# 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

Mike Burton Executive Officer
Planning Department Andy Cotugno Director
Prepared by: Data Resource Center Dennis Yee Chief Economist
People Places Open Spaces

## Metro Planning that protects the nature of our region
“It’s better to 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 of the Oregon Convention Center, Civic Stadium, the Portland Center for the Performing Arts and the Portland Metropolitan Exposition (Expo) Center, all managed by the Metropolitan Exposition-Recreation Commission.
For more information about Metro or to schedule a speaker for a 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 Summary Regional Forecast Tables: High, Mid & Low ................................................. 3 Summary Regional Forecast, Region, UGB, and UGR Need .......................................... 4

2000-2030 Regional Forecast Introduction................................................................................................................... .... 5 Context of this Forecast and Past Regional Forecasts ...................................................... 6 Policy and Economic Assumptions .................................................................................. 6 Alternate Regional Forecasts ............................................................................................ 8 Forecast Methodology Summary...................................................................................... 9 Report Organization........................................................................................................ 10

2000-2030 Regional Forecast U.S. Economy in Review................................................................................................ 13 National Forecast Overview ........................................................................................... 15 Global Setting ................................................................................................................. 17 Long-range U.S. Macroeconomic Outlook...................................................................... 20 Portland-Vancouver Economic Forecast Recent Trends ................................................................................................................. 23 Regional Expectations .................................................................................................... 24 Forecast Summary for the Portland-Vancouver Region................................................. 25 Comparison of Population and Empl oyment Demand Projections ................................ 26 Regional Population Trends............................................................................................ 26 Industry Details and Long-term Forecast Outlook ......................................................... 28 Alternate Regional Growth Scenarios Introduction................................................................................................................... .. 35 Regional Growth Alternatives ........................................................................................ 35 U.S. Economic and Demogra phic Summary Details...................................................... 40 Early Risks to the Regional Forecast.............................................................................. 40

Appendix A: Regional Economic Forecast Details Table 1: Total Population of Selected Metropolitan Areas, Counties, States and U.S................................................................................. A-1 Table 2: Components of Population Chan ge for the Portland-Vancouver, OR-WA Multnomah, Clackamas, Washingt on, Yamhill and Clark counties)......................... A-2 Table 3: Population by Age for th e Portland-Vancouver, OR-WA.............................. A-3 Table 4: Households by Age of Head for the Portland-Vancouver, OR-WA ...............A-4 Table 5: Employment for Portland- Vancouver, OR-WA and U.S. .............................. A-5 Table 6: Total Employment Po rtland-Vancouver, OR-WA ......................................... A-9 Table 7: Wage and Salary Employme nt Portland-Vancouver, OR-WA .................... A-10 Table 8: Total Employment for Yamhill County, OR ................................................ A-11 Table 9: Wage and Salary Employment for Yamhill County, OR. ............................ A-12

## Table 10: Personal Income by Major S ource, Portland-Vancouver, OR-WA............ A-13 Table 11: Personal Income, Total and Per Capita, Portla nd-Vancouver, OR-WA Consumer Price Inde x, All Earners ......................................................................... A-14 Table 12: Average Weekly and Hourly Ea rnings, Average Work Hours Per Week, Manufacturing Industries Only................................................................................ A-15 Table 13: Residential Authorized Pe rmits, Housing Price Statistics...........................A-16 Table 14: Alternate Forecasts for Portland-Vancouver, OR-WA............................... A-17 Table 6: Total Employment Po rtland-Vancouver, OR-WA ......................................... A-9 Table 7: Wage and Salary Employme nt Portland-Vancouver, OR-WA .................... A-10 Table 8: Total Employment for Yamhill County, OR ................................................ A-11 Table 15: Employment Assumptions – By Standardized Metroscope Industry Classifications. ........................................... A-25

Appendix B: U.S. Economic Forecast Details DRI-WEFA, The U.S. Economy, Th e 25-Year Focus, Winter Issue 2002 Part 1: Forecast Overview.................................................................................................. 1 Part 2: The Four Scenarios: The Trend Projection ......................................................... 11 Part 3: The Four Scenarios: The Op timistic and Pessimistic Projections....................... 35
(Note: DRI-WEFA produces a fourth scenario known as the “cyclical projection”. This scenario is not used in the produc tion of the Metro Regional Forecast)

Appendix C: Forecast Review Committees

Appendix D: Model Documentation Summary Paper delivered at the Pacific Northwest Regiona l Economic Conference, 1998

# Executive Summary 2000-2030 Regional Forecast

The National View: Winter 2002



### It’s official – the U.S. is in a recession sin ce March 2001, according to the private economic think tank: National Bureau of Economic Research.



### There’s little worry of inflation. Interest rates are low; but so are consumer confidence and business activity. The National Association of Purchasing 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 part of 2002.



