projected growthrate ofthe labor force and increases in productivity.

U.S. long-run growth fundamentals:
Annual Average Growth Rates History (1970-00) 25 YearForecast Gross Domestic Product 3.1 percent 3.2 percent Productivity 1.0 percent 2.1 percent LaborForce 1.7 percent 1.2 percent

Source: DRI-WEFA, Winter 2002 U.S. Economy outlook as derivedby Metro DataResource Center

20

### The national forecast from DRI

-WEFA calls for annual productivityrates to double, increasingto 2.1% from its historicalrate of1.0%. Productivity increases are assumed, as
more and more U.S. and international firms continueto take advantage ofautomation and information processingresources. The current U.S. forecast view continuesto incorporate significant amounts of"New Economy" growth into the longrun macroeconomic forecast. Unlike thetechnologywave in priordecades, which replaced manual and less efficientmeans ofproducing goods and services, this second wave ofinformation technology is creating innovation ofa different sort. 

### In the new economyparadigm, new technology assumes the form ofnew ideas and newproducts, which 

## liftthe overall wealth ofthenation.

The significant increases in industrial plant and equipment growth forecasted for the investment in the computers and software category supportthis view. Overthe long haul, the national outlookfor high-technology investments is veryrobust with an annualized growth rate of6.8 percent peryear. This is slowerthan the break-neckpace ofhightechnologyinvestments ofthe 1990's, which sawrates shoot up to 22 percent and average over 16 percent a year. This projected investment inhigh-technology and other innovation will help to bolster productivityin the longrun. This allows thenation to create more goods and services at lower costs.

Atthe sametime, employment in high-technologyrepresents a bright spot in the manufacturing sector. Mostothermanufacturing industries are expectedto slowly shed employment as more labor intensive production processes are shipped overseas. 

### In addition, corporate outsourcing is expectedto continue along its present path as more employment functions are reII**~** lIJI"n

..f.."'

....inn 

### classified into services. Higher productivity rates allow firms to do

more with fewer people. With the exception ofthe current recession, employment growth in the technology sector continues to see expansion on the order ofunder0.5 percentperyear. Forthe whole of manufacturing, employment over the long-haul is expect to decline an average of-0.6 percent annually.

The next fundamental is the growth inthe laborforce. TheU.S. labor force is not expected to grow as rapidly in the next 30 years as ithas in the last. This slowerrate of increase tends to dampen potential GDP growth. One factor which offsets thepotential decline is immigration from abroad, which is expectedto be higher than previously assumed. Retention ofolderworkers in the workforce also serves to amelioratethe effect ofthe slowing oflabor force growth.

An economy's growthrate can fluctuate year-to-yearwith the rise and fall ofthe business cycle, butthe longrange trend ofGDP growth is not likelyto wavertoo far from its

21

# - expectedtrend. Changes in monetary or fiscal policy, anunforeseen global recession, changes in capacity utilization, investments and inventory fluctuations are likelyto cause economic growthto change as some ofthese factors play out inthe currenteconomic malaise. Butthese variables are transitorY'and will

## tend to fade into the background inthe long-run. Determinants ofthe long-run are primarilythe labor force and its productivity.

U.S Gross Domestic Product

8.0% ;-­

____**---'('-in_fla_ti_on_a_d'Tju_._d~)** ________;

6,0%

4.0%

2.0%

0.0%

-2.0% '--

__-'-

_____..1-

________, 70 75 80 85 90 95 00 05 10 15 20 25 30

U.S LaborForce 8.0% .,---------,----------"

60% 

# ---------[

4.0%

30 YearTreasury Bond Rates

16.0% ,.---------..,.---------, 140%

12.0%

10.0%

80%

6.0% 

### '_0%

2.0%

70% ,---------,------­ ---1' 6,0%
5.0%
4.0%
3.00h
2.O"AI
1.0%
0.0%
·10%
·2.0% U.S Productivity
8.0% ,.---------..,.----------,

60%

4.0%

2.0%

00%

·20% '--->--

....**------~----------'** 70 75 80 85 90 95 ::c 05 10 15 20 25

U.S. Foreign Exchange Rate Index (trade weighted to 18 largesttrading partners)

ConsumerPrice Index

16.0% ,-----------,---------,
14.0%

U.S. HOUSing Starts (in millions}



### 22

# Portland-Vancouver Economic Forecast (5 counties

- Multnomah, Clackamas, Washington, Yamhill and Clark)



### Recent Trends. Economic conditions in the region during the past yearhave been muchworse thanthe U.S. as a whole. In fact, Oregon brings up the rear in state unemploymentrates with an unemployment rate of7.5 percentlO•

### And it's notjust Oregon; the entireNorthwest is suffering. 

### In Washington State unemployment hit 7.1 percent. Things were so bad in November 2001 that for a briefwhile the Portland metro regional unemploymenttopped the State'sunemploymentrate.

Unemployment Rates 

### Nonfarm employment growth slowed in 1998-99, before seeing

a modest rebound in 2000. In 2001, the previous year'sbrief growth spurtturned negative. Employmentnews has not been this bad since 1991. Total nonfarm employment lost

Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov 

### ground in 2001 as annualjob figures for the region fell 0.34 percentage points (or a netloss 7.5



### of3,200jobs). The average number ofunemployedrose to near 60,000, with peak unemployment soaringto 75,000 unemployed workers in November and December2001.

The last four years ofeconomic expansion

- dating backto 1991 have beenmuchmore turbulentthanthe previous six. Regional nonfarmjobgrowth slowed for consecutive years in 1998 and 1999, with growth reaching only 1.8 and 1.4 percent, respectively. The roots for this region's economic slowdown can be tracedto the world-wide hightechnology slump happeningthen. The region'shigherproportion ofmanufacturing especially its concentration ofhigh technology

- madethe region more susceptible tothe so-called "AsianFlu". Andtheregion's proportionally greaterexposureto the Pacific Rim caused growth in the late 1990'sto decelerate.



### In2000 employment growth exhibited a mini-rebound across the board. Manufacturing jobsedged up 1.5 percent and nonmanufacturingrose 2.5 percent. As 2001 drew nearer, it seemed at first possiblethatthe region would be ableto skirtthe latest recession, as it had in 1990-91, butevents unraveled andtheterrorist attacks on September 11 th 

### werethe last straw for an economythat was onthe brink ofa downturn. Even bymid-2001, most economic pundits were still hopeful that a regional bounce couldbepossibleby September. Thosehopes were destroyed.

10 

### Seasonally adjusted. Source: LocalArea Unemployment Statistics, Bureau ofLabor Statistics,



### 23

# - The greatest weaknesses in the region's currenteconomic state lies in its manufacturing sector. Employment declines appeared across almost everymajor industry group. Overall manufacturingjobs fell by 2.3 percent in 2001 withthe steepestdeclines in transportation equipment, machinery, metals, and food processing.



### Regional Expectations. The conditionsthatcreated therecession in theregion mayprovidethepossibility as well

asthe initial surge for a strong rebound in 2003 and 2004. However, until then, the regional economywill have to wait. We anticipate the recession to continue toexert its poweroveremployment andregional growth through muchof2002. Prospects for a rapid rebound in 2002 are quite slim forthe region, as a rebound for thenation is not expected until mid-2002. Weanticipate arecovery for theregion afterthe U.S., and growthrates to rebound more sharply as comparedto the U.S.

This recession has been onethat has been marked by a slumpinghigh-technology industry. Negativereturns triggered bythe collapse in Internet companies andrapid decline in information processing and software investments startedwhatwill be athree year decline in the non-electrical machinery and "second-dip" in the region'S electronics and instrument industry. High-technology, which hadbeen a mainstay for theregion's rapidrise during the mid-1990's, has becomethisregion'sAchillesheel. Forthisreason, the regional economyhas dipped lowerthan that ofthe U.S., but we anticipate a stronger resurgence in theregion'shigh-tech sectorthan for thenation as a whole. 

# ­
Moreover, this region'sgreater dependence on manufacturing firms to supplyemployment opportunities has turned into a manufacturers recession, with retail and other service sector industriesbeing dragged downbythe producer sector's weaknesses. As the region recovers, what was once a source of 2,0%

-2,0% High.Tech Manufacturing Employment

# 1:~~**Lo'1'~"~** --0-1 --0-1 --0-1 --0-1 -=----- =-rn-'

........

# ,~ ...

# ,-"-~-=-=-=--,: I

# ~

M AA 00 M M m M 

### weakness will again become a Population,total 

### source ofstrength for the region's 4,0% ,...-_--'-P...:,o:..:.,rtl...:.a ":..:.,d-..:..va...:.":..:.,eo...:.u...:.v8_rM_e_tfO,,;,,:p_o_lita_n_A_re_a

___----, 

### future.**,,----,,~** 

# 1

... -------- 

### : 3,0% 

### Despite currentweakness in the 2,5% 

### - - -

-- -- -­ 

### economy, regionwide population 2,0% 15% 

### estimatesthrough this periodhave been surprisingly strong. i 0,5% 

### Population growth had been

0,0% 

# --------------11 slowing since 1998 withthe regional economywinding down. , 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05



# -

24 

### I

# ,­ Forecast Summary for the Portland· ancouver Region**AnnualAv~** 

### 1999 2000 2001 2002 2003 2004 2005 2006-22 (percentage growth rates) Population 1.8 1.6 1.5 1.6 1.7 2.0 1.7 1.5 Crude Birth Rate (per 1,000) 14.64 14.66 15.17 15.00 14.83 14.78 14.75 14.3 Crude Death Rate (per 1,000) 7.24 7.35 7.47 7.48 7.49 7.46 7.47 8.5 LaborForce Participation Rate (%) 69.0 69.1 69.1 68.9 68.6 68.4 68.4 69.7
Personal Income, nominal 5.6 7.5 3.5 2.0 6.4 6.3 6.5 5.5

Wage Disbursements 6.4 7.8 2.7 1.4 5.2 6.7 6.8 5.3 Social Insurance Contrib. 6.7 4.7 1.8 0.9 4.8 6.3 6.2 5.6 Other Labor Income 3.5 4.8 2.5 1.1 5.4 5.9 6.5 6.1 TransferPayments 5.0 4.8 8.6 12.5 11.6 2.1 0.0 6.3 Proprietors' Income 7.4 4.1 2.0 2.2 8.1 4.4 4.8 6.5 Div., Interest & 

### Rent 3.6 9.3 3.6 -1.6 5.5 8.1 5.1 5.3 HousingPrice

- Median avg. 2.6 3.8 2.3 0.6 3.2 4.7 5.8 4.0 CPI all items

- Portland 3.3 3.1 2.7 3.2 3.6 3.3 3.2 2.7
Total Employment 1.7 2.5 0.6 -0.4 2.4 3.2 3.2 2.0 Proprietors 2.9 6.5 0.8 

### -004 1.7 2.5 2.4 2.6

onfarm

- Wage & 

### Salary, total 

### 104 204 -0.3 

### -004 2.7 3.5 

### 304 1.9 Manufacturing, total -2.5 1.5 -2.3 -1.3 2.7 3.6 3.5 0.7

Food Processing -6.3 -1.5 -4.9 -1.7 0.6 1.3 0.3 -1.2 Textile & 

### Apparels -10.9 -10.7 3.8 -0.7 6.2 5.0 1.5 -3.0 Lumber & 

### Wood -4.6 1.5 -2.2 0.8 -0.3 -1.8 0.4 -2.8 Paper -2.9 9.6 -1.3 -0.6 0.1 1.4 0.8 -1.1 Printing 4.6 1.8 -0.3 

### 304 2.9 2.3 2.0 0.6 ,''''­ 

### Metals -2.3 -1.0 -4.6 -2.7 3.1 2.8 2.3 -0.3 Machinery -IDA 

### -4.5 -6.4 0.0 3.2 3.1 4.1 1.3 ElectronicEquipment -1.3 

### 804 5.0 -1.3 3.5 6.4 5.9 1.3 Transport. Equipment 7.2 

### -304 -20.7 

### -504 3.6 3.0 3.5 0.8 OtherNondurables -6.3 -0.6 

### ·504 -3.8 1.2 2.7 4.1 2.3 OtherDurables 2.2 1.1 

### 3.2 -1.7 3.4 2.7 2.7 1.6 onmanufacturing 2.2 2.5 0.0 -0.2 2.6 3.3 

### 304 2.1 Construction -0.5 0.6 

### -104 004 4.0 3.2 3.6 1.6 Trans., Comm., Util. 2.2 2.2 -1.1 

### -0.5 1.2 2.7 2.9 1.5 Wholesale Trade -2.1 -0.3 -2.5 -0.9 4.1 4.3 3.9 1.6 Retail Trade 3.0 2.0 0.0 

### -004 2.0 4.0 4.0 1.8 Fin., Ins., R.E. -0.7 -2.6 0.1 -0.1 0.3 2.3 3.4 

### 104 Health Services 1.5 -0.1 1.8 2.1 3.5 

### 304 3.0 2.6 Other Services 3.6 5.2 0.7 -0.5 4.6 4.9 3.9 2.8 State & 

### Local Gov. 5.4 5.2 1.1 -0.6 0.2 -.01 1.9 1.5 Federal Gov.

- Civilian -1.7 5.5 -3.6 1.4 -0.5 -0.7 -0.2 0.9


### With therecessionuponthe region, population still grew 1.6 percent in 2000 and 1.5 percent in 2001. The lasttimepopulation growth came anywhere closeto 1percentwas back in the mid-1980's

- which was a particularlyweakperiod for the region. Stimulus from relativelymoderate population increases in the lasttwo years has helped bolster regional employment in industries that are strongly dependent on population growth, such

as retail, services and government. Thisrelatively strong employment growth, compared

25

# - to ourneighboring states, has in turn attracted more than 300,000 new residents since 199011•



## Comparison of Population and Employment Demand Projections. (5 counties Multnomah, Clackamas, Washington, Yamhill and Clark)



### POPULATION EMPLOYMENT OldForecast New Forecast Diff. Old Forecast New Forecast Diff. 2000 1,837,600 1,874,450 36,850 

### 2000 1,147,300 1,208,900 61,600 

### 2005 1,993,300 2,049,200 55,900 

### 2005 1,274,900 1,320,600 45,700 

### 2010 2,152,800 2,233,900 81,100 

### 2010 1,406,400 1,483,800 77,400 

### 2015 2,315,400 2,394,600 79,200 

### 2015 1,537,900 1,631,700 93,800 

### 2020 2,475,000 2,571,100 96,100 

### 2020 1,673,700 1,795,400 121,700 

### 2025 2,768,200 

### 2025 1,979,200 

### 2030 2,955,300 

### 2030 2,158,100 Employmentfigures includesproprietors or selfemployedworkers. 

### ManufacturingEmp.'" Non-manufacturing Emp.'" Old Forecast New Forecast Diff. OldForecast New Forecast Diff. 2000 138,900 145,500 6,600 

### 2000 780,600 812,500 31,900 

### 2005 145,300 154,700 9,400 

### 2005 870,000 888,800 18,800 

### 2010 149,700 165,900 16,200 

### 2010 961,700 1,002,700 41,000 

### 2015 153,600 168,900 15,300 

### 2015 1,015,200 1,104,200 89,000 

### 2020 157,300 172,800 15,500 

### 2020 1,142,600 1,214,900 72,300 

### 2025 177,200 

### 2025 1,338,200 

### 2030 182,900 

### 2030 1,458,500 '" Employment figures in these two table above include only wage and salaryjobs.



### HOUSEHOLDS PERCAPITA INCOME ($1996) 

# ­
Old Forecast New Forecast Diff. Old Forecast New Forecast Diff. 2000 736,000 725,400 -10,600 

### 2000 26,600 28,400 1,800 

### 2005 812,100 799,600 -12,500 

### 2005 28,100 27,900 -200 

### 2010 891,500 876,700 -14,800 

### 2010 29,300 28,800 -500 

### 2015 972,000 946,900 -25,100 

### 2015 30,500 30,400 -100 

### 2020 1,052,000 1,021,600 -30,400 

### 2020 31,800 33,000 1,200 

### 2025 1,104,200 

### 2025 35,500 

### 2030 1,177,800 

### 2030 37,500

Source: 1995-2015 Regional Forecast (old forecast used in Sept. 1999 Urban GrowthReport) 2000-2030 Regional Forecast (new forecast for Dec. 2002 Urban GrowthReport)


## Regional Population Trends. The latest Census figures for population in the Portland region have been released, and

now show almost 37,000 more residents in 2000than originallyestimated. Higherlevels ofin-migration account for this largerpopulationtotal. Migrantstendtobeyounger and ofworking age, which in turnraisesthe employmenttotals. The demographic composition ofthe region's population is also not exactly aswe had anticipated. The downward trend in household size (i.e., personsperhousehold) seemsto have stabilized duringthe decade ofthe 1990's, instead offalling as previouslyexpected. Theregion's

11 

### We estimate from population figures from the Census and Portland State University that the change in population for 1990to 2000was close to 450,000 persons, and migration accounted for about 300,000 of thoseresidents, representing two-thirds ofthe region's population increase.

26

### average household size in 1990

was 2.57 people. Today, it is estimatedto be nearthat same level. However, the new forecast returns to the longer run secular trend ofdeclininghousehold sizes, but assumes a less precipitous drop-off. As a consequence, the number ofnewhouseholds formed in the future as a result of regionwide population growth is actually less thanpreviouslypredicted. Household sizes by2020 are expected to stabilize ataround 2.5 persons per household, as comparedto 2.4 persons perhousehold in the previousregional forecast.
Population growth from decade to decade has fluctuated up and down with major migrations ofAmericans, coming west overthe Oregon Trail in the mid-1800's and movingto the north andwest soon after World War II. Morerecently, in the 1990's peoplemovedto the Portland area in search ofa better place to live or a greater number of jobopportunities. This was especiallytrue for high-tech workers.
Population Avg.


### period in decade 1850-60 16,046 9.2% 1860-70 29,857 6.4% 1870-80 54,980 6.3% 1880-90 124,490 8.5% 1890-00 164,381 2.8% 1900-10 322,114 7.0% 1910-20 393,306 2.0% ,'.'­

1 Q"lfL'l{\ A '1'1 {\'1'l 1 QOI. 

### 1930-40 527,611 1.0% 1940-50 738,313 3.4% 1950-60 854,645 1.5% 1960-70 1,049,342 2.1%

1980-90 1,477,895 1.3% 1990"'()0 1,874,449 2.4% Source: U.S. Census andPSU 

### During the 1990's, about two-thirds ofnew residents had never lived inthe Portland area before. Netin-migrationwill still bea force driving popUlation growth in the future, but a lesser one. Onlyabouthalfoftheregion's population increase during the next 20years will

come from migration; the remainder will be from residents having children and grandchildren.

The shape offuture population growth in the region will depend onthe quality oflife here inthe region andthe abilityto generate goodpayingjobs for future workers. We anticipatepopulation growth to shadow the future employmenttrends for theregion. Regional population growth is expected to average about 1.6 percent per year through 2030, as compared to about 2 percent from 1970 to 2000. Populationwill increase morerapidlyin the nearterm as current conditions favor an economicrebound, which will attract greaternumber ofmigrants. Overthe longhaul, though, the average growth rate peryear will startto taper offas regional economic growth moderates.

27

# - Industry Details and Long-term Forecast Outlook.

TheRegional Economy. The regional economy is approaching a crossroad. The current land supply situation is becomingtighter as more buildable land inside the UGB is absorbed bybusinesses and housing, butas yet is not a limiting factor. This forecast

assumes that current land marketconditions and regional transportation accessibility do not interrupt growth trends thatare evidenttoday.

Total nonfarm employment for theregion is expectedto rise an average of 1.9 percentper yearas compared to 1.1 percent intheU.S

.. This is somewhat sloweremployment growth than intheprevious 30years, which saw 3 percent average growth in theregion. To a great extent, slower labor force growth is the culpritbehind slowerjob growth. Asthe labor force participationrate ofwomen eventuallyreaches and exceeds male participation rates in the future, the rate ofgrowth ofthework force slows with the slowdown in labor force participation.
Productivity is projected to rise steadily overthe next 30 years, but productivity is a "two-edged sword". On the one hand, productivityhelps lift corporate profits, wages and salaries without causing additional inflation, but it also tends to cutinto employment. 

# ­
: Ontheotherhand, when productivity can also bolster output and createnew demand, this type ofinnovation makes employees more productive and valuable and has the effect of bolstering employment growth.

In 

### older manufacturing situations, productivity does indeed reduce the need for more employment. When new machineryand innovative processes simply replace human U.S Productivity
80% ,-----------,--------,

6.0%

4.0%

.20% L-.f...-

______---'

.. ---------!
70 75 80 85 90 95 00 05 10 15 2!l 25 30



### activity without a corresponding increase in the demand for additional goods or services, then the need for labor isreduced and employment growth in that industry stalls. In

### this region, traditional industries such as food processing, metals, and other

resource extractive industries are projectedto improve their productivity byreplacing people Hiah-Tech Waae & Salarv Emolovment 100,­

______**(~in_th_oo_sa_nd,S~)~** .........-----__,**~** 90 80 70 60 50 40 30 20 10

fl



### withmachinery. Outputmay staythe same orincrease, butprojected employment declines.

28

### Onthe otherhand, when productivity and innovation can boostoutput and create new demand, the need for workers particularly skilled ones

- will become increasingly significant in these industries. The "NewEconomy" presupposesthathigh-tech industries such as computers, infonnation processing, software, telecommunications and biotechnology firms will lead employment growth. The regional finns are well situated to take advantage ofcomputer, infonnation processing and software developments. These regional industries are one oftwo classifications in manufacturingthat will see employment actually increase from today's levels.

The combined high-tech industries in the region employed approximately 60,000 workers in 2001. Theranks ofthe high-techworkforce in the region are expectedto swell to 94,000 by 2030. This represents an addition oftwo high-tech companies the size ofIntel today. Possibly, some ofthis growth will be from an agglomeration ofsmaller finns, but in orderto facilitate this level ofgrowththe region mayperhaps attract another major high-techplayer. However, the majority ofindustry growth will likelybe attributedtothe internal expansion andvitality ofexisting finns in theregion.

Thetotal number ofregionaljobs, including self-employedworkers, is about 61,000 higher in 2000 in the new forecast than was previously forecasted. Job growth in hightech electronics and semiconductors, construction, andthe service sector showed the widest deviations. This is tobe expected, given thatthe old forecast was completed before the wave ofhigh-tech expansion and construction. Unanticipated service sector job growth canbe attributedto faster-than-predicted population increases, andthe economic downstream effect ofmore high-tech workers in the region. This new forecast incorporates these latesttrends.

Nondurable Manufacturing:. 

### Industries which are included in nondurable manufacturing are FoodProcessing (SIC 20), Textile and Apparel (SIC 22 & 23), Paper (SIC 26), Printing and Publishing (SIC 27). Except for printing and publishing, the majornondurable industries are expectedto see falling employment levels duringthe next 25 years. A combination ofanticipatedproductivity gains, overseas competition, limited supplies, and relocation ofproduction capacity abroad spells an overalltrendto decliningjobs.

Ourview on the printing and publishing industry assumesjob growth to continue in this industry but at a slowerpacethan during the last 30 years. Employment growth is expected to achieve an average rate of 1.4 percent peryear as comparedto 3.4 percent in the decades before. Manufacturing Employment

29

# - DurableManufacturing. Industries classified in this category include Lumber & Wood Products (SIC 24), Metals (SIC 33 & 

### 34), Machinery & 

### Computerequipment (SIC 35), Electrical Machinery, Semiconductors and Instruments (SIC 36 & 

### 38), and Transportation Equipment (SIC 37). The resource based industries (lumber and paper) are projectedto experience steady decreases in employment as productivityand competition from otherregional sources erode theregion's competitiveness.

Thebusiness cycle for metals andtransportation is not dead. Transportation equipment in the nearterm is expectedto remain weakbecause oftravel fears. Howevera delayed rebound is expected even after the travel industryrecovers and the global recession retreats due to the weakness in the airline market. The region's metals industry, include primarily aluminum makers and scrap metal re-producers, is projectedto remain flat in employment. Long-term, regional employment inthis sector is projectedto be about the

same level ofemployment as today. However, the path into the future for both industrial sectors is likelyto sufferthrough wide swings in employment with fluctuating global change.
Nonmanufacturing EmploymentTrends.The steady shift in focus ofthe workforce to nonmanufacturing is expectedto continue. Job gro\\'1h in the nonmanufacturing sector is projectedto exceed 2 percent per year on average. Thenonmanufacturing sector created

over 800,000jobs in 2000 as comparedto 300,000 in 1970. This total is expected to reach 1.46 million by 2030.

The largest component continuesto be the service sector, which employs almost 280,000 workers. A fast growing segment ofthe service sector includes businessservices, computer software development and health services. Health services alone comprises

more than 22 percent ofservice sectorjobs. With the average age ofthe U.S. population growing older, moreresources are expectedto be divertedtowards health care. A generally olderpopulation will tend to have greater accumulated wealth and is more likelyto purchase more services than today. Regionaljob growth in total services is projected to reach an average of2.8 percent gro\\'1h per year.

Business services, andtemporaryhelp services in particular, is likelyto be a relatively fast growth segment as more and more firms out-source temporary help as well as ancillary business functions such as accounting, printing, and human resources.

Software development is expectedto be another strong growth segment in services. With long-run investments in computer and business equipment steadily growing, software to manage and control these new devices will be aided bythe advancement in technology.

Thetransportation services sector is expected to see relatively stronger growth than its companion communication and utility sectorworkforce. While the transportation sector continues to press its comparative advantage as a regional distribution hub in Portland, the communication andutility sector is expected to see limited expansionopportunities. Overall, the transportation, communication and utilities industry (TCU) is projected to growth at nearthe region's rate ofpopUlation growth (1.5 percentAPR).

30

### The retail and wholesaletrade sectors in the region are expected to also increase at about the rate ofpopulation growth. Retail trade employment is forecasted to grow an average of1.9 percent APRwhile wholesaletrade is expected to grow a bit slower at 1.7%APR. The region's proximityto Asian markets and as distribution hub for the Northwestwill playakey role in aiding wholesaletrade employment to continue to add tojobgrowth in the region.

The region's finance sectorhas beenweakened in the wake ofmergers and acquisition in the banking communitythathas led to a significantnumber ofcorporate headquarterjobs relocating to other states. Theprospects for well-paying corporate level finance positions have diminished and as a resultthe forecast reflects significantly slowerjobgrowth in the finance, insurance, and real estate sector. The cyclical weakness in the region has hamperedjob growth in the insurance and real estate sectors. These industry segments tendto ebb and flow with changes in population and income. Right now, these factors are down. Overthe long haul, weexpectthese economic factors to rebound. In

### total, the average percentrate ofgrowth is expected to run about 1.4 

### percent peryear.

Non-manufacturing Employment thousands mllions 1,600 1,400 1,200 1,000

800
600**~~~**

400
200

0 180 160 140 120 100 80 80 40 20 0



### The construction sector has historicallybeen an early indicator ofbusiness cycle turning points. In

### fact, construction employment has been very weak for several years leading up to the current recession. This is clearly another factor that has lead this region to having

one ofthe highest unemployment rates ofmetropolitan areas in the nation. Theregional forecast calls for constructionjobsto rebound after the recovery and for growthto be moderate instead ofa sharprebound. The forecast anticipates the region's construction industryto experiencejobgrowth similarto the average in population

- 1.6 percent.
Employment in state and local government is projectedto increase by a small margin slowerthan population growth. The assumption is that tight state and local budgets will limitjob growth in government.

3114.0 

# - Total Non-Farm Wage8r. Salary Employment Total Manufacturing Employment
1600,0 200,0 200,0 25,0 180,0 1400.0 160,0 'Vi" 175.0 20,0 

### i



### ... ! c 140,01 11200.0 

# 1

0 120,0 

## i :6 

## .s 150.0 15.0**:~** :S 1000.0 100,0**~** !**~** 

## i i 80,0 E 125,0 

# 1 10,0

# ! t !

800.0 60,0 

## ! i .!i 

# i oS 40.0 UoI 100.0 5,0

600,0 20,0 75,0 0,0 400.0 0,0 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025

Food Processing Employment

12,0

..... 10.0 -/I c 

### ! 8,0 

### :5

c :::. 6,0 

### i t 4,0 

# !

2,0

0,0

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025

Lumber 8r. Wood Products Employment

12.0 

### i

### !i 10,0 

# . :5 8,0 c :::. 

### i 6,0 t i 4,0 oS 2,0

0,0

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025

Printing 8r. Publishing Employment 2,00

1.80

1.60



## ... 1.40 5

1.20**~** 5 1.00 

### i

0.80 !.
.2 0.60 

## !

0.40
0,20
0,00

1.20

1.00

0,801 E
c 0,60 ':' 

# !

0.40 -i .Ii
0,20

0,00 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025

Textile 8r. Apparel Employment

7,0

6,0 

### i

; 5.0 

### i 4.0 

# 1 e

3 0

. {2.a oS
1.0

0,0

1975 1980 1985 1990 1995 2000 2.50

2,00



## ...**~** 1.501 

## e. i
1.00 !. t .!i
0.50

0,00 2005 2010 2015 2020 2025

Paper 8r. Allied Products Employment

10,0



## ... 8,0 1!



# . 0 6,0 :6 ! 5 4.0 

# 1 t

2,0

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025

Metals Industry Employment 

# -, 0,80

0,70

0.60 'B'**~** 0,50 i

c 0.40**~**
0.30


# .. l

0.20**~**

0.10

0,00

25,0 3.50 18.0 1.80
16,0 1.60 ),00 

### i 20,0 

### i 14,0 1.40

..... ! 2.50 

# I Ii 1.20 :§!**~** 12,0 

# I
:6 15,0 i 

### :5 2.00

# !

1.00 :§. &: 10.0 c :::. :::. 

### "" 

# I 8,0 0,80

# 1 150 

### 1 10 0 ! 

# 16,0 0.60

## t

1.00 

## ! E 0.40 ILl 4,0 

# i .

5,0 0.50 0,20 2,0
0,00 0,00 0,0 0,0

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025



# -

32Electrical Machinery, Semiconductors &; Instruments Employment

70.0.,--

..·----..·-----,---....-------......., 3.50

60.0 3.00 Transportation Equipment Employment

14.0.,-----·

..····----··---,-····--....··--·-..·, 2.50

12.0 

# 1

10

.0**~** 8.0 

## e. 

# i 60 

# !

4.0

2.0

0.0 2.00

0.00 1975 1980 1965 1m 1995 2000 2005 2010 2015 2020 2025

Other Nondurable Goods Employment

12.0 3,00

10.0 2.50



## ... 8.0 2.00**~** e
6.0 ISO

# t

4.0 1.00

## t .!i

2.0 0.50 2.50 1500 

### .J 40.0 2.00

150 

## e. 

# i 30.0



# .. 1.00 120.0

10.0 0.50

0.0 0.00

1975 1980 1985 1990 1995 2000 2005 2010 2015 1020 2025

Other DurableGoods Employment

14,0 1.8

1.6 110 1.4 

# i

100 U

8.0 ; " 

### I 1.0

0.8

### ~ 0.6 

### il 6.0

1!. 4.0 .Ii 0.4

2.0 0.2

0.0 0,00 0.0 0.0 1975 1%0 19B5 1990 1995 2000 2005 2010 1015 2020 2025

1975 1980 1%5 1990 1995 2000 1005 2010 2015 2020 2025

Transportation, Communications, Utilities Employment

90.0 10.0
9.0 80.0
8.0 

## i 700



# . 7.0 

## 1**~** 600 

# , 6.0 £i .! 50,0 

## e 5.0 

# ! 1: 

# .40,0 4.0**~** 30.0 3.0 

# I 1!. 

### ! 20,0 2.0

10.0 LO
0.0 0.0

1975 1980 1985 1990 1995 2000 1005 2010 2015 2020 2025 WholesaleTrade Employment

120.0

,§. 60.0 

### i**~** 40,0 1!. ! 2M

0.0

1975 1980 1985 1990 1995 2000 8.0

7.0

6.0 'iii'

5,0' " 4.0 ::- Ii E 30

## i

2.0 .!i

1.0

0.0 2005 2010 2015 2020 1015

Retail Trade Employment

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 30.0

25.0

20.0

# I

E .Ii 15.0 ::: Ii**~** 10.0 -l .!i

5.0

0.0 120.0

100.0 

### .a ; 80.0 

# . ! £i ,§.



# . 60.0 1: 

### j 40.0



# .. .!i Finance, Insurance &; Real Estate Employment

20.0 1 .2 11 E 

## e. 

# I 

# 1

33other Services Employment**,------~** ...**-------,----------~ ~**  300.0 •

0.0 

# -

160.0

140.0 

# i 1<0.0 

# ! 100.0 ! ao.o

0 

# . I 60.0 

### .!i 40.0

20.0

0.0 Health Services Employment

20.0 18.0 16.0**~** 14.0**~** 12.0**.~** 

# :'1

6.0 ::;­ 4.0 UJ 2

.0 0.0 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 -r----

.....**----r-------~**



# i _._

State &. Local Government Employment



# .. I

15.0 E ! 'o! 10,0**~** 'Ii. .Ii 450.0
"100,0 

# 135 0.0**~** 

### 1 ! 250.0

20

0.0 

### J Ii 150.0



# .. Jj 100.0

50.0



# -

34

# Alternate Regional Growth Scenarios

Introduction.
Regional forecasts are constructedbased onnumerous assumptions. Prior sections ofthis economicreport focused onthe mid-growth orbaseline regional growth forecast and its assumptions. Thebaseline forecast represents, in our opinion andthose ofpeerreview panels, the most likely andreasonable growth projection forthe Portlandregion overthe next 20+years. Knowingthat forecasts can change asworld events unfold, wehave prepared seperatehigh and a low growth scenarios. Forpolicymakers, thesetwo scenarios delineate a range ofpossibilities in case economic and demographic conditions change drasticallyfrom thebaseline assumptions.

Wehave preparedtwo alternative forecasts: a pessimistic scenario andan optimistic scenario. Each scenario begins with theregional baseline forecast andtilts all the economic drivers in onedirection or another. Thepessimistic scenario assumes economic andpopulationwill growmuch more slowly. Thepessimisticregional scenario incorporates DRi-WEFA'spessimistic U.S. growth projections in which all thekey economicvariables are "dialed"to a lower growth setting, andalso assumes the Census Bureau'shigh mortality and low fertility assumptions. The optimisticregional scenario

assumes DRi-WEFA's optimistic U.S. growth projections and the Census Bureau's low mortality and high fertility assumptions.

The high and low growth scenarios thathavebeen developed forthe region represent extreme bandwidths for regional growth. It is estimatedthatoverthe next20+years of the forecast thatthere is overa 90 percentprobabililtythat regional growthwill fall withintherange ofthesetwo scenarios. However,the baseline regional forecast remains

as the best approximation oftheregion's mostapparent growth trend.



### The Regional Growth Alternatives.
Regional Overview. The low growth (pessimistic scenario) forecast for the region is characterized by substantiallyslower employment growththan its baseline counterpart. Total wage and salaryemployment growth comes in atan anemic 1.3 percent APRover theduration ofthe forecast. Manufacturingemploymentwithintheregion stalls and in particularhightechnolgyjobs grow atvery low levels (0.5 percentAPRin pessimistic, 1 percent in the baseline, 1.5 percentin optimistic). Otherregional industries suffer significantjob losses as industrial production nationwide is assumedto contractin many
resource and labor intensive industrial sectors. As a result ofthis national pessimissm, the

consumer sectortakes a significant beating as consumption falls well belowhistoric rates.

Not only isthe economic sector battered byweakerregional economic performances, the population andlabortrends for thepessimistic scenario assumes much slowerincreases too. The pessimistic scenario restricts labor force growth because oflowernetmigration into the region and lower birth rates and lowerlife expectancies. Thesefactors combine to slow the future rate ofpopulation growth. In tum, the lowerdemographic factors force

35

# - employment growth in population serving industries to cutback employment growth too. Generally, in the traded sector industries, a dimmer outlookfor national growth dampens regional economic activity relative to the base trend. Overall, the potential output for the region is significantly diminished as compared to the region's baseline forecast.

Other economic factors in the low growth regional scenario also grow more slowlyincluding the housing stock, housing values appreciate much less, and the abilityof governments to generate revenue from taxes is lower (but demand for government servicesmaybe less in some areas butmore in others, such as welfare and other low income aid.) because personal income in the regionwill also be substantially less.

In

### the case ofthe regional high growth (optimistic scenario) forecast, economic and demographic assumptions are "dialed up at a higherrate". National economic conditions

are all assumed to favor morerapid economic expansionworldwide. This 

## V.S. forecast is characterized by higher GDP, lower inflation, lower interestrates, lower exchange rates, loweroil prices and at the sametime employment and industryproduction rates are to grow more rapidly. Demographic conditions inthe optimistic case is characterized by a greater migration ratesthatcorrespondsto greateroverallpopulation, labor force, and employment growth. Thenational outlookthat drives the high scenario assumes annual 

## V.S. population growth averages 1.3 percent peryear (1.0 percent in the baseline trend, 0.5 percent for the pessimistic scenario).

Becausethe optimistic scenario assumes a higher growth trend for the 

## V.S., the region shares in the greaterbounty. Birthrates are higher, life expectancies arehigher, and regional migrationhits greaterheights which intum drives up regional population growth. The region's population growth averages 2 percentperyear during the forecast (1.5 percent in thebaselinetrend, 0.8 percent for the pessimistic scenario). Thehigher populationtrend pushesthe adult population higherwhich directly affects the regional labor force. More people in the labor force and better economic conditions lead to higher jobgrowth inthe region. Regionwide wage and salary employment growth averages 2.2 percent in the optimistic case (1.8 percent in the baseline trend, 1.3 percent for the pessimistic scenario).
Population Comparisons. Total population in the baseline scenario for the five county region12 

### grows from 1,874,400 residents in 2000 (source: Census sfl)to 2,647,000 by year 2022. In 

### comparison, the optimistic scenario grows to 2,822,300; whereas the pessimistic scenarioreaches a level of2,212,100 residents in the same period oftime. The difference between scenarios as comparedto the baseline is a matter ofminus 4 years for the optimistic regional scenario and plus 10 years in the pessimistic regional scenario13•



### The baseline population growth trend is characteristic ofbirth, death and migration trends consistent with emerging trends in the region and ofnational demographic expectations.

12 IncludesMultnomah, Clackamas, Washington, Yamhill and Clarkcounties

13 In otherwords, the optimistic scenario reaches the 2022 population markinthe baseline trend4 years
sooner and in the case ofthe pessimistic scenario, over 10 years later.

36

### Regional population trends assumed in the optimistic case are characteristic ofmigration patterns experienced inthe Portland region during a sustained period ofveryhigh inmigration levels. The variation inmigration levels inthe optimistic scenario mimicthose experieced duringthe late-1980'sand 1990's in the Portlandregion, but overthe entire forecast, the average growth rate in the optimistic case is belowthe regional trendrate in the 1990's (history: 2.4 percent, forecast: 2.0 percent). In addition, we assume higher fertility and life expectancies for residents living inthe region.

A populationrate that mimics national growth rates is assumed inthe pessimistic scenario. This scenario represents an extremely lowpopulation rate for theregion and is highlyuncharaceteristic ofpasttrends. At no point inhistoryhasthe region ever experiencedover 20years ofrepressive populationtrends as exhibited in this pessimistic regional scenario. The onlyperiod in regional historythat sawpopulation growth slow to

near 1percentAPRwasthe 10-yearperiodthat includedthe 1930 eraDepression. Clearly, the region is unlikely to experience 20years ofdepression-style population growth and so this scenario representsthe lowerbounds ofthis region'spopulation trends.



## BandwidthForecasts for Selected Regional Population Characteristics



# - Population Growth Scenarios**~** ,0

: 10

9 Net Migration Scenarios

20 25 3Q

70 15 80 85 90 95 00 OS 10 15

Crude Death Rates

(blrll1. per 1,000)



### Inthe pessimistic scenario, we wantedto characterize what couldbe a lower bound of population ifwe assumedvery little regional in-migration, lownatural increases in regional population and how these factor would impact regional employment growth. The population growth rate in the pessimistic scenario is similarto the growth rate thatDRIWEFA has forecasted for the U.S. in its baseline trend projection.
Similarly, the optimistic scenario for the region is as equallyunlikely, but is illustrative of

a higherbound ofthis region'spopulation trend. It is improbablethatthis region would achieve 20years in a row ofpopulation growth that copiedwhatthis region experienced 

# ,_.

37

### during the 1990's. It

### is also unlikelythat another $12 billion ofhigh-tech investments would be repeating itselfin next 20years

- especially so soon afterthe 1990's boom.

Economic Comparisons. In part, employment growth drives offofpopulation because ofthe labor force characteristics derived from each growth alternative. Labor force conditions in the optmistic scenario call for growthto average 2.1 percentperyear (1.6 percent in the base, 1percent in pessimistic). Because atthe national level, the adult population is expectedto grow faster inthe optimistic case, moreworking age adults are expectedto migrate into theregion seekingjobs. Also, faster internal population growth from natural increases will also addtotheregion's labor force. The expectation inthe high growth scenario calls for regional employmentto rise an average of2.2 percentper year (1.8 percent in the baseline trend, 1.3 percent forthe pessimistic scenario).
Wage and salary employment growth is expectedto exceed the change in the labor force in partdue tothe expectationthat labor force participation rates will continueto edgeup modestly in all scenarios

In the optmistic case, regional income growth is expectedto rise more sharplythan the baseline trend scenario. However, because population growth rises farily rapidly and the inflationrate inthe high growth scenario is greater, theregion forecast exhibits a quirky situation in which per capitaincome growth in real dollars is slower in the optimistic case thanthebase case. Otherwise, in current dollars, regional per capita income grows and is higher inthe optimistic case.

In all cases, wage and salary disbursements stillrepresent overhalfofall earned and unearned income. Interestingly, the amount oftransferpayments comingtotheregion in the optimistic case is less than transfer paymentsreceived in thebaseline forecast. This results from the region achieving greater economic prosperity in the high growth case as to offset income transfersto medicare/medicaid recipients, unemployment benefits, and social security, aid for dependent children and welfare payments.

Home prices appreciate morerapidly (average 4.8 percentperyear inthe optimistic, 3.8 percent in base case, 2.0 percentin pessimistic) in the optmistic case. Higher housing prices are indicative ofan economythat exhibits hefty gains inpopulation, employment and income as in the optmistic scenario. More population fuels the labor force which in turn leads to employmentgains. Robust employment and relatively greaterproductivity in the future combinetoboosttherate ofincome growth. More income and morepeople add upto more demand for housing. In the shortrun, production ofhousing falls behind the demand for housing, home prices appreciate in the shortrunbecause ofdeficts. However, overthe long run the consistentlyhigher demand shifts the demand curve higher resulting inhigher home prices. The opposite occurs in the pessimistic scenario for the region. Thus, a lowerreving regional economy generates less housing demand, and so homeprices don't appreciate as readily. 

# -,

-,

38

## Bandwidth Forecasts for Selected Regional Economic Characteristics

2,000 i,saO 1,600 1,400 1,200 1,000 BOO 600 400 200

o

# ~II I

...... 10;' I,

: mid! Non·Manufacturing JobGrowth Scenarios 

# [:;

1,400 1,200



### ......**~!**

__high 1,000 i••• low
600 BOO i_midi

400 200

o· 90 95 00 05 10 15 20 25 3Q

Consumer Price Index



# -

120,000
100,000

00.000

60,000

40,000
20,000 70 75 SO 85 90 95 00 05 10 15 20 25 3Q

Per Capita Income, Nominal $



## National Overview. Regional growth is directly affected bythe national outlook. The regional baseline forecast is derived from DRl-WEFA'strend outlook for the U.S. The optimistic and pessimistic regional alternatives derive from DRl-WEFA'srespective optimistic and pessimistic national scenarios.

A U.S. economic outlookthatpresents a much more robust forecast creates economic incentives and downstream benefits for regional industries and households. 

### Inthe case of the DRl-WEFA optimistic U.S. forecast, higher GDP, productivity, employment, and other favorable economic conditions spur a faster pace ofregional activity. Conversely, a U.S. forecast that is more constrained in its outlook for the U.S. will have an opposite effect on regional economic activity.

39

# - The following table highlights major sectors ofthe U.S. economyas well as demographic and economic factors which affect the pace oflong-run economic activity for the region.


## U.S. Economic and Demographic Summary Details. (Average Annual PercentChange) 

## History 30-YearForecast 1970-00 Optimistic Baseline Pessimistic Population and LaborForce i



### Total Population 1.0% 1.3% 1.1% 0.5% LaborForce 1.7 1.1 1.0 0.8 Total Wage & SalaryJobs 2.1 1.1 1.0 0.5

Manufacturing -0.1 -0.3 -0.7 -0.9 Non-manufacturing 2.6 1.3 1.2 0.7 

## GDP Components ($1996)

Gross Domestic Product I 

### 3.1 3.6 3.1 2.6 Consumption 3.3 3.6 3.1 2.7 Investment, total 4.3 5.0 4.0 I 

### 3.5

Technology (equipment & software) 14.6 6.6 6.1 5.7 Governnment, Federal 0.7 1.5 1.3 1.4 Governnment, State & Local 2.6 2.1 1.7 1.5 Personal Income ($1996) 2.6 3.5 3.0 2.7 

## Output and Productivity

Output 2.9 3.5 3.0 2.4 Productivity 0.8 2.6 2.4 1.9 

## Inflation andPrices

CPI 5.2 2.5 3.1 3.9 GDP price deflator 4.4 2.3 2.8 3.6 Oil Price ($/barrel) 14.2 ! 