### After a year, the recession may be coming to an end. . . 1. Consumer confidence is on the rise – but still under pre-recession levels 2. NAPM index is on the rise too – the level is presently near 50 – indicative of positive growth just around the corner 3. Surplus capacity utilization and industrial production are showing early signs of acceleration 4. Very favorable interest rates for stimulating additional domestic investments which could lead to a recovery in computers and software production 5. Timely tax cuts prior to 9/11 and huge federal spending are stimulating GDP

Favorable Economic Factors Unfavorable Economic FactorsEarly & deep interest rate cutsUnusually well timed Federal spending initiatives and tax cutsLow fuel pricesDecline in U.S. importsSteady housing demandStrong consumer auto purchases Vulnerable capital goods cycle – weak domestic investment outlookGlobal recessionWeak U.S. exportsWeak state & local budgetsPoor business profitsInventories overstocked 

## The Regional Perspective.



### The region is in its worst condition in over a decade.



### The average number of unemployed rose to near 60,000 with peak unemployment reaching 75,000 in November and December 2001.



### The manufacturing sector is in full retreat – that’s not good news for a region that has proportionally more industrial jobs than other areas of the country.



### Regional mainstays high tech, transportation equipment, machinery, metals, and food processors, are hurting. Quarterly job figures in manufacturing are off 6 percent from over a year ago on a seasonalized annual basis.



### A weak Pacific Rim has also hurt regional exports. Japan is in its 3 rd 

### 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, but that figure is still high compared with growth in the early half of the 1980’s.


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



### The good news is: Probably by mid-summer. But at the start the rebound will be slow...so the region probably won’t feel like its out of the recession until the first quarter of 2003.



### The U.S. should be well on its way to a recovery, so the region can count on a boost from higher U.S. business activity. High-tech will be on its way up, and that should help fuel regional growth.



### A mild recovery overseas – especially in Japan – will aid in bolstering exports and the regional economy, too.

### 2 

# 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 of the land supply assumed to not restrict underlying market growth trends.



### Population growth in last half of 1990’s grew more rapidly than expected. Nearly 40,000 more residents by 2000 than previous 1995-2020 Regional Forecast 1



### .


### 20 year population expected to rise 1.6% A.P.R. as compared to 2.0 percent a nnual average since 1970.



### Population in 2022 expected to hit 2.65 million residents living in the region. 5 county region expected to reach 3 million mark by 2030.



### Population table (left) shows growth tapering off during the forecast to 1.4 % per year between 2010 to 2030.



### Migration represents one-half of future population growth.



### Despite more people in this forecast, the number of households or the housing unit need forecast is actually 30,000 lower than the previous regional forecast.



### Household size was revised upwards by Census. Future household sizes expected to hold up higher than in previous forecast assumption.



### Population growth helps fuel population-dependentindustries reach 4 and 4.5 percent growth rates in mid1990’s.



### Employment growth in near term expected to rebound and as a result so too will population (see charts below).



### Long-run employment prospects are expected to be favorable for the region. Job growth expected to exceed U.S. growth rates.



### Manufacturing jobs are expected to grow at an average of 0.8 percent a year – fueled primarily by high tech developments. Nonmanufacturing jobs expected to average 2.0 percent a year. Total is 1.9 percent average annual growth as compared to 3.0 percent during the last 30 years.


## Annual Growth Rate Charts

1 

### Source: Metro Data Resource Center, 2015 Regional Forecast , January 1996 Population change in

decade Avg. Growth in decade 1850-60 16,046 9.2% 1860-70 13,811 6.4% 1870-80 25,123 6.3% 1880-90 69,510 8.5% 1890-00 39,891 2.8% 1900-10 157,733 7.0% 1910-20 71,192 2.0% 1920-30 83,767 1.9% 1930-40 50,538 1.0% 1940-50 210,702 3.4% 1950-60 116,332 1.5% 1960-70 194,697 2.1% 1970-80 248,584 2.1% 1980-90 179,969 1.3% 1990-00 396,554 2.4% 2000-10 359,451 1.8% 2010-20 337,200 1.4% 2020-30 384,200 1.4%

Regional Nonfarm Employment

-6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0%

70 75 80 85 90 95 00 05 10 15 20 25 30 Regional Population, total

-6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0%

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

### 3 

# Executive Summary – continued 2000-2030 Regional Forecast for Various Geographies

Exhibit 1 

## 5-County Regional Forecast Tables (Multnomah, Clackamas, Washingt on, Yamhill and Clark counties)

Total Employment (thousands) 

## Wage & Salary Jobs (thousands) 

## Self-Employed (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 1,431.0 1,202.4 1,168.7 1,138.0 315.9 308.5 293.0 