### 2.5 2.6 4.0 

## Global Conditions

Global GDP 2.4 2.5 2.4 2.3 Exchange Rate 0.3 -0.3 -0.1 0.0 i 

# ,­

Source: DRI-WEFA, WmterU.S. forecast as complied 

### by Metro DRC



## Early Risks tothe Regional Forecast.

The regional forecast assumes that the U.S. economy is in a mildrecession, but that the monetary and fiscal boosts succeed in turning it around in early 2002. Theregional forecast also assumesthat, by spring 2002, consumershave shaken offtheirfears of flying and large crowds. Finally, it assumes that there are no further directterrorist attacks onthe United States, and that militaryaction ends with the defeat oftheTaliban, the rout ofal Quaeda, and stability in the middle east. Any orall ofthese assumptions could provetoo rosy.

40

# .­ Onthe otherhand, the regional forecast couldbe overlypessimistic. Businesses may have overreactedto the plunge in spendingthat followedthe September 11 attacks. This scenario carries its ownrisks. Ifactivity is about to tum around on its own, thehuge amount ofmonetary and fiscal stimulus inthe pipeline could prove excessive. Rather than grease the wheels ofthe recovery, it would setup the conditions for a return of inflation and speculative investment. Nonetheless, in our estimation there is more downside riskthan upside growth potential at thisjunctureofthe business cycle.



## SeeAppendixSections for further details:

• AppendixA: Table 14: "Alternate Forecasts for the Portland-Vancouver, OR-WA" for a summarytable ofkey variables in the regional forecast.

• Appendix B: "ARange ofPossiblities: The Optimistic and Pessimistic Projections" for DRI

-WEFA'sdescription ofthe national alternatives.



# ,­

41

# AppendixA: Regional Economic Forecast Details



# -

# -

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 1,075.8 1,072.5 1,092.6 1,117.5 1,145.8 1,171.7 1,2036 1,234.8 1,266.0 1,297.9 1,314.8 1,325.6 1,316.9 1,329.6 1,342.3 1,355.2 1,369.5 1,398.6 1,428.4 1,477.9 1,502.0 1,552.0 1,597.4 1,643.4 1,681.1 1,723.9 1,772.7 1,812.0 1,844.6 1,874.5 1,902.5 1,934.3 1,963.7 2,007.7 2,049.2 2,091.0 2,132.8 2,170.1 2,203.0 2,233.9 2,264.5 2,294.6 2,324.7 2,357.9 2,394.1 2,429.5 2,464.2 2,499.5 2,534.9 2,571.1 2,608.4 2,647.0 2,687.0 2,727.6

768.2 -0.3% 1.9% 2.3% 2.5% 2.3% 2.7% 2.6% 2.5% 2.5% 1.3% 0.8% -0.7% 1.0% 1

1.4% 1.4% 1.5% 1.5% 1.5% 1.5% 1.5% 194.3 200.1 205.0 207.5 214.7 219.7 231.6 237.0 249.9 256.4 252.4 250.5 255.0 258.1 254.8 260.3 266.3 271.8 278.0 287.9 294.5 301.0 307.2 313.4 319.1 324.4 331.6 335.4 347.2 352.6 358.6 364.6 370.6 376.4 382.2 387.4 392.7 398.2 404.2 410.7 417.2 423.9 430.7 437.5 444.3 451.1 458.1 465.1 472.2 479.4 486.6 494.0 501.4 508.9 1.6% 1.6% 1.6% 1.6% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 3.1% 1.8% 43.4 2.9% 44.0 1.4% 44.9 2.0% 45.7 1.8% 47.2 3.3% 51.8 9.6% 53.6 3.5% 55.3 3.3% 56.3 1.8% 566 0.5% 56.2 -0.7% 57.0 .1.4% 57.6 1.1% 57.1 -0.9% 58.4 2.3% 59.8 2.4% 60.7 1.5% 65.6' 8.0% 67.9 3.6% 69.2 1.9% 70.9 2.5% 72.8 2.7% 74.6 2.5% 77.5 3.9% 79.2 2.2% 81.9 3.4% 83.1 1.5% 85.0 2.3% 86.4 1.6% 88.2 2.0% 89.9 1.9% 91.4 1.7% 92.9 1.6% 94.3 1.5% 95.6 1.3% 96.8 1.3% 98.2 1.4% 99.6 1.4% 101.0 1.5% 102.6 1.5% 104.1 105.6 107.2 108.8 110.4 112.1 113.7 115.4 Pet. Columbia C 28.8 29.9 3.8% 30.1 0.7% 30.2 0.4% 31.2 3.2% 31.8 2.1% 32.4 33.3 33.9 34.9 35.7 36.2 36.2 36.0 36.2 36.1 36.1 36.1 36.8 37.3 37.6 37.8 38.8 38.8 39.4 39.7 40.1 41.5 42.3 42.7 43.6 43.5 -0.2% 43.9 1.0% 44.4 1.0% 44.8 1.1% 45.3 1.1% 45.8 1.1% 46.3 1.1% 46.8 1.1% 47.4 1.1% 47.9 1.1% 48.4 •. 1% 49.0 1.1% 49.5 1.1% 50.0 1.1% 50.6 1.1% 51.1 1.1% 51.7 1.1% 52.2 1.1% 52.8 1.1% 53.4 1.1% 53.9 1.1% 54.5 1.0% 55.1 1.0% 55.6 1.0% 56.2 1.0%1 2,091.0 2,151.0 2,197.3 2,241.9 2,285.0 2,329.7 2,378.3 2,446.7 2,518.3 2,588.0 2,633.1 2,668.0 2,664.9 2,653.1 2,666.6 2,672.7 2,683.5 2,701.0 2,741.3 2,790.6 2,842.3 2,918.8 2,973.9 3,034.5 3,087.1 3,141.4 3,195.1 3,243.3 3,282.1 3,316.2 3,421.4 3,465.8 3,504.5 3,533.7 3,583.0 3,629.6 3,674.9 3,720.5 3,762.3 3,798.8 3,832.8 3,866.8 3,900.8 3,935.0 3,972.6 4,013.5 4,053.4 4,092.7 4,132.5 4,172.4 4,213.2 4,255.0 4,298.2 4,342.6 4,387.7 Pet. Chg.

2.9% 2.2% 2.0% 1.9% 2.0% 2.1% 2.9% 2.9% 2.8% 1.7% 1.3% -0.1% -0.4% 0.5% 0.2% 0.4% 0.7% 1.5% 1.8% 1.9% 2.7% 1.9% 2.0% 1.7% 1.8% 1.7% 1.5% 1.2% 1.0% 3.2% 1.3% 1.1% 0.8% 1.4% 1.3%

1.0% 1.0% 1.0% 1.0% 1.0% 1.0% California 20,039.0 20,346.0 20,585.0 20,869.0 21,174.0 21,538.0 21,936.0 22,352.0 22,836.0 23,257.0 23,782.0 24,278.0 24,805.0 25,337.0 25,816.0 26,403.0 27,052.0 27,717.0 28,393.0 29,142.0 29,811.4 30,414.1 30,875.9 31,147.2 31,317.2 31,493.5 31,780.8 32,217.7 32,682.8 33,145.1 33,871.6 34,456.6 35,127.7 35,771.6 36,549.6 37,337.6 38,087.1 38,904.6 39,715.2 40,469.0 41,159.9 41,818.7 42,447.5 43,082.3 43,678.7 44,251.8 44,827.5 45,420.6 45,972.1 46,526.6 47,139.7 47,680.1 48,187.2 48,754.4 49,342.9 1.5% 1.2% 1.4% 1.5% 1.7% 1.8% 1.9% 2.2% 1.8% 2.3% 2.1% 2.2% 2.1% 1.9% 2.3% 2.5% 2.5% 2.4% 2.6% 2.3% 2.0% 1.5% 0.9% 0.5% 0.6% 0.9% 1.4% 1.4% 1.4% 2.2% 1.7% 1.9% 1.8% 2.2% 2.2% 2.0% 2.1% 2.1% 1.9% 1.7% 1.6% 1.5% 1.5% 1.4% 1.3% 1.3% 1.3% 209.9 211.9 213.9 216.0 218.0 220.2 222.6 225.1 227.7 230.0 232.2 234.3 236.4 238.5 240.7 242.8 245.0 247.3 249.9 252.7 255.4 258.1 260.7 263.0 265.2 267.6 269.9 272.2 274.5 276.8 279.1 281.3 283.6 285.9 288.2 290.5 292.9 295.3 297.7 300.1 302.6 305.1 307.6 310.2 312.7 315.2 317.7 320.2 322.7 325.2 327.7 Table 1

Pet. Chg.

1.3% 1.1% 1.0% 0.9% 1.0% 1.0% 1.0% 1.1% 1.1% 1.2% 1.0% 1.0% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 1.0% 1.1% 1.1% 1.1% 1.0% 0.9% 0.8% 0.9% 0.9% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.7%

In Thousands Source: Metro ORe A-I Metro01.xls 10/7/02Table 2 

### Components of Population Change for Portland-Vancouver, OR-WA

Percent Natural Migration 

# - Population Change Change Births Deaths Increase Net Migration Share" 

### 1970 1,049.3 12.1 18.0 10.0 8.0 4.1 34% 

### 1971 1,075.8 2.5% 26.5 16.5 10.1 6.4 20.1 76% 

### 1972 1,072.5 -0.3% -3.3 15.2 10.4 4.8 -8.1 244% 

### 1973 1,092.6 1.9% 20.1 15.0 10.5 4.4 15.7 78% 

### 1974 1,117.5 2.3% 24.9 15.9 10.2 5.7 19.2 77% 

### 1975 1,145.8 2.5% 28.3 16.5 10.2 6.3 22.0 78% 

### 1976 1,171.7 2.3% 25.9 16.9 10.3 6.7 19.2 74% 

### 1977 1,203.6 2.7% 31.9 18.3 10.1 8.1 23.8 74% 

### 1978 1,234.8 2.6% 31.2 18.9 10.4 8.6 22.6 73% 

### 1979 1,266.0 2.5% 31.2 20.2 10.5 9.7 21.5 69% 

### 1980 1,297.9 2.5% 32.0 21.1 10.8 10.3 21.7 68% 

### 1981 1,314.8 1.3% 16.8 21.6 10.7 11.0 5.9 35% 

### 1982 1,325.6 0.8% 10.8 20.9 10.4 10.4 0.3 3% 

### 1983 1,316.9 -0.7% -8.7 20.1 10.7 9.4 -18.1 208% 

### 1984 1,329.6 1.0% 12.7 20.0 11.2 8.8 3.9 31% 

### 1985 1,342.3 1.0% 12.8 20.5 11.3 9.2 3.5 28% 

### 1986 1,355.2 1.0% 12.9 20.3 11.2 9.1 3.8 29% 

### 1987 1,369.5 1.1% 14.2 20.3 11.6 8.7 5.6 39% 

### 1988 1,398.6 2.1% 29.1 21.4 11.6 9.8 19.3 66% 

### 1989 1,428.4 2.1% 29.8 22.3 11.6 10.6 19.2 64% 

### 1990 1,477.9 3.5% 49.5 23.8 12.1 11.7 37.8 76% 

### 1991 1,502.0 1.6% 24.1 23.8 11.9 11.9 12.2 51% 

### 1992 1,552.0 3.3% 50.0 23.7 12.3 11.4 38.5 77% 

### 1993 1,597.4 2.9% 45.4 23.6 13.1 10.5 34.9 77% 

### 1994 1,643.4 2.9% 46.0 24.0 13.1 11.0 35.0 76% 

### 1995 1,681.1 2.3% 37.8 24.5 13.2 11.3 26.5 70% 

### 1996 1,723.9 2.5% 42.8 24.8 13.2 11.6 31.2 73% 

### 1997 1,772.7 2.8% 48.8 25.5 13.5 12.0 36.7 75% 

### 1998 1,812.0 2.2% 39.3 26.4 13.6 12.7 26.6 68% 

### 1999 1,844.6 1.8% 32.6 26.8 13.5 13.3 19.3 59% 

### 2000 1,874.5 1.6% 29.9 27.5 13.8 13.7 16.2 54% 

### 2001 1,902.5 1.5% 28.1 28.9 14.2 14.6 13.4 48% 

### 2002 1,934.3 1.7% 31.8 29.0 14.5 14.6 17.3 54% 

### 2003 1,963.7 1.5% 29.4 29.1 14.7 14.4 14.9 51% 

### 2004 2,007.7 2.2% 44.0 29.7 15.0 14.7 29.3 67% 

### 2005 2,049.2 2.1% 41.5 30.2 15.3 14.9 26.6 64% 

### 2006 2,091.0 2.0% 41.8 30.8 15.7 15.2 26.6 64% 

### 2007 2,132.8 2.0% 41.8 31.4 16.0 15.4 26.4 63% 

### 2008 2,170.1 1.8% 37.4 31.9 16.3 15.6 21.8 58% 

### 2009 2,203.0 1.5% 32.9 32.3 16.7 15.6 17.3 53% 

### 2010 2,233.9 1.4% 30.9 32.6 17.1 15.5 15.4 50% 

### 2011 2,264.5 1.4% 30.6 32.9 17.5 15.3 15.3 50% 

### 2012 2,294.6 1.3% 30.2 33.2 18.0 15.2 15.0 50% 

### 2013 2,324.7 1.3% 30.1 33.4 18.4 15.0 15.0 50% 

### 2014 2,357.9 1.4% 33.2 33.8 18.9 14.9 18.3 55% 

### 2015 2,394.1 1.5% 36.3 34.3 19.4 14.9 21.4 59% 

### 2016 2,429.5 1.5% 35.4 34.7 19.9 14.9 20.5 58% 

### 2017 2,464.2 1.4% 34.7 35.2 20.4 14.8 19.9 57% 

### 2018 2,499.5 1.4% 35.3 35.6 20.9 14.7 20.5 58% 

### 2019 2,534.9 1.4% 35.4 36.1 21.4 14.7 20.7 59% 

### 2020 2,571.1 1.4% 36.3 36.6 21.5 15.1 21.2 58% 

### 2021 2,608.4 1.5% 37.3 37.0 21.6 15.4 21.9 59% 

### 2022 2,647.0 1.5% 38.6 37.6 21.7 15.8 22.8 59% 

### 2023 2,687.0 1.5% 39.9 38.1 21.8 16.3 23.7 59% 

### 2024 2,727.6 1.5% 40.6 38.7 21.9 16.7 23.9 59% 

### 2025 2,768.2 1.5% 40.6 39.2 22.7 16.5 24.1 59% estimates are In thousands • net migration / change

Source: Metro ORe A-2 Metro01.xls 1017102----- 

## ') 

## )

Table 3 

## Population by Age for Portland-Vancouver, OR-WA 0·4 5-910·14 15·19 20-24 25-29 30·34 35·39 40·44 45-49 50-54 55-59 60-64 65-6970-7475·7980-84 85+ Total 

### 1,477.9 19.1 35.4 22.8 44.9 54.8 65.5 55.3 55.4 139.1 123.1 89.8 136.2 1990 108.9 103.6 95.5 98.2 120.6 109.8 1,535.4 23.7 19.8 36.0 54.8 45.8 55.5 69.0 56.9 139.8 125.9 94.4 111.1 119.5 135.6 1991 110.8 105.3 97.5 99.5 1,566.2 24.8 20.9 36.7 54.6 46.7 74.7 59.8 55.9 129.7 101.3 135.7 141.0 1992 114.7 113.2 108.0 101.2 104.5 120.7 1,608.4 22.0 47.5 37.5 25.9 54.6 56.9 107.7 80.6 63.3 136.6 142.3 133.3 117.7 116.0 111.0 105.1 110.0 123.4 1993 1,638.6 23.1 26.8 48.2 38.3 58.4 54.8 86.5 67.2 143.7 136.5 113.5 120.5 118.9 126.6 138.0 1994 114.0 108.9 115.2 1,670.7 24.1 27.6 48.7 39.0 60.2 55.3 118.6 92.3 144.5 139.0 71.4 1995 122.7 121.3 116.6 112.0 119.0 129.1 138.9 1,706.7 28.4 25.1 49.2 56.0 39.6 123.2 75.8 62.5 140.2 145.4 141.2 97.8 124.8 115.0 122.7 131.9 1996 123.7 119.2 1,737.7 26.1 40.3 29.2 57.1 49.8 80.5 65.3 127.5 103.3 127.6 142.5 146.9 143.5 1997 126.5 122.1 118.5 127.5 135.9 27.1 1,773.0 29.8 40.9 58.5 50.5 131.3 85.2 68.3 148.1 145.3 108.4 1998 130.2 128.9 124.7 121.4 131.0 139.1 144.5 1,798.6 27.9 41.5 30.4 60.0 51.3 134.4 113.0 89.8 71.5 132.2 145.8 148.9 146.7 1999 130.7 126.7 123.6 132.9 141.0 1,874.5 26.4 46.2 42.1 30.0 61.1 48.5 149.6 126.9 88.3 148.2 153.8 156.3 132.1 135.0 132.5 127.4 125.4 144.8 2000 1,902.5 31.4 29.5 53.0 42.5 98.1 77.9 63.6 148.1 138.8 120.5 136.0 126.7 134.6 142.5 146.9 149.4 2001 133.3 129.6 1,934.3 30.3 43.3 32.0 102.4 81.6 66.0 54.4 149.1 141.1 124.2 138.7 147.5 150.0 2002 135.2 131.4 128.5 135.4 143.1 1,963.7 31.1 44.1 32.6 68.5 55.8 142.8 127.4 106.4 85.2 148.2 150.5 149.8 2003 140.8 136.9 133.0 130.1 136.7 143.9 2,007.7 31.9 45.1 33.2 71.4 57.5 110.5 89.1 151.1 144.8 130.6 2004 144.0 139.9 135.5 132.8 140.5 147.2 150.5 152.1 2,049.2 32.7 46.2 33.9 74.4 59.4 133.6 114.3 92.9 152.8 153.6 152.4 146.6 2005 147.0 142.6 137.9 135.3 143.5 150.2 2,091.0 34.7 61.5 47.4 33.5 77.5 153.7 136.3 118.0 96.7 149.9 140.3 137.7 153.1 155.1 155.3 148.3 2006 145.4 146.5 2,132.8 35.5 48.8 34.3 80.7 63.8 138.8 121.4 100.5 152.8 140.2 156.0 157.5 157.1 155.1 150.0 2007 148.2 142.8 149.4 2,170.1 35.1 50.3 36.4 124.5 104.0 83.9 66.1 156.4 141.0 155.3 150.7 145.1 142.3 151.3 158.1 159.5 158.7 151.4 2008 2,203.0 36.0 87.1 51.8 37.3 107.3 68.6 161.0 157.5 152.7 142.9 127.3 2009 157.4 152.8 147.2 144.1 152.5 159.5 1.60.0 2,233.9 38.3 36.9 71.1 53.5 144.7 129.9 110.4 90.2 161.1 158.5 153.8 2010 159.3 154.8 149.2 145.8 153.5 160.5 162.2 2,264.5 37.8 73.6 55.3 39.4 132.4 113.4 93.3 161.0 163.4 162.3 155.0 146.3 2011 156.8 151.1 147.6 154.6 161.5 159.6 2,294.6 40.6 38.8 76.3 57.2 156.1 147.8 134.6 116.3 96.3 162.7 158.7 149.3 162.5 164.5 163.5 160.6 2012 153.1 155.8 2,324.7 41.9 39.8 78.9 136.7 119.0 99.2 59.2 161.7 157.2 149.3 2013 164.4 160.5 155.0 151.1 157.1 163.5 165.6 164.6 2,357.9 43.2 40.9 121.6 81.6 61.2 138.7 102.1 166.2 162.6 157.1 167.1 166.0 162.9 158.4 150.7 2014 153.2 159.1 165.1 2,394.1 42.1 44.7 124.1 84.3 63.4 159.7 152.2 140.7 105.0 168.4 164.8 155.5 161.6 167.3 168.9 167.6 164.4 2015 159.4 2,429.5 43.3 46.2 107.7 86.9 65.5 161.0 153.7 142.6 126.5 2016 170.5 167.0 161.6 157.7 163.9 169.4 170.8 169.2 165.8 2,464.2 47.8 44.6 67.7 110.3 89.6 162.3 155.1 144.3 128.8 2017 172.6 169.1 163.8 171.5 172.6 170.9 167.2 159.9 166.1 2,499.5 49.4 46.0 70.0 130.9 112.9 92.1 163.7 156.5 146.0 2018 174.8 171.3 166.0 162.2 168.4 173.7 174.5 172.6 168.8 2,534.9 47.4 94.7 51.0 147.7 133.0 115.3 72.2 165.1 157.9 2019 177.0 173.5 168.2 164.4 170.8 175.9 176.5 174.3 170.3 49.1 2,571.1 52.7 97.1 74.4 149.3 134.9 117.6 2020 179.3 178.6 176.2 171.9 166.5 159.3 175.7 170.4 166.7 173.2 178.2 2,608.4 51.4 76.6 54.4 119.9 99.5 2021 178.1 168.0 160.7 150.8 136.8 181.6 178.0 172.7 169.0 175.7 180.7 180.8 173.6 2,647.0 54.1 78.8 56.2 162.2 152.4 138.7 122.0 101.9 2022 184.1 180.2 175.4 169.6 180.3 175.0 171.4 178.3 183.3 183.2 2,687.0 104.1 57.9 57.3 124.1 80.9 171.2 163.7 153.9 140.4 2023 186.6 182.8 181.0 186.1 185.7 182.4 177.3 177.4 173.8 2,727.6 61.1 83.0 59.7 142.2 126.1 106.3 2024 172.9 165.2 155.5 189.3 185.3 179.8 176.2 183.7 188.9 188.3 184.7 179.3 2,768.2 64.9 108.5 85.1 61.4 174.7 157.0 143.9 128.1 191.0 187.0 166.8 2025 191.9 187.8 182.3 178.7 186.4 191.7 181.3

In Thousands Source: Metro DRe Details may not add due to rounding A-3 Metro01.xls 10/8/02

# - Household by Age of Head for Portland-Vancouver, OR-WA Table 4



### under25 25 •34 35 ·44 45 •54 55 •64 65

- 74 75-79 85 over TOTAL 

### Avg. HH 

### Size 1990 31.6 125.0 148.0 88.9 66.9 62.4 40.2 12.5 575.5 2.57 1991 30.4 124.5 149.7 94.9 66.6 64.7 42.2 12.9 585.8 2.56 1992 32.0 124.4 152.5 101.9 69.3 65.2 43.4 13.6 602.2 2.58 1993 34.8 126.0 150.9 110.9 71.7 64.5 43.7 13.9 616.5 2.59 1994 38.1 129.5 153.9 114.9 73.6 63.9 43.9 14.3 632.0 2.60 1995 40.8 131.1 156.8 121.8 77.3 65.1 45.2 15.0 653.1 2.57 1996 41.0 133.3 157.0 126.0 81.7 65.5 45.7 15.5 665.6 2.59 1997 42.2 136.0 158.7 134.2 86.1 66.7 46.5 16.1 686.4 2.58 1998 42.9 137.6 159.9 139.7 91.5 68.2 47.3 16.6 703.6 2.58 1999 43.6 138.7 160.9 143.7 96.6 69.5 47.8 17.0 717.8 2.57 2000 44.7 139.2 162.0 146.6 101.3 70.9 48.2 17.4 730.2 2.57 2001 45.8 139.5 163.3 149.1 105.1 72.5 48.7 17.8 741.7 2.57 2002 46.9 139.6 164.5 151.0 108.3 74.3 49.2 18.1 751.8 2.57 2003 47.8 138.8 165.8 153.7 112.8 76.9 50.3 18.6 764.6 2.57 2004 49.9 141.1 168.2 155.9 117.7 79.6 51.2 19.1 782.6 2.57 2005 50.9 142.6 170.2 158.4 122.4 82.9 52.6 19.6 799.6 2.56 2006 51.8 144.3 172.1 161.1 126.6 86.4 54.1 20.1 816.5 2.56 2007 52.5 146.7 176.0 164.0 130.3 89.8 55.5 20.6 835.3 2.55 2008 53.2 148.6 175.0 166.6 134.1 93.3 57.1 21.2 848.9 2.56 2009 54.1 150.2 174.3 169.2 137.3 96.9 58.8 21.7 862.5 2.55 2010 55.1 152.1 174.0 171.6 140.5 100.5 60.7 22.3 876.7 2.55 2011 56.0 154.0 173.7 173.9 143.4 104.2 62.7 22.9 890.7 2.54 2012 56.6 154.9 174.9 175.4 146.4 107.7 64.7 23.5 904.1 2.54 2013 57.2 155.9 176.0 176.9 149.2 111.2 66.8 24.1 917.3 2.53 2014 57.9 157.4 177.5 178.5 151.9 114.6 69.1 24.8 931.6 2.53 2015 58.8 159.3 179.1 180.1 154.6 118.1 71.5 25.5 946.9 2.53 2016 59.6 161.2 180.8 181.7 157.0 121.5 73.9 26.2 961.9 2.53 2017 60.4 163.0 182.4 183.2 159.4 124.8 76.4 27.0 976.6 2.52 2018 61.3 165.0 184.1 184.8 161.6 128.0 78.9 27.8 991.5 2.52 2019 62.1 167.0 185.9 186.4 163.8 131.0 81.5 28.7 1,006.4 2.52 2020 63.0 169.1 187.8 188.1 165.9 134.0 84.1 29.7 1,021.6 2.52 2021 63.9 171.3 189.8 189.8 167.9 136.9 86.7 31.1 1,037.3 2.51 2022 64.8 173.7 191.9 191.5 169.9 139.7 89.3 32.7 1,053.5 2.51 2023 176.2 65.8 194.1 193.4 171.8 142.5 91.8 34.7 1,070.1 2.51 2024 66.7 178.7 196.4 195.2 173.7 145.1 94.4 37.0 1,087.2 2.51 2025 67.7 181.3 198.7 197.1 175.6 147.6 96.9 1,104.2 2.51 39.2 2026 68.6 183.7 201.1 199.1 177.5 150.1 99.4 41.4 1,120.8 2.51 2027 69.4 186.0 203.4 201.0 175.3 152.4 101.8 43.5 1,132.8 2.51 70.2 2028 188.1 205.7 203.0 176.8 154.7 104.1 45.4 1,148.1 2.51 2029 71.0 190.2 208.0 205.0 178.3 156.8 106.5 47.3 1,163.0 

### 2.51 2030 71.8 192.2 210.3 207.0 179.8 159.0 108.7 49.1 1,177.8 2.51

Source: Metro DRC In Thousands A-4 Metro01.xls 

### 10/7/02Table 5 Emplo'/ment for Pcrtland-vancc,u'/er OR·WA and U 5

___-'In"'dustry 1990 1991 1992 1993 1994**199.;;.5=-_1;.:9c::.96"-_1"'99"'7'___--'1"-99~B'__'1_'_99;.:9'___"20"_0;.:O _~20;.:O""1_-,2;.:0,,,02~**  Total Nonfarm Employ,'1**PortIBnd~Vancouver"2** tlTh·1

O/.change 4.0% 1.2% 1.5% 3.1% 5,5% 4.3% 4A% 3.7% 2.3% 2,2% 3.6% .0.1% -0.4'% U.S. (millions) Htl 11];.1**!~V~** l1U I!:),) 1S1**1~1i l~U** **l~U l~O**  14<:1-1**1~Q.!l** 14M

%chan,. 1.4% -0.9% 0.1% 2.1% 2.9% 2,4% 2,0% ,.5% 2.3% 2.1% 2.0% 0.3% -0,5% Nonfarm Self-Employ.**Portland~** Vancouver**,~~** HM**\~% 1~!J** **j~i** a.l

%change 5,5% 4.9% 0.2% 1.3% 9.6% 2.4% 3.5% 4.5% 5.7% U.S. (millions) U**~.~** M**~.~ ~ii** **~.~ ~.1**  IMl M

%clw""" 1.3% 1.5% --3.,,% 4.5% 0.5% 0.8% ·.0% -1.1% -1.9% -1.2% Wage and Salary Emp. /'3 Portland-Vancouver**~1!U** Inti**~u ~li'!!** **~U ~M** **~f ~'I(l**  IOM.S

o/oehangti 3.6% 0.3% 1,9% 3.8% 4,6% 1.8% 1.4% 2,.11% -0.3% U.S. (millions)

%change**'~!H\~~** 1.4% -1,1% l(lU
0.3% 1tU
1.9% 11<\1 3,1% l;;U
2.6%**I~U** 

## ,.4"**\~lJ\** 2,2%**1~.~** 0.4% Manufacturing PortlancJ..Vancouver**l~t.f** 11M lHUI**1~1~** IS7**1~~** l<1jHI

%change 2,4% ·1.6%**-Oj~%** 2,5% 3.9% 8.5% 4.2% U.S. (millions)**l~j HI~**  113.1 !a.l1M lU \U

');,change -1.6% -3.5%**~1.6%** -0.2% 1.4% 1.1% 1.0% Nondurable Manuf. Por1land-Vancouver**l~~** :1M**~1l! M~** **~1I4 ~u**  3H**~ill**

_ngo 3.1% 1.1% 1.1% 2.6% 3.3% -0.4% -1:\% -3.7% 0.9% U.S. (mOlions) \!.Q U U 'tl! U H M 1. 13

%change -0.4% -L6% -0.1% 0.4% 0,3% -0.5% -0.8%**~2i%** -1.5% Food Processing**Portland~Vancouver** @.@**~.11 ~.jf**  

### in**\!.~** 1M 

### In (I., 1I.1i U %change 6,1% -0.6% -1,3% -0,3% 0.8% ·0.8% -1.7% -6.3% ".9% -1,6% U.S. (millions) U 17 1.1 11 1.1 11 1.1 11 1,7 l.1 11

%change 1.00/. 0.4% -0.3% 1.1% -0.'1%**-O.~%** -0.1% 0.0% -0,2% 0.0% 0,6% TexHles & App.rel Portland-Vancouver 41\ H**4~** 4·1\ M tii

..**~** .3 :HI H**~i** %change 2.8% -2.2% -2.7% 3.6% 4.4%**~1.5% ~3.1%**  -3.0% ·,1.5% '10.1% 3.8% -0.8% U.S. (millions) .<,7 n 11**,~** 11 1,Q ;**~ ~.'4**  n 1 , ,·0**1~** %change -3.8% <}.O% 0,3% ·1.0% -0.7% ·3.2%**~3.6% ~5.4%**  ...3% -7.1% '10.3% -7.7% Paper& Pulp**Portiand~Vancouver** 1·.1 %changa U.S. (millions) 1.1% \\1 -5.2% il'l 0% IH 1.7%**~,jf** 1.5% M -S.1%**ilc~** <3.7% 

### .n 0.9% 

### (;; ·2.9% O·f 9.6% Q,f -12% M -0.6% M ""change 0.1% -1.3% OA% 0.2% 0.1% -1.3% .{I.1%**~O,9%** .1.3.% -1.2% -3.0% .3.1% Printing & Publishing**Portland~Vancouver** \1.1 U IU U 1M '\l..t 1\.\\ IQ.l IiH 10.1 111 11.1) 11,4

-"", 4.7% 9,6% 0.5% 3.;% 1.1% '.2% ·3,00/. 2.2% 3.0% 3.6% 2.8% -0.3% 3,4% U.S. (millions) 14**1~ ~** **1~ ~**  1

..**~** 11 I.**.~** 14 1.1 1.11 j,ii %change 0.9% -2.1% -i.9% 0.7% 1,3% 0.8% .{).3% 0.7% 0.8% -0.8% -Q,1%**~3.9%** -2.7% Nondur. Goods, other**PorUand~Vancouver** IU n U U t& M gO I!.Q 30 *.0**7,~ 1~**  %cha"9& ·1.4% 2.0% 9.2% 6.1% 11.0% 7.0% 9.4% 2.2% ·5.5% -6.3% -0,5% .5.4% -3.9% U.S. (milnnns) n**~.~ iil.~**  U U M l!\\ U iU U iI.1**j~**

%change 0.4%**~1,9%** 0.7% 0.7% 0,6% -{).7% 0.4% 0.4% .1.0% -0,5% -3.1% '1.8% Durable Manufacturing Portland-Vancouver**~M 3~,O**  n1**~u ~M** **~Ji** IlIH lMA10H 1\lll1 'tWA H160**lQ3·~**

%chilnge 2,0% ·2.7% -1,6% 2.5% 4,3% S.4% 5,1% 6.0% 2.3% -2.4% 2.2% -2,3% -1,6% U.S. (millions) 11.1**IU.~ lQ,~**  10·1\**1O~** 1<:11 1M lHI IU! 111 III 106 1M %eNn

.. -2.5% -4,9% -2,7% .{I.6% 2.2% 2.3% 1.0% 2.0% 1.8% -0.8% 0,3% ..4.5% -6.4% Lumber & Wood Portland-Vancouver**§~ ij~**  ri, M M U II f@ i'li 'f·1i Hi H %change ..4.6% -11.S% -5.0% 0.8% 0.0% -0.7% ·1,2% .4.8% -2.90/, ..4.S% US% -2,2% 0,8% U.S. (millions) 

### in (If M 07**O·~ ~~**  08 O·@ 0·6 M**~I** 08 %d'.ange -3.t%**~7,9%** 0.7% 4.3% 6,3% 1.2% 2.3% 2,3% 2.6% -0.6% -4.8% 1.3% Metals Portland-Vancouver lU 1/ 1 lMi 1§,1 lfl**>~.O** cU**l!Q.~ ~oa**  IU**I~U l~·fi**  %chang!} ·ZA% -S.S% -3.5% -2.5% 6..3% 2.3% 3.9% 4.2%**~2.0%** -1.3% ..4,6% -2.7% U.S. (mOlions) in**~l ~.§** **~a ~!**  U U U**~.~** U**~1** B %change -1.9% 4.5% -2.8% -0.1% 3.2% 0.5% 1.3% 1.6% ..Q.2% 0.9% -4.9% -5.2% Etectronics, total Portland-Vancouver

..0, 1**~O~ ~UI**  011**~da M~**  11M 

### au liM aU**~H** liU %change 2.7% 1.1% -1.40/" 4,3% 6.1% 9.6% 7.1% 1,4% ..4.9% 5,0% 1.7% +1.0% U.S. (millions)**~.~** .Ii HUH**Ii.~** H ·U H U H .1 %Change -2.5% 4.4% -3.9% -0.8% 1.6% 2.1% 2.0% j .3%**~2,5%** 0.6% ..4,5""" -8.7% Nonelectrical Mach. Portland-Vancouver 14.1 1§1 147 1M 110**1~'** In 1M 'U 111 'fO IU IU %change 3.3% 7.4%**~2.9%** 9.1% 5.7% 10.5% 6.4% 4,8% ·5.0% -10.4% -4,5% --6..11% 0.0% U.S. (millions)**~,1** M U**1~** M**~.' ~1**  U n**~.1 ~1**  M l.ft %change ·1.4% -4.5% -3,5% 0.1% 3.1% 3.9% 2,3% 2.6% 1.8% -3.1%. -0.8% -5.2% -12.4% Electrical Mach. & Instr. Portland..vancouver ilIl.O**~~( ~!\.~** **~~.~ ~H**  00'1'**~u** nl**~~I'l ~U** **~'1** liM!**4~.~** %chenge 2.4% -22% -0.5% 1.5% 6.3% 12.6%
, 1.6% 8.5% 5.0% -2.2% 9.4% 5.0% -1.3% U.S. (millions) Ii'**~.~** U**~d ~.d**  U "U U M M U U M

%cha(lgs ·3.3% -4.3% ..4..2% -1.5% 0.4% 1.5% 1,9% 1.6% 1.00/. -2..1% 1.7% -3.9% -5.1% Transportation Equip.**Portland~Vancouvar** 1M 1\l.@ 11l, 1**16.~ 1~~**  l1Hi 1M 11.1 lU**1~1** lH '0' @.Ii %chenge 16.3%**~1.9%** 1.0% 1.2% 0.1% 3.8% -1,8% 6.6% 10.1% 7.2% -3.4% -20.7% ·5.4% U.S. (mUilans)**~.ij 1~**  ,**~** .l.@ l'**,.~** 'l la**l.~ 1~**  1.1'1 q**1.~** %changs -3.0% --5.0%**~3.1%** ..4.0% 0.3% 1.6% -0.3% 3,4% 2.6% -0.3% .;:.0% -5..11% -6.9%

In thousands A·S SouR;6:MotroDRC Metro01,l(iS 12/5/02Table 5 Employment, Portland-Vancouver OR-WA and U S Industry 2003 2004 2005 2010 2015 2020 2025 Total Nonfarm Employ.!t**Portland~Vancouverl2** I,D7U 3.2% l.2% 1.7% 1.4% 1.9% 1.9% 

# ­**%chan~** 2.4% 3.2% 2.1% 1.8% 1.9% U.S. (millions) 1411l! 14aO ll1i1.1 IBU**17Il~** 1.1% t7% 0.9% 1.2% 1.0% 0.9%

%ch.nge 1.4% 2.0% 1.3% 1.0% 1.0% 0.8% Nonfarm Self-Employ.**Portland~Vancouver ~n**  lOO.li**~~H** 4,0% 4.1% 1.4% 1.7% 1.7% 2.6%

O/..ehangJ;1 1.7% 2.4% 2.5% 2.6% 2.5% U.S. (millions) M U 

### n n 1.7% .o.1% ·0.3% 0,3% 0.1% 0.1%

%ehange 0.1% 02% 0.4% 0.2% 0,0% 0.1% Wage and Salary Emp. 13 Portland-Vancouver 1,Mali 1,1QU**1,~lM** 3.0% 3.0% 1.7% 1.3% 1.7% 1.8%

%change 2.6% 3.4% 2.1% 1.6% 1$% 1.7% U.S. (millions) un 

### nn HH 1liM 11'0.1 1.1% 1.9% 1.0% 1.2% 1.0% 0.9%

%chang& 1,5% 1.5% 1.4% 1.0% 0.8% Manufacturing Portland-Vancouver 

### leu 112.8 \1H 1.7%**~.9%** 1.2% 1.4% 0.4% 0.5%

%chal'l99 0.4% 0.5% 0.5% U.S. (millions) 1f,1 IU IU ·0.2% -<>.3% ·1.3% 0.2% .o.5% -0.2%

%Cha:'lge -0.5% 0.1% -05% Nondurable Manuf. Portland-Vancouver**~u** :lU**40·~** 40.7 0.6% 0.4% 0.6% 0.6% 0.0% 0.0%

%change 1,8% HI%, 0.'% 0.1% U.S. (millions) 1.1 H 1.1 10 ·0.4% ·0.8% ·0.1% ·0.1% ·0,5% ·0.2%**%chan~** 2$% 0,7% -O.£'i; 0.0% Food Processing**Port!and~Vancouver** U 

### n U 82 Ili' ·0.7% ·1.0% ·0.9% ·0.8% .1.2% ·1.4% 'YllChar;ge 0.6% 1,2% 0.4% ·1,6% -1.3% -1.2% -1.6% U.S. (millions) 1.1 1 @ 18 U 1.G I.a 1 G {).2% 0.1% O.S% ·0.5% ·0.8% ·02% %change 1.8% 1,7% 0.0% .1.2% -0.6% 0.0% -0.6% Textiles &. Apparel Portland-Vancouver**~,O ~l**  H -1.8% ·3.4% 3.1% -2.0% -3.1% -3.3%

%change 5.1% 1,3%**~2.7%** -3.2% -3.0% ·3.5% U.S. (millions)**1·~** 00 05**O~ ~8**  -2.3% -3.9% ·4.1% .1.5% -<>.9% -<>.!I%

%change 0.0% 0.0% 0.0% 0.0% 0.0% Peper &. Pulp Portland-Vancouver U**~ii** .o.4% .o.S% 0.1% .o.5% -1.1% -13% %change O.o%- 0,9% -1.2% -1.4% U.S. (millions) M iH QJi -0.2% ·0.5% -0.3% -0.6% -1.0% -0.5% %changa 1.6% 0")%**~1.7%** Printing &. Publishing Portland-Vancouver 11.1 lU**1~.1 '~.1**  3.4% 2.4% 2.0% 1.4% 0.5% 0.2% %change 2.6% 2,0% 0.8% 02% U.S. (millions) Hi 11 1} :**~** 1.1% .o.l% 1.0% 0.6% ·0.6% ·0.3% %<hang- 4,1% 2,5% -0.6% 0.0% Nondur.Goods. other Portland-Vancouver**,~** 1G M M 101 lU**1~.3** 1.5% 3.3% ·0.3% 2.7% 2.3% 2.1%

%char,ge 1.2% 2.7% 4.0% 2.1% 2.5% 2.2% 1.5% U.S. (millions)**~.~ ~.~** **~,~ ~,~**  H H**~.4** 0.0% ·0.1% 0.3% 0.3% 0.0% 0.0%

%change 3.2% 3.1% 0.4% 0.0% 0.0% 0,0% -0.4% Durable Manufacturing Portland-Vancouver ifiU**110,~ ~~(}~**  :234 1.1% 2,3% 1.4% 1.7% 0.5% 0.6%

%cneng9 3.1% 4.0% 4,1% 0.4% U.S. (millions) U 1M lOO '00 0.0% 0.0% ·2.1% 0.4% ·0.5% .o.I% %change -0.4%**~5%** 0.6% ·<15% lumber&.Wood Portland-Vancouver 7!i H -0.7% -2.0% .o.S% -1.6% ·2.8% -3.3% %change -0,3% .1.!;% U.S. (millions) M Og 05 0.8% 1.2% 1.2% 0,0% ·0.5% -1.0% %change 3.7% 3.6% -1.2% Metals PortlandNancouver**1~·1 1~.1**  III!! 1.3% 0.9% 0.1% 0.3% -0.7% ·0.4% %emnge 3.1% ..Q.3% -0,5% U.S. (millions)**~.1** H ;·fl ·0.8% 0.3% ·0.6% .oJ% ·1.9% ·1.5% %chang9 3.5% -2.6% ..0.6% -1.8% Electronics,total Portt8nd-Vancouver MI! U.O tU 1141 a81 3.6% 3.9% 3.0% 2,4% 0.9% 1.0% %c"tang9 5.5% 5..4% 1.8% 0.9% 1.i% 

### "''Yo U.S. (millions) H**~.§ ~.~**  H 4·0 0.2% .o.l%**~,O%** 1.0% 0.1)% 0.7% %change -2.6% 0.3% -0.7% 0.5% 0,9% 0.4% Noneiectrical Mach.**Portland~Vancouver** lU**~g~** 1.6% 1.9% 0.7% 2.7% 0.6% 0.9%

o/Qchange 3.1% 0.8% U.S. (millions) 1·.m lj' 02% 0.1% ·7.1% 3.1% 0.2% 0.6%

o/...change -3.9",1, 0.6% Electrical Mach. &. Inslr. Portland-Vancouver M4 4.1% 4.9% 3.9% 2.3% 1.0% 1.0% %Change 1.9% 1.1% U.S. (millions) U 0.1% .o,4% -1.8% 1.3% .o.2% 0.8% %change ·3,5% Transportation Equip. Portland-Vancouver**§.~** ll·fi \'1 II!l 1.1% 2.2% ·3.7% 1.8% 0.4% 0.6% %cnenge 3.6% 0.9% -0.1% 0.£% U.S. (mHiions) 1.1 lij**1.~ I~**  0.0% .o,7% ·1.1% .1.4% 0.0% ·0.2% %ch/lnge**~,2%** ·1.3% -0.6% 0.0%

SOurce: Metro: DRe In thousands A-6 Melro01,xls 12.tSID2Table 5 Employment for Pcrtland- )ancQu'/er OR-WA and U S Industry 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2601 2002 Durable. Goods, other PortlandNancouver U H 1'4 fl!**,~ ~1** **\I,~** 

### n \I,},**~ii** u U

%changa 1,8% -:t9% 2.1% 7.8% 0.1% ·1.1% 3.2% ·1.6% 1.9% 1.5% 3.2%**~1.7%** U.S. (millions)**\~ 1~**  1**~** 1A '( 1**.!~** 11\ l·ll U**1~** 14

%change -2.5% -5.3% -0.2% 1,8% 3.1% 1.0% -C.3% 1.5% 2.2"10 1.1% 1.70/0**~2.6%** -4.7% Nonmanufact {exe. military) PortJandNancouver**~u ~~i'1**  <:I1U**~\\ ~~** **~1** nM nu 11U**~U.1l ~109** 

%changa 3.9% 0.7% 2.5% 3,a% 4,7% 5.0% 4.4% 1.9% 2.2% 2,5% 0,0% -0.2% U.S. (millions)**OO·~ ~~II**  Ml'! \In lin 101·1 'tl<4.a l01Q 1Ia.}.**I1l~** l1U I1U

%change 2.1% -C.5% 0.7% 2.4% 3.5% 2.5% 2.9% 2.9% 3.'% 2,7% 1.1% 0.3% Constr. & Mining PorUandMVancouver**3ii,~ ~U** **~'S.1** aU;\('l.\**~u** M-ij @.8 M·9 83·1 53,3 o/Ocha".ge 14.1% -2,6% -4.5% 4.4'Y, 13.8% 12.2% "4.6% 5.8% -1.3% -1,9% 2.0% -1

..1% 0,4% U.S. (millions) U U 111 M M U U 1Q 

### a U**1~** %cnar.ge -C.5% -8.4% -4.1% 2.9% 5,8% 4.3% 5.1% 5.2% 4,1% 2.6% -2.0% Private Service Producers4**Portland~Vancouver .~u**  ,jilU**~?U ~I!ll.Q**  %lM MH**~u ~\lli.** **~11U ~~1@** **!lM.~** !l:lo.!!

%chaong4li 3,2% 0.6% 2.8% 404% 4.8% 4,6% 4.8% 2.0% 2.1% 2.0% 0.0% -0,20/0 U.S. (millions) !lU Ii<!
, Ii<!.? i\\\.S 11.1 7U 7M**!\i).~** 8U eM**8t\.~** 

### au %change 2.1% -{I,1'Yo 0.9% 2.1% 3.8% 2,8% 3,3% 3.1% 3.2% 2.6% 1.0% 0.2% Transport, Comm" & Uti!. Portland-Vancouver**~1@ ~2Q**  

### .\u**~~.~ ~u** **~'f.'** M,1 iU**1\~.~** M.I liH %change 3,6%**~.Q% ~.1%**  2,0% 3,7% 6.4% 4.8% 2.5% 2,2% 2.2".<i. ·1.1% -0.5% U.S. (millions) U U lir**Ii.~** §·O**~I ~.ii**  U M 't.l '/0 %chenge 2.9% -0.4% --0:.6% 1.6% 3.0% 2.5% 3.2% 3.4% 2,7% 0,7% -0,4% Trade, total Portland-Vancouver In.. 1I1U lU.l**I~U** 001 (I**2~M ~3U** **!~a.4 ~n't** **l~U** %change 2.7% 0.3% 1.3% 2.7% 5.3% 1.5% 1,5% 1..3% ..().1% -0.5% U.S. (millions)**~u ~IH** **~!i4 ~Ii.~**  l!iU H.l**~U ~Q~** **~O.1l 30·~**  %change 0040/0 .1.6% 0.0% 1.6% 3.5% 3.4% 1.7% 2.3% 1.9% 0,6% -0.9% Retail Trade**Portland~Vancouver \~8·f** **l~Mi \30~!M.~**  HM**1~3,1 l~H**  HIOl 'BU 1Ml 168·;**;~74** %change 3.1% 0.3% 1.8% 3.0% 5.4% 4.1% 2.9% 1.6% 3.0% 2,0% 0.0% -0,4% U.S. (millions) !U iU IU 1U 00 Ii**~I.a ~M** **~M ~U**  U},**~;u n~**  %change 0.6% -1.6% 0.4% 2.2% 3.7% 1.1>% ;,7'Yo 1.5% 2,5% 2.0% 0,8% ·0:9% WholesaleTrade Portland-Vancouver**M.~** 

### au**6~~** !!Ii..1l i!lH \lU**~u** 56.9 ijH eU 1l5« 630 %change 1.7% 0.4% 0.1% 2.1% 5,2% 3.8% 3.0% 1A-.4, -2,1% -C.3% -2.5%. -0:9% U.S. (millions) 1ll! fi.l**~.O** M U M M U U 1.0 1.0 10 %crmnga ·0.2% -1.5% -1,4% ...Q.3% 3.0% 3,5% U% 2.3% 1.6% 1.6% -0.1% -0.9% Fin" Ins., & Real Est Portland-Vancouver iil!1**Ii~,i!** IiIUi**Ii~·fi** @\.! fiU @lO 11M §ij '7**oo.~** Mil**~~.Il** Uti %d1l1nge -3.0% 3.3% 3.3% 6..1% 3,7% -2,2% 504% 5.2% 0,5% -0.7% -2.6% 0.1% .0.1% U.S. (millions) (i1 U Bij U M U U 11 14**1.~** H 1(1 n %crmnga 0.6% -O.Sf%; --0:.7% 2.3% 2.0% -1,3% 1.5% 2,8% 3,9% 2.3% 0.1% 0.8% 0,7% Services.total Portland-Vancouver 1IiU**!~21 111O~** **~Ol.~** alP**~~~,1 ~jjQ.~**  m.'t M.li**n~,~** arU**~1lI.l** %change 5.5% -0.1% 4.5% 6.1% 4.8% 6.8% 5A% 2.7% 3.4% 3.7% 0.9% 0.1% U.S. (millions)**~7~ ~8~** **~,a** ;m

..1 )1.(j \\l,!**~M ~H** **~gO 40~**  410 He %changa 3.8% 1.5% 2.5% 3.9% 4.6% 4.9% 4.6% 4.'% 4.1% 3.6% 1.4% 1.1% Health Portland-Vancouver**~~.O ~U**  liM**iil!.~** Ma II<lI**~n** GU f!U QU**O~~ G~O**  %Changa 4.3% 1.6% 1,8% 4.0% 3.2% 3.4% 2,8% 1.'7% 2.€-% ·1.2% 1.8% 2.0% U.S. (millions)**r~ (j~**  Mi U**~O ~l**  ll,§**ll~** 1M 10.1 1M Ig1
4.7% 4.7% 3.7% 3,1% 2,7% 2.6% 2.7% 1.5%**~,3%** 1.2% 2,4% 3,3% lio"health Portland-Vancouver**l~U 13~,~**  13U**1.~.3** l1i1. HIU 100 1 1I1U iKlU i!IH J10.6 llU %dlange B.O% -O.G% 5.6% a,8% 5.4% 6.0% 5.7% 3.0%' 3.7% 5.1% 0.7% -0.5% U.S. (millions) lIil.l lIilJ**lIil~ ~I~** **~u** 2U lIil.3 Ui' llIIl**~o~** 3tH**~Mj** %'Mnga 3.5% 0.2% 2.0% 4.3% 5.3% 5.8:% 5,4% 5.1% 5,0% .1.4% 1.1% 0.4% Govt., Fed. Civilian**Portland~Vancouver** lei '77 'M I!.\ 17.!! If.@ 176 lYe 11\1**17~** ,U 17.1l 10.1

%cMnga 2.5% ·2,0% 3.5% ·1.3% .3.0% 0.2% -0.7% 1.7% 0.6% -1.7% 5.5% -3.8:%.**~.5%** U.S. (millions)**~,1** M V**~Q** M !O lIU**~,Q** lO**~o** U M 2.0 %change 6.0% -4.2% 0.2% .(lA% 0,'% -0.2% -0.7% 1,0% 0.4%**6.0o/~** -7.0% 1.0% Govt., Fed. MiliI.ry Portland-Vancouver**O~** O. M r"f n 7.1 11.**~8** ij.ij**6~** (n u %cr.ange 1.8% 1.2% -4.5% ·3.0% -5,1% ·2.7% 0.2% -4.3% -3,4% 3.5% -'\.3% -1.3% U.S. (mill"n.) 10**O~** Ot M U 

### aa 01 01 M 

### o.a O.ij**O~** %Change ·2.3% ·3.2% -C.4% ·5,1% -5.2% -5.6% -5.7%

.. 4.7% -3.8% ·1.6% -1.6% 0,0% Govt., State & Local Portland-Vancouver**7§~** IlH**~n ~~.~**  iU iJU**~1j1 g't~** **19~.11QU** lfi9·1 'Ill! g %Change 3.9% 3.6% 3.6% 1.3% 1.9% 2,2% 1.3% 2.9% 5.4% 5.2% 1.1% ..(i.€-% U.S. (mIllions)**1~·3** H\' lHlM! iU**1§.~ 1e.~**  171 1M 'H**\~~** 189 %cllange 2.9% 1,4% 15% 1.5% 2.1% 1.4% 1.2% 1,6% 2.3% 2,1% 2.0% 1.3%

SourtQ; Metro ORe In thousands A-7 Metro01.l6S 1215102Table 5 Employment, Portland-Vancouver OR-WA and U S Industry Durable Goods, other 2003 2004 2005 2010 2015 2020 2025 1CHl1l 90-0II

_ 05-10 10.15 15-25



# -**Por1land~Vancouver** M 1M 111 lU 1M

%changa 3.4% 2.1% 1,7% 1.2% 1.5% 1.4% U.S (millions) H 1.8 U U!**1.~** H 0.1% 1.2% .{lA% 0.0% ·0,4% .0.5%

%cnange 1.4% 0.1% -0.7% 0.0% 0.0% -1.4% Nonmanufact. ($l;c. mllitaryl PortJaf1d..Vancouver**~~u ~!i§.~** **;~u** 1Il0U 111lU**\~U.~ 1~~**  3,4% 3.2% 1.8% 2.4% 1.9% 1.9%

%Changa 2,6% 3.3% 3.4% 2.3% 1.8% 1.9% 1.9% U.S. (millions) lU.'I**11§.~ l~U** **I~U m·.~** **I~M** lM.a 1.7% 1.6% 1,4% 1,4% 1.2% 1.1%

%d".ange 1.6% 2.2% 1.7% 1.1% 1.2% 1..2% 1.0% Constr. & Mining Portland-Vancouver**M!.~ ~u** **~1G** 3.8% 4.0% 1.9% 1.7% 1.2% 1.1%

%change 4.0% 3.2% 0.8% U.S. (millio"s)**j'~** U ll. \III 1.8% 1.2% 1.2% 1.6% 1.5% 0.7% %&.ange 0.8% 2.7% 1.2% 0,9% 0.0% Private Service Producers· PortlsndNancouver MU §rU**~~u t.Mf!.~**  3.6% 3.2% 1.1% 1.6% 1.1% 1.1%

%cnange 3,0% 4.0% 2.0% 2,0% U.S. (millions) 88\ 11Mj 1144**I~U** 3.0% 2.6% 1.6% 1.6% 1.5% 1.2% '¥.change 2.0% 2.7% 1.2% 1.2% Transport., Comm., & Uti!. Portland-Vancouver ilU**~n** l'U 29% 1.9% 1.0% 1.1% 1.5% 1.5% %change 1.2% 16% 1.4% 1.5% U.S. {millions} H jI.g U U 1.5% 2.0% 1.9% 1.3% 0.8% 0.3% %change 2.6% 0.6% 0.5% 0.1% Trade, mtal Portland-Vancouver 3.1% 1.5% 1.9% 2.3% 1.1% 1.6% %ctmng& U.S. (millions) 2.4% 1.6% 0.6% 0.5% 0.9% 0.6% %change Retail Trade Portland-Vancouver 3.4% 1.7% 1.9% 2.3% 1.7% 1.7% %change U.S. (millions) 1.5% 1.7% 0.6% 0.4% 0.9% 0.6% %changa Wholesale Trade**Por1land~Vancouver** 117·1**l'\'l~** IIt6 2.5% 2.0% 1.7% 2.2% 1.5% 1.5% %c.'Iange 4.1% 4.3% 1.9% U.S. (millions) 7Q U 

### a U 1.9% 1.3% 0.8% 0.9% 1.0% 0.4%
%change 1.3% 2.3% 1.1% 0.4% Fin

.. Ins., & Real Est Portland-Vancouver 

### aU rU 1l0i**'li\.~** 3.2% 2.1% 1.2% 1.6% 1.5% 1.1%

%change 0.3% 1.5% 1.4% 1.1% U.S. (milliors) U**~7 ~l** **il~** 1.5% 12% 1.5% 1.1% 1.0% 0.8% %c/".anga 1.3% 2.3% 0.9% 0,9% 0.8% Services. total**Portland~Vanoouver** :IOU**~lU ~IU**  

### nn 4.7% 4.3% 1.7% 3.1% 1.7% 1.7%

%Change 4.8% 3,7% 2.5% 2.6% U.S. (millklrs)**~~.\** 48·; 00.\ lilt 4.3% 3.8% 1.1% 1,4% 1.0% 1.8%
%chanQe 3.1% 2.4% 1,7% 1.8% Health Portland-Vancouver flU**a~.l** 1'12 AU \!':I.1i IOU llU 3,5% 2,4% 1.7% 3.0% 2,6% 1,4% %change 3.5% 3A·% 3,0% 2.8% 2.4% 2.3% 2.5% U.S. (milliors)**11~ H.~**  114 lU I·U 11l@**19~** 4.1% 2.6% 2.5% 2.0% 2.8% 2.8%
%change 2.6% 2.3% 2,1% 2.1% 3.3% 2,5% 2.6% Nonh••lth PorUandNar,couver**~Hij** 5.2% 4.9% 2.7% 3.1% 2.S% 1.7%
%change 3.9% U.S. (millions) jilT 4.3% 4.2% 1.1% 1.5% 1.7% 1.4%
%change 2.5% Govt, Fed. Civilian Portland-Vancouver 1M 0.9% 0.3% ·0.7% 1.5% 0.2% 0.9% %change -0.2% U.S. (millions)**~a** 0.8% 0.1% .1.0% .(l,4% 0.5% 0.8%
%change 1.0% 0.0% Govt., Fed. Military**Portland~Vancouver** 

### eli !j.q il·§ iH 0.0% ·1.9% .05% 0,4% ·0.3% 0.1% %c/".ange -0.2% "{).3% -0.7% 0.0% U.S. (millions) O.@ M M Od ·1.7% 4.0% ·0.3% ·1.3% 0.3% 0.3%

%changa 0.0% 0.0% 0.0% -1.1% o.()% G()vt., State & Local Portland-Vancouver 2.6% 3.1% 0.5% 1.)% 1.4% 1.5%

"Change 1.4% U.S. (milliors)**\~.,/** 1.8% 1.6% 0.9% 0.4% 0.2% 0.5%
%change 0.5%

1fTela: Employmentircl!JdeS nonfarm wags and salaryjobs, military, '" salfemployed (SEA) 21 PortlandNancouyg( (In i.hQ;.sande:):**Multncma~l,** Oackamas, W3shlflgton,Yemhill in OR

and Clark, WA; U.s. tl11 mdlIorm) 3J Wage OInd salary employmentby plaClll Of work**~** CUrrent Employmanl StlrVtiy (CES), 41 PS? ioch,

..des: Teu, Trade, FIRE and all Services**TCU~** TransportatiOn.Comrrr"nicatkms &. Utililies

FIRE;: Finance, Insurance & Real Eslale



# -

Source: Mt!!Iro DRC In thousands .'1.-8 MelroOb:ls 1215f{)2Table 6 

### Total Employment for Portland-Vancouver, OR-WA 

# .- Wage and Salary
Total Proprietors Non-dur.
wID f Plus' Dur. Mfg. Mfg. Non-Mfg. Military eense 1970 475.6 78.7 56.5 32.1 301.5 6.8 1971 484.9 82.5 55.6 31.2 308.8 6.8 1972 513.3 85.9 59.5 31.9 329.2 6.7 1973 540.5 90.7 66.6 32.6 343.6 7.1 1974 558.9 93.0 69.7 32.3 355.6 8.3 1975 561.1 99.7 63.0 30.8 359.6 8.0 1976 584.6 103.5 66.3 31.8 375.9 7.2 1977 613.3 104.3 71.1 32.4 398.7 6.8 1978 654.9 105.7 81.4 31.5 429.0 7.3 1979 690.3 112.8 87.7 33.1 449.9 6.8 1980 699.3 120.1 86.1 32.7 453.8 6.6 1981 689.4 120.4 80.4 32.1 450.0 6.4 1982 668.3 122.9 72.9 31.0 434.6 6.9 1983 675.1 131.7 68.3 31.4 436.7 7.0 1984 707.4 135.8 74.4 32.3 457.8 7.2 1985 728.5 142.5 75.2 32.2 470.9 7.8 1986 749.5 143.9 74.1 32.3 491.1 8.1 1987 777.9 149.0 75.9 33.8 511.3 8.0 1988 819.3 156.4 80.6 34.0 540.1 8.1 1989 857.6 159.2 83.6 35.3 571.3 8.1 1990 891.5 168.0 85.3 36.4 593.5 8.3 1991 902.2 176.3 83.0 36.8 597.7 8.4 1992 916.1 176.6 81.7 37.2 612.6 8.0 1993 944.5 178.9 83.8 38.2 635.9 7.7 1994 996.2 196.5 87.3 39.4 665.6 7.3 1995 1,038.8 201.1 94.6 40.3 695.6 7.2 1996 1,084.5 208.1 99.4 39.8 730.1 7.1 1997 1,124.8 210.8 105.4 39.6 761.9 7.1 1998 1,150.1 220.4 107.8 39.2 776.0 6.8 1999 1,175.1 232.9 105.1 37.7 792.8 6.6 2000 1,217.0 252.2 107.4 38.1 812.5 6.8 2001 1,215.8 254.3 105.0 37.2 812.5 6.7 2002 1,211.2 253.3 103.3 37.1 810.9 6.6 2003 1,240.7 257.7 106.5 37.8 832.2 6.6 2004 1,280.0 264.2 110.8 38.6 859.8 6.6 2005 1,320.7 270.7 115.3 39.3 888.8 6.6 2006 1,352.0 277.3 118.1 39.7 910.2 6.8 2007 1,382.1 284.9 119.8 39.8 930.7 6.9 2008 1,420.6 293.6 121.8 40.1 958.3 6.9 2009 1,452.7 301.0 124.0 40.5 980.3 6.8 2010 1,483.9 308.5 125.5 40.5 1,002.7 6.8 2011 1,514.2 317.3 125.6 40.4 1,024.1 6.7 2012 1,544.9 326.3 126.2 40.3 1,045.4 6.7 2013 1,575.0 334.7 127.1 40.4 1,066.1 6.7 2014 1,603.2 343.1 127.8 40.5 1,085.1 6.7 2015 1,631.8 352.0 128.4 40.5 1,104.2 6.7 2016 1,662.9 361.6 129.0 40.6 1,125.1 6.7 2017 1,694.2 371.0 129.7 40.6 1,146.2 6.7 2018 1,728.3 381.2 130.4 40.6 1,169.4 6.7 2019 1,761.6 391.2 131.2 40.7 1,191.9 6.7 2020 1,795.5 401.2 132.1 40.7 1,214.9 6.7 2021 1,832.5 412.0 133.1 41 1,240.0 6.7 2022 1,868.2 422.9 134.0 40.7 1,263.9 6.7 2023 1,904.5 434.1: 134.9. 40.6 1,288.2 6.7 2024 1,942.2 445.6 135.91 40.6 1,313.4 6.7 2025 1,979.3: 1 457.2 136.7 40.5­ 1,338.2 6.7

In Thousands, Details may not add due to rounding Source: Metro ORe "ncludes partnerships, self-employed, and wage salary workers A-9 Metro01.xls 10/8/02Table 7 

### Wage and Salary Employment for Portland-Vancouver, OR-WA
Government Constr. Transp. Finance, Total W & S and Com. & Insur., 

### & State 

## &
eense xc d f ) M'

. (e mmg M anu. tilities Wh I Retail Local f U s e. Real E. Service Fed. Civ. 390.1 17.6 88.6 1970 30.5 32.4 62.1 25.3 69.6 49.9 14.1 395.7 18.2 86.8 1971 30.2 32.7 63.5 25.6 72.5 51.7 14.4 420.7 21.4 91.4 1972 31.0 34.5 67.2 29.6 77.6 53.3 14.6 442.8 21.8 99.2 1973 32.1 36.0 71.6 31.6 81.6 54.5 14.5 457.6 21.7 102.0 1974 32.2 37.0 74.3 32.3 85.5 57.8 14.8 453.4 18.7 93.8 1975 30.9 36.4 77.5 32.7 88.5 60.0 15.0 1976 474.0 20.6 98.0 31.1 37.7 81.9 34.2 93.1 62.4 15.0 502.2 23.4 103.5 1977 32.5 39.5 87.6 98.8 37.9 64.1 15.0 541.9 26.9 112.8 1978 34.3 43.2 95.0 41.7 105.2 67.2 15.7 570.7 28.8 120.8 1979 36.3 45.8 99.4 45.4 110.5 67.8 15.9 572.6 26.0 118.8 1980 37.1 46.0 99.5 46.6 114.2 68.1 16.4 562.5 21.9 112.5 1981 37.0 46.1 99.5 46.5 114.8 68.2 16.1 1982 538.5 18.4 103.9 35.9 43.7 95.6 44.7 112.6 67.6 16.1 536.4 17.4 99.7 1983 35.5 45.7 95.1 43.7 116.2 67.2 16.0 1984 564.5 20.7 106.7 36.5 47.7 100.3 44.0 124.1 68.5 16.0 578.3 21.4 107.4 1985 36.8 48.5 102.2 45.0 131.4 69.2 16.6 597.5 22.7 106.4 1986 36.8 49.2 105.8 47.6 141.3 71.1 16.7 620.9 23.4 109.6 1987 37.8 50.0 110.1 50.7 149.0 73.4 16.9 654.7 26.9 114.7 1988 38.4 51.8 119.2 51.9 159.4 75.0 17.4 690.2 31.8 118.9 1989 40.2 54.2 124.3 53.7 172.7 76.9 17.6 715.2 36.3 121.7 1990 41.6 55.2 128.2 52.1 182.2 79.9 18.1 717.5 35.3 119.8 1991 42.1 55.4 128.6 53.8 182.1 82.8 17.7 731.5 33.7 118.9 1992 42.5 55.5 130.9 55.6 190.3 85.8 18.3 757.8 35.2 121.9 1993 43.3 56.6 134.8 59.0 201.9 86.9 18.1 792.4 40.1 126.8 1994 44.9 59.6 142.1 61.2 211.7 88.6 17.6 830.5 45.0 134.9 1995 47.8 61.8 147.1 59.8 226.1 90.6 17.6 869.3 51.5 139.2 1996 49.4 63.6 153.1 63.0 238.1 93.9 17.5 906.9 54.5 145.0 1997 51.7 67.9 157.6 66.3 250.9 95.1 17.8 923.0 53.9 147.0 1998 53.1 68.9 160.1 66.7 257.7 97.9 17.9 935.7 52.8 142.9 1999 54.2 67.5 164.9 66.2 266.6 103.1 17.6 958.0 53.9 145.5 2000 55.4 67.2 168.1 64.5 276.3 108.5 18.5 954.81 53.1 142.2 2001 54.8 65.6 168.1 64.6 278.9 109.7 17.9 951.3 53.3 140.4 2002 54.5 65.0 167.4 64.5 279.1 109.0 18.1 976.5 55.5 144.3 2003 55.2 67.7 170.8 64.7 291.2 109.2 18.0 1,009.3 57.2 149.4 2004 56.7 70.6 177.7 66.2 304.5 109.1 17.9 1,043.5 59.3 154.7 2005 58.4 73.3 184.8 68.4 315.6 111.2 17.9 1,068.0 60.6 157.7 59.8 2006 75.1 189.5 69.9 323.9 113.5 17.9 1.090.4 62.41 159.6 61.2 2007 76.6 193.9 71.3 331.9 115.6 17.8 1.120.2 64.7 161.9 62.5 2008 78.4 198.6 72.3 346.0 117.7 18.0 1.144.9 66.3 164.5 63.8 80.0 202.9 2009 73.1 356.6 119.4 18.3 1,168.7 67.7 165.9 2010 64.9 81.6 207.0 74.2 367.1 121.0 19.3 1.190.2 166.0 2011 65.9 82.9 210.7 75.4 378.7 122.9 19.2 68.61 1,212.01 70.4. 166.5 2012 66.8 84.3 214.9 76.8 388.4 124.7 19.1 1,233.7 71.1· 167.5 67.8 2013 85.6 218.6 78.0 399.4 126.5 19.1 1,253.4 71.5 168.3 68.9 2014 86.8 222.1 79.1 409.6 128.1 19.2 1,273.11 71.8 168.9 69.9 87.9 225.6 2015 80.1 419.7 129.7 19.4 1,294.81 72.3· 169.6 71.0 89.1 229.4 2016 81.2 430.9 131.7 19.6 1,316.51 73.1 170.2 72.0 90.4 233.2 2017 82.3 442.1 133.5 19.8 1.340.5 74.0 171.0 73.1 91.7 2018 237.2 83.3 454.5 135.6 20.0 1,363.8 75.0 171.9 74.1 2019 93.1 241.2 84.3 466.5 137.6 20.2 1,387.7 76.3 172.8 75.2 94.4 2020 245.3 85.3 478.6 139.5 20.4

, 1,413.9 77.5 173.8 76.3 2021 95.9 249.6 86.3 492.1 141.8 20.5 1,438.6 78.3 174.7 77.4 97.3 253.7 2022 87.3 505.2 144.0 20.7 1,463.7 79.3 175.5 257.9· 88.2 78.6 98.7 2023 518.5 146.2 20.9 1,489.9 80.4 176.4 79.8 100.2 2024 262.1 89.2 532.3 148.4 21.1 1,515.5 81.0 177.2 2025 80.9 101.6 266.3 90.2 546.2 150.8 21.2
In thousands Source: Metro ORe Details may not add due to rounding A-IO Metro01.xls 10/8102 

### -.



# -



# -Table 8 

### Total Employment for Yamhill County, OR Wage and Salary
Total Proprietors Non-dur.


### wID f PIus Dur. Mf Ig. Mf Tg. Non-Mf g. 

### MTt eense t t ary 1970 12.4 2.5 1.8 1.1 6.7 0.3 1971 13.1 2.7 2.0 1.0 7.1 0.3 1972 14.0 3.0 2.2 1.1 7.4 0.3 1973 14.9 3.2 2.6 1.1 7.7 0.3 1974 15.8 3.9 2.7 1.0 7.9 0.3 1975 16.9 4.8 2.6 1.0 8.3 0.3 1976 18.1 4.9 3.0 1.1 8.8 0.3 1977 19.5 5.2 3.4 1.2 9.5 0.3 1978 20.9 5.4 3.8 1.2 10.2 0.3 1979 22.4 5.5 4.1 1.3 11.2 0.3 1980 22.9 6.3 3.6 1.3 11.5 0.2 1981 22.3 5.9 3.4 1.4 11.3 0.2 1982 21.6 5.9 3.1 1.4 10.9 0.3 1983 21.7 6.0 3.0 1.4 11.0 0.3 1984 22.3 6.3 3.3 1.5 11.0 0.3 1985 22.6 5.9 3.3 1.4 11.6 0.3 1986 23.3 5.9 3.4 1.5 12.3 0.3 1987 24.1 6.0 3.6 1.6 12.7 0.3 1988 25.1 5.9 3.7 1.5 13.7 0.3 1989 26.1 5.8 3.8 1.8 14.4 0.3 1990 27.1 6.4 3.6 1.8 14.9 0.3 1991 26.9 6.3 3.5 1.9 14.8 0.3 1992 28.4 7.0 3.5 2.0 15.6 0.3 1993 29.3 6.4 3.6 2.0 17.0 0.3 1994 31.0 6.9 3.9 2.0 17.9 0.3 1995 32.4 7.4 4.0 1.9 18.8 0.3 1996 34.5 8.1 4.1 2.1 19.8 0.3 1997 35.1 8.3 4.1 2.2 20.3 0.3 1998 35.7 8.1 4.1 2.3 20.9 0.3 1999 36.8 9.2 4.0 2.3 21.0 0.3 2000 37.5 9.8 4.0 2.2 21.3 0.2 2001 37.0 9.8 3.8 2.1 21.1 0.2 2002 37.1 9.6 3.7 2.0 21.5 0.2 2003 37.9 9.5 3.8 2.1 22.3 0.2 2004 39.5 9.4 4.0 2.4 23.5 0.2 2005 40.9 9.3 4.3 2.5 24.6 0.2 2006 42.0 9.2 4.5 2.7 25.4 0.2 2007 42.6 9.2 4.5 2.8 25.9 0.2 2008 43.1 9.2 4.5 2.8 26.4 0.2 2009 43.7 9.1 4.6 2.8 26.9 0.3 2010 44.3 9.1 4.6 2.9 27.5 0.3 2011 45.0 9.2 4.6 2.9 28.1 0.3 2012 45.8 9.2 4.7 2.9 28.7 0.3 2013 46.5 9.3 4.7 2.9 29.4 0.3 2014 47.3 9.3 4.7 3.0 30.0 0.3 2015 48.0 9.3 4.8 3.0 30.7 0.3 2016 48.8 9.4 4.8 3.0 31.4 0.3 2017 49.7 9.4 4.8 3.0 32.1 0.3 2018 50.5 9.5 4.9 3.0 32.8 0.3 2019 51.3 9.5 4.9 3.0 33.6 0.3 2020 52.2. 9.6 5.0 3.0 34.4 0.3 2021 

### 53.' 9.6 5.0 3.1 35.1 0.3 I 2022 54.0 9.7 5.0 3.1 35.9 0.3

1 2023 54.9 9.7 5.1 3.:

# I 2024 55.9: 9.8 5.1 : .1 36.8 37.6 0.3 0.3 

### I 2025 56.81 9.9: 5.2 3.1 38.5 0.3

In Thousands, Details may not add due to rounding Source: Metro DRe "Includes partnerships, self-employed, and wage salary workers A-II Metro01.xls 10/8/02Table 9 

### Wage and Salary Employment for Yamhill County, OR
Government Total Constr. Transp. Whsle. & Finance, Wage & and Com. & Retail Insur., & Fed. Civ., 5aary I M'**Inin~** Manu. f Utilities Trade Real Est. Service State &Local 1970 9.6 0.2 2.9 0.4 2.0 0.5 2.0 1.7 1971 10.1 0.3 3.0 2,1 0.4 0.5 2.0 1.8 1972 10.7 0.4 3.3 0.3 2.1 0.5 2.1 2.0 1973 11.4 0.4 3.8 0.4 2.2 0.6 2.2 2.0 1974 11.6 0.4 3.7 0.4 2.2 0.6 2.2 2.1 1975 11.8 0.4 3.5 0.3 2.4 0.6 2.4 2.2 1976 12.9 0.6 4.1 0.3 2.5 0.7 2.5 2.3 1977 14.1 0.7 4.6 0.4 2.8 0.7 2.7 2.3 1978 15.2 0.8 5.1 0.4 3.1 0.8 2.8 2.5 1979 16.6 0.9 5.4 0.4 3.3 0.9 3.3 2.5 1980 16.4 1.1 4.9 0.5 3.2 0.9 3.1 2.6 1981 16.1 0.6 4.9 0.5 3.4 1.0 3.2 2.7 1982 15.4 0.3 4.5 0.5 3.2 1.0 3.3 2.6 1983 15.4 0.4 4.4 0.4 3.2 0.9 3.5 2.6 1984 15.7 0.6 4.7 0.4 3.1 0.9 3.4 2.5 1985 16.3 0.6 4.7 0.5 3.5 1.0 3.5 2.6 1986 17.1 0.6 4.9 0.5 3.8 1.0 3.8 2.6 1987 17.8 0.7 5.2 0.6 3.9 0.9 3.9 2.8 1988 18.9 0.8 5.2 0.7 4.1 0.9 4.3 2.9 1989 19.9 0.9 5.6 0.6 4.4 0.9 4.5 3.1 1990 20.3 0.9 5.4 0.7 4.4 0.8 4.7 3.4 1991 20.2 1.0 5.4 0.8 4.0 0.9 4.7 3.5 1992 21.1 1.0 5.5 0.8 4.2 0.9 5.0 3.8 1993 22.6 1.1 5.6 0.8 4.9 1.0 5.4 3.8 1994 23.8 1.2 5.9 0.7 5.3 1.0 5.8 3.9 1995 24.7 1.3 6.0 0.8 5.5 1.1 6.3 3.8 

# - 26.1 1.6 6.2 1996 0.8 6.0 1.0 6.5 3.9 1997 26.5 1.6 6.3 0.9 5.9 1.1 6.8 4.1 1998 27.3 1.6 6.4 0.9 6.0 1.1 7.1 4.2 1999 27.3 1.5 6.3 0.9 6.1 1.1 7.2 4.2 2000 27.5 1.5 6.2 0.9 6.0 1.1 7.3 4.3 2001 27.1 1.6 6.0 0.9 6.0 1.1 7.3 4.3 2002 27.2 1.6 5.7 1.0 6.2 1.0 7.4 4.3 2003 28.2 1.7 5.9 1.1 6.5 1.0 7.6 4.4 2004 29.9 1.7 6.4 1.2 7.0 1.0 8.0 4.6 2005 31.4 1.7 6.8 1.3 7.2 1.0 8.7 4.8 2006 32.5 1.7 7.2 1.3 7.3 1.0 9.2 4.9 2007 33.1 1.7 7.3 1.3 7.4 1.0 9.5 5.0 2008 33.7 1.7 7.3 1.3 7.5 1.1 9.8 5.0 2009 34.3 1.7 7.4 1.3 7.6 1.1 10.1 5.1 2010 34.9 1.7 7.5 1.4 7.8 1.1 10.4 5.2 2011 35.6 1.7 7.5 1.4 7.9 1.1 10.7 5.3 2012 36.3 1.8 7.6 1.4 8.0 1.1 11.0 5.4 2013 37.0 1.8 7.6 1.4 8.2 1.2 11.3 5.5 2014 37.7 1.8 7.7 1.5 8.3 1.2 11.7 5.6 2015 38.4 1.8 7.7 1.5 8.5 1.2 12.0 5.7 2016 39.2 1.9 7.8 1.5 8.6 1.2 12.4 5.8 2017 1.6 40.01 1.9 7.9 8.8 1.2 12.8 5.9 2018 40.7 1.9 7.9 1.6 8.9 1.3 13.2 6.0 2019 41.5 2.0 7.9 1.6 1.3 13.6 6.1 9.11 42.3 2.0 8.0 1.6 9.2 1.3 2020 14.0 6.2 2021 43.2 2.0 8.0 1.7 9.4 1.3 14.4 6.3 2022 

### i 44.0 2.1 8.1 1.7 9.5 1 1.3 14.9 6.4 2023 44.9 2.1 8.1 1.7 9.7 1.4 15.4 6.6 45.8 2.1 8.2 15.8 6.7 

# ­**1.~1** 1.4

# ~~;: I 46.7 2.2 8.3 1.8

# 1~:~i 1.4 16.3 6.8
In thousands Source: Metro DRe Details may not add dueto rounding A-12 Metro01.xls 10/8/02Table 10 

## Personal Income by 

## Major Source, Portland-Vancouver OR-WA
Dividends Total Personal Wages & Other Labor Transfer Interest & Proprietors' Social Ins. Resident Income Salaries Income Payments Rents Income Contribution Adjust. 1970 $4,583,778 $3,007,793 $198,709 $412,942 $692,965 $428,469 $132,699 -$24,401 1971 4,989,157 3,221,885 226,813 483,247 750,322 464,809 146,766 -11,153 1972 5,557,442 3,606,551 266,059 523,817 809,930 519,746 171,361 2,700 1973 6,258,168 4,050,079 306,828 610,602 915,961 585,458 221,960 11,200 1974 7,092,332 4,529,620 375,583 738,819 1,056,436 628,091 257,619 21,402 1975 7,806,160 4,817,701 446,745 933,504 1,139,852 667,346 272,919 73,931 1976 8,845,638 5,426,508 551,653 1,022,064 1,274,184 798,513 304,392 77,108 1977 9,897,231 6,110,939 670,178 1,098,368 1,457,081 882,529 344,780 22,916 1978 11,452,259 7,131,016 805,845 1,190,498 1,741,584 1,008,637 407,548 -17,773 1979 13,110,100 8,178,315 926,762 1,320,604 2,134,387 1,081,605 484,973 -46,600 1980 14,697,285 8,981,025 1,064,603 1,551,864 2,585,966 1,109,729 539,065 -56,837 1981 16,091,647 9,547,238 1,136,175 1,792,460 3,173,490 1,124,688 623,603 -58,801 1982 16,636,752 9,613,964 1,208,400 2,042,448 3,407,599 1,055,718 649,368 -42,009 1983 17,474,173 9,917,636 1,267,138 2,216,439 3,626,196 1,147,434 673,899 -26,771 1984 19,213,950 10,839,648 1,356,592 2,250,517 4,110,824 1,441,795 744,053 -41,373 1985 20,376,011 11,456,435 1,557,811 2,355,180 4,315,639 1,570,349 828,689 -50,714 1986 21,487,037 12,191,225 1,559,433 2,427,298 4,572,894 1,703,840 903,945 -63,708 1987 22,859,879 13,023,012 1,690,540 2,539,734 4,830,343 1,819,559 967,696 -75,613 1988 25,143,546 14,420,807 1,865,703 2,751,218 5,210,286 2,116,318 1,126,024 -94,762 1989 27,696,108 15,821,423 2,087,312 2,970,906 6,003,996 2,176,977 1,257,941 -106,565 1990 30,517,226 17,359,781 2,347,638 3,240,651 6,485,510 2,590,914 1,382,937 -124,331 1991 32,174,558 18,272,383 2,549,204 3,597,119 6,676,208 2,694,622 1,501,665 -113,313 1992 34,270,886 19,604,662 2,779,411 3,994,778 6,709,608 2,933,704 1,600,197 -151,080 1993 36,735,666 20,855,908 3,003,008 4,283,095 7,224,649 3,259,725 1,710,170 -180,549 1994 39,370,499 22,530,618 3,232,621 4,425,478 8,035,830 3,230,984 1,855,967 -229,065 1995 42,661,456 24,786,516 3,261,021 4,739,211 9,018,831 3,183,367 2,028,071 -299,419 1996 45,872,189 27,300,282 3,335,219 4,911,304 9,453,829 3,454,693 2,205,273 -377,865 1997 49,743,957 30,003,725 3,531,843 5,068,853 10,252,203 3,744,645 2,397,724 -459,588 1998 52,539,011 31,853,197 3,627,459 5,204,265 10,887,713 3,952,727 2,509,026 -477,324 1999 54,874,825 33,361,176 3,716,622 5,422,305 11,256,262 4,245,566 2,633,711 -493,395 2000 59,689,525 36,581,871 3,664,492 5,915,498 12,448,842 4,401,230 2,802,567 -519,840 2001 61,745,373 37,574,109 3,754,668 6,423,055 12,890,789 4,489,748 2,853,232 -533,764 2002 62,987,798 38,112,379 3,795,750 7,226,837 12,682,797 4,589,316 2,877,493 -541,788 2003 66,918,346 40,105,109 4,000,732 8,066,776 13,375,022 4,958,654 3,016,200 -571,748 2004 71,089,969 42,798,284 4,234,611 8,236,851 14,458,692 5,175,429 3,205,704 -608,193 2005 75,024,509 45,721,337 4,511,644 8,234,122 15,187,558 5,423,779 3,405,674 -648,257 2006 78,671,039 48,166,127 4,776,595 8,341,487 15,904,576 5,743,162 3,577,469 -683,439 2007 82,477,778 50,624,365 5,061,721 8,541,691 16,629,023 6,093,994 3,753,660 -719,355 2008 88,509,462 53,640,190 5,598,337 9,029,181 18,278,631 6,705,896 3,974,806 -767,967 2009 93,499,037 56,401,533 5,975,321 9,454,045 19,581,983 7,076,018 4,181,294 -808,568 2010 98,999,632 59,432,456 6,362,448 9,937,627 21,010,511 7,518,578 4,408,734 -853,253 2011 104,062,674 62,724,410 6,577,925 10,517,299 22,317,719 7,492,402 4,674,327 -892,754 2012 109,695,481 66,229,447 6,935,385 11,153,747 23,757,991 7,499,034 4,943,144 -936,978 2013 115,900,868 69,946,070 7,347,287 11,879,447 25,413,108 7,524,095 5,224,624 -984,515 2014 121,521,793 72,974,837 7,767,741 12,674,353 26,197,347 8,401,882 5,459,661 -1,034,707 2015 127,656,746 76,301,544 8,209,052 13,562,728 27,112,316 9,277,134 5,717,521 -1,088,506 2016 135,332,036 80,896,980 8,685,705 14,505,306 29,121,178 9,338,422 6,068,359 -1,147,197 2017 142,527,754 84,989,646 9,185,452 15,512,260 30,196,729 10,240,244 6,385,908 -1,210,669 2018 151,333,496 90,302,422 9,734,608 16,621,350 32,392,066 10,355,660 6,793,639 -1,278,971 2019 159,508,678 94,931,432 10,314,124 17,813,765 33,542,363 11,416,126 7,157,799 -1,351,333 2020 168,188,025 99,866,020 10,931,129 19,108,819 34,722,956 12,535,714 7,548,304 -1,428,309 2021 178,661,799 106,106,217 11,599,455 20,543,721 37,180,694 12,784,847 8,043,175 -1,509,959 2022 188,506,544 111,597,494 12,283,754

. 22,090,295 38,627,914 14,002,475 8,500,496 -1,594,892 2023 198,842,614 117,317,718, 13,006,317 23,748,218 40,172,524/ 15,267,390 8,986,309 -1,683,245 2024 2025

### 209'725,68~1 221,160,595**123,311,85~1** 129,559,584 13,782,631' 25,539,422 14,600,0131 27,434,053 41,581,796 43,117,605 16,792,542: 18,384,088 9,504,187 10,057,2711 -1,778,382 -1,877,478

In Thousands Source: Metro DRe Detail may not add due to rounding A-13 Metro01.xls 10/8/02Table 11 

### Personal Income, Total and Per Capita Consumer Price Index, All Earners Portland-Vancouver OR-WA (1982-84

# = 100) PerCapita Amount Percent Infl. Adj. (1996 Percent Infl. Adj. Percent Port.-Vanc. Percent (in thous.) Change $) Change Nominal (1996 $) ORWA Change 

### us



# .. Change



### ­ 1970 $4,583,778 $19,791,972 $4,368 $18,861 1970 38.8 38.7 1971 4,989,157 8.8% 20,999,701 6.1% 4,638 19,520 1971 40.5 4.2% 39.7 2.6% 1972 5,557,442 11.4% 22,760,994 8.4% 5,182 21,223 1972 41.8 3.3% 40.8 2.8% 1973 6,258,168 12.6% 24,039,997 5.6% 5,728 22,003 1973 44.4 6.3% 43.5 6.6% 1974 7,092,332 13.3% 24,285,424 1.0% 6,347 21,732 1974 49.3 11.0% 48.8 12.2% 1975 7,806,160 10.1% 24,381,483 0.4% 6,813 21,279 1975 53.8 9.1% 53.5 9.6% 1976 8,845,638 13.3% 25,931,686 6.4% 7,549 22,132 1976 56.9 5.8% 57.0 6.5% 1977 9,897,231 11.9% 26,847,846 3.5% 8,223 22,306 1977 60.6 6.5% 61.6 8.1% 1978 11,452,259 15.7% 28,225,258 5.1% 9,275 22,859 1978 65.2 7.6% 67.8 10.1% 1979 13,110,100 14.5% 28,450,620 0.8% 10,356 22,474 1979 72.6 11.3% 77.0 13.6% 1980 14,697,285 12.1% 28,164,178 -1.0% 11,324 21,699 1980 82.4 13.5% 87.2 13.2% 1981 16,091,647 9.5% 28,304,360 0.5% 12,239 21,528 1981 90.9 10.4% 95.0 8.9% 1982 16,636,752 3.4% 28,367,360 0.2% 12,551 21,400 1982 96.5 6.2% 98.0 3.2% 1983 17,474,173 5.0% 29,464,524 3.9% 13,269 22,375 1983 99.6 3.2% 99.1 1.1% 1984 19,213,950 10.0% 31,232,014 6.0% 14,451 23,490 1984 103.9 4.4% 102.8 3.7% 1985 20,376,011 6.0% 31,910,323 2.2% 15,179 23,772 1985 107.6 3.5% 106.7 3.8% 1986 21,487,037 5.5% 33,183,770 4.0% 15,855 24,486 1986 109.7 1.9% 108.2 1.4% 1987 22,859,879 6.4% 34,444,416 3.8% 16,693 25,152 1987 113.7 3.7% 110.9 2.5% 1988 25,143,546 10.0% 36,630,223 6.3% 17,978 26,192 1988 118.4 4.1% 114.7 3.4% 1989 27,696,108 10.2% 38,438,701 4.9% 19,390 26,911 1989 124.0 4.8% 120.4 5.0% 1990 30,517,226 10.2% 40,026,911 4.1% 20,649 27,084 1990 130.8 5.4% 127.4 5.8% 1991 32,174,558 5.4% 40,152,118 0.3% 21,421 26,732 1991 136.3 4.2% 133.9 5.1% 1992 34,270,886 6.5% 40,963,269 2.0% 22,082 26,395 1992 140.4 3.0% 139.8 4.4% 1993 36,735,666 7.2% 42,422,459 3.6% 22,997 26,558 1993 144.6 3.0% 144.7 3.5% 1994 39,370,499 7.2% 44,182,743 4.1% 23,957 26,886 1994 148.3 2.6% 148.9 2.9% 1995 42,661,456 8.4% 46,532,176 5.3% 25,377 27,679 1995 152.5 2.8% 153.2 2.9% 1996 45,872,189 7.5% 48,330,661 3.9% 26,610 28,036 1996 157.0 2.9% 158.6 3.5% 1997 49,743,957 8.4% 50,668,791 4.8% 28,062 28,584 1997 160.6 2.3% 164.1 3.4% 1998 52,539,011 5.6% 52,539,011 3.7% 28,995 28,995 1998 163.1 1.6% 167.1 1.9% 1999 54,874,825 4.4% 53,126,207 1.1% 29,749 28,801 1999 166.7 2.2% 172.6 3.3% 2000 59,689,525 8.8% 56,034,380 5.5% 31,844 29,894 2000 172.3 3.3% 178.0 3.1% 2001 61,745,373 3.4% 56,442,297 0.7% 32,455 29,667 2001 177.2 2.8% 182.8 2.7% 2002 62,987,798 2.0% 55,795,489 -1.1% 32,563 28,845 2002 179.7 1.5% 188.6 3.2% 2003 66,918,346 6.2% 57,211,847 2.5% 34,.078 29,135 2003 184.1 2.4% 195.5 3.6% 2004 71,089,969 6.2% 58,845,464 2.9% 35,408 29,310 2004 188.7 2.5% 201.9 3.3% 2005 75,024,509 5.5% 60,208,412 2.3% 36,612 29,382 2005 193.3 2.5% 208.2 3.1% 2006 78,671,039 4.9% 61,372,225 1.9% 37,624 29,351 2006 198.0 2.4% 214.2 2.9% 2007 82,477,778 4.8% 62,614,314 2.0% 38,672 29,358 2007 202.7 2.4% 220.1 2.8% 2008 88,509,462 7.3% 64,393,640 2.8% 40,786 29,673 2008 207.5 2.4% 229.7 4.3% 2009 93,499,037 5.6% 66,028,607 2.5% 42,442 29,972 2009 212.3 2.3% 236.6 3.0% 2010 98,999,632 5.9% 67,901,484 2.8% 44,317 30,396 2010 217.3 2.4% 243.6 3.0% 2011 104,062,674 5.1% 69,311,515 2.1% 45,954 30,608 2011 222.8 2.5% 250.9 3.0% 2012 109,695,481 5.4% 71,140,708 2.6% 47,805 31,003 2012 228.7 2.7% 257.7 2.7% 2013 115,900,868 5.7% 73,260,081 3.0% 49,856 31,514 2013 235.1 2.8% 264.4 2.6% 2014 121,521,793 4.8% 74,928,200 2.3% 51,539 31,778 2014 242.0 3.0% 271.0 2.5% 2015 127,656,746 5.0% 76,800,872 2.5% 53,321 32,079 2015 249.5 3.1% 277.8 2.5% 2016 135,332,036 6.0% 79,447,664 3.4% 55,703 32,701 2016 257.7 3.3% 284.6 2.5% 2017 142,527,754 5.3% 81,638,459 2.8% 57,838 33,129 2017 266.4 3.4% 291.7 2.5% 2018 151,333,496 6.2% 84,560,532 3.6% 60,546 33,831 2018 275.6 3.5% 299.1 2.5% 2019 159,508,678 5.4% 86,933,790 2.8% 62,926 34,295 2019 285.1 3.5% 306.6 2.5% 2020 168,188,025 5.4% 89,390,010 2.8% 65,414 34,767 2020 295.2 3.5% 314.4 2.5% 2021 178,661,799 6.2% 92,600,455 3.6% 68,495 35,501 2021 305.6 3.5% 322.4 2.5% 2022 188,506,544 5.5% 95,262,335 2.9% 71,214 35,988 2022 316.5 3.6% 330.7 2.6% 2023 198,842,614 5.5% 97,976,000 2.8% 74,003 36,463 2023 327.8 3.6% 339.1 2.6% 2024 209,725,681 5.5% 100,747,912 2.8% 76,891 36,937 2024 339.8 3.6% 347.9 2.6% 2025 221,160,595 5.5%1 103,567,344 2.8% 79,894 37,413 2025 352.2 3.7% 356.8 2.6%