### 2015 1,677.3 1,625.2 1,525.7 1,321.6 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 1,267.8 413.6 401.2 341.3 

### 2025 2,115.9 1,972.7 1,709.4 1,627.7 1,515.5 1,335.8 488.2 457.2 373.6 

### 2030 2,399.9 2,151.6 1,814.2 1,823.8 1,641.5 1,406.0 576.1 510.1 408.2


## Population, total (thousands) 

## Household, total (thousands) 

## Personal Income (million $ 1996) 

## High Mid Low High Mid 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 1,991.4 811.1 799.6 785.9 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


## Per Capita Income ($ 1996 ) 

## Portland CPI (1982-84=100) 

## Median Home Price (nominal $) 

## High Mid Low High Mid Low High Mid Low 2000 28,320 28,320 28,320 178.0 178.0 178.0 166,000 166,000 166,000 

### 2005 28,300 27,900 28,300 211.0 208.2 205.9 199,200 195,200 186,900 

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

### 2015 31,200 30,400 34,100 284.9 277.7 253.9 328,800 308,300 242,800 

### 2020 33,400 33,000 35,200 335.9 314.4 298.3 403,500 365,000 252,500 

### 2025 34,800 35,500 35,400 400.1 356.8 355.1 520,700 434,800 273,200 

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



### Table Notes:


### Total employment includes wage & salary jobs, proprietors and other self-employed individuals.


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


### Portland CPI is the Bureau of Labor Statistics all items urban consumer price index for the PortlandVancouver metropolitan area


### Median Home Price derived from RMLS median sales price statistics

### 4 

# 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 Total Household 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 Table Notes:


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

Exhibit 3 

## Metro UGB Forecast Table (data tables include Multnomah, Clack amas, Washington, and Clark county)
Total Employment 1/ 

## Total Population 2/ 

## Total Household 3/ 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 1,886,300 760,000 2030 1,640,900 2,006,900 807,600 Table Notes (source: Metro Urban Growth Report, August 2002): A capture rate represents a Metro policy determina tion to accommodate with the Metro UGB a fraction of expected regional growth. There are two pertinent capture rates assumed in the UGR: 1) households (housing units) and 2) employment (jobs). The numerator represents the number of households or jobs in the Metro UGB. The denominator represents a four-county total. The ratio is the capture rate for the future. 1. Assumes a 75 percent job capture rate 2. Assumes a 68 percent population capture rate 3. Assumes a 68 percent household capture rate

Exhibit 4 

## Metro UGB Employment, Populati on and Household Demand Table
Total Employment Total Population Total Household 2000 953,134 1,305,574 520,395 2022 1/2 1,428,134 1,821,300 732,600 Change 475,000 515,700 212,200 Table Notes: “Change” values have been rounded


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


### The total employment figures include self-employed and also do not yet subtract out the effects of redevelopment and infill. (An adjusted change without self-employed totals 355,000 jobs.)

### 5 

# 2000-2030 Regional Forecast

Introduction

Purpose. In order to maintain a sound and vibrant regional economy, planning for future land needs is essential. State la w mandates that Urban Growth Boundaries (UGB) in Oregon are periodically updated, and the inve ntory of buildable residential land inside UGB’s are replenished up to a 20 year supply at the time of periodic review. And as a matter of general practice, Metro also maintains an inventory of up to 20 years of industrial and commercial land at its periodic review of the Me tro UGB. The basis for future land need and demand is derived from a regional forecas t of employment and household change.
The regional forecast is, in part, the s upporting evidence for Metro’s UGB decision which is due to be finalized in December 2002. This demand, represented by the current regional forecast, provides the technical info rmation for a baseline estimate of a 20 year need for both residential and employment land 2 

## . Metro is now in the process of completing its studies and analyses fo r its 2002-2022 periodic review UGB decision 3



## . The Metro regional forecast presents the tec hnical underpinnings for estimates of future employment and future resi dential land need. National ec onomic assumptions drive a regional forecast that is derived from a regional economic mode l of the PortlandVancouver region. Overall regiona l control totals for aggregate demand for employment land are derived from sector-b y-sector employment forecas ts. Commercial and industrial land demand (need) are derived from sector level employment forecasts and by projections of employment density and floor-to-area -ratios (FAR) for each sector 4



## .
Future residential land dema nd (need) is determined from housing unit forecasts created from the Metro regional forecast. Future re gional population is estimated using an agecohort model, with the final result a forecast of population by age. U.S. Census “middleseries” age-specific birth and age-specific mortality rates are the initial basis for projecting natural population growth. These age-specific rates are benchmarked to regional vital statistics data to create compos ite regional age-specific birth and death rates used in estimating natural in creases in regional population 5 

## . The migration component is

2 

### Additional high and low growth scenarios for the region will accompany this baseline forecast to cover a range of uncertainty in the forecast. 3 