Source: Metro ORe A-14 Metro01,xls 10/8/02Table 12 

## Average Weekly and Hourly Earnings, Average Work Hours PerWeek, Manufacturing Industries Only United States Portland·VancouverOR·WA Avg. Weekly

E'

armngs 1970 $133.83 1971 141.87 1972 154.86 1973 166.38 1974 177.33 1975 190.45 1976 209.43 1977 228.67 1978 249.45 1979 268.80 1980 288.87 1981 318.48 1982 331.50 1983 354.26 1984 373.76 1985 386.56 1986 396.11 1987 406.51 1988 417.18 1989 428.95 1990 441.65 1991 454.69 1992 470.48 1993 486.86 1994 505.68 1995 514.47 1996 530.72 1997 552.46 1998 564.03 1999 580.33 2000 597.07 2001 604.17 2002 615.37 2003 637.31 2004 661.30 2005 678.26 2006 699.92 2007 725.28 2008 750.88 2009 775.23 2010 800.65 2011 826.37 2012 851.13 2013 880.17 2014 912.70 2015 945.96 2016 981.22 2017 1,015.51 2018 1,048.50 2019 1,082.89 2020 1,120.05 2021 1,159.22 2022 1,204.61 2023 1,248.68 Avg. Hourly Avg. Hours Avg. Weekly E'

arnmgs PWk ee er Earnings $3.36 39.8 $145.84 39.85 155.90 3.56 3.82 40.54 166.44 4.09 40.68 175.96 4.43 40.03 191.82 4.83 39.43 210.92 40.12 231.49 5.22 5.67 40.33 247.23 6.17 40.43 266.39 6.69 40.18 291.90 7.28 39.68 325.66 7.99 39.86 361.28 8.50 39.00 386.77 8.83 40.12 406.26 9.19 40.67 412.42 9.54 40.52 403.68 9.73 40.71 425.86 9.91 41.02 425.30 10.18 40.98 425.20 10.48 40.93 431.79 10.83 40.78 451.56 11.18 40.67 471.74 11.45 41.09 496.05 11.74 41.47 499.84 12.06 41.93 514.88 12.37 41.59 521.95 12.77 41.56 533.12 13.16 41.98 559.76 13.50 41.78 588.72 13.91 41.72 609.59 14.37 41.55 627.17 14.83 40.74 608.06 15.09 40.78 595.84 15.32 41.60 619.77 15.87 41.67 643.12 16.32 41.56 665.98 16.89 41.44 690.05 17.54 41.35 715.89 18.19 41.28 734.77 18.83 41.17 749.01 19.49 41.08 779.32 20.18 40.95 813.10 20.81 40.90 841.29 21.52 40.90 864.49 22.31 40.91 889.66 23.14 40.88 917.73 24.02 40.85 946.61 24.89 40.80 977.34 25.73 40.75 1,008.13 26.60 40.71 1,037.82 27.54 40.67 1,069.00 28.51 40.66 1,101.92 29.59 40.71 1,135.78 30.62 1 40.78 1,172.88 1,301.261 31.80, 40.92 1,208.62 2024 1,350.131 32.891 41.05**1,248.23 ~**  1 2025 Avg. Hourly Earnin s $3.80

4.04 4.26 4.52 4.94 5.51 5.98 6.45 6.95 7.71 8.57 9.53 10.17 10.34 10.42 10.45 10.85 10.80 10.74 10.89 11.38 11.77 12.42 12.44 12.66 12.84 13.17 13.43 14.44 15.10 15.44 15.70 15.68 15.99 16.52 17.16 17.84 18.58 19.09 19.48 20.30 21.18 21.88 22.46 23.09 23.80 24.53 25.30 26.07 26.81 27.58 28.40 29.25 30.19 31.07 32.08 Avg. Hours PerWeek 38.4 38.59 39.07 38.93 38.83 38.28 38.71 38.33 38.33 37.86 38.00 37.91 38.03 39.29 39.58 38.63 39.25 39.38 39.59 39.65 39.68 40.08 39.94 40.18 40.67 40.65 40.48 41.68 40.77 40.37 40.62 38.73 38.00 38.76 38.93 38.81 38.68 38.53 38.49 38.45 38.39 38.39 38.45 38.49 38.53 38.56 38.59 38.63 38.67 38.71 38.76 38.80 38.83 38.85 38.90 38.91

Source: Metro ORe A-IS Metro01.xls 10/8/02Table 13 

### Residential Authorized Permits Housing Price Statistics Median Home Price 

### .­ Relative Price Single Portland·Vane. Family Ch

### ange Multi·Family Ch

### ange U.S. OR·WA 1970 5,500 5,130 $17,243 $18,300 1971 7,740 2,240 9,270 4,140 18,588 20,000 69.4 1972 9,000 1,260 9,950 680 20,008 21,400 66.5 1973 7,490 .1,510 6,010 -3,940 21,716 23,400 65.9 1974 6,120 ·1,370 3,160 -2,850 24,032 26,000 65.9 1975 7,200 1,080 2,720 -440 26,453 30,500 70.9 1976 10,190 2,990 5,320 2,600 28,573 33,300 70.6 1977 12,350 2,160 7,590 2,270 32,080 40,400 78.4 1978 11,750 -600 7,510 -80 36,536 50,910 87.9 1979 7,530 -4,220 6,190 -1,320 41,679 59,900 92.8 1980 5,750 -1,780 2,960 -3,230 46,562 62,900 89.9 1981 3,680 -2,070 2,020 -940 49,612 66,500 90.2 1982 2,300 -1,380 1,260 ·760 50,784 65,000 86.5 1983 3,850 1,550 790 -470 52,373 63,000 78.4 1984 3,820 -30 1,410 620 54,227 62,500 75.0 1985 4,180 360 4,640 3,230 56,522 61,500 71.7 1986 4,790 610 3,230 -1,410 60,205 62,900 68.1 1987 5,240 450 4,450 1,220 84,206 63,000 62.4 1988 5,980 740 5,080 630 66,941 84,000 59.3 1989 7,090 1,110 9,140 4,060 67,106 70,000 63.0 1990 8,320 1,230 2,960 -6,180 68,937 79,700 69.7 1991 7,060 -1,260 2,020 ·940 72,632 91,750 79.2 1992 8,740 1,680 1,260 ·760 74,778 97,000 83.2 1993 9,940 1,200 790 -470 77,056 107,000 88.1 1994 10,400 460 1,410 620 80,268 117,000 91.8 1995 9,800 -600 4,640 3,230 82,435 128,000 96.2 1996 10,720 920 3,230 -1,410 86,702 139,900 100.0 1997 10,660 -60 4,450 1,220 91,085 150,000 102.4 

# -. 10,620 -40 5,080 1998 630 133,958 155,100 102.3 1999 9,900 -720 9,140 4,060 139,592 161,000 105.0 2000 9,300 -600 3,260 ·5,880 145,455 166,000 104.8 2001 10,170 870 2,590 -670 151,404 169,730 104.8 2002 10,600 430 2,010 -580 151,235 170,740 107.3 2003 10,160 -440 1,670 -340 156,281 176,280 107.4 2004 10,010 ·150 1,590 -80 161,319 184,580 110.0 2005 10,540 530 1,690 100 166,022 195,210 113.9 2006 10,570 30 1,810 120 171,127 206,680 118.2 2007 10,570 0 2,020 210 175,706 218,190 122.9 2008 10,050 -520 2,330 310 183,084 230,890 126.9 2009 9,680 -370 2,690 360 187,752 244,590 132.2 2010 9,750 70 3,150 460 192,212 256,060 136.3 2011 9,800 50 3,650 500 195,797 265,980 140.4 2012 9,900 100 4,210 560 200,378 275,450 143.1 2013 10,010 110 4,620 410 205,593 287,350 146.1 2014 10,190 180 5,070 450 211,185 297,350 149.2 2015 10,330 140 5,440 370 216,967 307,290 152.1 2016 10,360 30 5,760 320 222,912 318,150 154.1 2017 10,500 140 6,060 300 229,025 329,410 157.1 2018 10,600 100 6,360 300 235,330 340,730 158.7 2019 10,700 100 6,620 260 241,841 352,610 161.5 2020 10,780 80 6,960 340 248,558 364,950 164.2 2021 10,910 130 7,250 290 255,468 377,850 166.1

1 11,000 90 7,450 200 262,559 2022 391,400! 169.5 2023 11,120 120 7,630 180 269,801 405,120 172.8 2024 140 7,810 180 277.254 419,440i 176.4 1 11

## ~:;:~ 80 2025 7,940 130 284,953 434,830 180.4


# -

Source: Metro ORe A-16 Metro01.xls 10/8/02Table 14 

## Alternate Forecasts forthe Portland.Vancouver, OR·WA AARG 2000 2005 2010 2015 2020 2025 2030 2000·30 (in thousands) Population, total Base 1,874.5 2,049.2 2,233.9 2,394.1 2,571.1 2,768.2 2,955.3 1.5% High 1,874.5 2,087.8 2,299.6 2,453.6 2,701.4 3,026.2 3,391.5 2.0% Low 1,874.5 1,991.4 2,079.6 2,120.3 2,177.2 2,275.2 2,385.8 0.8%
Age, 0to 4 years Base 133.1 147.0 159.3 168.4 179.3 191.9 204.1 1.4% High 133.1 158.8 180.9 191.9 210.7 239.0 271.9 2.4% Low 133.1 133.6 130.0 125.1 124.6 129.1 134.4 0.0%
Age, 5 to 9 years Base 132.3 142.6 154.8 164.8 175.7 187.8 199.7 1.4% High 132.3 147.6 167.4 182.1 200.8 225.5 254.8 2.2% Low 132.3 135.8 134.6 129.5 127.4 130.0 134.1 0.0%
Age, 10to 14 years Base 127.5 137.9 149.2 159.4 170.4 182.3 193.9 1.4% High 127.5 139.9 155.4 169.9 189.1 211.8 237.9 2.1% Low 127.5 134.2 136.1 133.0 130.6 131.6 133.9 0.2%
Age, 15to 19 years Base 124.5 135.3 145.8 155.5 166.7 178.7 190.0 1.4% High 124.5 136.9 148.5 160.0 179.4 202.3 226.8 2.0% Low 124.5 131.8 135.4 134.5 133.6 134.8 136.5 0.3%
Age, 20 to 24 years Base 133.1 143.5 153.5 161.6 173.2 186.4 197.2 1.3% High 133.1 146.6 154.5 159.5 181.9 209.4 235.6 1.9% Low 133.1 136.1 137.7 135.2 137.1 142.3 146.4 0.3%
Age, 25 to 29 years Base 142.2 150.2 160.5 167.3 178.3 191.7 203.0 1.2% High 142.2 153.4 161.8 162.4 182.1 210.9 239.6 1.8% Low 142.2 142.5 142.0 137.6 139.0 146.1 153.0 0.2%
Age, 30 to 34 years Base 146.7 152.8 162.3 168.9 178.6 191.0 202.6 1.1% High 146.7 155.2 164.1 164.7 178.9 203.9 232.3 1.5% Low 146.7 147.1 145.9 141.1 140.4 146.2 153.3 0.1%
Age, 35 to 39 years Base 149.4 153.6 161.1 167.6 176.2 187.0 198.2 0.9% High 149.4 155.3 163.0 165.2 175.4 194.6 219.6 1.3% Low 149.4 149.8 148.9 144.7 142.7 145.8 151.0 0.0%

A-17Table 14 

### Alternate Forecasts for the Portland-Vancouver, OR-WA 

# -
AARG 2000 2005 2010 2015 2020 2025 2030 2000-30
Age, 40 to44years Base 147.7 152.4 158.5 164.4 171.9 181.3 191.5 0.9% High 147.7 153.6 160.2 163.5 171.5 185.8 205.8 1.1% Low 147.7 150.0 150.1 147.3 145.0 146.0 148.8 0.0%
Age, 45to49 years Base 137.0 146.6 153.8 159.7 166.5 174.7 183.8 1.0% High 137.0 147.5 155.2 159.8 167.0 178.0 193.5 1.2% Low 137.0 145.1 148.4 147.9 146.5 146.6 147.8 0.3%
Age, 50 to 54years Base 117.1 133.6 144.7 152.2 159.3 166.8 174.8 1.3% High 117.1 134.4 146.0 153.0 160.7 170.5 183.0 1.5% Low 117.1 132.5 141.3 144.5 145.4 146.2 147.3 0.8%
Age, 55to 59 years Base 94.1 114.3 130.0 140.7 149.3 157.0 164.6 1.9% High 94.1 115.1 131.4 142.0 151.7 161.9 173.2 2.1% Low 94.1 113.6 127.8 135.9 140.2 143.3 145.9 1.5%
Age, 60 to 64 years Base 74.7 92.9 110.4 124.1 134.9 143.9 151.6 2.4% High 74.7 93.7 112.1 126.0 138.3 150.3 162.0 2.6% Low 74.7 92.4 109.1 121.3 129.6 135.9 141.4 2.2%
Age, 65 to 69 years Base 61.8 74.4 90.2 105.0 117.6 128.1 136.7 2.7% High 61.8 75.1 91.8 107.1 121.3 135.1 148.2 3.0% Low 61.8 74.0 89.4 103.4 114.7 124.3 133.2 2.6%
Age, 70 to 74 years Base 52.1 59.4 71.1 84.3 97.1 108.5 118.0 2.8% High 52.1 60.0 72.6 86.5 101.0 115.9 130.3 3.1% Low 52.1 59.3 70.8 83.8 96.2 108.0 119.9 2.8%
Age, 75to 79 years Base 42.0 46.2 53.5 63.4 74.4 85.1 94.6 2.7% High 42.0 46.7 55.1 65.8 78.4 93.0 107.7 3.2% Low 42.0 46.2 53.9 63.9 75.1 87.5 101.2 3.0%
Age, 80 to 84years Base 30.9 33.9 38.3 44.7 52.7 61.4 69.8 2.8% High 30.9 34.4 39.7 47.0 56.5 69.2 83.2 3.4% Low 30.9 34.0 38.9 45.7 54.3 65.5 79.2 3.2%

A-18Table 14 

### Alternate Forecasts for the Portland-Vancouver, OR-WA AARG 2000 2005 2010 2015 2020 2025 2030 2000-30

Age, 85 and over years Base 28.7 32.7 36.9 42.1 49.1 64.9 81.2 3.5% High 28.7 33.6 39.9 47.3 56.8 69.3 86.0 3.7% Low 28.7 33.5 39.3 46.3 55.0 66.2 80.9 3.5%

Births, total Base 27.5 30.2 32.6 34.3 36.6 39.2 41.7 1.4% High 27.5 34.7 38.8 39.7 44.3 50.9 58.0 2.5% Low 27.5 25.7 24.9 24.5 24.7 25.8 27.0 -0.1%

Deaths, total Base 13.8 15.3 17.1 19.4 21.5 22.7 26.1 2.2% High 13.8 13.5 15.1 17.2 19.7 18.9 22.3 1.6% Low 13.8 13.4 14.7 16.6 18.7 17.6 20.4 1.3%

Migration, total Base 16.4 25.4 15.3 21.7 21.6 24.0 20.4 

### n.m. High 16.4 29.3 4.0 20.1 32.0 39.2 39.5 

### n.m. Low 16.4 11.2 0.8 -0.5 9.1 13.9 11.9 

### n.m.
Household,total Base 725.4 799.6 876.7 946.9 1,021.6 1,104.2 1,177.8 1.6% High 725.4 811.1 894.1 956.3 1,049.8 1,171.6 1,308.7 2.0% Low 725.4 785.9 840.1 876.7 915.1 966.4 1,022.6 1.2%

INCOME Per Capita Income, 1996 

### $ Base $ 28,320.3 27,875.3 28,836.2 30,432.9 32,982.5 35,493.6 37,532.0 0.9% High 28,320.3 28,328.1 28,687.1 31,200.8 33,346.7 34,788.1 36,442.2 0.8% Low 28,319.9 28,317.9 31,563.7 34,070.2 35,229.8 35,438.4 34.479.8 0.7%

Per Capita Income Base $ 31,787.2 36,602.5 44,305.5 53,306.7 65,396.6 79,872.3 96,087.5 3.8% High 31,787.2 37,699.3 44,650.1 56,054.2 70,639.3 87,777.8 110,631.9 4.2% Low 31,786.9 36,770.8 44,517.4 54,545.5 66,281.8 79,367.2 92,498.8 3.6%

Personal Income, 1996 

### $ millions Base $ 53,088.4 57,130.8 64,428.6 72,874.1 84,818.6 98,271.6 110,938.8 2.5% High 53,088.4 59,154.3 65,981.7 76,568.4 90,101.1 105,294.4 123,614.7 2.9% Low 53,088.4 56,400.2 65,650.3 72,250.3 76,714.3 80,641.3 82,263.9 1.5%

Personal Income Base $ 59,689.5 75,017.6 98,990.6 127,646.0 168,173.3 221,140.7 284,015.0 5.3% High 59,689.5 78,724.4 102,695.6 137,559.6 190,865.5 265,686.4 375,279.3 6.3% Low 59,689.5 73,234.7 92,589.8 115,667.7 144,329.8 180,602.8 220,691.5 4.5%

A-19Table 14 

### Alternate Forecasts for the Portland-Vancouver, OR-WA 

# -
AARG 2000 2005 2010 2015 2020 2025 2030 2000·30
Wage Disbursements Base $ 36,581.9 45,721.3 59,432.5 76,301.5 99,866.0 129,559.6 167,863.3 5.2% High 36,581.9 47,196.0 61,803.9 81,078.0 109,364.3 147,711.8 197,360.2 5.8% low 36,581.9 44,660.7 57,279.2 69,862.4 84,178.5 101,627.0 121,649.0 4.1%

Social Security Base $ 2,802.6 3,405.7 4,408.7 5,717.5 7,548.3 10,057.3 13,420.1 5.4% High 2,802.6 3,510.9 4,565.9 6,234.6 8,379.9 11,342.9 15,310.7 5.8% low 2,802.6 3,323.5 4,225.2 5,758.4 7,775.6 10,569.8 14,562.2 5.6%

Other labor Income Base $ 3,664.5 4,511.6 6,362.4 8,209.1 10,931.1 14,600.0 19,385.6 5.7% High 3,664.5 4,696.6 6,463.9 9,494.8 13,831.5 19,238.3 25,695.9 6.7% low 3,664.5 4,495.8 6,146.5 8,231.6 10,833.7 14,332.7 18,932.7 5.6%

Dividends, Interest, & Rent Base $ 12,448.8 15,187.6 21,010.5 27,112.3 34,723.0 43,117.6 49,724.0 4.7% High 12,448.8 16,862.7 22,274.2 30,760.9 45,278.4

. 68,521.3 104,081.6 7.3% low 12,448.8 13,993.9 17,330.4 22,978.0 30,894.6 42,335.3 58,264.9 5.3%

Transfer Payments Base $ 5,915.5 8,234.1 9,937.6 13,562.7 19,108.8 27,434.1 40,326.6 6.6% High 5,915.5 8,642.9 10,264.5 13,599.4 18,744.7 25,232.8 40,032.7 6.6% low 5,915.5 8,520.5 9,548.7 11,912.7 15,117.1 17,992.3 19,935.4 4.1%

Farm Proprietors' Income**~"** Base $ 76.7 75.0 72.5 72.4 82.0 93.1 104.3 1.0% High 76.7 77.6 80.9 105.6 120.1 120.2 121.6 1.5% low 76.7 70.5 74.9 99.1 112.7 112.l:! 112.4 1.3%

Business Proprietors' Income Base $ 4,324.5

. 5,348.7 7,446.1 9,204.7 12,453.7 18,291.0 22,469.6 5.6% High 4,324.5 5,435.0 7,263.6 9,934.2 13,507.5 18,372.1 19,637.0 5.2% low 4,324.5 5,460.2 7,267.4 9,363.5 12,209.4 16,287.2 17,318.6 4.7%

A-20Table 14 

### Alternate Forecasts forthe Portland-Vancouver, OR·WA

2000 2005 (in thousands) Employment, total (includes self employed) Base 1,210.2 1,314.2 High 1,210.2 1,344.3 Low 1,210.2 1,290.0 2010

1,477.2 1,518.3 1,431.0 2015

1,625.2 1,677.3 1,525.7 2020

1,788.9 1,873.4 1,609.1 2025

1,972.7 2,115.9 1,709.4 2030

2,151.6 2,399.9 1,814.2 AARG 2000-30

1.9% 2.3% 1.4%

Self Employment Base High Low 252.2 252.2 252.2 270.7 275.9 266.1 308.5 315.9 293.0 352.0 355.7 316.5 401.2 413.6 341.3 457.2 488.2 373.6 510.1 576.1 408.2 2.4% 2.8% 1.6%

Wage & Salary Base High Low 958.0 958.0 958.0 1,043.5 1,068.5 1,023.9 1,168.7 1,202.4 1,138.0 1,273.1 1,321.6 1,209.3 1,387.7 1,459.8 1,267.8 1,515.5 1,627.7 1,335.8 1,641.5 1,823.8 1,406.0 1.8% 2.2% 1.3%
Manufacturing Base High Low 145.5 145.5 145.5 154.7 159.1 148.9 165.9 172.7 157.5 168.9 181.1 158.4 172.8 190.0 157.8 177.2 201.1 157.6 182.9 214.0 157.6 0.8% 1.3% 0.3%

Durable Mfg. Base High Low 107.4 107.4 107.4 115.3 119.3 110.4 125.5 131.7 118.7 128.4 139.6 120.0 132.1 147.9 120.3 136.7 158.6 121.2 142.3 170.7 122.3 0.9% 1.6% 0.4%



# - Lumber & Wood Base High Low 7.6 7.6 7.6 7.4 7.2 7.3 6.8 6.5 6.3 5.9 5.7 5.3 5.0 5.0 4.5 4.2 4.5 3.8 3.6 4.0 3.2 -2.5% -2.2% -2.8%

Metals: Primary & Fabricated Base 19.9 High 19.9 Low 19.9 20.1 20.5 19.7 20.3 20.8 20.2 19.6 20.7 19.5 19.1 20.6 18.6 18.8 20.8 17.9 18.6 21.1 17.3 -0.2% 0.2% -0.5%

Nonelectrical Machinery Base High Low 17.0 17.0 17.0 17.6 18.3 17.4 20.2 20.4 19.9 20.8 20.9 20.0 21.8 21.8 20.2 22.9 23.1 20.7 24.1 24.6 21.3 1.2% 1.2% 0.8%

Electrical Machinery & Instruments Base 41.7 High 41.7 Low 41.7 50.4 50.7 46.3 56.4 56.7 50.6 59.3 61.5 53.4 62.4 66.0 55.2 65.8 70.9 56.7 69.9 75.9 58.1 1.7% 2.0% 1.1%

A-21Table 14 

### Alternate Forecasts for the Portland-Vancouver, OR-WA 

# -

2000 2005 2010 2015 2020 2025 2030 AARG 2000·30

Transportation Equipment Base High Low 12.7 12.7 12.7 10.5 11.5 10.6 11.5 12.7 11.6 11.7 12.8 11.2 12.0 13.0 10.9 12.4 13.5 10.7 12.6 13.8 10.5 0.0% 0.3% -0.6%

Other Durable Mfg. Base High Low 8.5 8.5 8.5 9.4 11.1 9.1 10.3 14.5 10.1 11.1 17.9 10.6 11.9 21.4 11.0 12.8 25.8 11.5 13.5 31.3 11.9 1.6% 4.5% 1.1%

Nondurable Mfg. Base High Low 38.1 38.1 38.1 39.3 39.8 38.6 40.5 41.0 38.8 40.5 41.6 38.4 40.7 42.1 37.5 40.5 42.5 36.4 40.7 43.3 35.2 0.2% 0.4% -0.3%

Food Processing Base High Low 8.9 8.9 8.9 8.5 8.8 8.5 8.2 8.4 8.0 7.7 7.9 7.3 7.2 7.4 6.7 6.7 6.9 6.2 6.3 6.3 5.6 "1.2% -1.1% -1.5%

Textile & Apparels Base High Low 3.4 3.4 3.4 4.0 3.9 3.5 3.6 3.9 2.9 3.1 3.8 2.5 2.6 3.8 2.3 2.2 3.8 2.1 2.0 3.8 1.9 -1.7% 0.4% -2.0%
Paper & Pulp Base High Low 6.7 6.7 6.7 6.8 6.8 6.9 6.6 6.7 6.6 6.2 6.5 6.2 5.9 6.3 5.7 5.5 6.1 5.3 5.2 5.9 4.9 -0.9% -0.4% -1.1% 

# -

Printing & Publishing Base High Low 11.1 11.1 11.1 12.2 12.4 12.2 13.1 13.3 12.9 13.5 13.6 13.0 13.7 13.9 13.0 13.8 14.2 12.9 13.8 14.5 12.8 0.7% 0.9% 0.5%

Other Nondurable Mfg. Base High Low 8.0 8.0 8.0 7.8 8.0 7.5 9.0 8.8 8.5 10.1 9.8 9.4 11.3 10.8 9.8 12.3 11.6 10.0 13.4 12.7 10.1 1.7% 1.6% 0.8%

Nonmanufacturing (except military) Base 812.5 High 812.5 Low 812.5 888.9 909.4 875.0 1.002.8 1.029.7

980.5 1.104.3 1.140.5 1,050.9 1.214.9 1.269.8 1,109.9 1.338.3 1,426.6 1,178.2 1,458.6 1.609.9 1.248.4 2.0% 2.3% 1.4%



# -

A-22Table 14**.~p-** 

### Alternate Forecasts for the Portland-Vancouver, OR-WA AARG 2000 2005 2010 2015 2020 2025 2030 2000-30

Private Services, total Base 685.5 759.8 862.5 955.1 1,055.1 1,166.3 1,275.7 2.1% High 685.5 778.5 888.3 989.4 1,104.1 1,241.6 1,401.8 2.4% Low 685.5 752.5 856.7 924.3 979.8 1,042.9 1,108.2 1.6%

Construction & Mining Base 53.9 59.3 67.7 71.8 76.3 81.0 85.4 1.5% High 53.9 60.0 71.2 76.6 79.5 84.9 91.3 1.8% Low 53.9 58.5 69.5 72.8 71.5 70.5 69.4 0.8%
Transp., Comm., Utilities Base 55.4 58.4 64.9 69.9 75.2 80.9 86.5 1.5% High 55.4 59.4 66.6 71.8 79.0 88.0 98.1 1.9% Low 55.4 56.5 60.5 62.7 64.7 67.6 70.8 0.8%

Trade, total Base 235.4 258.1 288.6 313.5 339.7 367.9 395.6 1.7% !"Iigh 235.4 261.4 294.4 322.1 353.2 389.8 430.9 2.0% Low 235.4 255.3 282.9 301.7 317.4 335.3 353.5 1.4%

Wholesale Trade Base 67.2 73.3 81.6 87.9 94.4 101.6 108.6 1.6% High 67.2 74.5 83.2 90.5 98.7 108.2 119.1 1.9% Low 67.2 72.6 79.9 84.7 88.7 93.0 97.2 1.2% 

# -. Retail Trade Base 168.1 184.8 207.0 225.6 245.3 266.3 287.0 1.8% High 168.1 186.9 211.2 231.6 254.5 281.7 311.8 2.1% Low 168.1 182.7 203.0 217.0 228.7 242.3 256.3 1.4%

Finance, Ins., & Real Est. Base 64.5 68.4 74.2 80.1 85.3 90.2 94.7 1.3% High 64.5 68.8 75.3 80.7 85.7 90.8 96.1 1.3% Low 64.5 67.8 73.9 76.8 78.4 79.9 81.6 0.8%
Service, total Base 276.3 315.6 367.1 419.8 478.7 546.3 613.4 2.7% High 276.3 328.9 380.9 438.2 506.7 588.1 685.4 3.1% Low 276.3 314.4 370.0 410.4 447.8 489.6 532.9 2.2%

Health Services Base 62.2 71.2 82.3 93.5 105.2 118.9 133.6 2.6% High 62.2 74.5 85.5 97.2 113.6 135.2 162.8 3.3% Low 62.2 71.3 77.7 83.6 90.4 99.0 108.3 1.9%

A-23Table 14 

### Alternate Forecasts for the Portland-Vancouver, OR-WA 

# ­

Other Services Base High Low 2000

214.2 214.2 214.2 2005

244.5 254.4 243.1 2010

284.8 295.3 292.3 2015

326.3 340.9 326.8 2020

373.5 393.1 357.5 2025

427.4 452.9 390.6 2030

479.8 522.6 424.5 AARG 2000-30

2.7% 3.0% 2.3%

Government, total Base High Low 133.9 133.9 133.9 135.7 137.7 129.3 147.0 148.1 130.5 155.8 157.8 133.3 166.6 172.4 136.9 178.8 191.7 142.0 189.6 214.9 146.9 1.2% 1.6% 0.3%

Federal Civilian, Govt. Base High Low 18.5 18.5 18.5 17.9 17.5 17.5 19.3 17.2 17.2 19.4 17.8 17.1 20.4 18.8 17.1 21.2 19.8 17.0 21.8 20.8 17.0 0.5% 0.4% -0.3%

Federal Military, Govt. Base High Low 6.8 6.8 6.8 6.6 6.8 6.8 6.8 6.8 6.8 6.7 6.7 6.7 6.7 6.7 6.7 6.7 6.8 6.7 6.7 6.8 6.7 0.0% 0.0% 0.0%

State & Local Govt. Base High Low 108.5 108.5 108.5 111.2 113.4 105.0 121.0 124.2 106.6 129.7 133.2 109.5 139.5 147.0 113.1 150.8 165.2 118.2 161.1 187.3 123.2 1.3% 1.8% 0.4%



# -

A-24

# -

Table 15 Employment Forecastfor Standardized MetroScope Industry Classification

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 AFF Services & Mining 16.6 16.2 15.6 15.7 15.8 15.7 15.5 15.3 15.2 15.0 14.7 Construction 71.7 70.9 71.1 73.8 75.9 78.4 80.2 82.7 85.7 87.9 89.8 Nondur. Mfg. less Paper 31.9 31.1 31.0 31.6 32.3 32.9 33.2 33.5 33.8 34.2 34.2 Durable Mfg. plus Paper 59.2 55.6 54.3 55.4 56.3 57.4 58.0 58.3 58.6 59.0 59.0 HI-tech Mfg. 58.1 59.2 58.6 60.4 63.5 66.8 68.9 70.4 72.0 74.0 75.4 Transport & Warehouse 41.3 40.9 40.6 41.0 42.0 43.1 44.2 45.2 46.2 47.1 47.9 Comm. & Utilities 21.8 21.6 21.5 21.7 22.2 22.9 23.4 24.0 24.6 25.1 25.5 Wholesale Trade 74.6 72.9 72.2 74.9 77.9 80.8 82.7 84.5 86.4 88.3 90.0 Retail Trade 201.8 202.2 201.3 204.7 212.3 220.2 225.8 231.4 237.0 242.2 247.2 FIRE 93.5 93.8 93.6 93.6 95.5 98.4 100.6 102.7 104.2 105.4 107.0 ConsumerServices 177.5 179.4 178.6 186.5 195.4 202.7 208.4 214.1 223.8 231.0 238.4 Health Services (80+83) 119.2 121.3 123.0 127.2 131.6 135.6 139.1 142.8 148.5 153.2 157.7 Bus. & Prof. Services 83.3 84.2 83.8 87.5 91.7 95.1 97.8 100.5 105.0 108.4 111.9 Government (civilian) 122.3 123.0 122.5 122.3 121.7 123.4 125.6 127.6 129.9 131.9 134.3 TOTAL

- excl. military 1172.9 1172.2 1167.7 1196.4 1234.2 1273.4 1303.5 1332.9 1370.9 1402.4 1433.1**_-,,2:.=0..:..11.:..,-~2::::0..:.;12=-~2==0:..:.1.::.3_-=-2014** 2015 2016 2017 2018 2019 2020 2021 AFF Services & Mining 14.4 14.0 13.6 13.2 12.6 12.1 11.5 10.9 10.3 9.6 8.9 Construction 91.1 93.7 94.7 95.4 96.0 96.8 98.0 99.3 100.9 102.7 104.5 Nondur. Mfg. less Paper 34.3 34.4 34.6 34.7 34.9 35.1 35.2 35.4 35.5 35.7 35.8 Durable Mfg. plus Paper 58.8 58.8 58.7 58.4 58.3 58.2 58.1 58.0 58.0 58.1 58.1 Hi-tech Mfg. 75.8 76.4 77.5 78.5 79.3 80.2 81.1 81.9 82.9 83.8 84.9 Transport & Warehouse 48.7 49.5 50.2 51.1 51.9 52.8 53.6 54.4 55.3 56.1 57.0 Comm. & Utilities 26.0 26.4 26.8 27.3 27.8 28.2 28.7 29.2 29.7 30.1 30.6 Wholesale Trade 91.6 93.3 94.8 96.2 97.6 99.2 100.6 102.3 104.0 105.6 107.4 Retail Trade 251.9 257.3 262.0 266.5 271.2 276.2 281.1 286.4 291.6 296.8 302.5 FIRE 108.9 111.0 112.8 114.5 116.3 118.0 119.7 121.5 123.0 124.6 126.3 Consumer Services 246.8 253.7 261.7 269.3 276.9 285.1 293.7 303.0 312.1 321.5 331.6 Health Services (80+83) 162.4 167.2 171.9 176.3 180.9 186.0 190.8 196.1 201.2 206.3 212.1 Bus. & Prof. Services 115.9 119.1 122.8 126.4 129.9 133.8 137.8 142.2 146.5 150.9 155.6 Government (civilian) 136.2 138.1 139.9 141.8 143.7 146.1 148.2 150.6 153.0 155.2 157.8 TOTAL

- excl. military 1462.7 1492.7 1522.0 1549.5 1577.3 1607.7 1638.1 1671.4 1703.9 1736.9 1773.0

AFF Services & Mining Construction Nondur. Mfg. less Paper Durable Mfg. plus Paper Hi-tech Mfg. Transport & Warehouse Comm. & Utilities Wholesale Trade Retail Trade FIRE Consumer Services Health Services (80+83) Bus. & Prof. Services Government (civilian) TOTAL

- excl. military 2022 8.1 105.8 35.9 58.1 85.9 57.9 31.2 109.1 307.9 127.8 341.6 217.8 160.3 160.3 1807.8 2023 7.2 107.2 36.0 58.1 86.9 58.8 31.7 110.9 313.4 129.4 351.9 223.7 165.1 162.8 1843.1 2024 6.3 108.9 36.1 58.1 88.0 59.8 32.2 112.6 319.0 131.1 362.5 229.7 170.1 165.4 1879.8 2025 5.3 110.0 36.1 58.1 89.0 60.7 32.8 114.4 324.6 132.7 373.2 235.9 175.2 168.1 1916.0 2000-05 -1.1% 1.8% 0.6% -0.6% 2.8% 0.9% 1.0% 1.6% 1.8% 1.0% 2.7% 2.6% 2.7% 0.2% 1.7% Annual Avg. Growth Rates for Selected Periods 2005·10 2010·15 2015·20 202()"25 2000·25 -1.3% 2.7% 0.8% 0.5% 2.4% 2.2% 2.2% 2.2% 2.3% 1.7% 3.3% 3.1% 3.3% 1.7% 2.4% -3.0% 1.3% 0.4% -0.2% 1.0% 1.6% 1.7% 1.6% 1.9% 1.7% 3.0% 2.8% 3.0% 1.4% 1.9% -5.4% 1.4% 0.4% -0.1% 1.1% 1.6% 1.7% 1.6% 1.8% 1.4% 3.0% 2.7% 3.0% 1.5% 1.9% -11.1% 1.4% 0.2% 0.0% 1.2% 1.6% 1.7% 1.6% 1.8% 1.3% 3.0% 2.7% 3.0% 1.6% 2.0% -4.5% 1.7% 0.5% -0.1% 1.7% 1.6% 1.6% 1.7% 1.9% 1.4% 3.0% 2.8% 3.0% 1.3% 2.0%
Adjusted to BEA employmentlevels which includes proprietors. Geographic Extent: Multnomah. Clackamas. Washington and Clark

A-25 Source: Metro DRC Metro01.xls 10/8/02

# -

Appendix B:
U.S. Economic Forecast Details DRI-WEFA, The U.S. Economy, The 25-Year Focus, Winter Issue 2002

# THE 

# u.s. ECONOMY

The 25- 

# Year Focus • Winter Issue



# 2002

DRI-WEFAprepares 4 U.S. macroeconomic scenarios:

.:. Trend Projection (abaseline scenario)

.:. Cyclical Projection (a scenario that incorporatesbusiness cycles)

.:. Optimistic Projection (ahigh growth scenario)

.:. Pessimistic Projection (a low growth scenario)

The Metro Regional Forecast assumes the national growth projections from DRI-WEFA'sTrend Projection scenario for the baseline regional forecast. Metro's optimistic and pessimistic alternative growth forecasts are produced using DRI-WEFA'scorresponding projection alternatives. The DRI-WEFAcyclical projection is not used in any Metro Regional Forecast.

# - FORECAST OVERVIEW

ThisissueofThe U.S. Economy, 25-YearFocuspresents DRI-WEFA's most recent set oflong-rangeprojections. Given the detail available in the currentDRI-WEFA model, the projections for the nextquarter-century
covernotjustthe macro concepts such as output, inflation, and unemployment, but also the moredisaggregated variables such asproduction and employmentby industry. This disaggregationprovides a variety ofconcepts for analysts to useintheirplanningmodels. Many ofthese variables serve as inputs to DRI·WEFA's Regional andEnergy models.

Whilethelong-range outlooks havebeen ofparticular interest to utilities and state and local governments, which haverelatively longplanning horizons, they can beequally relevant to analysts dealing with shorter intervals. This is especially true ofthe trend scenario, theprincipal long-rangeprojection. The trend is completely consistent with DRI-WEFA's February shorttermbaseline (Control) solution (detailed in the February 2002issue of The U.S. Economic Outlook), which represents our forecast through 2011. Thereafter, the economy is expected to make a transition to "full employment" (4.0-5.0% unemployment), and then evolve gradually along this full-employment growth path. Hence, the transition between the short and longtermforecasts is smooth, makingthetrendprojectionan excellentbasefor ten-yearplanningpurposes andpolicy simulations.


### TheFour Long-TermProjections
This 25-YearFocuspresents four projections: baseline, cyclical, optimistic, andpessimistic.

The trend projection is the baseline scenario. It



### assumes that the economy suffers nomajormishaps betweennow and 2027. It grows smoothly, in the sense that actual output follows potential outputrelatively closely. This projection is bestdescribed as depicting the mean ofallpossible paths that the economy could

EXHIBIT 1 

### A Comparison ofthe Past and Future (Percent) History Trend Cycle Optim Pesim 1976-2001 2002-2027 2002-2027 2002-2027 2001-2027
Average Annual Real Growth Average Annual Real Growth

Potential Output 3.1 2.8 2.5 3.4 2.3 GDP 3.3 3.1 3.1 3.7 2.7 Consumption 3.4 3.0 3.2 3.6 2.6 Business Fixed Investment 5.9 5.2 5.2 5.7 4.6 Govemment 2.1 1.6 1.6 1.8 1.4 Exports 6.6 6.9 6.7 7.0 6.6 Imports 7.7 5.8 6.3 6.1 5.7 Average Annual Growth
Labor Force 1.6 0.7 0.7 1.0 0.5 Productivity 1.7 2.5 2.2 2.7 2.1 Industrial Production 3.4 3.7 4.9 4.3 2.4 Average Level

Inflation (Chain-wt. Impicit GOP deflator) 4.0 2.6 3.9 2.1 3.3 Unemployment 6.5 4.9 4.9 4.8 5.1 Average Percentof GDP

Fuel Import Bill 1.3 1.0 0.9 1.0 1.1 Trade Balance -1.4 -2.5 -2.9 -3.2 -2.4 Federal Deficit -2.5 0.0 -1.1 0.5 -2.5 Fixed Investment 11.7 12.9 12.4 13.3 12.5

Note: Growth rates for the projecionperiod are compound annual growth rates calculated between the years 2001 and 2027. Level Variables are averages for the years 2001 to2027. Interpretation 01 the historical ligures is similar. Unless otherwise stated, all real data are in chained 1996 dollars.



### 25-YearFocus, Winter 2002 1EXHIBIT 4 

### Contributions to Real Potential GOP Growth (Average annual percent change)
History Trend Cycle Optim Pessim

1979·1989 1989·1999 2001-06 2007·27 2001-06 2007-27 2001·06 2007·27 2001-06 2007·27

Factors of Production: Private NonreSidential

Labor Force (0.643) 1.1 1.0 0.8 0.5 0.8 0.5 0.9 0.7 0.7 0.3 Capital Stock (0.272) 0.9 1.4 1.1 1.3 O,g 1.3 1.2 1.4 1.0 1,2 Energy (0.084) 0.0 0.1 0.1 0.2 0.1 0.2 0.1 0.2 0.1 0.1 Gov!. Infrastructure (0.022) 0.0 0.0 0.0 0.1 0.0 0.1 0.1 0.1 0.0 0.1 Total 2.1 2.5 2.0 2.0 1.9 2.0 2.3 2.4 1.8 1.7 Contributionsto Factor Productivity

Research and Development 0.3 0.2 0.3 0.3 0.3 0.2 0.3 0.3 0.3 0.2 Other O.S 1.0 1.0 0.9 1.0 0.7 1.2 1.2 O.S 0.7 Total 1.1 1.2 1.3 1.2 1.3 0.9 1.5 1.4 1.1 0.9 Output Coverage -0.2 ·0.5 -0.3 -0.4 -0.3 -0.4 -0.4 -0.4 -0.3 -0.4 Real Potentiai Growth 2.9 3.2 3.0 2.7 2.8 2.5 3.4 3.4 2.6 2.1 Note: Figures in parentheses are production function weights. All real data are in chained 1996 dollars. laborand capital exclude laborand capital used to produce energy. 

### FORECAST OVERVIEW

EXHIBIT 2 

### Real GOP (Trillions of chained 1992 dollars)**25~--------------------~------------~**

10 

### +--------**~--~ "';w~-** **O~~~~~~~~~~~~~~~~~~**

1962 1972 1982 1992 2002 2012 2022 -Trend ---Cycle

••••••Optimistic

- - - Pessimistic



### follow in the absence ofmajordisruptions. Suchdisruptions includelargeoilprice shocks, untoward swings in macroeconomicpolicy, orexcessivelyrapidincreasesin demand. In all three situations, demographic forces slow thepace ofrealeconomic growth after 2010.
The cyclical**pr(~jection** 

### is the primary alternative scenario. Itsuperimposes business-cycle behavior on the trend scenario. Economic growthproceedsina series of starts and stops, with periods ofrapid expansion, followed by externally- orpolicy-induced recessions. The timing oftherecessionsis merelysuggestive. Becauseit is impossibleto predict the exacttiming ofbusiness EXHIBIT 3 

### GOP Price Inflation (Percent)**10~--------------~------~ 8+---~~~-1~-------~-------~** **O~~Trr~~nn~~~~~~~~~~~~~**

1962 1972 1982 1992 2002 2012 2022 ,.,.,.,.,.,."" Trend ---Cycle

• - ••.•Optimistic

- -Pessimistic



### cycles muchin advance, itis unwiseto focus on specific years. It is also inappropriateto calculate average growthrates between differentpoints in thebusiness cycle.
Theoptimistic projection is the "upside" scenario, in which economic growthproceeds smoothly but more rapidly than in the baseline, while pricesrise more slowly. In this projection, population, labor force, and capital stock growth, as well as exogenous technological changes, occur morequickly than in thetrend. Potentialoutputthus climbs morerapidly, and because

2 DRloWEFA 

### TheU.S. 

### EconomyEXHIBIT 5 

### Mortality Assumptions (Ultimate levels by 2050) Trend/Cycle Optim Pessim

Life Expectancy at Birth (Years) Male Female 81.2 86.7 83.8 88.4 79.5 84.9



### output is primarily supply-detennined in the longrun, real GDP grows 0.5 percentagepointquickerperyear.
The pessimistic projectionis the "downside" scenario. Here, growth proceeds smoothly, butmore slowly than inthe baseline, andproductivity growthis weaker. In thisprojection,population,laborforce, andcapital stock growth,togetherwithexogenoustechnologicalchanges,

occur less rapidly than in the trend. Outputthus climbs 0.5 percentagepointmore slowlyperyear. 

## Probabilities
The underlying rate ofgrowth in TREND25YR0202 is consistentwith history, as well as with conjecture about theeconomy'sunfolding structure. Itcanberegardedas the best unbiasedprojection ofthe economy. Although any probabilities attached to long-runprojections must behighly subjective, DRI·WEFAbelieves there is only

a 10% chance thatthe economy's underlying path will beoutside the "bandwidth" encompassedby the optimistic and pessimisticprojections. 

### Key 

## Assumptions Demographics.Demographic factors are a primary drivingforce in anylong-tenneconomicprojection.The population's growthrate andchangesinits composition have considerable impacts onthe laborforce, thefullemploymentunemployment rate, housing demand, and other spendingcategories-mostnotably, consumption ofhealth services andpurchasesby state and local governments.
Thepopulationprojections inDRl·WEFA's trend and cyclical scenarios are consistentwith the Census Bureau's "middle" projectionfor the U.S. population. Thisprojectionis based on specific assumptions about immigration,fertility, andmortality rates. The fertility rate (the average number ofbirths perwoman upon completion ofchildbearing) willrise from its current level of2.0to about2.2 in 2027, whilethemortalityrate FORECAST OVERVIEW



### should continue to improve-with life expectancy for

men and women rising steadily from 74.1 and79.8 years, respectively, in 1999 to77.6 and 83.6 years, respectively, in 2027. Meanwhile, netimmigration (includingundocumented immigration) is estimatedto rise from only 960,000 persons in 1999 to 979,000 in 2027. Based on these assumptions, the U.S. population will average 0.8% growth peryear through 2027, down from the 1.0% pace during thelast 25 years. Thus total population will risefrom 273.1 million in 1999to 343.0 million in 2027.

Theage distribution ofthepopulation is also an important factor inthelong-tenn outlook. As babyboomers beginto retire, the share oftheU.S. population aged 65 years and overwilljump from 13% in 2010to 19% by 2027, pushingup outlays for Social Security, Medicare, andMedicaid. In addition, the growth rate ofthe working-agepopulation will slow morethan thatofthe overall population. Afterincreasing 1.1% annually overthe past 25 years, thepopulation aged 16 to 64years will grow 0.8% annually during 1999-2014 andjust0.2% peryearthereafter.
Theoptimistic andpessimistic alternatives embody populationprojections different from those inthe trend. Theoptimistic outlookassumestheU.S. populationwill increasemorequickly because ofhigher netimmigration. Conversely, the pessimistic alternative constricts growth inthe laborforce because oflowerassumed net immigration from the startofthe forecast period. As a result, annual population growth averages 1.3% in the optimistic scenario andjust0.5% in the pessimistic scenario. By the endofthe forecast interval, the current population increases to 390 millioninthe optimistic

EXHIBIT 6 The Percentage of the Population Aged 65 and Older Rises 20

18

16

14

12

10

8 

# - / ./ 

# / /

# ~ 1---­

.. 1962 1972 1982 1992 2002 2012 2022

25-YearFocus, Winter 2002 3

### FORECAST OVERVIEW

EXHIBIT7 

### Population Growth (Percent) 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 

# \

# V\ /\ 

# ,....... 

# ..,., '--' '-**.~** ......**A~** 

# ----:- I



# -

. 

# . '



# ...... '"



### ..............

1963 1973 1983 1993 2003 2013 2023
-Trend/Cycle

--- Optimistic' •.••• Pessimistic



### projection, butto only 310 millioninthe pessimistic scenario compared with 343 million in the baseline.
TheCensusBureau has yetto revise its projections to makethemconsistentwiththe 2000census. Therevised projections, which will be released inlate 2002, will show a largerpopulation; the revised 2000estimates 

# -.

. wereraised to 281.4 million, up from 275.3 million.

FiscalPolley. We expect federal spending on defense, transferpayments, and federal aid to state and localgovernments to consume a larger share ofGDP than previously thought. As aresult, the federal government shouldpost surpluses intheunified budget, averaging 0.02% ofGDPfrom 2001 through 2027.

In the longerrun, thebaby boomers' retirement will

cause a gradual disappearance ofthe surplus, despite

some increases in the Social Security tax rate. In the trend scenario, the (unified) surplus falls, butdoes not return to a deficituntil fiscal 2018. MonetaryPollcy andInflation. Monetarypolicy remains important inthe long-teonprojections, not so much in determining the level ofoutput, but ratherin determiningtherate ofinflation. Ultimately, theFederal Reserve decides onthe "steady-state" rate ofinflation. Monetarypolicy cancause inflation to accelerate by being overly accommodative and pushing the unemployment rate temporarily below therate at whichinflation is stable. Alternatively, it

### can cause inflation to decelerate by being restrictive and pushing the unemploymentratetemporarily abovethe rate at which inflation is stable.
The monetary authorities choose to keep short-teon interestrates slightly below theirequilibrium levels throughout the forecast periodinthe trendprojection. causing a slow but steady increaseininflation. Consequently, the rate ofinflation-as measuredbythe chainweighted GDPpriceindex-risesfrom 1.4% in 1999 to 2.2% by 2010 and 3.2% in 2027

. Bondyields will generally move parallel to the funds rate overthe forecast interval, butrun somewhathigher. Theyield onten-year treasuries stays below 6.0% through 2007. Thereafter, thecombination ofhigher short-teonrates and increased government borrowing pushes up the ten-yearbondrate to 9.6% by 2027. The forecast implies a real federal funds rate ofabout 2.0% and a real long-termbond rate between 2.5% and 3.0%-inline with historical averages.
In the cyclical scenario, periods ofoverly expansive monetary policy are followed by intervals ofoverly restrictive policy, which translates into the periodic acceleration and deceleration ofinflation. In the optimistic scenario, the Fedis assumed to keep a tight rein

onthemoney supply, permitting little acceleration of inflation. Conversely, in thepessimistic scenario, the central bankis assumed to bereluctant to put the economy through the pain necessary to bring inflation back to baseline levels, choosing instead to tolerate an inflationrate that eventually exceeds 6%.

EXHIBIT 8 

### The Federal Surplus Shrinks asthe Population Ages ifercent of GNP, NIPA basis)**2~~~--··--~~~-J~~~~········~~~l**



## o -1**+-~~** ....**~-4~-----4-~---- -2+---~~~~------~-+~** **·3~·~----HL-~~~-F··-4------------~ ·4+-----~~~~·~~~L**  ·5**-6~------------------~------------~**

1962 1972 1982 1992 2002 2012 2022

-February2002 Forecast --August2001 Forecast



### 4 DRloWEFA The 

### U.S. EconomyFORECAST OVERVIEW


# - EXHIBIT 9 

### Short-Term Interest Rates Will Settle atTheir Equilibrium (Federal funds rate less nominal GOP growth, percentage P?ints)

8 

# , i 6
! 

# J 4

A 2 

# ,..,...... 

# ,**~** ./\J l. A 

## o**l,/~** 

# 'U 

# V 

# ­ -2 

# "

-4 

## V \) ._­ -6



# ... -8

1962 1972 1982 1992 2002 2012 2022



### Energy. Except for temporary spikes (such as this year's), DRI·WEFA'sEnergy Serviceexpects the average acquisitionprice offoreign oil to remain below $30 perbarrel until 2015. With worldwide demand steadily increasing, however, the OPEC cartel will maintain

somepricing power. Energypriceinflation shouldthus heat up early in the next decade. Although itis impossibleto predict the precisetiming ofprice changes, the trend projection assumes that oilprices hover around $25 perbarrel through the end of2012. Thereafter, the forecast shows oil prices climbing steadilyto $59 per barrel by 2027. TheWest Texas Intermediateprice for oil is projectedto reach $63.1 perbarrel by 2027, compared with the averageprice of$26.4in 2000.

EXHIBIT 10 

### Real Oil Prices Are Higher in the Long Term (Refiners' acquisition cost of imported crude, 1996 dollars/barrel)**30.---------~-------------~**

15**10~~** ____**~~~.+~~~~~~~~~~~~**

1989 1999 2009 2019

-February 2002 Forecast --August2001 Forecast 

### In the long run, scarcity tends tobid energyprices up, while new technologies tend to hold them down. In the end, we project that scarcity will win out, with the real price ofimported oil rising from about $20.0 a barrel in 2001 to $27.0a barrel in 2027.

The oil pricepath in the cyclical scenario has a major spikein 2020, where oil producers are assumed to mimic their behavior ofthe 1970s, raising oil prices substantially when the world economy is close to a cyclical peak. In thepessimistic scenario, nominal oil prices arehigher than in the trend. In the optimistic scenario, bothnominal andreal oil prices arebelow what they areinthetrend

. 

### International. In all three projections, the majorU.S. trading partners are assumed to follow a growth pattern similarto that in the United States, with the pace of growth (inreal consumption) averaging 2.45% over the forecast period, down from an average 2.8% overthe past25 years. This slowdown reflects demographic forces similarto those operating in the United States, as well as the maturation ofmany developing economies. The dollar's exchange rate will depreciate steadily through 2027, in orderto keep the country'scurrent account deficit from growing too fast.

Variations intheinternational environmenthelp explain

some ofthedifferences amongthe alternative scenarios. A faster (slower)rate ofgrowth abroadpartially explains the higher (lower) level ofexports in the optimistic (pessimistic) scenario. Meanwhile, a cycle in the real exchange rate due to swings in domestic interest

EXHIBIT 11 

### Oil Price Paths Across the Four Scenarios (Refiners' acquisition cost of imported crude, 1996dollars/barrel)**60~-,~------~--------~**

40**+--f--~---- ---+---~"---.-----I** **30~~···· -~------+-~--~~~---4** 
20**10~~~~~~~rMTn~n,rn~~~~~>TrrM**

1976 1986 1996 2006 2016 2026 -Trend

--------- Cycle

•• - •••Optimistic

- - - Pessimistic 

# -

25-YearFocus, 

### Winter 2002 5

### FORECAST OVERVIEW

EXHIBIT 12 

### The Consumption Share Will Keep Rising (Percent of GDP)**74,-------------------~----------~ 72+-----············-----~~----** **+------------~** 70 +---------**------------+-~ ~---_f_--~**  68**68t-··············--------~~----~----------~** 64 -f----­**62~.-~~~L--------4---------~ OO+-~~~~~~~~~~~~~~~~~** 

1962 1972 1982 1992 2002 2012 2022



### rates helps explain the trade pattern in the cyclical scenario.
Demand Mix. Although the overall level ofoutput is determined by supply conditions, many mixes ofaggregate demand are consistent with that level ofoutput. Over the forecast period, the demand mix will be dominated by theretirement ofbaby boomers. The consumption shareofGDPrises because seniorcitizenscontinue to spend, even thoughthey are no longer directly producing GDP. In addition, federal governmentoutlays for Social Security and Medicare explode, further boosting consumption relative to GDP. Between 20II and 2027, consumption's share ofGDPjumps from 69% 

### to more than 72%.
The sum ofthe remaining shares ofGDP must decline to makeroom for the rising share devoted to consumption. Government spending will bear some ofthe burden-between 2011 and 2026, government's share of GDPwill decline by morethan three percentagepoints. 

### Methodologyoverthe Short-Term Forecasting Horizon
The trendremains consistent with the February Control forecast through 2011. The two bandwidth scenarios, optimistic andpessimistic, take the trend solution as their starting point and immediately diverge from itaccording to their own underlying assumptions-atthe beginning ofthe solution interval. This ensures that growth is always higherin the optimistic alternative, andlowerin thepessimistic alternative. However, while average GDP growth, inflation, unemployment, and interestrates may be higher orlowerthan in the trend, depending on which is appropriate, these relationships will notnecessarily hold for every individual quarter of the forecast period. byPatrick 

### 1. Newport, Mike Montgomery and

### Michael Donnelly

6 DRI·WEFA The U.S. EconomyFORECAST OVERVIEW

TABLE 1 

### Capsule Summary ofthe Long-Term Projections

Trend
General Outlook The economy exhibits mild variations in growth and approaches its balanced-growth path. Inflation rises slowly, averaging 3.0%.
I. Principal Exogenous Assumptions Cyclical
Typical business·cycle lIuctuations.

Demographic

Energy imports

Food prices

II. Principal Policy Dimensions
Tax changes

Growth of federal government purchases

Transfers Budget deficit

Average federal government share of GOP Monetary policy

Federal funds rate

Nonborrowed reserves Projections consistent with the Census Bureau's latest middle-growth forecast, which assumes a leveling off ofthe fertility rate at 2.2 births, an ultimate mortality rate of77.6 years for men and 83.6 years for women, and net immigration of 912,000-954,000 peryear.
Real oil prices remain stable. No embargoes are assumed.

Wholesalefarm prices average 1.5% annual increases.

Lower personal income tax rates. Corporate tax falls to 33.0% as the national debt shrinks.
Real, +1.2% peryear.

Real growth of4.0% peryear. Surplus averages 0.02% of GOP.
18.5%

Sufficient funds made availableto promote stable credit growth. Money (M2) growth averages 5.3%.

Rises gradually overforecast period. Steadily rises over forecast period. Sharp price hikes occur in periods of peak demand.

Wholesalefarm prices average 2.9% annual increases. Inflation spikes in 2020.

Fluctuates with the business cycle.

Real, +12% peryear. Growth pattern resemblesthe trend's.
Real growth of4.0% per year. Deficit averages 0.3% of GOP.
19.2%

Fluctuations in monetary policy contribute to severity of cycles. M2 averages 5.6% annual growth.
Ranges between 1.75% and 9.50%. Steadily rises over forecast period.



# -

25-YearFocus, Winter 2002 7

### FORECAST OVERVIEW



# - TABLE 1 (Continued) 

### Capsule Summary ofthe Long-Term Projections

Trend

III. Behavior of Economic Agents
Consumers Consumerconfidence weakens as inflation picks up.

Average annual real 3.0% consumption growth
Business Decisions made in relatively stable environment.

Average fixed investment 13.0% share in GDP Average share of corporate 10.9% cash flow in GNP
State and local government Real expenditures dictated by demographics and ability to raise taxes. Average real growth in purchases of 1.7% peryear. Federal budget position Surpluses through 2017. (Fiscal years)
International

Average annual wholesale 1.8% (OECD countries) price inflation for major 3.7% (Developing countries) trading partners

U.S. exchange rate Declines over forecast period.

IV. Other Parameters Average annual productivity 2.5% growth
2.8% Average annual potential output growth
Consumer price inflation Demand pressures and a return of moderate oil and food price inflation gradually push consumer price inflation from 2.5% in 1999 to 3.7% in 2027. Consumer price index

Average annual increase 3.0% Peak annual 3.75% (2027) Hourly earnings

Average annual rise 4.4% Peak annual 5.0% (2026) Housing market Demographics dictate slower growth of the housing stock after 1998. Median new horne price in $393,300 2027 Average annual rise 3.1% Unemployment Hovers about 5.0%.

Average rate 4.9%



### -------------------

.......**-~** Cyclical

Cyclical swings in confidence, income, and wealth cause large fluctuations in expenditures, particularly on durable goods.
3.2%

Fluctuations in output, interest rates, and inflation lead to fluctuations in investment.
12.4%

10.2%

Average real growth in purchases of 1.7% per year.

Deficits starting in 2013.

1.9% (OECD countries) 3.8% (Developing countries)

Declines overforecast period.

2.2%

2.5%

Periodic demand surges, oil price shocks, and
more aggressive wage responses boost the average inflation rate.

4.3% 6.7% (2027)

5.6% 7.8% (2027)
Cycles in incomes and monetary policy affect the housing sector more severely. $512,700

4.1%

Annual rates vary between 3.0% and 7.0%.

4.9%



### 8 DRI-WEFA The U.S. EconomyFORECAST OVERVIEW



# - TABLE 1 (Continued) 

### Capsule Summary ofthe Long-Term Projections

Optimistic High growth. General Outlook Pessimistic
Low growth.

Deviations from trend dueto differences in demographic assumptions, productivity growth, and investment.

I. Principal ExogenousAssumptions Demographic

Energy imports

Food prices

II. Princtpal Policy Dimensions
Tax changes

Growth offederal government purchases
Transfers Budget deficit

Average federal government share of GDP Monetary policy

Federal funds rate

Nonborrowed reserves Projections above the trend are a result of higher net immigration.

By 2027, oil import bill reaches $528 billion.

Wholesale farm prices rise 1.5% annually.

Similarto trend. Real, +1.2% peryear.

Real growth of 4.3% peryear.
The govemrnent runs a surplus through forecast period.
17.5%

Stable and predictable.

Settles at 5.0%.
2.4% average growth. Projections below the trend due to lower net immigration.

Oil prices rise steadily, reaching $97 per barrel by 2027. Oil import bill reaches $553 billion by 2027.

Wholesale farm prices average 2.6% annual increases.

Similar to trend. Real, +1.3% peryear.



## -.. Real growth of 3.8% per year.
Deficits in most years.

20.6%

Tight policies required to contain rising inflationary pressures.
Rises continually overforecast period.
2.0% average growth.

25-YearFocus, Winter2002 9

### FORECAST OVERVIEW

TABLE 1 (Continued) 

### Capsule Summary 

### ofthe Long-Term 

### Projections

III. Behavior of Economic Agents
Consumers

Average annual real consumption growth
Business

Average fixed investment share in GDP Average share ofcorporate cash flow in GNP

State and local govemment

Federal budget position (Fiscal years)

International

Average annual wholesale price inflation for major trading partners

U.S. exchange rate

IV. Other Parameters Average annual productivity growth Average annual potential output growth
Consumer price inflation

Consumer price index Average annual increase Peak annual Hourly earnings Average annual rise Peak annual Housing market

Median new home price in 2027 Average annual rise Unemployment Optimistic

Consumer confidence weakens as inflation rises.

3.6%

High demand expectations plus low inflation and interest rates enhance the business environment.
13.3%

11.1%

Average real growth in purchases of 2.1% per year.
Government runs surplus through forecast period.

1.6% (DECD countries) 3.4% (Developing countries)

Declines over forecast period.

2.7%

3.4%

Hovers below 3.0%.

2.5% 2.9% (2017)

4.2% 4.7% (2017)

The higher population projections push the housing stock above the trend. $336,600

2.6%

Remains neartrend throughoutforecast period. Pessimistic

Lower real incomes depress consumer expenditures, especially on durable goods.
2.6%

Higher inflation, higher interest rates, and weakerdemand make investors more cautious.
12.5%

10.4%

Average real growth in purchases of 1.5% per year.
Deficits after 2001.

2.5% (DECD countries) 4.4% (Developing countries)

Declines overforecast period.

2.1%

2.3%

Inflation accelerates, approaching 6.0% in 2027.

3.7% 5.7% (2027)

4.7% 6.2% (2027)

Lower real incomes and high cost of funds depress housing starts. $498,700

4.2%

Remains neartrend throughoutforecast period.



### 10 DRI-WEFA The U.S. Economy

### THEFOlJR SCENARIOS: THE TREND PROJECTION 

# SLOWGROWTHAND RISING INFLATION: THE TREND PROJECTION

Highlights

• Real GDPgrowth will average 3.1%per year during 2001-27. Growth slows after 2012 as baby boomers retire.

• The outlook for inflation remains moderate. CPI inflation will average 3.0%peryear overthe forecastperiod. Coreinflation will average 3.0%.

• High investment and a more slowly growing labor force shouldresult inhigherproductivity growth. Nonfarmbusiness productivity growth averages 2.5% overthe forecast period, compared with the 1.7% average experienced since 1975.

• After worsening through 2002, the current account deficit will narrow, butremain negative. The deficit will hoverbetween 3% and 4% ofGDPduring most ofthe projection period.

• Real oil prices will creep up overthe forecast period. Thereal price ofimported oilrises from about $20.0 a barrel in 2001 to $27.0 abarrelin 2027.

• The labormarket will stay tight, with the unemploymentrate remaining below 5.0% through most of the forecast period.

• Solid economic growth, combined with only moderate increases in federal spending, will result in surpluses throughoutmost ofthe forecast period. 

### Introduction
Economists focus on the short run. Will the Federal Reserve raise interestrates? Is the stock market overvalued? Will we have a recession next year? This focus is understandable. We care more about what will happen tomorrow than what will happen three years from today. The focus, though, is misplaced. When historians look back on the 20th 

### century, the most striking economic fact that will distinguish it from previous centuries will not be the 21 recessions, but rather the steady, inexorable rise in percapita income.

Thedriving force behind rising per capita income is one thateconomists still do not quite understand: productivity growth. They agree that new technologies eventually make workers more productive, but many questions remain under debate. What determines the pace oftechnological progress? How long does ittake for new technologies to catch on? How does an innovation such as the Internet compare with the invention ofthe transistor, the airplane, or the electric bulb? Not knowing these

answers makes productivity-and the course of the economy-extremely tricky to forecast.

A further complication made this forecast even trickier. Productivity, before the current slowdown, was surging, possibly because ofwhat Alan Greenspan called "a revolution in information technologies." Although productivity growth eased as the economy slowed in 2001, recent data indicate that itis surging again. Will the productivity boom continue much longer? While there are several promising new technologies 

### in the pipeline, we think things will settle, with productivity growth rising faster than it did in during the 1970s and 1980s, but slowerthan in the second halfofthe 1990s.


### Long-Term ForecastAssumptions
In the trend scenario, we assume an environment free of exogenous shocks. Economic output will converge 

# ­
towards its potential level, with all resources fully utilized. As a result, the growth rates of output, real incomes, real expenditures, and the general standard of living of the population are determined by the growth rate ofpotential GDP. The long-range outlook is dominated by supply factors, such as population growth and demographics, labor force participation rates, average weekly hours worked, national saving and capital stock accumulation, productivity growth, fiscal and monetary policies, foreign developments, and internationally determined prices.


### Population andDemographics
DRI·WEFA's population projections are based on the Census Bureau's middle series assumptions for fertility, life expectancy, and net immigration. These projections have the U.S. population expanding at an annual rate of 0.8% between 2000 and 2027, when the population reaches 344 million. Growth in the older age cohorts will be stronger as the baby boomers age. The 65 years and over population share rises from 12.5% in 2001 to 19.5% in 2027.

25-YearFocus,Winter2002 11

### THE FOUR SCENARIOS: 

## THE TREND PROJECTION



### The population projections do not incorporate the 2000 Census estimates. When the Census updates its population projections later this year, the population numbers should be 2-3% higher than currentlyprojected.


### Productivity andAggregate Supply
It

### is the economy's ability to increase supply in the long

run that determines its potential growth path. Growth in aggregate supply depends on the increase in 

### the labor force, the growth ofthecapital stock, and improvements inproductivity.

DRI·WEFA believes productivity growth will exceed its recent historical average and average 2.5% per year during 2001-27. This is lower than the stellar 2.9% average annual growth achieved during the 1960s, although higher than the 1.7% annual growth rate for 1975-2000. The pickup in productivity growth, particularly over the next decade, is largely due to robust growth in equipment spending and new technologies.

The real capital stock will grow 4.5% annually, compared with 4.2% in 1976-2001. The declining price of capital goods relative to other inputs accounts for the robust capital stock growthrates.



# - GovernmentPolicy The government sector's share ofGDP will decline over the forecast period. Public purchases (both state and local) as a share of GDP will decrease from 18.0% in 2001 to 14.3% in 2027. This reduction in the government's share ofthe economy is concentrated in the federal sector. The reduction in federal spending as a

EXHIBIT 1 The Labor-Force Participation Rate Will Drop (Percent)**69.-------------------~------------_, 67+---~~·····~~~----~~·** **65·~~---~·------·~~~-··~~----~~-** 63

59**57+--_~ -~--~~.----~~** **55~~~~~~~~~~~~~~~nn~TM**

1962 1972 1982 1992 2002 2012 2022 EXHIBIT 2 Population Aged 16-65 as a Percent of the Total Adult Population 87

85

83

81

79

77

751962 

# -......

-............

# ­ ""

# " "

\ \

1972 1982 1992 2002 2012 2022



### percentage ofGDP will largely be the result ofa declining defense share. State and local spending as a share of GDP will shrinkfrom 12.0% in 2001 to 10.0% in 2027.

DRI·WEFA expects the federal government to record a surplus through 2017. The federal surplus will average 0.2% of GDP over the entire forecast period. Our projections are based upon the assumption that Congress and the executive will find it 

### politically difficult to spend or tax away the Social Security surplus, and consequently, the publicly held debt will decline over time. We also expect state and local governments will run surpluses throughout the forecast period, since, statutorily, most states are required to do so. 

### MonetaryPolicy andFinancial Markets The Federal Reserve decides on the "steady-state" rate of inflation. Monetary policy can cause inflation to accelerate by being overly accommodative. Alternatively, it can cause inflation to decelerate by being restrictive. The monetary authorities choose to keep short-terminterest rates slightly below their equilibrium levels throughout the forecast period in the trend projection, causing a slow but steady increase in inflation. Consequently, the rate ofinflation-asmeasured by the chain-weighted GDP price index-rises from 1.3% in 2002 to 2.2% by 2010 and 3.2% in 2027.

Bond yields will generally move parallel to the funds rate over the forecast interval, butrun somewhat higher. The yield on ten-year treasuries stays below 6.0% through 2007. Thereafter, the combination of higher short-term rates and increased government borrowing

12 DRI·WEFA The U.S. Economy

### THEFOUR SCENARIOS: THE TREND PROJECTION

EXHIBIT3 Contribution to NewJobs (Payroll employment, cumulative percent change)
History Trend

1976 1986 2002 2008 2018 -1986 -2001 -2007 -2017 -2027

Manufacturing 4.5 -2.3 -4.7 -8.2 -7.6 Mining and Construction 6.4 4.8 2.3 6.6 -5.5 Government 8.4 12.4 9.2 8.5 15.8 Private Services 80.6 85.0 93.2 93.1 97.3 Total New Jobs (Millions) 20.4 34.4 8.5 12.2 6.2



### pushes up the ten-year bond rate to 9.6% by 2027. The forecast implies a real fed funds rate ofabout 2.0% and

a real long-term bond rate close between 2.5% and 3.0%-inline withhistorical averages.



### Oil Prices Except for temporary spikes (such as this year's), DRl-WEFA's Energy Serviceexpects the average acquisitionprice offoreign oil to remain below $30perbarrel until 2015. With worldwide demand steadily increasing, however, the OPEC cartel will maintain some pricing power. Energy price inflation should, therefore, heat up early in the next decade. Although it is impossible to predict the precise timing of price changes, the trend projection assumes that oil prices hover around $25 per barrel through the end of2012. Thereafter, the forecast shows oil prices climbing steadily to $59 per barrel by 2027. The West Texas Intermediate price for oil is proEXHIBIT 4 Manufacturing's Share of Total Employment Continues to Slide (Percent)

30

25

20

15

10

5

1962 1972 1982 1992 2002 2012 2022**35~-------------------,------------,** 

# - jectedto reach $63.1 per barrelby 2027, compared with the average price of$26.4 in 2000.

In the long run, scarcity tends to bid energy prices up, while new technologies tend to hold them down. In the end, we project that scarcity will win out, with the real price ofimported oil rising from about $20.00perbarrel in 2001 to $27.00./barrel in 2027.


### ForeignAssumptions
The major U.S. industrialized trading partners are assumed to follow a growth pattern similarto that in the United States, with the pace of growth averaging 2.5%
over the forecast period, down from an average 2.8%

over the past 25 years. This slowdown reflects demographic forces similar to those operating in the United States. The developing countries that trade with the United States will grow 4.6%, about the same as during the past 25 years.
The dollar will have to depreciate steadily against foreign currencies throughout the forecast period in order to keep the U.S. current account deficit from growing too fast. Over the forecast period, the real U.S. tradeweighted dollar with industrialized countries. depreciates 0.5% annually. 

# ­ Long-TermForecastHighlights 

### Real GDP. The trend projection assumes that the U.S. economy experiences no major mishaps between now and 2027. The projection is identical with ourFebruary short-term forecast through 2011, and represents

EXHIBIT 5 Potential Output Growth Will Slow (Percent)

4.5

4.0

3.5

3.0

2.5

2.01965 1975 1985 1995 2005 2015 2025 5.0,-----------..,---------,



### 25-Year Focus, Winter 2002 13

### THE FOl:"R SCENARIOS: THE TREND PROJECTION



### ,-.

EXHIBIT 6 Consumer Price Inflation (Percent) 14.--------------------,------------1

10 

### t--------t-­

8 'I-----n--:

6**t---.~** 4

2



### o 1962 1972 1982 1992 2002 2012 2022



### DRI-WEFA's best estimate ofthe economy's path over that period. Beyond 2011, the projection should be interpreted as the mean of all possible "near-fullemployment" paths the economy could follow. The smooth-growth characteristics of the trend projection make it most useful for tasks largely impervious to short-tenncyclical fluctuations, such as planning capacity additions and evaluating new markets. This projection is also the best base from which to evaluate the effects ofvarious assumptions about key exogenous elements, such as fiscal policy or energy prices, on the overalleconomic outlook.

EXHIBIT 7 The Federal Funds Rate (Percent) 18
16 14
12
10
8
6
4
2


## o

1962 1972 1982 1992 2002 2012 2022 

# • /I 

# , J 

# , I. 

## '\ A 

# 1l\J

# Y V\ 

# \ l"""\ V**~**

## ~ I 

### Annual real GDP growth averages 3.1% during 2001­ 27, compared with 3.0% during 1976-2001. The economy's underlying growth rate will slow after 2011 as baby boomers begin to retire, slowing labor force growth. Potential output growth should hold up fairly well in the future, with greater business fixed investment and R&D spending offsetting the slowdown in labor force growth. Eventually, though, the effects of weaker labor force growth become dominant and, in a sense, self-perpetuating. As output growth drops off, business fixed investment rises more slowly, limiting capital stock growth and thus future output gains.
Employment. 

### Slower long-run increases in the labor force indicate more moderate long-run employment growthin the future. Total civilian employmentwill rise at an average annual rate of 1.0% from 2000 to 2005 and will moderate to an average growthrate of 1.1%for the rest of the forecast period. Total establishment employment will rise from 131.4 million in 2000 to 173.5 million in 2027, an increase of 32%. This growth is significantly slower than the astonishing gain of49.7 million (63%) recorded in the previous 25 years. Manufacturing's share of total employment will continue to decline over the forecast period, falling to 10.1% in 2027 from 14.1% in 2000. Thebroad service sector will generate an increasing share of employment growth in the forecast period, although the share of employment accounted for by the federal government will decline during the forecast period.

EXHIBIT 8 The Consumption Share Rises Steadily (Percent of GDP) 74.---------------------T-------------,**72+---------------------+-----------~** 70'1---­**68+----------·------~------** 66**'I-------~ 60+rr~~~~~~~~~~~~~~~~~** 

1962 1972 1982 1992 2002 2012 2022



### 14 DRI·WEFA The U.S. Economy

# -- THE FOUR SCENARIOS: THE TREND 

### PROJECTION

EXHIBIT 9 Personal Consumption Slows in Trend Scenario (Average annual percent change)
History Trend

1976 1986 2002 2008 2018 -1986 -2001 -2007 -2017 -2027

Total Personal Consumption 3,3 3,3 3,0 3,2 3,0

Durable Goods 5,4 5.4 4,0 4,2 4,8 Autos & Parts 5,1 3,2 2,7 2,0 3.2 Furniture &Appliances 6,2 8,2 5.4 5,9 6.0 Software N/A 38,3 9.2 6.2 6.7 Ophthalmic Goods 5.8 3,6 3,3 5.7 7,1 Other Durable Goods 4,2 5,4 4,2 5.4 5.5 Nondurable Goods 2.4 2,8 2,8 3,2 3,4 Food & Beverages 1.7 2,1 1,9 2,2 2,2 Prescription & Over-the-Counter Drugs 4.4 5.4 4,4 6,1 6,4 Clothing & Shoes 5.9 4,7 4.4 4.4 4,2 Gasoline & Oil 1,3 1.5 2.3 2.2 1,4 Fuel Oil & Coal -5.6 -0.8 1.0 -0.6 -0.8 Tobacco Products -1.2 -2,2 -1.2 -1.3 -4.8 Othe Nondurable Goods 3.8 4,3 4.4 4.3 4.3 Services 3.5 3,1 2.8 3,1 2.7 Housing 2,9 2,1 1.8 1.4 1.0 Household Operation 2.7 3.5 3,7 4.5 4,7 Electricity 3,1 2,0 3,1 2.4 2,3 Natural Gas '1.1 0,9 1.5 1,2 1.3 Telephony 5.1 7.8 7.0 7,9 7,7 Other 2.4 1,9 1.4 2.8 2.6 Transportation 3,2 3.1 2.2 1.8 1.2

Motor Vehicle Leases NlA N/A 6.9 6,3 1.9 OtherTransportation NlA N/A 1,6 1.1 1.1 Personal Business Services 4.7 4,0 3.1 2,8 1.9 "Free" Financial Services 5.5 3,6 3.6 2.2 1.1 Medical 3,8 2,9 3,0 3,9 3.4 Recreational 5.7 4.8 6.1 5.1 3,6 Other Services 3,4 3.2 1.6 2,6 2.8

Note: All real data are in chained 1996 dollars.



### Inflation. 

### Over the long run, inflation is a monetary phenomenon. Its future course will be determined by policies implemented by Alan Greenspan and his successors. Since we do not know who his successors will be, we assumed the following in the 25-year forecast:

• TheFed will attempt to keep inflation contained

overthe first ten years ofthe forecast period.

• In the second halfofthe forecast period; asbaby boomers startretiring, labor markets will tighten, putting pressure on wages. We assume that theFed will allow inflation to creep up ratherthan slow the economy-possiblyinducing arecession-tokeep inflation checked. The CPI is expected to average 3.0% annual increases between 2000 and 2027, somewhat less than the**4~0%** 

### average from 1947 to 2000. The broader-based GDP deflator will rise 2.6% per year. The acceleration of inflation over the projection period reflects a more accommodative Federal Reserve attitude in response to pressures createdby the aging population
Consumption. 

### Expenditures, in the long term, are primarily determined by the growth of real permanent income, demographic influences, and changes in relative prices. The share ofpersonal consumption expenditures in GDP will rise slightly overthe forecast interval, and should account for 72% ofthe overall economy by the end of the forecast horizon. Real consumption expenditure growth will average 3.0% peryear over the forecast period. With total output growth easing, real consumer spending gains will slow from 3.2% annually between 1973 and 2000 to 2.9% during 2001-26. In per capita terms, growth will advance about 2.0% per year, 0.4% below the 1975-2000 rate. Most consumption categories are expected to slow, except for health-care spending, which will pickup again after 2012.

The share ofconsumption devoted to services will rise, mainly because ofrising health expenditures, while that for goods will fall over the forecast period.

The long-term outlook for auto and light truck sales calls for a slowdown in the rate ofincrease relative to pastperformance. Vehicle sales growth will average close to0.8% overthenext 25 years. Light-vehiclesales

are forecasted to reach 21.3 million units by 2027. Although the numberofvehicles perperson has increased significantlyin the past 20years, the United States is approaching a saturation point in the rate of vehicle ownership. Future growth in vehicle sales will

EXHIBIT 10 Light-Vehicle Sales (Millions of units) 22 

# ,-----------------T-----------------,**18~~-~~~~~~_+----_w~I~~Hf 16~-----.r--------~HI~IHllllllj~** 

14

12

1978 1988 1998 2008 2018



### 25-YearFocus, Winter 2002 15

### THE FOUR SCENARIOS: THETREND PROJECTION

EXHIBIT 11 Housing Starts (Millions of units) 2.6
2.4
2.2
2.0
1.8
1.6
1.4
1.2
1.0

1962 1972 1982 1992 2002 2012 2022 

# n**-~** .. 

# J/\ 

# N V 

# " \



# . \

" ...


### __..- 

# ('\

.... .....A ../ 

# \//

.... !- 

# -

V ._.



### be primarily driven by growth inpopulation and demand for replacement vehicles. Automobile sales should be relatively strong throughout theprojection period, averaging 9.2 millionunits peryear. Total lightvehicle sales (carspluslighttrucks)reached 145 million units in the 1990s and will reach 171 million in the subsequentdecade, compared with 135 million during the 1980s. According to DRl.WEFA's Energy Service, real energy-intensive consumption (gasoline, fuel oil, coal, electricity, and natural gas) should increase 1.7% per year through 2027, compared with 1.5% annual gains since 1970. Energy conservation efforts will continue. This stems partly from a stock/flow phenomenon: despite the trend toward minivans and sport/utility vehicles, for example, the average new vehicle is still more fuel-efficient than the existing stock. Gasoline usage per vehicle should fall for several more years, even ifrelative energy prices remain flat. Similar considerations apply to business capital and housing stocks. The ongoing employment shift from manufacturing to services also implies lower energyusage per unit ofoutput.

Real personal disposable income, which climbed 3.1% between 1970 and 2000, will rise 2.9% annually over the next 25 years-in line with the slowdown in total outputgrowth. This does nottake into account the rising volume ofwithdrawals from existing retirement plans.
Housing. 

### Household growth clearly depends on population growth, butreal incomes, employment, the age distribution of the population, and societal values also

16 DRl'WEFA TheU.S. Economy EXHIBIT 12 Investment's Share of GOP Will Turn Down After 2015 (Percent of GOP)**15··r--------------------r-----------~ 9~~~~~~~~~~~~~~~~** 

1962 1972 1982 1992 2002 2012 2022



### influence it. Net additions to the housing stock are closely linked to household growth, which is the primary driver of housing starts. Many analysts tend to overlook another key factor for housing starts: the geographic location ofthe demand for net additions.

The 25-34 age cohort is key for the demand for new housing. This is the age group where individuals typically purchase their first home. The demand for new housing wasboostedby the large gains in this age group in the late 1960s and 1970s, as the baby-boom generation entered the housing market. Unfortunately for the housing sector, the baby-boom generationbegan to pass through this age bracket in the mid-1980s, limiting the demand for additions to the housing stock. The number of households in this cohort will begin a modest

EXHIBIT 13 Saving and Investment Shares of GNP (Percent) History Trend

1976 1986 2002 2008 2018 -1986 -2001 -2007 -2017 -2027

Household 10.3 7,4 4.4 4.0 3.4 Business 9.1 9.2 9.6 10.8 11.8 Government -3,4 -2.5 -0.8 -0.3 -1.4 Total Saving 15.9 14.0 13.2 14.5 13.8 Total Investment 16.5 13.9 11.8 13.6 13.1 Gross Private Investment 17.3 15.8 16.3 17.2 16.4 Nonresidential Fixed Investment 12.1 11.3 11.8 13.4 13.5 Residential 4.5 4.1 4.1 3.5 2.6 Change in Inventories 0.6 0,4 0.3 0.3 0.2 Net Foreign Investment -0.8 -1.9 -4.5 -3.6 -3.2 Statistical Discrepancy 0.9 0.0 -1.3 -0.9 -0.7EXHIBIT 14 Net Interest Paid 

### bythe Federal Government (Percent of federal government expenditures, excluding investment)**18~--------------------~----------~**

6
4 2 

## o**16+----~~~--~.~~** 14 +-----

- ..---- 12**+--~---** 

### ..**~~** 

### .... 10**+-.~---~-~II** 8 -I-----:.::-----c=-::-r

1962 1972 1982 1992 2002 2012 2022



### increase after 2005. The overall headship rate will gradually increase toward older segments due to the shift in the age composition.

The demographic demand for housing will be higher

over the next 25 years than overthe past 25 years. Thus, housing starts are projected to average 1.7 million units annually from 2001 to 2027, above the 1.5 million average for 1971-2000. Meanwhile, the housing stock will climb from 109.3 million units to 142.0million units. THE FOUR SCENARIOS: THETREND PROJECfION



### Business Fixed Investment. Good profitability and solid demand growth should keep investment healthy
over the next 25 years. The share of GDP devoted to business fixed investment will hover about 12-13% of GDP through most ofthe forecast period. The effective capital stock (in 1996-dollar terms) is projected to increase 4.5% annually, just above the average growth rate recorded for 1971-2001. Inventory investment will remain a small percentage of GDP. Although inventories have played significant roles during past business cycles, inventory investment represents an average in the stable growth scenario and is thus artificially smooth. Capital inflow will contribute to net domestic investment throughoutthe forecastperiod, although federal deficits clearly hurt it in the later years ofthe forecast The government saving projection assumes that state and local governments continue to run modest operating surpluses.

The composition ofinvestment will continue to change in the forecast period; structures' share of investment will decline modestly, while equipment's share rises. This is a continuation ofa long-standing trend, and is a direct result of declining relative prices for equipment and software.

International Trade. A decline in the exchange rate, combined with modestunit laborcost growth, will stimulate U.S. exports abroad and result in an eventual

EXHIBIT 15 

### The Trade Outlook (Percent of GDP)

The Goods and Service Trade Balance Net U.S. Investment Position 20
10



### o
-10
-20

-30

-40

-50
-60 1962 1972 1982 1992 2002 2012 2022

# ~,**,~r·~··r~···~**

# ~'"

# ""' \ 

# "- ...--
..

### _-_.-

# ~ 

# -I

1978 1988 1998 2008 2018**2r-------~----------.-----------,**

-1 -I---

...**~------\.,;I'--'~-----f --\'-~--I~--------4** 

-3 +---­

-4 _5L-

__________________-L

__________**~**



### 25-YearFocus, Winter 2002 17

### THE FOUR SCENARIOS: THE TREND PROJECTION

EXHIBIT 16 Ratio of Manufacturing Outputto Real GOP (1996=100)**130~-----------------,~--------------,** 125**+----~---------------------+--------~** 120
115
110
105
100
95
90

1974 1984 1994 2004 2014 2024



### improvement in the U.S. current account balance. DRl·WEFA projects that real exports will expand at an average annual rate of 6.9% over the entire forecast EXHIBIT 17 Foreign Oil Prices (Dollars per barrel) 70.------------------r----------------,

50 t--------­

40

30

1976 1986 1996 2006 2016 2026



### period. Real imports, meanwhile, will grow at an average annual rate of5.8%.

­

18 DRI·WEFA The U.S. EconomyTHEFOUR SCENARIOS: THE TREND PROJECTION**~.,** 

### Summary for the U.S. Economy--TREND25YR0202

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Composition of Real GOP (Annual percent change) Gross Domestic Product

Final Sales Gross National Product 1.0 0.3 1.1 4.0 3.7 3.7 3.9 3.8 3.7 3.0 3.2 3.0 2.9 2.9 2.8 2.9 2.9 2.9 3.3 3.3 3.3 3.4 3.4 3.4 3.6 3.6 3.6 3.4 3.4 3.4 3.4 3.4 3.3 3.3 3.3 3.3 3.3 3.3 3.3 Total Consumption

Durable Goods Nondurable Goods Services Nonres. Fixed Investment Equipmentand Software Computers Software Communications Equipment Light Vehicles Other Private Nonres. Structures Buildings and Other Residential Fixed Investment Exports Imports Federal Government State and Local Governments 1.9 -0.6 2.0 2.4 -4.6 ·2.3 10.8 6.0 -9.1 -3.4 -6.4 -11.0 -9.8 -0.5 -8.6 0.6 4,5 1.8 3.6 6.7 3.2 3.1 6.7 8.3 14.9 8.6 8.7 8.9 6.7 1.9 3.4 1.3 7.6 6.5 4.7 2.1 3.3 4.4 3.2 3.1 8.5 10.4 18.2 9.0 11.1 6.7 10.6 3.0 3,0 1.3 9.3 5.2 2.3 1.8 2.8 2.5 2.8 2.9 6.1 7.4 19.9 10.4 8.0 1.9 5.2 2.0 2.2 1.7 7.9 4.5 1.0 2.0 2.6 3.2 2.5 2.6 5.0 6.1 20.1 10.6 8.1 2.9 2.0 1,2 1.6 0.5 8.1 4.1 0.6 1.8 2.6 3.2 2.4 2.5 5.5 6.3 19.8 10.6 6.7 3.4 2.2 3.1 2.7 1.0 7.8 4.0 0.5 1.5 2.9 2.9 2.7 3.0 6.4 7.5 19.1 10.8 7.3 5.1 4.0 3,1 3.8 2.3 7.4 4.1 0.7 1.5 3.1 3.6 2.8 3.1 6.6 7.8 18.4 10.9 7.7 5.0 4,4 2.9 4.0 2.0 7.4 4.5 0.8 1.4 3.3 4.5 3.0 3.2 6.7 7.8 17.9 11.0 7.5 4.8 4,5 3,1 3.9 3,1 7,1 4.8 1.2 1.4 3.2 4.4 3.0 3.1 6.7 7.7 17.2 11.1 7.4 4.6 4.1 3.8 4.5 3.1 6.9 4.7 -0.2 1.4 3.3 2.6 3.3 3.4 7.2 7.8 17.5 11.5 7.1 4.4 4,0 5.3 6.2 -1.2 7.0 5,4 0.8 1.5 3.3 4.1 3.3 3.2 6.3 7.5 17.7 11.2 6.1 4.1 3.4 2.6 2.9 -1.9 7.6 6.0 1.0 1.6 3.2 4.8 3.3 3.0 6.3 7.4 17.2 10.4 6.4 4.5 3,6 2,6 2,9 0.1 7.7 6.3 1.0 1.8

Billions of Dollars Real GDP (Chained 1996 $) Gross Domestic Product 9416.7 10431.3 9794.5 11058.7 10172.5 11728.4 10480,1 12339.3 10783.7 12957.3 11100.7 13615.6 11470.3 14360.7 11862.4 15161.8 12287.2 16042.4 12709,2 16979,5 13140.7 17987,3 13575.2 19048.4 14029.7 20212,2

Prices and Wages (Annual percent change) GDP Price Index (Chain-WI.) CPI

- All Urban Consumers

Excl. Food & Energy Producer Price Index

- Fin. Gds, Emp. Cost Index

- Total Comp. Output per Hour 1.2 1.4 2.5 -1.4 3.3 2,8 1.9 2.4 2.6 0.8 2.9 3.4 2.1 2.5 2.6 1.4 3.0 2.4 2.1 2.5 2.6 1.3 2.9 2,3 2.1 2.4 2.6 1.1 3,1 2.3 2.1 2.4 2.5 1.0 3.2 2.3 2.1 2.4 2,5 1.1 3.3 2.4 2.1 2.3 2.4 1.1 3.4 2.4 2.2 2.4 2.5 1.2 3.6 2.4 2,3 2.5 2.6 1.4 3.8 2.3 2.5 2.7 2,8 1.5 4.0 2.9 2.5 2.8 2.9 1.6 4.1 2,6 2.7 3.0 3,1 1.7 4.4 2.4 

# -

Other Key Measures Industrial Production (% chI Nonfarm Inven. Accumulation (Billion chained 1996 $) ConsumerConfidence Index Housing Starts (Mil. units) Light-Vehicle Sales (Mil. units) Unemployment Rate (%) Payroll Employment (% ch.) Federal Budget Surplus (Unified, CY, bi!. $) -1.3
15,6 93.2

1.6 15.4 6.0 -0.4

5.3 7.5

53.3 92.2

1.6 16.9 5.8 1.6

-7.4 5.7

58.9 94.7

1.6 17.3 5.1 2.1

·20.5 4.0

41.8 93.7

1.6 17,0 5.0 1.6

-8.9 3.6

39.6 91.8

1.6 17.3 5.1 1,2

32.0 3.7

40.4 91.6

1.6 17.5 5.1 1.1

80.4 4.7

45.4 92.2

1,6 17.5 5.0 1.2

101.0 4.8

47.9 92.8

1.7 17.6 4.8 1.3

130.5 4.8

52.1 94.8

1.7 17.9 4.4 1.4

160.8 4.7

52.4 94.8

1.7 18.3 4.2 1.2

207.9 4.5

53.0 90.9

1.6 18.1 4.5 0.7

128.1 4.3

54.0 91.7

1.6 18.4 4.6 0,9

115.3 4,0

57.0 91.9

1.6 19.0 4.6 1.1

103.3
Foreign Trade Curro Account Balance (Bil. $) Foreign Crude Oil ($ per barrel) -459.8 19.6 -535.5 21.0 -567,2 22.7 -579.5 23.8 -588,3 24.8 -590.5 25,5 -599.0 26.1 -605.7 26.9 -618.5 27.7 -627.4 28.7 -671.3 29.8 -701.3 30.9 -733.6 32.1

Financial Markets Money Supply (M2, billion $) Percent Change Thirty-Year Mortgage Rate (%) Ten-YearTreasury Note Yield (%) Treasury Bill Rate (%) Federal Funds Rate (%) Prime Rate (%) S&P 500 Stock Index 5821.9 7.6 7.1 5.3 2.0 2.2 5.2 1161.5 6136.3 5.4 7.4 5.8 3.7 4.0 7.0 1237.8 6424.4 4.7 7.5 5.9 4.6 5.0 8.0 1324.7 6726.3 4.7 7.4 5.9 4,6 5,0 8.0 1423.7 7043.9 4.7 7.4 5.9 4.6 5.0 8.0 1507.5 7379.1 4.8 7.4 5,9 4.6 5.0 8.0 1599.0 7735.7 4.8 7.3 6.0 4.6 5.0 8.0 1692.3 8115.5 4.9 7.3 6.0 4.6 5.0 8.0 1786.0 8521.4 5.0 7.3 6.1 4.7 5.0 8.0 1876.8 8955.3 5.1 7.3 6.1 4.7 5.0 8.0 1973.8 9396.4 4.9 7.7 6.5 5.1 5.5 8.5 2103.1 9869.4 5.0 7.8 6.6 5.1 5.5 8.5 2235.8 10378.0 5.2 7.9 6.7 5.1 5.5 8.5 2376,6

Incomes Personal Income (% chI Real Disposable Income (0/. ch) Saving Rate (%) Profits AfterTax (% chya) 2.5 2.2 1.9 4.8 5.3 3.5 1.8 8.4 5.7 3.5 2.0 1.0 4.8 2.7 1.8 2.2 4.7 2.3 1.3 5.0 4.8 2.3 1.0 5.3 5,3 3,0 1,0 7.4 5.4 3.1 1.1 6.8 5.7 3.3 1.2 7.2 5.9 3.3 1.3 7.1 6.0 3,4 1.5 7.2 5.9 3.3 1.5 7.7 6.2 3.3 1.6 8.7

25-Year Focus, Winter 2002 19

### ------- 

### THE FOUR SCENARIOS: THE TREND PROJECTION

TABLE 1 (Continued) 

### Summary for the U.S. Economy--TREND25YR0202

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Composition of Real GOP (Annual percent change) Gross Domestic Product 3.3 3.3 3.3 3.1 3.1 3.0 2.7 2.8 2.8 3.0 2.9 3.0 3.1

Final Sales 3.3 3.3 3.3 3.1 3.1 3.0 2.7 2.7 2.8 3.0 2.9 3.0 3.1 Gross National Product 3.3 3.2 3.3 3.1 3.2 2.9 2.7 2.8 2.9 2.9 3.0 3.1 3.1
Total Consumption 3.2 3.2 3.2 3.1 3.2 3.0 2.7 2.8 2.9 3.1 3.0 3.2 3.3

Durable Goods 4.4 4.6 4.4 4.1 4.8 4.3 3.1 4.6 4.6 5.8 4.7 5.6 5.5 Nondurable Goods 3.3 3.4 3.4 3.4 3.4 3.3 3.2 3.1 3.3 3.4 3.5 3.6 3.6 Services 3.0 3.0 3.0 2.9 2.9 2.7 2.5 2.5 2.6 2.7 2.7 2.7 2.8 Nonres. Fixed Investment 6.2 6.0 5.7 5.1 5.0 4.8 4.1 3.9 4.0 4.4 4.3 4.3 4.4 Equipment and Software 7.2 7.0 6.5 6.1 5.8 5.4 4.8 4.8 4.9 5.2 4.9 5.0 5.1 Computers 16.2 15.3 14.8 14.1 13.4 13.3 13.9 14.1 14.2 14.1 14.1 14.2 14.5 Softwal'll 9.6 8.8 8.0 7.2 6.4 5.6 4.8 4.1 4.0 4.0 4.0 4.0 4.0 Communications Equipment 6.7 6.6 5.6 6.0 6.1 5.8 4.5 4.8 5.3 5.6 4.7 5.0 5.5 Light Vehicles 4.6 4.6 4.2 4.0 4.3 4.1 2.8 3.9 4.2 4.8 3.8 4.4 4.5 Other 3.8 4.0 3.8 3.6 3.7 3.7 3.2 3.5 3.9 4.5 4.2 4.3 4.3 Private Nomes. Structures 2.8 2.8 3.0 2.0 2.3 2.6 2.0 0.8 0.8 1.5 1.9 1.9 1.8 Buildings and Other 3.2 3.2 3.5 2.2 2.5 2.9 2.3 0.9 0.9 1.6 2.2 2.0 1.9 Residential Fixed Investment 1.5 1.7 1.4 1.0 1.5 1.4 0.2 1.6 1.1 2.2 1.2 1.9 2.0 Exports 7.6 7.6 7.6 7.5 7.5 7.6 7.5 7.5 7.5 7.6 7.6 7.6 7.6 Imports 6.5 6.7 6.8 6.8 7.0 7.1 6.6 6.8 6.9 7.4 7.2 7.4 7.5 Federal Government 1.0 1.0 1.0 1.0 1.0 1.9 0.2 0.9 1.1 1.1 1.1 1.1 1.2 State and Local Governments 1.8 1.9 1.9 1.9 1.8 1.9 1.8 1.8 1.8 1.8 1.8 1.9 1.8

Billions of Dollars Real GOP (Chained 1996$) 14497.0 14982.6 15472.0 15955.3 16457.7 16952.7 17404.5 17884.0 18393.1 18945.6 19497.8 20091.0 20707.6 Gross Domestic Product 21465.4 22831.1 24290.8 25819.3 27444.1 29145.8 30839.9 32679.3 34638.8 36797.4 39083.7 41540.2 44187.4

Prices and Wages (Annual percent change) GOP Price Index (Chain-WI.) 2.8 2.9 3.0 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.2 3.2 3.2 CPI

- All Urban Consumers 3.1 3.3 3.4 3.5 3.5 3.5 3.5 3.6 3.6 3.6 3.7 3.7 3.8

Exc!. Food & Energy 3.2 3,4 3.5 3.6 3.6 3.7 3.7 3.7 3.7 3.8 3.8 3.9 3.9 Producer Price Index

- Fin. Gds. 1.8 1.9 2.0 2.0 2.0 2.1 2.0 2.0 2.0 2.1 2.1 2.1 2.2 Emp. Cost Index

- Total Compo 4.5 4.7 4.7 4.7 4.6 4.7 4.5 4.6 4.4 4.5 4.4 4.5 4.4 Output per Hour 2.6 2.5 2.7 2.8 2.6 2.4 2.3 2.2 2.4 2.1 2.3 2.3 2.4
Other Key Measures Industrial Production ('Yo chI 3.5 3.4 3.4 3.5 3.5 3.3 3.1 3.0 3.0 3.1 3.1 3.2 3.2 Nonfarm Inven. Accumulation (Billion chained 1996$) 58.1 61.5 60.5 60.3 63.2 83.1 58.8 62.1 66.4 72.8 71.7 76.9 79.7 Consumer Confidence Index 91.2 91.3 90.0 88.4 88.3 87.8 86.7 86.7 96.6 87.7 87.2 87.8 87.4 Housing Starts (Mil. units) 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.7 1.7 1.7 1.7 Light-Vehicle Sales (Mil. units) 19.5 19.9 20.1 20.1 20.3 20.4 20.0 20.2 20.3 20.8 20.8 21.1 21.3 Unemployment Rate ('Yo) 4.6 4.5 4.6 4.8 5.0 5.0 5.1 5.1 5.2 5.1 5.1 5.0 5.1 Payroll Employment ('Yo ch.) 1.0 1.1 0.9 0.7 0.8 0.9 0.7 0.8 0.7 1.1 0.9 0.9 0.9 Federal Budget Surplus (Unified, CY, bil. $) 90.2 66.8 38.5 -3.5 -48.2 -58.2 -63.6 -66.6 -147.7 -230.1 -336.1 -436.8 -530.9 Foreign Trade Curro Account Balance (Bil. $) -770.5 -833.3 -873.4 -917.2 -972.6 -1054.9 -1083.0 -1119.2 -1176.8 -1292.1 -1372.0 -1465.0 -1568.2 Foreign Crude Oil ($ per barrel) 33.3 34.6 35.9 37.5 39.2 41.0 43.1 45.3 47.7 50.2 53.1 56.1 59.3
Financial Markets Money Supply (M2, billion $) 10925.3 11483.7 12087.8 12738.9 13438.5 14158.6 14915.3 15723.3 16586.0 17473.6 18412.9 19423.1 20509.1 Percent Change 5.3 5.1 5.3 5.4 5.5 5.4 5.3 5.4 5.5 5.4 SA 5.5 5.6 Thirty-Year Mortgage Rate ('Yo) 8.0 8.5 8.5 8.6 8.7 9.1 9.2 9.3 9.3 9.7 9.8 9.9 10.0 Ten-Year Treasury Note Yield (%) 6.9 7.3 7.3 7.4 7.5 7.8 7.9 8.0 8.0 8.4 8.5 8.6 8.6 Treasury Bill Rate (%) 5.2 5.6 5.6 5.7 5.7 6.0 6.1 6.1 6.1 6.5 6.6 6.6 6.6 Federal Funds Rate (%) 5.5 6.0 6.0 6.0 6.0 6.4 6.5 6.5 6.5 6.9 7.0 7.0 7.0 Prime Rate ('Yo) 8.5 9.0 9.0 9.0 9.0 9.4 9.5 9.5 9.5 9.9 10.0 10.0 10.0 S&P 500 Stock Index 2526.4 2685.6 2854.9 3034.8 3226.1 3429.4 3645.6 3875.3 4119.2 4378.3 4653.7 4946.1 5256.8
Incomes Personal Income (% ch) 6.3 6.6 6.6 6.5 6.5 6.6 6.3 6.4 6.3 6.6 6.5 6.7 6.7 Real Disposable Income (% eh) 3.3 3.4 3.2 3.1 3.1 2.8 2.4 2.5 2.7 3.0 2.9 2.9 2.9 Saving Rate (%) 1.8 2.0 2.0 1.9 1.8 1.6 1.4 1.1 0.9 0.8 0.6 0.4 0.1 Profits AfterTax (% chya) 8.3 5.1 8.4 8.2 7.5 2.9 3.6 4.2 5.4 1.8 3.4 4.9 5.7



### --_

.....



### 20 DRI·WEFA The U.S. Economy

### THE FOUR SCENARIOS: THE TREND PROJECTION



# - 2 Supply Conditions--TREND25YR0202

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Percent Change Unsmoothed Potential Output 3.0 2.9 2.9 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 Components

Labor Hours 0.6 0.8 0.9 0.8 0.9 0.8 0.7 0.7 0.6 0.7 0.6 0.6 0.6 Capital Stock 1.4 0.8 0.9 1.1 1.2 1.3 1.3 1.3 1.4 1.4 1.5 1.5 1.5 Energy Usage -0.1 0.3 0.2 0.1 0.1 0.1 0.1 0.2 0.2 0.2 0.2 0.1 0.1 Research and Development Stock 0.3 0.3 0.2 0.2 0.1 0.2 0.2 0.2 0.3 0.3 0.3 0.3 0.3 Stock of Infrastructure Capital 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 Smoothed Potential Output 3.2 3.0 2.9 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 Productivity Labor Output per Hour 2.B 3.4 2.4 2.3 2.3 2.3 2.4 2.4 2.4 2.3 2.9 2.6 2.4 Percent Industrial Supply Conditions Vendor Performance 50.2 52.9 53.6 52.7 52.0 51.8 52.2 52.4 52.9 52.6 52.2 51.9 51.7 Factory Operating Rate 0.7 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 Labor Availability Civilian Unemployment Rate 6.0 5.8 5.1 5.0 5.1 5.1 5.0 4.8 4.4 4.2 4.5 4.6 4.6 Full-Employment Unemployment Rate 5.1 5.1 5.0 5.0 4.9 4.8 4.7 4.7 4.6 4.5 4.5 4.5 4.5 Finance Net Mortgage Acquisitions (% change)-28.4 -10.9 -6.9 0.2 2.9 7.3 11.3 10.1 9.0 9.1 1.5 -1.4 1.7 Nominal Corp. Costof Financial Capital 4.9 4.9 5.0 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.3 5.4 5.5 Real Cosl of Financial Capital 3.8 3.8 3.8 3.9 3.9 3.8 3.8 3.8 3.7 3.7 3.9 3.9 4.0 Personal Saving Rate 1.9 1.8 2.0 1.8 1.3 1.0 1.0 1.1 1.2 1.3 1.5 1.5 1.6 Money Supply (M2. % change) 7.6 5.4 4.7 4.7 4.7 4.8 4.8 4.9 5.0 5.1 4.9 5.0 5.2



# -

25-YearFocus, Winter 2002 21

### THEFOUR SCENARIOS: THE TREND PROJECTION



# - TABLE 2 (Continued) 

### Supply Conditions--

### TREND25YR0202

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Percent Change Unsmoothed Potential Output 2.9 2.9 2.8 2.7 2.7 2.5 2.5 2.4 2.4 2.4 2.4 2.4 2.3 Components Labor Hours 0.5 0.5 0.4 0.4 0.3 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.3 Capital Stock 1.5 1.5 1.5 1.4 1.4 1.3 1.2 1.2 1.1 1.1 1.1 1.1 1.1 Energy Usage 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Research and Development Stock 0.3 0.3 0.2 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 Stock of Infrastructure Capital 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Smoothed Potential Output 3.0 2.9 2.9 2.8 2.7 2.6 2.5 2.4 2.4 2.4 2.4 2.4 2.3 Productivity Labor Output per Hour 2.6 2.5 2.7 2.B 2.6 2.4 2.3 2.2 2.4 2.1 2.3 2.3 2.4 Percent Industrial Supply Conditions Vendor Performance 51.6 51.7 51.5 51.3 51.4 51.1 50.5 50.6 50.S 51.1 51.1 51.5 51.7 Factory Operating Rate O.S 0.8 O.B O.S O.S 0.8 0.8 0.8 O.S 0.8 0.8 0.8 0.8 LaborAvailability Civilian Unemployment Rate 4.6 4.5 4.6 4.8 5.0 5.0 5.1 5.1 5.2 5.1 5.1 5.0 5.1 Full-Employment Unemployment Rate 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 Finance Net Mortgage Acquisttions ('Yo change) 4.4 3.0 5.2 5.4 5.7 2.B -0.4 1.3 O.B 1.5 1.7 4.9 5.5 Nominal Corp. Costof Financial Capital5.6 5.8 5.9 6.0 6.0 6.2 6.2 6.2 6.3 6.4 6.4 6.5 6.5 Real Cost of Financial Capital 4.1 4.2 4.2 4.3 4.3 4.4 4.4 4.3 4.3 4.3 4.3 4.3 4.3 Personal Saving Rate 1.8 2.0 2.0 1.9 1.8 1.6 1.4 1.1 0.9 0.8 0.6 0.4 0.1 Money Supply (M2, % change) 5.3 5.1 5.3 5.4 5.5 5.4 5.3 5.4 5.5 5.4 5.4 5.5 5.6

22 DRI-WEFA 

### The U.S. EconomyTHE FOUR SCENARlOS: THE OPTIMISTIC AND PESSIMISTIC PROJECTIONS


# - A RANGE OF POSSIBILITIES: THE OPTIMISTIC AND PESSIMISTIC PROJECTIONS

Highlights

• Real GDP advances 

### 3.7% peryearon average
overthenext

### 25 years intheoptimistic scenario (optim). This is above the 

### 3.2% growth rate recorded between 

### 1975 and 

### 2001, and higher than the projected averages of

### 3.1

### % inthe baseline (trend) and 

### 2.7% inthepessimistic scenario (pessim).

• Despite optim's strong growth, inflation as measured by the GDP deflator averages a moderate 

### 2.2%. This compares withthe averages of 

### 2.6% inthe trend and 

### 3.3 % inpessim.

• In optim, the federal budgetremains in surplus throughout the forecast period; in pessim, deficits start appearing in 

### 2001.

• In optim, capital formation is strong through 

### 2018, with business fixed investment soaring beyond 

### 15.0% ofGDP. Investment's share of GDPthen declines slowly but steadily, ending
at 

### 13.5% by 

### 2027.

• Outputperman-hourrises 

### 2.7% in optim, 

### 2.5% in trend, and 

### 2.1% in pessim.

The optimistic scenariois characterizedby strong GDP growth and moderate inflation, with higherrates of growthin capital spending andfactor-productivity relative to the trend. Thepessimistic alternative (which encompasses opposite assumptions on laborforce, capital stock, and factor productivity) exhibitshigherinflation than optim, partly because ofescalating energy prices.

In the optimistic case, real GDPgrowth averages 3.7% annually, which is above the 3.2% gains achieved during 1975-2001 (Exhibit 1). Consumerpriceinflation, on the other hand, averages only 2.2%, well below the previous 25-yearrate of4.8%. Thehigh-growth, low-inflation environment depictedhere is especially favorable to durable-goods spending categories such as business fixed investment, housing construction, and motor vehicles. In contrast, the low-growth environmentofthe pessimistic projection debilitates these same sectors. Forexample, inoptim,business investmentin equipment and softwareis 11% higherthanits trend level by 2027, while in pessim 

### itis 10% lower. 

## ProjectionDetail ParticipationRates and theLaborForce. These two scenarios incorporatedifferentdemographic assumptions from those inthe trend, leading to varying laborforce growth and participation rates. The optimistic outlook assumes that the U.S. population will grow more quicklybecause ofhighernet immigration. The pessimistic alternative constricts growth in the laborforce, the result oflower assumed netimmigration. As a result, theU.S. populationincreasesfrom 273 millionin 1999to 392millionby 2027inthe optim,buttojust311 million inthe pessim, compared with the 344million in 

# - the trend. Annual population growth averages 1.3% in optim, butonly 0.5% in pessim.
Thus, by 2027, the adult population (aged 16 and over) is roughly 11% higherin optimthan in the trend, while 

### itis 7% lowerinpessim.Theseresults directly affectthe

EXHIBIT 1 

### Output Growth Will Weaken (Real GDP, annual percent change)
8

6 II



# IV il 

# f M 

# , ,... W' 

# ,,N

4

2

# ~**~** ."**TT~** 

# , o

-2**~ ~./**  

### ':;';:::::'**-~,""""'-~**

## ~

1962 1972 1982 1992 2002 2012 2022

-Trend ---Optimistic

- •• ­ ••Pessimistic

25-YearFocus, Winter2002 35 

# -

### THE FOUR SCENARIOS: THE OPTIMISTIC AND PESSIMISTIC PROJECTIONS

EXHIBIT 2 Labor-Force Participation Rates Retreat After 2010 (Percent) 69,---------------------------,,-----------------,**-~ ~----------~** **67~----··~~~---~--------_r~~---- 65+---~~--~---~---·~~··---~~~'f------~~~~·** **63+-------~~----_.~--------r_·····~------~~~~** 61**+------~,~--** 

### .....**~--** 

### ..**----~r_-----~--~- 59+-----~~--------------r_** **57~~~----** -----------_r--------

...- ...**--~ 55·hT~~~~ryn~~~~~~~~~~~~~** 

1962 1972 1982 1992 2002 2012 2022 -Trend ---Optimistic····· 'Pessimistlc



### laborforce. By 2027, the civilian laborforce is 9% higherin optim and4% lowerin pessim relative to the trend. Labor-force growth averages 1.0% in optim and 0.5% in pessim overthe next 25 years, compared with the 0.7% annual gains inthetrend.



# -

EXHIBIT 3 Bandwith Projections at a Glance (Percent difference from trend in 2027)

2027
Optim Pessim Spread

Real GOP Growth 4.6 3.7 0.9 CPI Inflation -0.5 2.7 -3.2 Real GOP 3.7 2.7 1.0 Consumption 3.6 2.6 1.0

Motor Vehicles 3.4 0.7 2.7 Nonresidential Fixed Investment 5.7 4.6 1.1 Residential Fixed Investment 2.9 -0.3 3.2 Exports 7.0 6.6 0.4 Imports 6.1 5.7 0.4 Total Government 1.8 1.4 0.4 Chain-WI. Implicit GOP Deflator 2.1 3.3 -1.2 Output per Hour 2.7 2.1 0.6 Real Short·Term Interest Rates (Basis pts.) 0.0 0.0 0.0 Federal Funds Rate (Basis pts.) 0.9 3.5 -2.5 Unemployment Rate (% pts.) 0.2 0.4 -0.2 Foreign Cude Oil ($Ibarral) 31.2 74.2 -43.1 Real After-Tax Profits 4.5 0.8 3.7 Real Disposable Income 3.5 2.7 0.8 Population 1.3 0.4 0.9 Real Disposable Income Per Capita 2.1 2.3 ·0.1 Light Vehicle Sales (Mil. Units) 294.3 35.7 258.6 Housing Starts (Mil. Units) 1.5 -0.7 2.2

Note: All data represent compound annual growth rates calculated overthe entire toreast period, except where units are given. Data accompanied by units represents the absolute change overthe torecast All real data are in chained 1996 dollars. EXHIBIT 4 Actual Output Growth Will Be Constrained by Slower Potential Output Gains (Potential output, percent change) 5.0 

## .,------------------r-------------,**~,..,....__c_"'** 

### ......=_l

'" 4.5**-l#'It'~.~--~----.~.-----~.~--+_~~** ..**~----------__1** 4.0 3.5**+~~_1~'*** 

## ___**------I-~h-oL-\"""_'t;;_----__I** 3.0**+--~----"""'-\....,I__+_~.-+--~** .....

# --_o;:_

2.5**+---~~.-----___1~---".+_I_~** ..**~+_-~.** 2.0**+~----~** 

### ...-..**~----------_+_ 1.5+---------······~----~---~1~---** **~-- ---~~~__1**  1.0**+n.".,..,..,.,.,.,..,.,..,..,.,,,..,.,..,.,..rT"'r"'f~.,.,..,..,..,.,...r+:-,"'!"T'1'.,..,..,.,..,.,..,r"""T'TTr"!'.,..,..,.T"l"T",.,-I**

1965 1975 1985 1995 2005 2015 2025 -Trend ---Optimistic

_•••. -Pessimistic



### Potential Output. Overthe longertenn,theeconomy's actual growth is constrained by 

### the expansion ofpotential output. Theoptimistic scenario, with its above-trend supplyfactors, yields averagepotentialoutputgrowthof 3.7% peryearthrough 2027. In thepessimistic scenario, with its slowerlabor-force and capital-stock growth, potentialproductionis limitedto 2.3% gains overthe forecast interval (Exhibit4).

Inflation. The subdued inflation in the optimistic scenario depends onrelatively low energy prices and moderate wage increases. When combined with faster productivity growth, consumerprice inflation averages

EXHIBIT 5 Consumer Price Inflation (Percent) 14
12
10 I--­



# 1\ A 1

.... 

# n

V

I

.... 

# A 8
6
4
2


## o 

# r' '9 

# 'V 

# ""'" .­ .' 

# .- 1-' 

### ....

1962 1972 1982 1992 2002 2012 .........

### ...... ".

### ..


### ,



# -

2022

-Trend ---Optimistic····

- -Pessimistic



### 36 DRI·WEFA The U.S; Economy

### THE FOUR SCENARIOS: THE OPTIMISTIC AND PESSIMISTIC PROJECTIONS

EXHIBIT7 EXHIBIT 6 

### Personal Consumption The Federal Funds Rate (Average annual percent change) (Percent)
History Optim Pessim

1976 1986 2002 2008 2002 2008 ·1986 -2001 -2007 ·2027 -2007 -2027

Total Personal Consumption 3.5 3.3 3.4 3.7 2.4 2.7

Durable Goods 5.7 5.3 4.2 5.4 2.5 3.5 Autos & Parts 6.5 2.6 1.7 3.9 0.3 0.7 Furniture & Appliances 5.6 8.5 7.2 6.7 4.6 5.4 Software N/A 45.7 11.6 6.9 10.1 6.6 Ophthalmic Goods 4.5 5.6 2.3 5.5 2.0 6.7 Other Durable Goods 4.1 5.7 4.7 6.1 3.4 4.8 Nondurable Goods 2.6 2.9 3.2 3.8 2.4 2.9 Food & Beverages 2.0 2.1 2.1 2.5 1.5 1.9 18

.....­ 16

### ~ 14 12 I--- 

# I I 10
.0'•••• 

## I 1'1 8 

### " A

,

# ....**~** 

# I

..

## ~\ 6 

# .­ \IV I 

# \ f-I V ...... 4 

# W 2



# .. o

1962 1972 1982 1992 2002 2012 2022 -Trend ---Optimistic····· •Pessimistic



### only 2.5% peryearthrough 2027, compared with 3.0% in the trend and 4.5% overthe past 25 years (Exhibit 5).

In thepessimistic case, inflation is fanned byhigher crude oil prices. Thus, although the GDPdeflator recedes to less than 3.0% early in the forecast period, it**th~n** 

### reaccelerates to over 5.0% in 2027. Rising energy pnces, wages, and importprices combinetopush consumerpriceinflation up to nearly 6.0% annually in 2027. Consumerprice inflation averages 3.7% peryear through 2027, compared with 3.0% inthe trend.



### Financial Conditions. Thefederal funds rate averages 6.7% inpessim and 4.9% in optim,justbelow as in the' trend (Exhibit 6). Therate would behigherinpessim, butthe FederalReserve compromises between fighting theinflationary forces ofrising oil prices and pushing theeconomy into recession. Atthe long end ofthe maturity spectrum, the 10-year governmentbond yield rises to 8.6% in optim and 11.8%inpessim. The steeper yield curvein pessimreflects mounting concerns about theinflationary outlook, given theFed's accommodative monetary policy and accelerating inflation.



### ConsumerSpendingand Income. Real consumer spending averages 3.6% annual growth in optim, 0.6 percentagepoint above the trend rate. Real percapita consumption expands an average of2.3%, compared withits 2.4% annual rate since 1970.

Income-sensitivedurable goods are affected the most (Exhibit 7). Spending on consumerdurables rises an average 5.1% peryearinoptim, 1.0percentagepoint strongerthanthetrendgrowthrate; inpessim, growthin Prescription & Over-the-Counter Drugs 4.3 5.4 4.5 6.6 4.0 5.9 Clothing & Shoes 5.6 4.9 5.3 4.9 3.8 3.7 GaSOline & Oil 1.2 1.8 2.6 2.4 2.0 1.2 Fuel Oil & Coal -4.8 0.0 1.6 -0.1 0.9 -1.1 Tobacco Products -0.3 -2.3 -0.5 -1.4 -0.7 -4.0 Othe Nondurable Goods 3.8 4.3 4.9 4.8 4.1 4.0 Services 3.6 3.2 3.3 3.4 2.4 2.5

Housing 2.9 2.2 2.4 2.0 1.5 0.6 Household Operation 3.0 3.6 4.0 4.9 2.9 4.3 Electricity 3.5 2.3 3.3 2.9 2.5 2.0 Natural Gas -0.4 0.6 1.8 1.7 0.9 0.8 Telephony 5.5 7.6 7.0 8.3 5.4 7.4 Other 2.0 2.2 2.1 2.8 1.1 2.9 Transportation 3.3 3.4 2.9 1.8 2.1 1.6

Motor Vehicle leases N/A N/A 3.8 3.1 2.0 6.0 Other Transportation N/A N/A 2.8 1.6 2.1 0.9 Personal Business Services 5.3 4.0 3.9 3.1 2.6 2.0 "Free" Financial Services 6.5 3.8 4.4 2.4 3.4 1.4 Medical 3.9 3.0 3.4 3.9 2.7 3.4 Recreational 6.0 4.9 6.3 5.1 5.3 3.8 Other Services 3.4 3.3 2.4 3.4 0.9 2.2

Note: All real data are in chained 1996 dollars.



### the same spending category averagesjust3.3%. In the optimistic scenario, light-vehicle sales average 21.3 million units peryear, pushingthe stockofcars and light trucks 15% above its trend level by 2027. Real personal income averages 3.4% annual gains in optim, up from 2.9% inthetrend. Income grows only 2.6% peryearinpessim. Interest incomein pessimis bolsteredbyhigherinterestrates and largerfederal deficits. 

### Housing. Sincethedemographic forces ofpopulation growth and householdformation arethemain long-term determinants ofnew residential construction, we would expect the housing outlookto be weaker in pessim and stronger in optim relative to the trend. In fact, the disparity between interestrates in the two bandwidth alternatives drives theirrespective housing outlooks even further apart. The conventional mortgagerate averages 7.91% in optim, below its 9.77% averagein pessim and 8.27% average in the trend.

25-Year Focus, Winter 2002 37

### THEFOUR SCENARIOS: THE OPTIMISTIC AND PESSIMISTIC PROJECTIONS

EXHIBIT 8 Demographics and Interest Rates Determine the Housing Outlook (Housing starts, millions of units)
3.5 

### ,------,--------------r------------,

3.0 

### t----------+-------A
2.5 

### t--

...........-:-------+-----::;;;7L-----.J

2.0 

### +----I,

........**-.----~-+-/=**

1.0**.r-~-~---.=!..---¥--I---~** 

### ........=.............j
O.5**.h-r-r.,.,..,.,.,..,.,..,.,..,..,..,.,.,...,..,.,..,.,.,.,....,.,.,..,.,.,.,.,.,.,.,...,J,..,.,..,..,.,.,.,..,..-r"'I",.,..,.,....,.,.,.......,.,..~** 1962 1972 1982 1992 2002 2012 2022

-Trend ---Optimistic····· -Pessimistic



### Housing starts average slightly morethan 2.42 million units per year(or795,000 units abovetrend) in optim and 1.08 million (or539,000 below trend) in pessim (Exhibit 8). By2027, the housing stockin optimis 12% above thetrend level, whileinpessim it stands 8% below. Because ofthegloomierinflationpicture in pessim, the slower economypushes the average nominalprice ofa new hometo only $608,600 in 2027, compared with $478,000in the trend and $410,000 in the optimistic alternative.

Business Fixed Investment. Theextremely volatile investment sectorreacts strongly to the differing

EXHIBIT 9 Business Fixed Investment (Percent of GOP)**15,-----------~------------~** 14+--­

12 +------IL
11**9~~,..,.,..,.~~~~~~~~~~~~~**

1962 1972 1982 1992 2002 2012 2022
-Trend ---Optimistic

- - - - - -Pessimistic EXHIBIT 10 Saving and Investment Shares of GNP (Percent) History Optim Pessim

1976 1986 2002 2008 2002 2008 -1986 -2001 -2007 -2027 -2007 -2027

Household 10.4 7.4 4.4 2.9 4.7 5.5 Business 9.1 9.2 9.8 11.5 9.6 10.7 Government -3.5 -2.5 -0.4 -0.3 -1.6 -4.0 Tota! Saving 16.0 14.0 13.8 14.0 12.7 12.3 Tolallnvastment 16.7 13.9 12.4 13.3 11.2 11.5 Gross Private Investment 17.0 15.8 17.1 17.8 15.6 15.9 Nonresidential Fixed Investmentl2.0 11.3 12.1 13.8 11.6 13.1 Residential 4.4 4.1 4.6 3.7 3.8 2.6 Change in Inventories 0.5 0.4 0.4 0.3 0.3 0.3 Net Foreign Investment -0.4 -1.9 -4.8 -4.5 4.4 -4.4 Statistical Discrepancy 0.9 0.0 -1.3 -0.8 -1.4 -0.8



### assumptions in the alternatives. Business investment suffers long-termdamage in pessim, as weak final demand and higherinterestrates raisethecost ofcapital, lowerthe rate ofreturn on investments, and weaken investor confidence (Exhibit 9). The economy's overall sluggishness also hurts theprofitability ofcorporations, limiting the funds available for investment. Thus, real investmentin equipment and software grows only 5.8% annually inthepessimistic case, compared with 6.2% in thetrend and 6.7% in the optimistic scenario. Corporations may choosefrom several options to finance plant and equipmentexpansion. The type of inflationary environmentin whichthey operate is likely to influence whethertheyfinance by issuing stocks or bonds, selling short-termcommercialpaperorobtaining bank loans, or using internally generated funds. The higherinflation in thepessimistic environmentencourages firms to rely more heavily onrelatively scarce internal funds to finance investment-avoiding thepayouts associated with stocks, bonds, and bankloans. In addition, highinflation depressesthereal value of depreciation allowances, constraining corporate cash flow and, subsequently, business fixed investment.

Government. Thetaxation policy assumptions in the two bandwidth scenarios are similar to thoseinthe trend. The government expenditure assumptions are different, however, largely reflecting the different growth paths and demographic assumptions ofthe optim and pessimprojections. In pessim, a weaker economy leads to ahigherratio offederal spendingto GDP. Higher interestrates on pastdebt and larger operating deficits

38 DRl·WEFA The U.S. Economy1.15**·I--~t+----___.I\__-----~·····---_j**
1.05**+---__f.---!I----..I-+-~.**
0.95 +--+--1----

...... \__

___**-#tc--I-.-+---~~---__I**
0.85 THE FOtJR SCENARIOS: THE OPTIMISTIC AND PESSIMISTIC PROJECTIONS



# -
EXHIBIT 11 

### Federal Budget Paths Diverge in the Bandwidth Scenarios (Billions of dollars)



## o

-500

-1000

-1500

-2000

-2500 ,--­ .... 

### A**~** -':-::; ••.1•• '.
, 

# -........**.~.**



# .



# .

,

,

### ,

# "

.

\ 1962 1972 1982 1992 2002 2012 2022

-Trend ---Optimistic······Pessimistic



### boost federal interestpayments, exacerbating the persistent shortfalls.

Federal government outlays as a share ofGDP average 117.5% in optim and 18.5%inthe trend. They are higher, at 20.6% ofGDP, in pessim because ofthe slowereconomy and the needto make larger transfer payments.Thefederal budgetaverages an annualdeficit of$6.2 billion inthetrend projection and a surplus of $34.6 billionin the optimistic scenario, but averages a deficit of$202 billion in pessim.

Unlike the federal government, state and local governments must maintain budgets close to balance. Therefore, their spending is tied closely to available revenue,

EXHIBIT 12 

### Corporate Cash Flow as a Percent of GNP**14~--------------------~------------~** 13 

## +

....**--------~-~---j** ----------1

12+**----------I------~~y** 11 

### +-**~----------+_--~~~~~** 10**+----~ 9+-~--~~~~~J---~------** **7+rr,n~~~~~~~~~~~~~~~~~**

1962 1972 1982 1992 2002 2012 2022

-Trend ---Optimistic······ Pessimistic EXHIBIT 13 

### The Dollar's Real Trade-Wtd Exchange Rate (Versus developed-country currencies) 1.25 ,-----------------------------------,

1975 1985 1995 2005 2015 2025

-Trend

--- Optimistic ••.... Pessimistic



### which is created by economic activity within their regions. Increases in state and local governmentpurchases average 2.1% in optim, 1.7% in trend, and 1.5% inpessirn.

International.Theworld is assumedto becomemore opento trade in all the scenarios, butitopens up most quickly in the optimistic alternative and most slowly in thepessimisticprojection. In

### the optimistic outlook, the nation's majortrading partners are also assumed to experience strong output growth and low inflation, although the relative performance oftheUnited States improves slightly when compared with thetrend. Real export growth averages 7.0% per yearin optim, versus

EXHIBIT 14 

### Unemployment Varies Only Slightly Across the Bandwidth Alternatives (Percent)**10.---------------------~------------~ 9+-------~~-----~-----------~** **8+---~~__f.1_-----+---------~ 7+----~-\__~~~~-"._-~-~-~----~**  6 +-----...-1-.....-.,-**----lr-l---\.---t1~-** ........----__I**5~~~~---~--~~··~~~~-~~** ..**~ 4+-···~~--~-----~--~·····---**  j**3+r~~~~~~~~~~~~~~~~~**

1962 1972 1982 1992 2002 2012 2022 -Trend ---Optimistic······Pessimistic

25-Year Focus, Winter 2002 39

### THE FOUR SCENARIOS: THE OPTIMISTIC AND PESSIMISTIC PROJECTIONS**~~** 

### 6.9% in the trend; real importgrowth averages 6.1% annually in optim, versus 5.8% in the trend.

IndustrialProduction and Employment. In the pessimistic scenario, the index ofindustrialproduction is 13% below thepessim levelby 2027. Total nonfarm employmentis 4% lower, consistent with the laborforce participationprojections. Thepattern ofemployment losses by industryreflects outputdifferences from trend levels, as well as productivity losses inindividual industries.

Overtheprojection period, total payroll employment rises by 39.8 million in the trend, 52.8 million in optim, and 32.3 million in pessim; thelast 25 years saw total payrolls increase by about 54million workers. Total

EXHIBIT 15 

### Production Growth by Industry (Average annual percent change)
History Optim Pessim

1976 1986 2002 2008 2002 2008 -1966 -2001 -2007 -2027 -2007 -2027


# .- High Electrical Machinery 7.0 14.1 10.7 10.3 10.4 9.5 Non-Electrical Machinery 3.6 7.5 7.4 5.7 6.2 4.3 Rubber and Plastics Products 4.2 4.3 3.1 5.0 1.0 2.3 Utilities 1.3 2.1 2.7 3.2 1.5 2.1 Fabricated Metal Products 0.5 2.2 1.1 2.5 -0.8 1.2 Chemicals and Products 1.8 2.9 3.4 4.9 1.7 1.9 Medium Transportation Equipment 2.2 3.1 3.8 2.8 2.5 1.3 Instruments 5.3 2.2 3.3 3.3 2.0 2.2 Paper and Products 2.2 2.0 2.4 2.7 1.1 0.8 Textile Mill Products 1.4 0.7 3.0 1.6 0.9 0.1 Miscellaneous Manufactures 0.7 2.5 0.7 2.7 -0.9 1.2 Primary Metals -2.7 1.9 0.5 3.9 -2.0 -0.3 Stone. Clay and Glass 0.7 2.0 2.9 1.4 -0.9 -0.6 Furniture and Fixtures 2.4 3.0 3.2 1.8 0.3 -0.3 Petroleum Products 0.1 1.7 1.8 1.3 0.9 0.3 Low Food and Products 2.4 1.8 1.1 1.1 0.5 0.7 Mining 1.1 -0.8 0.3 1.0 -0.2 0.5 Lumber and Wood Products 2.0 1.7 2.6 2.1 -2.6 -1.7 Printing and Publishing 3.9 1.5 -0.1 1.2 -1.3 0.2 Tob.acco Products 0.2 -0.4 -0.8 -0.5 -0.9 -4.1 Apparel and Products 1.9 -0.7 -2.8 -2.7 -4.2 -2.9 Leather and Products -3.7 -4.3 -8.0 -0.6 -8.0 -1.1 Summary Total Production 2.2 3.4 2.4 3.2 1.4 2.1 Manufacturing 2.4 3.8 2.5 3.3 1.5 2.1 Durables Manufacturing 2.6 5.4 3.1 4.0 2.3 3.6 Nondurables Manufacturing 2.2 1.9 1.7 2.8 0.4 0.6 Final Products 2.7 2.9 3.4 3.5 2.1 2.0 Consumer Goods 2.1 2.2 2.4 2.9 1.1 1.0 Business Equipment 2.8 5.8 5.2 5.1 3.9 4.0 Defense Equipment 5.1 -1.0 3.4 -0.6 3.4 -0.6 Intermediate Products 2.2 2.5 1.6 2.2 -0.5 0.6 Materials 1.7 4.3 8.1 10.2 7.6 9.2 Note: Industries are ranked according to their average annual growth rates in the trend scenariofor the entire forecast period. EXHIBIT 16 

### Contribution to New Jobs (Cumulative percent change)
History Optim Pessim

1976 1986 2002 2008 2002 2008 -1986 -2001 -2007 -2027 -2007 -2027

Manufacturing 4.5 -2.3 -1.8 -4.6 -19.0 -17.4 Mining and Construction 6.4 4.8 9.8 10.8 -10.6 -7.9 Government 8.4 12.4 8.7 15.5 11.5 10.5 Private Services 80.6 85.0 83.2 78.3 118.2 114.8 Total New Jobs (Millions) 20.4 34.4 11.6 25.9 5.8 13.8



### employmentintheoptimistic scenario is 7.6% aboveits trend level by 2027. Manufacturing employmentfalls from 18.5 million in2000 to 17.8 million in 2027. In pessim, manufacturing payrolls decline to 14.7 million. Energy. The optimistic scenario assumes that energy availability is greaterthan inthetrend, facilitating strongereconomic growthbytheUnited States and its major trading partners. Total U.S. energyusage is boosted to 167 quadrillion British thennalunits (quads) by 2027 in this scenario, compared with 143 quads inthetrend.

EIn the longrun, production costs determine energy prices. Technological improvements lowerproduction costs, but drilling deeperholes raises them. In all three scenarios, higherdrilling costs win out: inboth optim and trend, the real oil price rises to $28 perbarrelby the end ofthe projectionperiod (Exhibit 17). Energy-efficiency gains are made in all scenarios, but lowerfuel prices hinder such developments in optim.

EXHIBIT 17 

### Foreign Oil Prices Rise (Average refiners' acquisition price of imported oil, dollars/barrel)**100,------------------r--------------~** /**80t-------------------,--------·······-----~/~ 60+-----------------r----------,~--c,1** 
40+---.----------------+

1977 1987 1997 2007 2017**202~**

-Trend ---Optimistic····

- -Pessimistic



### 40 DRI·WEFA The U.S. EconomyTHE FOUR SCENARIOS: THE OPTIMISTIC AND PESSIMISTIC PROJECTIONS


# -. Summary for the U.S. Economy
- Optimistic Outlook

2002 2003 2004 2005 2006 2007 200B 2009 2010 2011 2012 2013 2014

Composition of Real GOP (Annual percentcnange) Gross Domestic Product 1.5 5.0 4.3 3.7 3.5 3.5 3.9 4.1 4.2 3.B 3.6 3.9 3.9 Final Sales 0.7 4.7 4.3 3.8 3.5 3,5 3.9 4.0 4.2 3.8 3.6 3.9 3.9 Gross National Product 1.7 4.6 4.1 3.7 3.4 3.4 3.8 4.0 4.1 3.7 3.7 3.8 3.8 Total Consumption 2.2 4.1 3.8 3.5 3.4 3,3 3.8 4.0 4.1 3.9 3.9 3.7 3.7

Durable Goods 0.7 8.0 4.8 3.5 4.2 4.3 4.3 5.5 5,9 5.1 3.9 4.9 5.3 Nondurable Goods 2.1 3.6 3.7 3.4 3.1 3.0 3.4 3.7 3.8 3.7 3.7 3.7 3.6 Services 2.5 3.6 3.7 3.6 3.4 3.3 3.8 3.9 3.8 3.8 3.9 3.5 3.4 Nonres. Fixed Investment -3.9 9.5 9.4 6.8 5.6 6.2 6.9 7.0 7.4 6.5 6.6 7.1 6.6 Equipment -1.7 10.2 10.8 7.8 6.4 6.7 7.7 8.1 8.2 7.7 7.6 8.1 7.9 Computers 11.1 15.3 18.8 20.4 20.6 20.2 19.8 19.1 18.7 lB,1 18.2 lB.O 17.3

. Software 6.0 B.7 9.2 10.6 10.8 10.B 11.1 11.2 11.3 11.5 11.B 11.4 10.5 Communications -8.5 12.7 14.0 9.3 B.9 7.0 7.0 7.7 7.8 6.5 6.4 7.6 7.0 Light Vehicles -2.4 11.9 6.4 2.7 3.6 3.8 5.5 5.7 5.6 4.4 4.2 5.6 5.1 Other -5.7 9.1 10.8 5.4 2.2 2.7 4.2 4.7 4.9 4.1 3.5 4.0 4.5 Private Nonres. Structures -9.B 7.4 5.6 3.9 3.4 4.8 4.4 4.1 5.1 3.2 3.9 4.6 3.2 Buildings and Other -8,2 10.7 6.2 4.6 4.2 4.8 5.4 5.4 6.2 3.6 4.3 5.3 3.6 Residential Fixed Investment 5.0 10.6 0.4 3.3 1.4 2.1 3.3 3.3 4.6 2.6 -2.8 1.9 3.1 Exports -B.7 7.6 9.7 8.1 8.3 7.9 7.3 7.1 6.7 6.4 6.7 7,5 B.l Imports 1.1 7.8 5.5 5.1 4.7 4.7 5.0 5.6 5.8 5.1 5.3 6.1 6.3 Federal Government 4.5 4.7 2.3 1.0 0.6 0.5 0.7 0.8 1.2 -0.2 0.8 1.0 1.0 State and Local Governments 2.1 2.3 2.2 2.3 2.0 1.8 1.7 1.8 2.0 1.6 1.7 2.0 2.1

Billions of Dollars Real GDP (Chained 1996 $) 9468.5 9943.7 10368.1 10750.6 11128.8 11521.3 11973.1 12459.1 12978.9 13466.6 13955.6 14500.3 15060.7 Gross Domestic Product 10496.9 11255.1 11983.9 12679.7 13384.5 14131.2 14969.1 15878.2 16878.9 17880.5 18920.5 20092.5 21359.5

Prices and Wages (Annual percent cnange) GDP Price Index (Chain-WI.) 1.3 2.1 2.1 2.0 2.0 2.0 1.9 1.9 2.0 2.1 2.1 2.2 2.4 CPI

- All Urban Consumers 1.5 2.6 2.5 2.4 2.3 2.2 2.1 2.1 2.2 2.2 2.3 2.5 2.6

Excl. Food & Energy 2.5 2.7 2.6 2.5 2.4 2.4 2.3 2.2 2.3 2.3 2.4 2.6 2.7 Producer Price Index

- Fin. Gds. -1.3 1.1 1.4 1.3 1.0 0.9 0,9 0.9 1.0 1.1 1.1 1.3 1.5 Emp. Cost Index

- Total Comp. 3.3 3,0 3.1 3.1 3.3 3.4 3.5 3.5 3.7 3.9 4.1 4.1 4.3 Output per Hour 2.9 3.8 2.2 2.6 2.6 2.6 2,8 2.6 2.4 2.6 3.2 3.0 2.7 

# ­

Other Key Measures Industrial Production (% chI -0.6 8.8 5.9 4.6 4.3 4.3 5.2 5.5 5.4 4.8 4.6 5.0 4.6

. Nonfarm Inven. Accumulation

(Billion chained 1996 $) 24.2 64.5 64.5 49.8 47.6 46.6 54.3 58.6 61.7 57.0 56.4 64.4 66.1 Consumer Confidence Index 95.3 94.3 97.0 95.8 93.6 93.4 93.9 95.6 97.4 95.9 92.5 93.5 93.7 Housing Starts (Mil. units) 1.831 1.964 2.019 2.085 2.082 2.118 2.164 2.225 2.321 2.309 2.175 2.235 2.297 Light-Vehicle Sales (Mil. units) 15.7 17.4 17.B 17.7 18.0 18.3 18.5 18.9 19.4 19.7 19.8 20.3 21.1 Unemployment Rate (%) 5.9 5.7 5.0 4.9 5.0 5.0 4.9 4.7 4.3 4.1 4.4 4.5 4.5 PayrOll Employment (% ch.) 0.0 2.1 2.6 1.9 1.5 1.4 1.5 1.7 1.9 1.3 0.7 1.1 1.3 Federal Budget Surplus (Unified, FY, bil. $) 13.3 30.7 16.2 38.4 86.3 136.1 134.5 151.2 167.4 174.5 104.1 129.0 136.0
Foreign Trade Curr. Account Balance (Bit $) -468.6 -570.4 -607.6 -632.6 -654.8 -677.2 -710.7 -747.7 -799.6 -840.7 -883.8 -952.9 -1024.3 Foreign Crude Oil ($ per barrel) 19.6 21.1 22.9 24.1 25.0 25.7 26.4 27.1 27.9 28.9 29.8 30.8 31.9

Financial Markets Money Supply (M2, billion $) 5826.3 6153.9 6457.0 6778.4 7119.1 7481.2 7868.7 8283.5 8728.8 9203.8 9710.9 10251.9 10831.7 Percent Change 7.7 5.6 4.9 5.0 5.0 5.1 5.2 5.3 5.4 5.4 5.5 5.6 5.7 Thirty-Year Mortgage Rate (%) 7.0 7.4 7.4 7.3 7.3 7.5 7.5 7.5 7.6 7.7 7.7 7.8 7.9 Ten-Year Treasury Note Yield (%) 5.3 5.8 5.9 5.9 6.0 6.2 6.4 6.5 6,6 6.6 6.7 6.8 7.0 Treasury Bill Rata (%) 2.0 3.7 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 Federal Funds Rate (%) 2.2 4.0 5.0 5.0 5.0 5.0 5.0 5.0 5,0 5.0 5.0 5.0 5.0 Prime Rate (%) 5.2. 7.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 S&P 500 Siock Index 1164.6 1339.8 1479.7 1646.3 1789.7 1911.9 2049,9 2206.2 2314.6 2479.9 2803.9 2962.7 3099.2
Incomes Persona/Income (% chI 2.9 6.3 6.3 5.4 5.3 5.3 5.7 5.9 6.2 6.1 5.8 6.0 6.2 Real Disposable Income (% chI 2.5 4.1 4.1 3.4 3.0 3.1 3.9 4.1 4.2 4.0 3.5 3.6 3.7 Saving Rate (%) 2.0 1.9 2.1 1.9 1.4 1.1 1.2 1.3 1.4 1.5 1.2 1.1 1.2 Profits AfterTax (% chya) 10.0 14.0 1.4 3.2 5.5 4.9 8.6 7.0 6.8 7.2 9.8 9.2 8.5

25-YearFocus, Winter 2002 41

### THE FOUR SCENARIOS: THE OPTIMISTIC AND PESSIMISTIC PROJECTIONS

,>"-­ TABLE 1 (Continued) 

### Summary for the 

### U.S. Economy
- Optimistic Outlook

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Composition of Real GOP (Annual percent change) Gross Domestic Product 3.8 3.9 3.7 3.7 3.6 3.5 3.2 3.2 3.4 3.6 3.4 3.6 3.5

Final Sales 3.8 3.9 3.7 3.7 3.6 3.5 3.2 3.2 3.4 3.6 3.4 3.5 3.5 Gross National Product 3.8 3.9 3.7 3.6 3.6 3.6 3.3 3.3 3.4 3.6 3.5 3.6 3.6
Total Consumption 3.7 3.7 3.6 3.7 3.7 3.6 3.3 3.3 3.5 3.8 3.6 3.7 3.8

Durable Goods 5.3 5.9 4.8 4.8 5.5 5.9 4.3 5.0 5.5 7.3 5.8 6.3 6.3 Nondurable Goods 3.7 3.8 3.7 3.8 3.8 3.8 3.6 3.6 3.8 3.9 3,9 4.0 4.1 Services 3.4 3.3 3.4 3.4 3.4 3.2 3.0 2.9 3.1 3.2 3,2 3.2 3.3 Nonres. Fixed Investment 6.3 6.6 5.7 5.5 5.4 5.0 4.8 4,1 4.5 5.1 4.9 4,9 5.0 Equipment 7.5 7.3 6.7 6.4 6.1 5.8 5.4 5.2 5.4 5.8 5.6 5.7 5.7 Computers 16.5 15.8 15.0 14.3 13.8 13.8 14.3 14.5 14.8 14.8 14.7 14.7 15,3 Software 9,8 9.1 8.3 7,5 6,7 6.1 5.3 4.7 4.6 4.8 4,8 4.8 4.9 Communications 6.5 6.8 6.2 6.3 6.2 5.9 5.4 4.9 4.9 5.5 5,2 5.2 5.1 Ught Vehicles 4.7 5.3 4.4 4.5 4.7 4.5 3.9 4,1 4.5 5.4 4.5 4,8 4.8 Other 4.2 4.2 4.1 4.0 4,0 4.0 3.7 3,9 4.3 4.8 4.6 4.8 4,7 Private Nonres. Structures 3.2 4.7 2,9 2.9 3,6 2.9 3.4 1.2 2.1 3.2 2.8 2,8 2.8 Buildings and Other 3.6 5.4 3,3 3.2 4.0 3,2 3.8 1,3 2.4 3.6 3.1 3,1 3.1 Residential Fixed Investment 2.9 3.6 2.2 1,8 2,5 2,9 2,1 2.8 2,5 4,2 2,9 2.9 2,5 Exports 8.2 8.1 8.1 8,2 8.0 7.7 7.6 7.7 7.7 7.4 7.4 7.6 7.4 Imports 6.5 6.7 6.4 6.6 7.0 7.2 6.5 6.5 7,0 7,6 7,1 7.1 7,5 Federal Government 1.0 1.0 1.0 1.0 1,0 1,9 0.2 0.8 1.0 1.1 1.1 1,1 1.1 State and Local Governments 2.2 2.4 2.2 22 2.2 2.2 2.3 2.1 2.2 2.3 2.3 2.3 2.4

Billions of Dollars Real GOP (Chained 1996 $) 15634.2 16240.8 16840.3 17455.9 18091.7 18729.2 19331.6 19955.4 20630.3 21365.6 22098.0 22882.8 23687.1 Gross Domestic Product 22707.3 24185.2 25703.0 27300.2 28970.2 30700.8 32415.6 34211.2 36118.7 38197,7 40318.7 42610.0 45013.4

Prices and Wages (Annual percent change) GDP Price Index (Chain-WI.) 2.4 2.5 2.5 2.5 2.4 2.4 2.3 2.2 2.1 2.1 2.1 2.1 2.1 CPI- All Urban Consumers 2.7 2.8 2.9 2,9 2.8 2.7 2.7 2.7 2.6 2.6 2.5 2.5 2.5

Excl, Food & Energy 2.8 3.0 3.0 3.0 2.9 2.9 2.8 2.8 2.7 2.7 2.6 2.7 2.6 Producer Price index

- Fin. Gds. 1.4 1.5 1.5 1.5 1.3 1.3 1.3 1.2 1.0 1.0 1.0 1.0 1.0 Emp. Cost Index Total Comp. 4.3 4.4 4.5 4.4 4.2 4.2 4.0 4.0 3.7 3.8 3.7 3.7 3.6 Output per Hour 2.7 2.6 3.0 3.2 3.0 2.6 2.4 2.4 2.7 2.4 2.5 2.5 2.5
Other Key Measures Industrial Production (% chI 4.2 4.3 4.0 4.2 4.1 4.0 3.8 3.6 3.6 3.5 3.2 3.2 3.1 Nonfarm Inven. Accumulation (Billion chained 1996 $) 67,2 69.9 67.4 69.1 72.0 71.8 66.3 67.7 73.7 79.2 75.0 79.1 79.7 Consumer Confidence Index 93.8 94.1 91.6 90.3 90.2 91.0 89.6 89.2 89.3 91.0 90.4 91.0 90,9 Housing Starts (Mil. units) 2.358 2.433 2.449 2.479 2.536 2.622 2.659 2.734 2.799 2.927 2.986 3.056 3.094 Light-Vehicle Sales (Mil. units) 21,8 22,5 22.8 22.9 23.3 23.7 23.7 23.9 24.2 25.1 25.5 26.0 26,5 Unemployment Rate (%) 4.5 4.4 4.5 4.7 4.9 4.9 5.0 5.0 5.1 5.0 5.0 4.9 5.0 Payroll Employment (% ch.) 1.3 1.5 1.0 0.8 1.0 1.2 1.1 1,0 0.9 1.3 1.1 1.2 1.3 Federal Budget Surplus (Unified, FY. bil. $) 143,1 158.0 149,2 140.4 142.9 187.8 245.0 273.0 229.7 210.3 177.3 133.6 97.1 Foreign Trade Curro Account Balance (Bil. $) -1085.9 -1153.1 -1213.7 -1279.1 -1357.8 -1440.3 -1499.1 -1567.6 -1654.1 -1777.6 -1887.4 -2013.5 -2139.9 Foreign Crude Oil ($ per barrel) 33.0 34.1 35.3 36.6 38.0 39.6 41.2 43.0 44.8 46.7 48,8 50.9 53.2
Financial Markets Money Supply (M2, billion $) 11452.4 12119.0 12831.3 13591.3 14399.5 15256.5 16158.2 17106.1 18105.3 19160.3 20271.2 21442.6 22679.0 Percent Change 5.7 5.8 5.9 5.9 5.9 6.0 5.9 5.9 5.8 5.8 5.8 5.8 5.8 Thirty-Year Mortgage Rate (%) 8.0 8.1 8,1 8.2 8.2 8.3 8.3 8.4 8.4 8.5 8.5 8.6 8.6 Ten-YearTreasury Note Yield (%j 7.0 7,1 7.2 7.2 7,3 7,3 7.3 7.3 7.3 7.4 7.4 7.4 7,5 Treasury Bill Rate (%j 4.7 4.7 4.7 4.7 4.7 4.7 4.7 4.7 4,7 4,7 4.7 4.6 4.6 Federal Funds Rate (%) 5,0 5.0 5.0 5.0 5.0 5.0 5,0 5.0 5,0 5,0 5,0 5.0 5,0 Prime Rate (%) 8.0 8.0 8,0 8,0 8.0 8.0 8.0 8.0 8,0 8.0 8.0 8.0 8.0 S&P 500 Stock Index 3284,0 3514,1 3776.2 4046.8 4305.9 4601.4 4873.6 5042.1 5333,2 5636.0 6009,3 6263.5 6507.4

Incomes Personal Income (% chj 6,3 6.6 6.3 6.2 6.2 6.2 5.9 5.8 5.7 5.9 5.8 5.9 5.9 Real Disposable Income (% chI 3.7 3.7 3.5 3.4 3.4 3.2 2.8 2.9 3.2 3.4 3.3 3.4 3.4 Saving Rate (%) 1,2 1.3 1.2 1.0 0,7 0.3 -0.2 -0,5 -0.8 -1,1 -1,5 -1.8 -2.1 Profits Aller Tax (% chya) 7.4 7.6 8.0 8.7 7.4 4.9 4.2 3.3 5,1 3.8 3.6 3.6 3.4



### 42 DRI'WEFA The U.S. Economy

### THE FOUR SCENARIOS: THE OPTIMISTIC AND PESSIMISTIC PROJECTIONS



# - 2 

### U.S. Population

- Optimistic Outlook

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Millions of Persons Total Population Under 5 51015 16 and Over 161021 211064 65 and Over 281.2 19.2 43.5 218.4 25.0 158.0 35.4 284.4 19.5 43.4 221.4 25.5 160.1 35.8 287.8 19.9 43.5 224.4 25.8 162.4 36.2 291.3 20.2 43.7 227.4 26.2 164.6 36.7 295.0 20.6 43.9 230.4 26.5 166.7 37.2 298.6 21.1 44.2 233.4 26.7 168.8 37.9 302.4 21.5 44.5 236.4 26.9 170.6 38.8 306.2 22.0 44.3 239.9 27.6 172.6 39.7 310.1 22.5 44.1 243.5 28.4 174.7 40.5 314.1 23.0 45.1 246.0 27.8 176.8 41.4 318.2 23.5 46.3 246.4 27.0 178.2 43.2 322.4 23.9 47.0 251.5 26.9 179.9 44.6 326.7 24.4 47.9 254.4 26.8 181.5 46.1

Annual Rate of Change Tolal Population

Under 5 51015 16 and Over 161021 211064 65 and Over 1.1 1.2 -0.5 1.4 3.1 1.2 0.9 1.1 1.6 -0.2 1.4 2.2 1.3 1.1 1.2 1.8 0.3 1.4 1.2 1.4 1.2 1.2 1.9 0.4 1.3 1.3 1.4 1.3 1.2 2.0 0.5 1.3 1.2 1.3 1.4 1.2 2.1 0.6 1.3 0.9 1.3 1.8 1.3 2.2 0.8 1.3 0.6 1.1 2.6 1.3 2.2 -0.5 1.5 2.8 1.2 2.2 1.3 2.2 -0.5 1.5 2.6 1.2 2.1 1.3 2.2 2.4 1.0 -2.1 1.2 2.3 1.3 2.1 2.6 1.0 -2.6 0.8 4.2 1.3 2.0 1.4 1.2 -0.4 1.0 3.4 1.3 1.9 1.9 1.2 -0.7 0.9 3.3 Population Structure

- Percents ofTotal Under 5 51015 16 and Over 161021 211064 65 and Over 6.8 15.5 77.7 8.9 56.2 12.6. 6.9 15.3 77.9 9.0 56.3 12.6 6.9 15.1 78.0 9.0 56.4 12.6 6.9 15.0 78.1 9.0 66.5 12.6 7.0 14.9 78.1 9.0 56.5 12.6 7.1 14.8 78.2 9.0 56.5 12.7 7.1 14.7 78.2 8.9 56.4 12.8 7.2 14.5 78.4 9.0 56.4 13.0 7.3 14.2 78.5 9.1 56.3 13.1 7.3 14.4 78.3 8.8 56.3 13.2 7.4 14.6 78.1 8.5 56.0 13.6 7.4 14.6 78.0 8.4 55.8 13.8 7.5 14.7 77.9 8.2 55.6 14.1 Mortality

Percenl of Populalion 65 and Over 12.6 12.6 12.6 12.6 12.6 12.7 12.8 13.0 13.1 13.2 13.6 13.8 14.1
The Impacl of Shifts in Populalion Age Groups Dependency Ralio (a) 0.96 Ratio of Stock of Cars to Driving-Age Population 0.58 Ratio of New Car Sales to Driving-Age Population 0.07 Ratio of Stock of Houses and Mobile Homes to Population 21 and Over 0.62 Ratio of Stock of MUlti-Unit Houses to Population 21 and Over 0.17 0.95

0.57

0.08

0.62

0.17 0.94

0.56

0.08

0.62

0.17 0.93

0.55

0.08

0.63

0.17 0.93

0.55

0.08

0.63

0.17 0.93

0.54

0.08

0.63

0.17 0.94

0.53

0.08

0.63

0.16 0.93

0.53

0.08

0.63

0.16 0.93

0.52

0.08

0.63

0.16 0.94

0.52

0.08

0.63

0.16 0.96

0.52

0.08

0.63

0.16 0.97

0.51

0.08

0.63

0.16 0.98

0.51

0.08

0.63

0.16 ,

## ......**'-~**

a. The dependency ratio here is defined as the ratio of the number of people not in the civilian labor force or in the militarytothe number of people that are.



# -

25-YearFocus, Winter 2002 43

## THE FOUR SCENARIOS: THE OPTIMISTIC AND PESSIMISTIC PROJECTIONS

TABLE 2 Continued) 

### U.S. Population· Optimistic Outlook

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Millionsof Persons Tolal Population 331.1 335.5 340.1 344.7 349.5 354.3 359.5 364.5 369.7 375.0 380.4 386.0 391.7

Under 5 24.8 25,3 25.7 26.1 26.5 26.9 27.4 27.8 28.2 28.7 29.1 29.6 30.1 510 15 48.2 48.7 49.9 51.2 52.5 53.4 54.4 55.5 56.6 57.6 58.7 59.7 60.8 16 and Over 258.0 261.5 264.5 267.5 270.4 274.0 277.7 281.3 264.9 288.7 292.6 296.6 300.8 16 to 21 27.3 27.8 27.8 27.9 27.9 28.5 28.9 29.4 29.9 30.5 31.1 31.8 32.5 21 to 64 183.1 184.5 185.8 187.0 188.1 189.1 190.5 191.4 192.5 193.6 194.9 196.2 197.7 65 and Over 47.6 49.2 50.9 52.6 54.5 56.4 58.3 60.4 62.5 64.5 66.6 68.6 70.6

Annual Rate of Change Total Population 1.3 1.4 1.4 1.4 1.4 1.4 1.5 1.4 1.4 1.4 1.4 1.5 1.5

Under 5 1.8 1.7 1.7 1.6 1.6 1.6 1.5 1.5 1.6 1.6 1.6 1.7 1.6 5to 15 0.8 1.0 2.5 2.5 2.7 1.6 2.0 2.0 1.9 1.9 1.8 1.8 1.7 16 and Over 1.4 1.4 1.1 1.1 1.1 1.3 1.4 1.3 1.3 1.3 1.4 1.4 1.4 16 to 21 1.9 2.0 -0.1 0.2 0.0 2.2 1.6 1.7 1.8 1.9 2.1 2.1 2.2 211064 0.8 0.8 0.7 0.6 0.6 0.6 0.7 0.5 0.5 0.6 0.6 0.7 0.8 65 and Over 3.3 3.3 3.4 3.4 3.5 3.5 3.5 3.6 3.4 3.2 3.2 3.0 2.9 Population Structure

- Percents ofTotal Under 5 7.5 7.5 7.6 7.6 7.6 7.6 7.6 7.6 7.6 7.6 7.7 7.7 7.7 510 15 14.6 14.5 14.7 14.8 15.0 15.1 15.1 15.2 15.3 15.4 15.4 15.5 15.5 16 and Over 77.9 77.9 77.8 77.6 77.4 77.3 77.3 77.2 77.1 77.0 76.9 76.9 76.8 1610 21 8.2 8.3 8.2 8.1 8.0 8.0 8.0 8.1 8.1 8.1 8.2 8.2 8.3 21 to 64 55.3 55.0 54.6 54.2 53.8 53,4 53.0 52.5 52.1 51.6 51.2 50.8 50.5 65 and Over 14.4 14.7 15.0 15.3 15.6 15.9 16.2 16.6 16.9 17.2 17.5 17.8 18.0 Mortality

Percent of Population 65 and Over 14.4 14.7 15.0 15.3 15.6 15.9 16.2 16.6 16.9 17.2 17.5 17.8 18.0 The Impaclol Shifts in Population Age Groups Dependency Ratio (a) 0.98 0.99 1.00 1.01 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 Ratio of Stock of Cars to Driving-Age Population 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51 0.51 Ralio 01 New CarSales to Driving-Age Population 0.08 0.09 0.09 0.09 0.09 0.09 0.09 0.08 0.09 0.09 0.09 0.09 0.09 Ratio of Siock of Houses and Mobile Homes 10 Populalion 21 and Over 0.63 0.64 0.64 0.64 0.64 0.64 0.64 0.64 0.64 0.65 0.65 0.65 0.65 Ratio of Stock of Multi-Unit Houses 10 Population 21 and Over 0.16 0.16 0.16 0.16 0,16 0.16 0.16 0.16 0.16 0.16 0.16 0.16 0.16

a. The dependency ratio here is defined as the ratio of Ihe numberof people not in the civilian laborforce or in Ihe militaryto the number of people that are.



### 44 DRI·WEFA TheU.S. Economy

### THE FOUR SCENARIOS: THE OPTIMISTIC AND PESSIMISTIC PROJECTIONS



# - TABLE 3 

### Supply Conditions

- Optimistic Outlook

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Percent Change (SAAR) Unsmoothed Potential Output 3.1 3.3 3.4 3.5 3.5 3.5 3.4 3.7 3.8 3.5 3.4 3.6 3.6 Components

Labor Hours 0.8 1.0 1.0 1.0 1.0 0.9 0.8 1.0 1.0 0.7 0.6 0.8 0.8 Capital Stock 1.4 0.8 1.0 1.2 1.3 1.4 1.4 1.4 1.5 1.5 1.6 1.6 1.6 Energy Usage 0.0 0.3 0.2 0.1 0.1 0.1 0.2 0.2 0.2 0.2 0.2 0.1 0.2 Research and Development Stock 0.3 0.3 0.2 0.2 0.1 0.2 0.2 0.2 0.3 0.3 0.3 0.3 0.3 Stock of Infrastructure Capital 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Smoothed Potential Output 3.3 3.2 3.4 3.5 3.5 3.5 3.4 3.6 3.8 3.6 3.4 3.6 3.6 Productivity Labor (Output per hour) 2.9 3.8 2.2 2.6 2.6 2.6 2.8 2.6 2.4 2.6 3.2 3.0 2.7

Percent Industrial Supply Conditions Vendor Performance 50.9 54.2 54.0 53.3 52.4 52.1 52.7 52.7 52.7 52.3 52.0 52.0 51.6 Manufacturing Capacity Utilization 0.73 0.77 0.78 0.79 0.79 0.80 0.80 0.81 0.82 0.82 0.82 0.82 0.82 Labor Availability Civilian Unemployment Rate 5.9 5.7 5.0 4.9 5.0 5.0 4.9 4.7 4.3 4.1 4.4 4.5 4.5 Full-Employment Unemployment Rate 5.1 5.1 5.0 5.0 4.9 4.8 4.7 4.7 4.6 4.5 4.5 4.5 4.5
Finance Net Mortgage Acquisitions (% change)-19.8 6.8 -3.0 5.1 4.7 4.9 5.8 5.5 9.6 3.8 -3.5 4.9 4.7 Nominal Corp. Cost01 Financial Capital (%)5.0 4.9 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.2 5.2 5.2 5.3 Real Corp. Cost 3.8 3.8 3.9 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.9 Personal Saving Rate (%) 2.0 1.9 2.1 1.9 1.4 1.1 1.2 1.3 1.4 1.5 1.2 1.1 1.2 Money Supply (M2. % change) 7.7 5.6 4.9 5.0 5.0 5.1 5.2 5.3 5.4 5.4 5.5 5.6 5.7



### .­



# -

25-YearFocus, Winter 2002 45

### THE FOUR SCENARIOS: THE OPTIMISTIC AND PESSIMISTIC PROJECTIONS**A~** TABLE 3 (Continued) 

### Supply Conditions

- Optimistic Outlook

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Percent Change(SAAR) Unsmoothed Potential Output 3.7 3.7 3.4 3.3 3.2 3.3 3.3 3.1 3.1 3,2 3.2 3.2 3,3 Components Labor Hours 0,9 0.8 0.5 0.5 0,5 0.6 0.7 0.6 0,6 0,6 0.6 0.7 0.7 Capital Stock 1,6 1,6 1.6 1.5 1,5 1.4 1.4 1.3 1.3 1.2 1.2 1.2 1.2 Energy Usage 0,2 0,2 0,3 0.2 0,2 0.1 0.2 0.2 0.2 0.2 0.2 0.2 0.1 Research and Development Stock 0,3 0,3 0.3 0,3 0,3 0.3 0.3 0.3 0.3 0,3 0.3 0.3 0.3 Stock of Infrastructure Capital 0,1 0,1 0.1 0.1 0,1 0,1 0.1 0.1 0.1 0,1 0.1 0.1 0.1 Smoothed Potential Output 3.6 3.7 3.5 3.3 3.2 3.2 3.3 3.2 3.1 3.2 3.2 3.2 3.2 Productivity Labor (Output per hour) 2.7 2,6 3,0 3.2 3,0 2,6 2,4 2.4 2.7 2,4 2.5 2.5 2.5

Percent Industrial Supply Conditions Vendor Periormance 51.2 51.0 50,9 51.0 51.1 50,7 49.8 49.9 50.3 50,6 50,4 50,7 50.5 Manujacturing Capacity Utilization 0.82 0.82 0.82 0,82 0.81 0.81 0.80 0,80 0,79 0.79 0.78 0,78 0.77 LaborAvailability Civilian Unemployment Rats 4.5 4.4 4.5 4,7 4.9 4.9 5,0 5.0 5.1 5.0 5.0 4.9 5.0 Full-Employment Unemployment Rate 4.5 4.5 4,5 4,5 4.5 4.5 4,5 4.5 4.5 4,5 4.5 4.5 4,5
Finance Net Mortgage Accuisitions (% change) 4.7 7.8 4.4 4,5 3.5 1.9 1.3 -0.5 0.4 3,9 1.5 1.8 1.3 Nominal Corp. Cost of Financial Capital (%)5.4 5.5 5.6 5,6 5.6 5.6 5.6 5.6 5,5 5,5 5,5 5.5 5.5 Real Corp. Cost 3.9 4.0 4.0 4.0 3.9 3.9 3.8 3.8 3.7 3.7 3,6 3.6 3.6 Personal Saving Rate (%J 1.2 1.3 1.2 1.0 0.7 0.3 -0.2 -0.5 -0.8 -1.1 -1.5 -1.8 -2.1 Money Supply (M2, % change) 5.7 5.8 5.9 5.9 5.9 6.0 5.9 5.9 5.8 5.8 5.8 5.8 5.8



# -

46 DRI-WEFA The U.S. Economy

### THEFOUR SCENARIOS: THE OPTIMISTIC AND PESSIMISTIC PROJECTIONS

Summary for the U.S. Economy
- Pessimistic Outlook

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Composition of Real GOP (Annual percent change) Gross Domestic Product Final Sales Gross National Product 0.6 -0.1 0.7 2.9 2.6 2.6 3.6 3.5 3.3 2.6 2.7 2.6 2.5 2.5 2.4 2.7 2.7 2.6 3.0 3.0 2.9 2.8 2.8 2.7 3.3 3.2 3.2 2.8 2.9 2.S 2.8 2.8 2.S 2.8 2.8 2.6 3.0 3.0 2.8 Total Consumption Durable Goods Nondurable Goods Services Nomes. Fixed Investment Equipment Computers Software Communications Light Vehicles Other Private Nonres. Structures Buildings and Other Residential Fixed Investment Exports Imports Federal Government Siale and Local Governments 1.7 -1.5 I.S 2.3 -5.2 -2.6 10.S 6.0 -9.5 -4.1 -6.9 -12.0 -11.3 -4.4 -8.6 0.3 4.5 1.6 2.S 3.9 2.8 2.5 4.1 6.4 14.1 8.3 5.0 5.5 4.4 -2.4 -2.4 -7.2 7.6 5.1 4.7 1.9 2.9 4.6 3.0 2.5 7.4 9.6 17.5 8.7 6.1 6.7 10.2 0.7 -0.1 2.2 9.1 4.9 2.3 1.5 2.4 2.3 2.5 2.3 5.4 7.1 19.4 10.2 5.3 1.6 5.2 0.1 -0.3 0.5 7.6 4.3 1.0 I.S 2.2 3.0 2.1 2.1 4.5 6.1 19.7 10.4 8.1 2.5 2.0 -0.7 -1.0 -0.4 7.7 4.0 0.6 1.6 2.3 3.4 2.1 2.2 5.5 6.4 19.3 10.4 8.1 3.6 2.1 2.4 1.7 0.6 7.3 4.1 0.5 1.2 2.6 2.7 2.4 2.7 6.5 7.5 18.6 10.6 8.1 5.1 4.0 3.2 3.9 1.7 6.9 4.1 0.7 1.3 2.5 I.S 2.3 2.6 5.8 7.2 17.9 10.7 7.3 3.6 3.7 1.1 1.6 0.0 6.9 4.0 O.S 1.0 3.0 4.5 2.7 2.8 6.5 7.5 17.3 10.8 7.2 4.8 4.0 3.1 4.0 2.6 6.6 4.8 1.2 1.2 2.7 3.4 2.6 2.7 6.2 7.4 16.7 10.9 7.3 4.1 3.7 2.4 2.7 0.8 6.2 4.5 -0.2 1.0 2.S 1.9 3.0 2.9 6.6 7.4 17.2 11.4 6.4 3.7 3.3 3.9 4.6 -5.6 6.4 5.1 O.S 1.2 2.7 1.9 3.0 2.S 5.9 7.2 17.4 11.0 5.5 3.5 3.1 1.4 1.5 -1.8 6.8 6.0 1.0 1.3 2.9 4.1 3.2 2.7 6.4 7.2 16.7 10.2 5.2 4.6 3.5 3.5 4.2 1.1 6.9 6.8 1.0 1.6

Billions of Dollars Real GDP (Chained 1996$) Gross Domes1ic Product 9377.9 10384.9 9651.4 108S5.1 9996.4 11511.0 10253.S 12068.2 10511.4 12633.6 10791.4 13253.9 1111S.0 1396S.1 11424.5 146S3.6 11796.6 15534.7 12132.3 16407.0 12475.9 17362.4 12S23.3 18382.3 13212.7 19566.5

Prices and Wages (Annual percent change) GDP Price Index (Chain-Wt.) CPI

- All Urban Consumers

Excl. Food & Energy Producer Price Index

- Fin. Gds. Emp. Cost Index

- Total Compo Output per Hour 1.2 1.4 2.5 -1.4 3.3 2.6 1.9 2.4 2.5 O.S 2.7 3.0 2.1 2.5 2.6 1.3 2.7 2.2 2.2 2.6 2.7 1.5 2.7 2.0 2.1 2.5 2.6 1.2 2.S 2.1 2.2 2.5 2.7 1.2 2.9 2.0 2.3 2.6 2.7 1.4 3.2 2.1 2.3 2.6 2.7 1.3 3.3 2.2 2.5 2.7 2.8 1.5 3.5 2.0 2.7 2.9 3.0 1.S 3.9 1.9 2.9 3.2 3.2 2.0 4.1 2.3 3.0 3.3 3.4 2.1 4.2 2.3 3.3 3.6 3.7 2.3 4.6 2.0 

# -

Other Key Measures Industrial Production ('Yo chI Nonfarm Inven. Accumulation (Billion chained 1996 $) Consumer Confidence Index Housing Starts (Mil. unas) Light-Vehicle Sales (Mil. unns) Unemployment Rale ('Yo) Payroll Employment ('Yo ch.) Federal Budget Surplus (Unified, FY, bil. $) -O.S

9.2 91.6 1.391 15.2 6.1 -0.7

-5.4 6.1

40.4 87.3 1.242 16.1 6.1 O.S

-70.S 5.4

55.2 91.2 1.311 16.6 5.4 1.5

-IIS.S 3.7

38.S 90.0 1.306 16.4 5.2 0.9

-131.1 3.3

35.2 S9.5 1.279 16.6 5.3 O.S

-106.6 3.3

37.2 90.4 1.2S3 17.0 5.2 1.0

-74.3 3.9

41.1 91.2 1.284 17.0 5.0 1.2

-56.9 3.7

3S.5 90.5 1.251 16.S 4.9 0.9

-43.2 4.0

47.2 94.2 1.291 17.2 4.5 1.5

-38.3 3.4

43.2 93.4 1.23S 17.3 4.3 1.2

-35.6 3.1

43.9 89.9 1.079 17.1 4.6 O.S

-160.9 2.S

45.5 8S.9 1.043 16.8 4.7 0.6

-242.5 2.5

52.6 90.3 1.046 17.2 4.7 1.1

-320.5 Foreign Trade Curro Account Balance (BII. $) Foreign Crude Oil ($ per barrel) -454.7 19.8 -511.9 21.6 -547.2 23.B -557.2 25.5 -563.1 27.0 -569.2 28.3 -582.7 29.6 -587.6 31.0 -606.0 32.6 -621.9 34.5 -660.2 38.4 -716.9 38.5 -796.5 40.7

Financial Markets Money Supply (M2, billion $) Percent Change Thirty-Year Mortgage Rate ('Yo) Ten-Year Treasury Note Yield ('Yo) Treasury Bill Rate ('Yo) Federal Funds Rate ('Yo) Prime Rate ('Yo) S&P 500 Stock Index 5818.7 7.5 7.1 5.3 2.0 2.2 5.2 1152.8 6119.9 5.2 7.5 5.8 3.7 4.0 7.0 1017.2 6395.2 4.5 7.7 6.1 4.6 5.0 8.0 1002.5 6683.3 4.5 7.6 6.1 4.6 5.0 8.0 1105.4 6984.1 4.5 7.7 6.2 4.6 5.0 8.0 1226.7 7300.5 4.5 7.7 6.2 4.6 5.0 8.0 1292.2 7635.2 4.6 7.7

. 6.3 4.7 5.1 8.1 1362.9 7981.6 4.5 7.B 6.5 4.9 5.3 8.3 1434.8 8347.7 4.6 7.9 6.6 5.0 5.4 8.4 1491.1 8734.7 4.6 8.0 6.S 5.1 5.5 8.5 1554.9 9129.9 4.5 8.4 7.2 5.5 5.9 8.9 1622.7 9541.6 4.5 8.9 7.6 5.9 6.3 9.3 1633.1 9964.2 4.4 9.3 B.l 6.3 6.S 9.8 1649.9

Incomes Personal Income ('Yo ch) Real Disposable Income ('Yo ch) Saving Rate ('Yo) Profits After Tax ('Yo chya) 2.3 1.9 1.9 1.9 4.4 2.9 2.0 3.4 5.3 3.4 2.5 1.0 4.5 2.3 2.3 1.5 4.5 1.8 1.8 5.6 4.7 2.0 1.4 5.3 5.3 2.7 1.4 7.1 5.2 2.5 1.5 4.1 5.7 3.1 1.7 7.1 5.9 3.0 2.0 3.9 6.1 3.1 2.3 6.0 6.1 3.1 2.7 4.6 6.7 3.3 3.2 5.5



### 25-YearFocus, Winter 2002 47

### THE FOlJR SCENARIOS: THE OPTIMISTIC AND PESSIMISTIC PROJECTIONS

TABLE 4 (Continued) 

### Summary for the U.S. Economy
- Pessimistic Outlook

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Composition of Real GOP (Annual percentchange) Gross Domestic Product

Final Sales Gross National Product 2.7 2.7 2.5 2.8 2.8 2.7 2.7 2.7 2.6 2.7 2.7 2.5 2.5 2.5 2.4 2.5 2.5 2.4 2.3 2.3 2.3 2.4 2.4 2.2 2.5 2.4 2.3 2.6 2.6 2.5 2.6 2.6 2.4 2.7 2.7 2.5 2.8 2.8 2.7
Total Consumption

Durable Goods Nondurable Goods Services Nonres. Fixed Investment Equipment Computers Software Communications Light Vehicles Other Private Nonres. Structures Buildings and Other Residential Fixed Investment Exports Imports Federal Government State and Local Governments 2.7 2.7 3.1 2.6 5.8 6.7 16.2 9.5 4.8 3.3 3.2 2.4 2.7 0.1 6.5 6.8 1.0 1.5 2.9 4.4 3.2 2.6 5.3 6.4 15.4 8.7 4.6 3.8 3.0 1.3 1.4 0.7 6.2 6.9 1.0 1.5 2.8 3.1 3.1 2.6 5.4 6.3 14.4 7.7 5.9 4.1 3.3 2.5 3.0 0.0 6.4 6.6 1.0 1.6 2.7 3.0 3.2 2.5 5.1 5.9 13.6 6.9 5.4 3.9 3.5 2.4 2.7 0.1 6.8 6.8 1.0 1.8 2.7 3.5 3.1 2.5 4.2 5.3 13.3 6.1 4.4 3.0 3.2 0.3 0.1 -0.1 6.9 6.9 1.0 1.6 2.6 4.4 3.0 2.3 4.0 4.9 13.1 5.3 4.4 3.4 3.0 0.8 0.8 0.3 6.9 7.1 1.9 1.5 2.4 3.0 2.8 2.2 4.2 4.6 13.4 4.4 5.1 3.2 3.0 2.6 3.1 -0.6 7.1 6.5 0.3 1.5 2.4 3.7 2.7 2.1 3.5 4.4 13.4 3.5 5.4 3.6 3.5 ·0.1 -0.3 0.0 7.6 6.5 0.9 1.5 2.5 3.7 2.8 2.2 3.3 4.4 13.5 3.3 5.0 3.4 3.6 -0.7 -1.1 -0.5 7.9 6.7 1.1 1.5 2.7 5.6 2.9 2.3 3.7 4.6 13.5 3.4 5.3 4.1 3.9 0.4 0.2 0.8· 8.0 7.3 1.1 1.6 2.6 4.1 3.0 2.3 3.7 4.4 13.3 3.2 5.4 3.6 3.8 0.9 0.9 -0.3 8.1 7.0 1.2 1.6 2.8 4.9 3.1 2.4 3.7 4.4 13.2 3.1 5.4 3.8 3.9 0.8 0.6 0.2 8.3 7.2 1.2 1.6 2.9 5.1 3.1 2.6 3.7 4.5 13.6 3.0 5.5 4.0 4.0 0.9 0.7 1.5 8.5 7.5 1.2 1.7

Billions of Dollars Real GDP (Chained 1996$) Gross Domestic Product 13567.8 20789.0 13943.9 22140.5 14326.6 23612.4 14716.4 25237.7 15089.5 26943.6 15466.2 28777.4 15826.2 30700.8 16201.9 32827.1 16600.5 35149.2 17037.9 37755.4 17478.3 40570.7 17956.3 43717.9 18465.3 47208.0

Prices and wages (Annual percent change)**,e~,** GDP Price Index (Chain-Wl.) CPI All Urban Consumers

Excl. Food & Energy Producer Price Index Fin. Gds. Emp. Cost Index

- Total Camp. Output per Hour 3.5 3.8 3.9 2.4 4.7 2.0 3.6 3.9 4.1 2.5 5.0 2.1 3.8 4.2 4.3 2.7 5.2 2.3 4.1 4.5 4.6 3.0 5.3 2.1 4.1 4.6 4.7 3.0 5.2 2.0 4.2 4.7 4.8 3.1 5.4 2.0 4.3 4.8 4.9 3.2 5.3 2.1 4.5 5.0 5.2 3.5 5.5 1.8 4.5 5.1 5.2 3.5 5.4 2.1 4.7 5.3 5.4 3.7 5.6 1.7 4.8 5.4 5.6 3.8 5.6 1.9 4.9 5.6 5.7 4.0 5.7 2.0 5.0 5.7 5.9 4.1 5.7 2.0

Other Key Measures Industrial Production (% Ch) Nonfarm Inven. Accumulation (Billion chained 1996 $) Consumer Confidence Index Housing Starts (Mil. units) Light-Vehicle Sales (MIL units) Unemployment Rate (%) Payroll Employment (% ch.) Federal Budget Surplus (Unified, FY, bU. $) 1.4

47.8 88.6 1.019 17.1 4.7 0.8

-436.0 1.2

50.9 89.1 1.019 17.3 4.6 0.8

-543.3 1.2

51.4 87.2 0.995

17.1 4.7 0.6

-677.7 1.3

53.7 86.7 0.981

16.9 4.9 0.8

-830.3 0.9

52.4 85.4 0.961

16.7 5.1 0.7

-1019.2 0.8

54.4 85.1 0.956

16.8 5.1 0.7

-1169.0 0.8

53.5 83.9 0.931

16.6 5.2 0.5

-1320.0 0.7

56.5 83.7 0.920

16.6 5.2 0.7

-1500.4 1.1

61.1 83.6 0.901

16.5 5.3 0.6

-1775.3 1.5

68.0 84.9 0.903

16.9 5.2 1.0

-2051.7 1.9

88.9 84.0 0.873

16.8 5.2 0.8

-2388.6 2.5

75.1 84.6 0.869

16.9 5.1 0.9

-2760.1 3.3

80.8 84.5 0.880

17.0 5.2 1.0

-3142.5
Foreign Trade Curro Account Balance (Bil. $) Foreign Crude Oil ($ perbarrel) -869.4 43.1 -945.6 45.6 -1045.9 48.3 -1163.7 51.3 -1273.4 54.7 -1398.9 58.4 -1513.8 62.4 -1656.8 66.9 -1811.0 71.8 -1993.8 77.1 -2205.8 83.0 -2443.4 89.3 -2694.8 96.2

Financial Markets Money Supply (M2, billion $) Percent Change Thirty-Year Mortgage Rate ('Yo) Ten-YearTreasury Note Yield (%) Treasury Bill Rate (%) Federal Funds Rate (%) Prime Rate (%1 S&P 500 Stock Index 10413.1 4.5 9.7 8.4 6.6 7.0 10.0 1669.7 10895.1 4.6 10.0 8.7 6.8 7.2 10.2 1772.4 11405.1 4.7 10.4 9.0 7.1 7.5 10.5 1833.7 11943.1 4.7 10.8 9.4 7.4 7.9 10.9 1864.4 12526.9 4.9 11.1 9.7 7.6 8.0 11.0 1912.8 13154.0 5.0 11.4 9.9 7.8 8.2 11.2 2031.7 13828.7 5.1 11.6 10.1 7.9 8.3 11.3 2170.6 14546.4 5.2 11.9 10.4 8.2 8.6 11.6 2280.0 15318.0 5.3 12.2 10.7 8.4 8.8 11.8 2400.3 16150.6 5.4 12.5 11.0 8.6 8.9 11.9 2589.9 17036.7 5.5 12.9 11.3 8.8 9.3 12.3 2772.4 17997.0 5.6 13.1 11.6 9.0 9.4 12.4 2968.1 19054.6 5.9 13.3 11.8 9.1 9.5 12.5 3212.7

Incomes Personal Income (% ch) Real Disposable Income (% ch) Saving Rate (%1 Profits AfterTax (% chya) 6.7 3.2 3.7 3.5 6.9 3.1 3.9 6.2 7.1 3.0 4.2 5.8 7.3 3.0 4.4 4.8 7.3 2.9 4.6 4.6 7.4 2.5 4.6 3.6 7.3 2.2 4.5 5.1 7.5 2.3 4.4 2.1 7.5 2.5 4.5 4.3 7.9 2.7 4.5 3.7 8.0 2.6 4.5 3.2 8.3 2.7 4.5 5.3 8.4 2.7 4.4 8.3



### 48 DRI-WEFA The U.S. Economy

### THE FOUR SCENARIOS: THE OPTIMISTIC AND PESSIMISTIC PROJECTIONS 

# -, TABLE 5 

### U.S. Population

- Pessimistic Outlook

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Millions of Persons Total Population 279.9 281.7 283.5 285.1 286.7 288.2 289.7 291.1 292.5 293.9 295.2 296.5 297.8

Under 5 18.9 18.B lB.7 18.6 18.6 18.5 18.5 lB.5 lB.6 18.6 lB.6 18.7 18.7 51015 43.7 43.6 43.4 43.2 42.8 42.4 41.8 42.3 41.6 42.0 41.3 41.5 40.8 16 and Over 217.3 219.3 221.3 223.3 225.3 227.3 229.3 230.3 232.3 233.3 235.3 236.3 238.3 161021 24.5 24.8 25.0 25.3 25.8 26.2 26.6 26.1 26.6 26.0 26.3 25.6 25.9 21 to 64 157.5 159.0 160.4 161.8 163.0 164.1 164.8 165.7 166.6 167.6 167.9 168.4 168.8 65 and Over 35.3 35.6 35.9 36.2 36.6 37.1 37.9 38.5 39.2 39.7 41.2 42.4 43.6

Annual Rate of Change Total Population 0.6 0.7 0.6 0.6 0.6 0.5 0.5 0.5 0.5 0.5 0.5 0.4 0.4

Under 5 -0.6 -0.4 -0.5 -0.4 -0.3 -0.2 0.0 0.1 0.1 0.2 0.2 0.2 0.1 5to 15 -0.1 -0.2 -0.4 -0.7 -0.8 -1.0 -1.2 1.0 -1.5 0.8 -1.7 0.7 -1.8 16 and Over 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.4 0.9 0.4 0.9 0.4 0.8 161021 1.2 1.0 0.9 1.3 1.7 1.5 1.7 -2.0 1.8 -2.2 1.1 -2.7 1.4 211064 0.9 0.9 0.9 O.B 0.7 0.7 0.5 0.5 0.5 0.6 0.1 0.3 0.3 65 and Over 0.5 O.B 0.8 0.9 1.0 1.3 2.2 1.7 1.6 1.4 3.7 3.0 2.8 Population Structure

- Percents ofTotal Under 5 6.7 6.7 6.6 6.5 6.5 6.4 6.4 6.4 6.3 6.3 6.3 6.3 6.3 510 15 15.6 15.5 15.3 15.1 14.9 14.7 14.4 14.5 14.2 14.3 14.0 14.0 13.7 16andOver n.6 77.B 78.1 78.3 78.6 78.9 79.2 79.1 79.4 79.4 79.7 79.7 BO.O 161021 8.8 8.8 8.8 B.9 9.0 9.1 9.2 9.0 9.1 8.B 8.9 8.6 8.7 211064 56.3 56.4 56.6 56.7 56.8 56.9 56.9 56.9 57.0 57.0 56.9 56.B 56.7 65 and Over 12.6 12.6 12.7 12.7 12.8 12.9 13.1 13.2 13.4 13.5 14.0 14.3 14.6 Mortality

Percent at Population 65 and Over 12.6 12.6 12.7 12.7 12.8 12.9 13.1 13.2 13.4 13.5 14.0 14.3 14.6 The Impact of Shifts in Population Age Groups Dependency Ralio (a) 0.96 0.95 0.94 0.92 0.91 0.90 0.90 0.90 0.89 0.89 0.89 0.90 0.89 Ralio 01 Stock 01 Cars 10 Driving-Age Population 0.58 0.57 0.56 0.55 0.55 0.54 0.53 0.53 0.52 0.52 0.51 0.51 0.50 

# -.

Ratio of New Car Sales to Driving-Age Population 0.07 0.07 0.08 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 Ralio of Stock of Houses and Mobile Homes to Population 21 and Over 0.62 0.62 0.62 0.62 0.62 0.63 0.63 0.63 0.63 0.63 0.63 0.63 0.62 Ratio of Stock 01 Multi-Unit Houses 10 Populalion 21 and Over 0.17 0.17 0.17 0.17 0.17 0.16 0.16 0.16 0.16 0.16 0.16 0.16 0.16

a. The dependency ralio here is defined asthe ratio ot Ihe number at people not in the civilian labor force or in the military to the number of people that are.



### 25-YearFocus, Winter 2002 49

### THE FOUR SCENARlOS: OPTIMISTIC AND PESSIMISTIC PROJECTIONS

TABLE 5 (Continued) 

### U.S. Population**~** 

### Pessimistic Outlook

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Millions of Persons Total Population 299.1 300.3 301.5 302.6 303.7 304.8 305.8 306.7 307.7 30B.5 309.3 310.1 310.9

Under 5 18.7 18.7 18.7 18.7 18.6 18.6 18.5 18.4 18.3 18.2 18.1 18.0 17.9 5to 15 41.1 41.3 41.5 40.7 40.8 40.9 40.9 41.0 41.0 41.0 40.9 40.9 40.B 16 and Over 239.3 240.3 241.3 243.3 244.3 245.3 246.3 247.3 248.3 249.3 2SO.3 251.2 252.1 16t021 25.4 25.0 24.6 25.4 25.1 24.9 24.8 24.7 24.6 24.6 24.6 24.6 24.6 211064 169.1 169.3 169.2 169.1 168.9 168.5 168.1 167.5 167.0 166.4 165.8 165.2 164.7 65 and Over 44.8 46.1 47.5 48.9 SO.3 51.9 53.5 55.1 56.7 58.3 59.9 61.4 62.8

Annual Rate ofChange Total Population 0.4 0.4 0.4 0.4 0.4 0.3 0.3 0.3 0.3 0.3 0.3 0.2 0.2

Under 5 0.1 0.0 -0.1 -0.2 -0.2 -0.3 -0.4 -0.4 -0.5 -0.5 -0.6 -0.6 -0.6 5to 15 0.6 0.5 0.5 -2.0 0.3 0.2 0.1 0.1 0.0 0.0 -0.1 -0.2 -0.1 16and Over 0.4 0.4 0.4 0.8 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 161021 -2.0 -1.7 -1.4 3.0 -1.0 -0.8 -0.6 -0.3 -0.2 -0.1 0.0 0.1 0.1 211064 0.2 0.1 0.0 -0.1 -0.1 -0.2 -0.3 -0.3 -0.3 -0.3 -0.4 -0.4 -0.3 65 and Over 2.8 2.8 3.0 3.0 3.0 3.0 3.1 3.1 2.9 2.7 2.7 2.5 2.3 Population Structure

- Percents ofTotal Under 5 6.3 6.2 6.2 6.2 6.1 6.1 6.0 6.0 6.0 5.9 5.9 5.8 5.8 5to 15 13.7 13.7 13.8 13.4 13.4 13.4 13.4 13,4 13.3 13.3 13.2 13.2 13.1 16 and Over BO.O 80.0 80.0 80.4 80,4 80.5 80.6 80.6 80.7 80.B BO.9 B1.0 81.1 161021 8.5 8.3 8.2 8.4 8.3 8.2 8.1 8.0 8.0 8.0 8.0 7.9 7.9 21 to 64 56.5 56.4 56.1 55.9 55.6 55.3 55.0 54.6 54.3 53.9 53.6 53.3 53.0 65 and Over 15.0 15.3 15.7 16.1 16.6 17.0 17.5 lB.O lB.4 18.9 19.4 19.8 20.2 Mortality

Percent ot Population 65 and Over 15.0 15.3 15.7 16.1 16.6 17.0 17.5 18.0 18.4 18.9 19,4 19.8 20.2 The Impact 01 Shifts in Population Age Groups Dependency Ralio (a) 0.89 0.90 0.90 0.90 0.90 0.90 0.91 0.91 0.91 0.91 0.91 0.91 0.91**.~-** Ralio of Stock of Gars 10 Driving-Age Population O.SO O.SO 0.49 0.49 0.48 0.48 0.48 0.48 0.47 0.47 0.47 0.47 0.46 Ralio of New CarSales to Driving-Age Population 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 Ratio of Stock of Houses and Mobile Homes to Population 21 and Over 0.62 0.62 0.62 0.62 0.62 0.62 0.62 0.62 0.62 0.62 0.62 0.62 0.62 Ratio of Stock of Multi-Unit Houses to**Populatio~** 21 and Over 0.16 0.16 0.16 0.16 0.16 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15

a. The dependency ratio here is defined as the ratio 01 the number of people not in the civilian labor force or in the militaryto the number of people that are.



### 50 DRl-WEFA The U.S. Economy

### THEFOUR SCENARIOS: THE OPTIMISTIC AND PESSIMISTIC PROJECTIONS

6 

### Supply Conditions

- Pessimistic Outlook

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Percent Change (SAAR) Unsmoothed Potential Output 2.8 2.6 2.5 2.5 2.5 2.5 2.5 2.2 2.6 2.4 2.6 2.3 2.7 Components Labor Hours 0.5 0.7 0.8 0.8 0.8 0.7 0.7 0.3 0.7 0.5 0.7 0.4 0.7 Capital Stock 1.4 0.8 0.8 0.9 1.1 1.1 1.2 1.2 1.3 1.3 1.4 1.4 1.4 Energy Usage -0.1 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.1 0.1 0.1 Research and Development Stock 0.3 0.3 0.2 0.2 0.1 0.2 0.2 0.2 0.3 0.3 0.3 0.3 0.3 Stock of Infrastructure Capital 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Smoothed Potential Output 3.1 2.7 2.5 2.5 2.5 2.5 2.5 2.3 2.5 2.4 2.6 2.4 2.5 Productivity Labor (Output per hour) 2.6 3.0 2.2 2.0 2.1 2.0 2.1 2.2 2.0 1.9 2.3 2.3 2.0

Percent Industrial Supply Conditions Vendor Peiformance 49.7 51.7 53.3 52.5 52.1 52.1 52.5 52.5 53.2 52.6 52.0 52.1 52.0 Manufacturing Capacity Utilization 0.73 0.74 0.76 0.76 0.77 0.77 0.78 0.78 0.79 0.80 O.SO O.SO 0.81 Labor Availability Civilian Unemploymen1 Rate 6.1 6.1 5.4 5.2 5.3 5.2 5.0 4.9 4.5 4.3 4.6 4.7 4.7 Full-Employment Unemployment Rate 5.1 5.1 5.0 5.0 4.9 4.8 4.7 4.7 4.6 4.5 4.5 4.5 4.5
Finance Net Mortgage Acquisitions (% change)-34.7 -28.6 -12.8 -7.8 -0.8 13.7 22.7 13.6 12.5 5.S -4.5 -0.2 7.5 Nominal Corp. Cost01 Financial Capital (%)4.9 5.1 5.3 5.3 5.3 5.4 5.4 5.5 5.5 5.6 5.8 6.1 6.4 Real Corp. Cost 3.8 3.9 4.1 4.1 4.1 4.1 4.1 4.1 4.1 4.2 4.4 4.6 4.9 Personal Saving Rate (%) 1.9 2.0 2.5 2.3 1.8 1.4 1.4 1.5 1.7 2.0 2.3 2.7 3.2 Money Supply (M2, % change) 7.5 5.2 4.5 4.5 4.5 4.5 4.6 4.5 4.6 4.6 4.5 4.5 4.4

.-.,



### 25-YearFocus,Winter 2002 51

### THE FOUR SCENARIOS: THE OPTIMISTIC AND PEsSIMISTIC PROJECTIONS

TABLE 6 (Continued) 

### Supply Conditions

- Pessimistic Outlook

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Percent Change (SAAR) Unsmoothed Potential Output 2.3 2.3 2.2 2.4 2.0 1.9 1.8 1.8 1.7 1.7 1.7 1.7 1.6 Components

Labor Hours 0.3 0.3 0.2 0.5 0.2 0.1 0.2 0.1 0.1 0.1 0.1 0.1 0.2 Capital Stock 1.4 1.4 1.3 1.3 1.2 1.2 1.1 1.1 1.0 0.9 0.9 0.9 0.9 Energy Usage 0.1 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Research and Development Stock 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 Stock of Infrastructure Capital 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Smoothed Potential Output 2.4 2.3 2.2 2.4 2.1 1.9 1.8 1.8 1.8 1.7 1.7 1.7 1.6 Productivity Labor (Output per hour) 2.0 2.1 2.3 2.1 2.0 2.0 2.1 1.8 2.1 1.7 1.9 2.0 2.0
Percent Industrial Supply Conditions Vendor Performance 51.5 51.8 51.8 51.3 51.3 51.5 51.3 51.3 51.7 52.1 52.3 53.0 53.6 Manufacturing Capacity Utilization 0.80 0.81 0.81 0.81 0.81 0.81 0.81 0.81 0.81 0.81 0.82 0.82 0.83 Labor Availability Civilian Unemployment Rate 4.7 4.8 4.7 4.9 5.1 5.1 5.2 5.2 5.3 5.2 5.2 5.1 5.2 FUll-Employment Unemployment Rate 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 Finance Net Mortgage Acquisitions (% change) 4.2 6.4 6.9 8.4 3.3 2.8 4.2 0.9 0.4 4.5 3.7 6.3 10.1 Nominal Corp. Cost of Financial Capital (%)6.7 6.9 7.1 7.4 7.7 7.8 8.0 8.1 8.3 8.5 8.7 8.8 9.0 Real Corp. Cost 5.1 5.2 5.4 5.6 5.8 5.9 5.9 6.0 6.1 6.1 6.2 6.3 6.3 Personal Saving Rate (%) 3.7 3,9 4.2 4.4 4.6 4.6 4.5 4.4 4.5 4.5 4.5 4.5 4.4 Money Supply (M2.% change) 4.5 4.6 4,7 4.7 4.9 5.0 5,1 5.2 5.3 5.4 5.5 5.6 5.9



### 52 

### DRI·WEFA TheU.S. Economy

# -. Appendix

# c: Metro Economic Review Panel

Dennis Yee, chiefeconomist Metro Karen Larson, GIS economist Metro Richard Bolen, DRC manager Metro Robert Anderson, economist Bonneville PowerAdministration Thomas Aston, economist U.S. Department ofHousing and Urban Development BettyAtteberry, director Westside Economic Alliance Joe Cortright, consultant Impresa, Inc. Eric Hovee, consultant E. D. Hovee & 

### Company Steve Kelly, seniorplanner Washington County Gene Leverton, consultant Gene Leverton & 

### Associates John McConnaughey, transportation planner WSDOT Eric Moore, employment economist Oregon Employment Department Amy Vanderbuilt, employment economist Oregon EmploymentDepartment Hossein Parandvash, chiefeconomist City ofPortland Water Bureau Ken Pearrow, GIS demographer Clark County Tom Potiowsky, state economist Oregon Office ofEconomic Analysis Lynn Peterson, transportation planner Tri-Met Tony Rufolo, professor Portland State University

Not in attendance: BarryEdmonston, director Portland State University

- CPRC George Hough Jr., demographer Portland State University

- CPRC Kanhaiya Vaidya, state demographer Oregon Office ofEconomic Analysis


# Metro Economic Development Review Panel

Community & 

### Economic Development officials: 

### Doug Rux Tualatin City Janet Young Beaverton City Larry Pederson Hillsboro City Mary Gibson Port ofPortland Mike Ogan PortlandDevelopment Commission Pam Neal CREDC Renate Mengelberg Clackamas County Shelly Parini Gresham City

The views and economic outlook in this report are the sole responsibility ofMetro's DataResource Center. The review panels were instructed to offer any insights they may have, critique and then evaluate the accuracy and reasonableness ofthe regional forecast. The comments ofthe review committees were considered and incorporated into the regional forecast as interpretedby the Metro chiefeconomist.

# Appendix D: Model Documentation Summary



# Metro Regional Economic Model

Presented to the 32nd 

### Annual Pacific Northwest Economic Conference

May 1998

Dennis Vee Senior Economist Metro Data Resource Center 600 NE Grand Ave. Portland, OR 97232-2736 Phone: (503) 797-1578 Fax: (503)797-1909 E-Mail: yeed@metro.dst.or.us



## METRO

Executive Officer Mike Burton

Elaine Wilkerson Director

## Metro Regional Economic Model

O. Abstract

Portland Metro presents its version ofa regional economic model with embedded input-output coefficients

as explanatory variables in the model's employment sector equations. The Metro model implementsthe integration strategy as described by Coomes et al (1991), Stover (1994), and Rey (1997). Coomes et al first described the I-SAMIS model technique for linking 1-0 

### and econometric models. Stover evaluates the efficacy ofusing Census benchmark 1-0

### tables as technical coefficients for creatingthe inter-industry demand variables (mV) in each industry employment equation. Rey clarifies the theoretical underpinnings ofthe IDV and the use ofanational 1-0

### matrix as a proxy for an unavailable regional matrix. Theregional model implemented by Metro is based onthis integrated approach as described by the literature. This paper describes Metro's regional model and presents the empirical estimates and some results from our study. It 

### is shown that the Metro model contains reasonable parameter estimates and produces forecast estimates within tolerable limits. 

### Key words: integratedregional econometric and input-output model; inter-industry demand variable; forecasting

1. Introduction.

Formetropolitan areas, the federal ISTEA (lntermodal Surface Transportation Efficiency Act) legislation has generated a considerable amount ofstudy into the relationship between urban growth and transportation. ISTEA requires an understanding ofhow choices made in transportation and land-use simultaneously impact each other. In addition, Metro (the metropolitan planning organization for the Portland, ORmetropolitan region) initiated its own 50-yearregional planning framework to encourage
more compacturban development. Influence from the Metro Region 2040 Frameworkplan and ongoing interestto linktransportation and land use modeling has been the main stimulus behind Portland Metro's regional model development.

In Portland, Metro has responded to the planning and information demands ofISTEA and Region 2040 with two operational models: one designed and patterned after so-called integrated regional econometric and input-output methodologies and the second a micro-simulation model based on theories between the interaction ofland-use and transportation. Thetwo models taken together are used by Metro planners to forecast regional economic and population growth, future real estate and land prices, and future population

orhousehold distributions in each forecast analysis zone.

The focus ofthis paper is to describe the regional economic and demographic model. The organization of this paper begins with an introduction in section 1, followed in section 2 by a description ofthe integrated econometric and 1-0

### modeling approach for theMetro model's employment equations, and concluding in section 3 with empirical results and our conclusions.

The region is defined to be the Portland-Vancouver CMSA14• 

### The regional model includes a fully described employment sector with manufacturing industries disaggregated to two-digit SIC and nonmanufacturing in one-digit SIC. The model also includes econometrically estimatedregional wage rates, components of regional personal income, and non-stochastic equations which estimate regional production (indexed). Also included in the model is a cohort-componentpopulation model linked by a stochastic net migration equation to regional economic/employment growth.

14 

### The CMSA includes the Oregon counties ofMultnomah, Clackamas, Washington, Yamhill, and the Washington county ofClark.

### 2. Metropolitan Regional Model Described
Integration strategies for combining econometric and input-outputmodels for regional forecasting and policy analysis havebeen gaining attention in regional economic literature. This attention is basedon blending the analytical andpolicy properties found in input-output modeling withthe strengths and features available from traditional econometric forecasting models. Input-outputmodels generally perform well in analyzing inter-industry impacts and policy alternatives, but are not as well suited in forecasting future years. Structural econometric models are designed for forecasting and are constructed in a fashion to maximize this capability. The integration ofa structural econometric model with an input-output matrix for regional forecasting and analysis is the marriage ofthese two approaches in an effortto create a combined model that exceeds the capabilities ofthetraditional models taken individually. However, Metro has so far employed theregional model as a device for forecasting population and employment growth in the region.

The initial theoretical approach ofthe Metro economic model was fundamentally based on a traditional export-based structural econometric model formulation for the Portland-VancouverMSA. A structural econometric model ofthePortland regionhad never before been constructed for long-rangeplanning in the history ofMetro and its predecessorthe ColumbiaRegional Association ofGovemments (CRAG). The structural model includeddetailed stochasticestimates ofindustry manufacturing and nonmanufacturing employment, wage rates for aggregations for groupings ofmanufacturing and nonmanufacturing industries, components ofregional income, and a net-migration equation linking economic growth with future population increases. A five-year age-cohort survival model provided annual estimates ofpopulation growth along withchanges in employment, wages, and income from the econometrichalfofthemodel.
Early testing ofthe structural model yielded surprisingly effective inter-industry employment impact estimates. However, continued concern overthe model's lack ofspecific input-output features prompted a make-over in the theoretical formulation ofthemodel. Research into integratingregional econometric models with input-output models revealed three main strategies for combining regional econometric and input-output models: 

### linking, coupling, andembedding strategies. The Portland Metro economic model adopts an embedding integration strategy similarto the one used by the I-SAMIS (integrated-small area modeling ofthe industrial sector) model from the St. LouisMSA (metropolitan statistical area). Thispaper describes Metro's results from its attempt atcombining a traditional export-basedregional econometricmodel and thetechnical coefficients ofa national input­ output matrix.



### 2.1 Data

### and Methodology

The input-output tableused in the embedding strategy derives from the U.S. Bureau ofEconomic Analysis (BEA) industry-commodity flow table. The table includes considerably wider industry detail than is possible in a regional model. The disaggregate industry data is collapsed into broader aggregate estimates ofindustry-commodity flow which match the desired industry employment detail oftheMetro economic model. This means thatthe 90 industries/commodities ShOV;l1 in the national input-outputmatrix collapses to 20 industries in the desired Metro model.

Theprocedure combines the input-output matrix to the econometric model using an 

### inter-industrydemand variable (mV) in equations for industry employment in the model. Theparameter ofthe mv is determined by regression and therefore not pre-determinedorfixed as in otherembeddding strategies. Generalization ofthe industry employment equations in the Metro economicmodel are as follows:

m n Ejl :;;;; jJj 

## *IDV p 

## +LVa)NaJI 

## +LPbjRbjl +lijl**a~l** b=l 

### where, Ejt 

### employment in industryj 

### at time t mVjt 

### inter-industry dependent variable for industryj 

### at time t N

ajl 

### national variables al" .am 

### for industry

### j attime t RbJI 

### national variables b l

...

### bn 

### for industryj 

### attime t
jJj 

## = regression parameter for inter-industry variable for industryj 

### at time t



### 2

# - VaJ 

### parameterestimate for national variables for industryj 

### P aj 

### parameterestimate for national variables for industryj
&jt 

### stochastic errorterm for industryj 

### at time 

### t.

The employment equation represents oneoftwenty manufacturing ornonmanufacturing industry sector. Explanatory variables for employment in any industryj 

### may (or may not) include national drivers and/or aggregate regional macroeconomic drivers, such as: population, personal income, sector wage rates, land development activity, productivity oroutput production indexes, etc.

The inter-industry dependent variable is defined as follows: mVjI = 

## 'Z)=lCijEjt J'" 

### where, Cij 

### commodity by industry direct requirements coefficient
En employment in industry i 

### attime t 

### The commodity by industry directrequirements coefficient istaken from the 1987 Use of Commodities by Industry Table 

### and groupings ofeach industry/commodity are collapsedto the desired industry detail. The

crossproduct ofthe direct requirement coefficients matrix and the industry employment matrix results in an IDV term for an industryj 

### with anhistorical time-series equal to the numberoftimeperiods for the matrix ofemployment. Thus,the IDVterm provides an historical measurement ofthe inter-industry demand linkagebetween industryj 

### and all the otherindustries in the region.



### 3. EmpiricalResults

Table 1,nearby, summarizes the employment demand equations from the Metro economic model. In all but

one equation,the mvterm is statistically significant at the 1percent level (except inhealth services in whichthe term was not positive and significant). Specificationofemployment equations with the mv variable seemsto provide both satisfactory statistical fit and explanatory information. (In the following section, we shall compare an ex ante forecast with actual employment datato see how the model equations have performed in an outofsample forecast.)
According to the findings madeby Stover, he suggests that "ingeneral, the mv is a useful explanatory variable in those industrial sectorswherethe output serves as an input for other local industries." The health service industry (SIC 80) is certainly an industry which serves mostly final demand and has little interaction with other industries inthe region, and therefore the mvtermwas found to be insignificant and not a useful explanatory variable in the Metro health service employment equation.

Stovergoes onto suggest that the estimated coefficient for the mvterm may be an indicator ofthe degree ofinter-industry interactions and a measure ofthe strength ofthis reiationshipi5. 

### Inour log-log formulation ofeach employment equation, the m V term may be interpreted in terms ofanelasticity measurement. The empirical results in each equation showthe estimated IDVto be relatively inelastic although some more inelastic than others. Ourinterpretation is that the more inelastic mv'sindicate a lesser dependence ofthe particularindustry with all other industries in the regional economy. Generally, the inelastic nature ofthe

mvterm in each oftheemployment equations suggests to 

### us thatthe regional industries inthe Portland MSA are relatively less dependent and have less inter-industry interactions with one anotherthan perhaps in other regional economies. This also suggests thatthe mix ofindustries in the Portland MSA may have strongercommodity flow relationships with industry sectors outsideofthe region.

The empirical findings ofthemodel estimationsreveal no major surprises with the use ofthe mv as an explanatoryterm and seems consistent with the recent literature onthe matter. The Metro model in all but

one equation found satisfactory fits, and inthe industry sector thatproduced unsatisfactory statistics, the

mvterm was excluded.

15 

### Rey also agrees so long as the estimation ofthe employment equations with the mvterm is unrestricted.



### 3 

# -

### 3.1 Equation Listing 

## T bl 1 M t 

## R' M diEmploymen

## tE

a e 

# . e ro**~eglOna** 

## IEconomlC

. oe-**~qua** 

## f IOns Inter· Real Other Industry Other Industry Industry Regional Industry Product· National Durbin- Adj.­ Industry Intercept Demand Wage Explanatory Output ivity Explanatory Watson R2 Variable Rate Variable(s) Index Index Varlable(s) Food Processing 

### 0.8951 0.4313 1.43 0.90 (4.33) (7.86) Textile &

### Apparel 

### 1.8235 0.5364 0.6339 -0.9456 2.06 0.96 (3.51) (3.24) (4.10) (4.45) Lumber&

### Wood 

### 3.9579 0.1931 -0.7740 0.0392" 0.1665 0.1259u 

### 1.84 0.99 Products 

### (6.33) (3.49) (4.45) (2.52) (2.17) (1.82) 0.1854c 

### (3.05) Paper & 

### Pulp 

### 2.8822 0.4538 -0.2147 DUmmyo 

### -0.3167 2.12 0.86 (5.37) (6.68) (2.69) (2.37)
Printing & 

### -0.8372 0.7828 Dummt 

### 0.5009 -0.2917 1. Publishing 

### (2.36) (12.95) (12.95) (1.75) Metals 

### 3.2341 0.6420 -0.3558 Dummyo 

### 0.2324e 

### (5.31) (11.08) (2.18) (3.42) -0.1267' (1.84) Nonelectrical 

### 0.1343 0.6500 0.2472 -0.1664 0.13079 

### 1.98 0.99 Machinery 

### (0.52) (8.33) (3.98 (2.03) (2.94) Electrical Mach. 

### 1.6767 0.4399 0.4657 0.2424" 1.59 0.99 & 

### Instruments 

### (2.47) (6.59) (2.88) (2.37) Transportation 

### 1.5380 0.7122 -0.2629 -0.3074 1.94 0.93 Equipment 

### (1.63) (8.66) (2.27) (1.85) Other Durable 

### -1.1273 0.6684 

## O. 1.95 0.98 Goods 

### (2.20) (9.32) (3. Other Nondurable 

### -3.6252 0.6360 1.87 0.99 Goods 

### (8.87) (7.08) Construction & 

### -0.7889 0.4222 0.0490a 

### 1.81 0.99 Mining 

### (0.65) (5.91) (2.25) Transp., Comm. & 

### 1.2896 0.6672 1.03 0.99 Utilities 

### (6.09) (15.98) Wholesale Trade 

### 1.0729 0.5493 0.2121' 2.09 0.99 (4.14) (7.65) (2.60) Retail Trade 

### -0.4829 0.2614 (0.58) (7.46) Finance, Ins. & 

### 1.1425 0.4526 0.02078 

### 4.455sJ 2.03 0.99 Real Estate 

### (2.38) (3.18) (2.00) (1.91 ) Health Services 

### -4.7777 -0.3480**0.40540~** 

### 0.4933 2.13 0.99 (7.63) (2.73) (4.01) (7.15)

Nonhealth Other 

### -0.0397 0.3706 -0.1535 0.1294m 

### 1.70 0.99 Services 

### (0.11) (5.76) (1.53) (4.09) 0.9847n 

### (7.64) State & 

### Local 

### 0.2365

## 0'~~f1 

# I -0.2537 1.44 0.99 Govemment 

### (0.26) (5.21) (4.95)

a. Regional buildingpermits, number ofdwelling units b. (U.S. fixed investment in

### nonresidential structures, 1992$)/(Gross 

### Domestic Product, 1992$)

4

# - c. (U.S. fixed investment in

### residential structures, 1992$)/(Gross Domestic Product, 1992$) d. dummy variable(s) for periods ofwork stoppages
e. (U.S. fixed investment in nonresidential producer durable industrial equipment, 1992$)/(Gross Domestic Product, 1992$) f. 1990$ exchangerate index, weighted average, U.S. dollar vs. 18 countries, Morgan Guaranty. A polynomial distributed lags was used in the employment equation for the metals industry (the exchange rate statistic reported is a summation ofthe lags). g. Exports ofComputer Goods, nominal $ h. (U.S. investments in information processing equipment)/(Gross Domestic Product) in nominal $ 

### i. Regional retail trade employment 

### j. U.S. employment in Finance, Insurance & 

### Real Estate (FIRE) k. Regional total personal income, 1992$ 

### 1. Regional proxy ofper capita share ofU.S. consumption ofmedical services, 1992$

m. U.S. exports ofServices,total, 1992$

n. U.S. Service employment, less employment in health services (SIC 80)

Each employment equation is specified in log-log form and estimatcdusing OLS and corrected for autocorrelation. Sincethe data are quarterly frequency, the Durbin-Watson statisticthatwe report is modified to detect the existence ofa fourth-order autocorrelation. 16 

### Durbin Watson statistics to test for firstorder autocorrelation report generally nothing significant.



### 3.2 Forecast Results and Conclusions

Table 2. Employment Forecast

Wage & Salary Employment Nonfarm, Total Food Processing Textile & Apparel Lumber & Wood Paper & Pulp Printing Metals Nonelectrical Electrical Mach. & Instruments Transportation Other Durable Other Nondurable Construction & Mining Transp., Comm. & Utilities Wholesale Trade Retail Trade FIRE Health Services Nonhealth Services State & Local Govemment Forecast 813,288

9,875 4,967 7,666 6,956 10,304 18,159 18,496 29,350 10,210 10,049 7,957 44,640 46,926 63,077 147,364 61,392 55,847 170,243 89,810 

### 1995
Actual 812,800

10,100 4,900 7,800 7,100 10,200 18,700 18,700 30,600 10,600 8,200 8,000 44,900 47,800 61,800 147,000 59,800 56,100 169,900 90,600 %diff
0.06% -2.23% 1.37% -1.72% -2.03% 1.02% -2.89% -1.09% -4.08% -3.68% 22.55% -0.54% -0.58% -1.83% 2.07% 0.25% 2.66% -0.45% 0.20% -0.87% Forecast 848,981

9,855 4,957 7,449 6,641 10,469 18,770 19,032 31,728 9,884 10,192 8,469 46,578 48,708 65,790 155,832 64,379 57,167 180,287 92,794 

### 1996
Actual 851,800

10,000 4,600 7,700 6,500 9,900 19,000 19,900 34,200 10,400 8,200 8,800 51,600 49,400 63,600 153,100 63,000 57,700 180,300 93,900 %diff
-0.33% -1.45% 7.76% -3.26% 2.17% 5.75% -1.21% -4.36% -7.23% -4.96% 24.29% -3.76% -9.73% -1.40% 3.44% 1.78% 2.19% -0.92% -0.01% -1.18% Forecast 878,852

9,985 4,942 7,218 6,549 10,698 18,592 19,432 34,562 9,748 10,193 8,669 48,920 50,461 67,959 160,366 67,166 58,892 189,612 94,888 

### 1997
Actual 897,400

9,700 4,500 7,800 6,300 10,300 19,600 21,300 36,900 10,900 8,300 9,400 64,500 50,600 66,700 160,800 65,900 59,100 189,600 95,200 %dlff
-2.07% 2.94% 9.82% -7.46% 3.95% 3.86% -5.14% -8.77% -6.34% -10.57% 22.81% -7.78% -24.16%

-0.27% 1.89% -0.27% 1.92% -0.35% 0.01% -0.33% MAPE· 

### 1995-97
0.8% 2.2% 6.3% 4.1% 2.7% 3.5% 3.1% 4.7% 5.9% 6.4% 23.2%

4.0% 11.5%

1.2% 2.5% 0.8% 2.3% 0.6% 0.1% 0.8% 

# -

In total, thc mean absolute percent error is under 0.8 ofapercent for the forecast years *Mean Absolute PercentError nonfarm wage and salary employment. In particular, the employment equations for nom

16 

### Wallis test for fourth-order autocorrelation; 

### J. Johnston, EconometricMethods, 

### 3rd 

### Eamon,p. j 11



### 5.. 

### industries exhibit consistently lower MAPE'sthan the manufacturing and producer industry equations. The two highest being othernondurables (includes SIC 25, 32, and 39) and construction and mining. Thehigh MAPE's do notnecessarily pointto a misspecification, but could mean thatthesetwo particular industries

arejust subject to wider variance. This isprobably more likely in the manufacturing sectorthan in nonmanufacturing as the results reveal.
Duringthis periods, the Portland Metro area has experienced above average employment grov.'th which has exceededthe U.S. average. Theregional model has apparently capturedthe current trend and seems to have produced reasonably accurate projections for this short term period. Ofcourse as the forecast period extends out, we see increasing volatility from the 1994base year. Nevertheless, we have deemed the regional forecast to be sufficient for ourplanning purposes and are generally pleased with the model's performance and accuracy.

In this paper, we have described the employment sector ofthe Portland Metro economic model. We took an econometrically estimated structural model and re-estimated each ofits employmentequations by embedding the technical coefficients ofa national input-outputtable using the so-called inter-industry demand variable. The lOV is purportedto indicatethe degree ofinter-industry trade between a particular industry and all others inthe region.

The Metro formulation withthe lOV is in log-log specificationwhich in tumeasily shows the degree of elasticity ofthis inter-industry relationship. A higher elasticity in the lOV term suggests greater economic relationship between the particularindustry and other industries in the region. More inelastic lOV's suggest thattheparticular industry is morehighly linked ordependent to national trends andtrade conditions. All the regional employment lOV's indicate inelastic coefficientswhich suggestthe latter regional interindustry conditions may exist.

In closing,the lOV appears to be a useful explanatory variable. Integration ofan input-outputtable produces significantparameterestimates, and also provides reasonable and statistically good fitting model equations overall. Sensitivitytests ofthe mUltiplier impacts (incomplete and notreported in this paper) also reveal reasonableresults.**-----------------.--~- -.~---.--~.--------,**  6

# - Bibliography

Bureau ofEconomic Analysis (1994) Survey ofCurrentBusiness, U.S. Department ofCommerce, Bureau ofEconomic Analysis, U.S. Government Printing Office, Washington D.C.

Coomes P, OlsonD, Glennon D (1991) The interindustry employment demand variable: an extension ofthe IwSAMIS technique for linking input-output and econometricmodels, Environment 

### & PlanningA 23:1063­ 1068
Duobinis, S F (1981) An 

### Econometric Model ofthe Chicago SMSA, Journal ofRegional Science 21:293­ 319

JohnstonJ (1984)EconometricMethods, McGraw-Hill, New York

Metro (1994) Metro Regional Quarterly Economic Model: Model Reference Guide, (unpublished staff report)
Rey, S J (1997) Integrating regional econometric and input-output models: an evaluation ofembedding strategies, Environment 

### & Planning A 29:1057-1072

Stover, ME (1994) A comparison ofannual and benchmark input-output tables in regional economic modeling, The Annals ofRegional Science 28:223-228

## Appendix D10-6 Modeled Attainment Test
Appendix D1 0-6 details how DEO, Ecology and SWCM applied the modeled attainment test to the 2015 Maintenance Demonstration modeling results.

The modeled attainment test is an exercise in which an air quality model is used to simulate current and future air quality. The 8-hour NMOS for ozone requires the fourth highest 8-hour daily maximum ozone concentration, averaged over three consecutive years, to be less than 80 ppb8

. 

### The recommended attainmenttest is one in which model estimates are used in a "relative" rather than "absolute" sense. That is, take the ratio ofthe model's future to current (baseline) predictions at ozone monitors. EPA calls these ratios "relative reduction factors". Future ozone concentrations are estimated at existing monitoring sites by multiplying a modeled relative reduction factor at locations near each monitor by the observation-based, monitorspecific, "baseline" ozone design value. The resulting predicted future concentrations are compared to 84 ppb.

For more information, see "Guidance on the Use of Models and OtherAnalyses in Attainment Demonstrationsfor the 8-hour Ozone NMOS" (EPA-450/R-05-002, October, 2005).

6 

### Because of rounding conventions in which non-significantfigures are truncated, a modeling


# - estimate of<85 ppb is equivalent to <= 84 ppb. Attainment is demonstrated when a modeling target offuture estimates ofozone concentrations are <=84 ppb.

Adopted by

### the EQC 

### 02/22/07 51

# - :1'"rtland·Va"'LouverAQMA anc! lI.alem**SKAT!>Ana~lIof.a-Hour** Q"one Maintenance**u~J~** CMAQ dispersion model attainment test l see "GuidanceOn the Use of Models and OtherAnalySes in Attainment Demonstrationsforthe a·hour OzoneNAAQS" EPA-450IR"()5-002, October2005) .­

..**~.** I Step 1. Current Design Value 1998**·O~lIerved"** values

...... Current Design

Year**4~**

### 1-ii';h (ppbl

# ~i**,MonitOringSite~ue(DVc)** 

# t3mj**I~** 99 i 85 92 70 Carus 81 75.0 62 54 61 60 Milwaukie 67 "55' 56 59.3 1998 81 61 66 69 77 63 Sauvie Island 65 56 56 59. 1999 72 51 49 57 65 63 Mountain View 68 6C 61 62.9 2000 65 56 54 58

- 59 66



### -­ Turner 77 68 67 i 70.4 Wishram· 54 62 54 63.4 iii [Step 2. DetermlnationOt Maintenance,201!';Dro'ectlon Includinaarowth allowance I

...... ICarus I I 

## I Current Design 1998 Baseline 20 e I. Future

, Day a-Hour Max Predicted 8­ Reduction ;Design Value**~** ! ! Value (DVC) Hour Max Factor (RRFI i (DVF) i 1 90

..... _ .....13.6 

# L; 97 92 107 103

.....

### ­ Mean 75.0 98 94 0.965 71.7 I !**i~** ;

## .~ ICurrent Designll998 Baseline, 2015 Relative Day Predicted 8­ Reduction 0 ..

### ­

.... 

### i Value (DVC) ; 8-Hour Max Hour Max Factor IRRF\ IDVF\

........­ 1 86 93

# ~ 91 92

..._. ..... i I 9:1 96

...... 1.046 62.1 i

......­

# ~ i

- !Current Design 1998 Baseline**~u15** Relative i ,:,uture i ay ! Value (DVC) 8-Hour Max Predicted 8­ Reduction 'Design Value' I HOllrM". IDVF\ : 1 70 69 

## r-----¥ 90 79 i 3 87 80

........­ Mean 59.1 82 76 0.923 54.5 r.:-----c

....... i I Mountain:'iiew i i

## ~1998 Baselinel

## predi~d 8-1 Reduction

Day DesignValue a-Hour Max i Hour Max i Factor (RRFl IDVFl 1 76 81 2 86 77 3 88 87 I i Mean 62.9 83 81 0.975 613

Turner

........ ..­

I Current Design 1998 B r: 2015 i Relative Future I

Day

## 8_HOU~~~:el**P~~~~~~:-I F:~~~~~F)**  Design Value Value (DVC) fDVF) 1 74 64 2 101 88 I 3 89 I 73 i Mean 70A 75 0.852 60.0

Wi h!llll1'**:~es~gn** t Baseline 2015 Relative ! Future

-

Day Predicted 8-! Reduction Design Value, i Value (DVe) 8-Hour Max Hour Max Factor IRRFl IDVFl '

..

### ­ 1 55 51 2 

# -+ 56 51 I i 3 59 52 Mean 63.4 57 52 0.910 57,7 I *The Wishram monitorinQ..site is notwithin the I

.AQMA or Salem Area Ozone I Plan areas, data Is included here for i •purposes only. 

# -.

-

Adopted 

### by the EQC 

### 02/22/07 

### 52

# STATE OF OREGON AIR QUALITY CONTROL PROGRAM VOLUME 3: STATE IMPLEMENTATION PLAN



# SECTION 4.50
Portland-VancouverAir Quality Maintenance Area (Oregon Portion) And Salem-KeizerArea Transportation Study (SKATS) Ozone Maintenance Plan

Adopted by the Environmental Quality

# ~ Commission February 22,2007 

# N 1.]g.1 Oregon Department of Environmental Quality Air Quality Division. State of

### Oregon Departmentof 

## 811 SW 6th 

## Avenue Environmental 

## Portland, Oregon 97204 QualHy