### Additional information is needed from other tasks under periodic review to make a final determination of UGB land need, e.g., alternatives analysis, Metroscope data on capture rates and refill rates, policy inputs with respect to matters of urban form, regional transportation plan assumptions. 4 

### FAR projections and employment density assumptions are derived by Metro’s other economic model – Metroscope. In fact, Metroscope is a comprehensive la nd use allocation model that interacts with Metro’s regional transportation model as well as the regional economic model.
5 

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

### 6 

## estimated net of in- and outfl ows and is linked to the employment forecast. The completed population forecast is then conve rted to an estimate of the number of households and dwelling units. A vacancy rate of 5 percent is assu med for converting the number of households to dwelling units.
The Context of this Forecast and Past Regional Forecasts. The last officially adopted regional forecas t and growth allocati on was completed in 1995 and the results published in a two volume set: The 2015 Regional Forecast , and The 2015 Regional Forecast and Urban Development Patterns , January 1996 and February 1996, respectively. This Econo mic Report updates the firs t of these documents.
A regional forecast was prepared in Decembe r 2000 and presented to the Metro Council. That forecast was never officially adopted and remains as an “unpublished report”. 6



## This Report summarizes our recent review of the Portland-Vanc ouver metropolitan area as of February 2002. This review include s development of a new regional economic forecast consistent with a winter 2002, long -term U.S macroeconomic outlook. The U.S. outlook is prepared by DRI-WEFA. The Regi onal Forecast is the sole responsibility of Metro and not WEFA.
The regional forecast is devel oped by Metro Staff using an econometric model of the five county regional area (Multnomah, Clackamas , Washington, Yamhill in Oregon and Clark county Washington). The forecast results are reviewed by a panel of regional economic observers and peer reviewers. Comments from professional reviewers are factored into consideration in the final draft of the Regional Forecast.
Policy and Economic Assumptions. No economic forecast can be prepared free of policy assumptions. Im plicitly we maintain an assumption of status quo for regional a nd state policies. In terms of economic assumptions, the DRI-WEFA U.S. forecast sets the overall tone of anticipated macroeconomic conditions for the next 20 year period. The Metro regional forecast implicitly adopts these assumptions for the Me tro region for its next 20 year growth cycle 7



## . Before estimating future employment and population increases, a set of overarching conditions are presumed to be pre-set assumptions for the region and the U.S. These assumptions are often overlooked, but are fundamental to the forecast. For example, the

differences in these rates. These differences were no t large, but we felt it was reasonable to make the adjustments in order to better replicate regional trends. 6 

### Metro Data Resource Center, Economic Report to 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, thecurrent regional forecast plays out the present recession and attempts to forecast regional growth at its longrun expected growth rate. In the 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 expected to do so as well, but with a one-quarter lag. The recovery will initially show about a year or two of above average growth rates as the region climbs out of recession, but after this initial growth peak, the regional forecast gradually tapers off to the region’s long-run average growth path. This growth path is determined by the national forecast obtained from DRI-WEFA as well as demographic trends.

### 7 

## regional forecast assumes that Americans are free to go where they please without undue restrictions (this has implications on migra tion trends and business start ups), that Americans are protected by the U.S. Constitution and the rule of law (this implies that people and businesses can reasonably expect cer tain behavior from others and can plan for the future on this basis), that America’s fundamental economic syst em continues to be based on a system of free enterprise (this presupposes a sense of economic stability and conditions as opposed to a socialist regime that has a differe nt set of economic implications), that Americans have the right to the pursuit of happiness. These fundamentals we hold to be tr ue in the regional forecast as well as the U.S. forecast. Additional macroeconomic assumptions with re spect to fiscal policy, monetary policy, and so forth are also explicitly folded into the national forecast. And, in the course of assuming the national forecast, these national assumptions become implicit policies for the region too.
At the regional level we assume a policy-neutral set of cond itions over the course of the next 20 years. In other words, the policies that are in force today are presumed to be similar in the future. In terms of regional planning for the UGB, this means that future regional land use policies are a ssumed to be more of the sa me. In other words, future policies will have similar impact to that which exists today.
The region in the past, and arguably in th e present, has enjoyed land demand and supply conditions that pretty much do not su ffer from peculiar economic distortions. Additionally, the forecast presumes that the market for all goods and services in the region is no more constrained than that of the rest of the nation. What this translates into for the regional forecast is that regardless of future policies, the regional markets (whether for labor, land or goods and services) in the Metro region are able to determine market equilibriums, and the condition of th ese markets are competitive with other cities on the west coast. In short, the regional fo recast presumes future policies will do no harm to observable economic trends 8 

## . The State’s periodic review process and Metro code are intended to provide periodic replenishment of the available land i nventory by balancing the desire for economic vitality with land and environm ental conservation.
The economic trends for the region are base d in part on past ec onomic relationships, clusters, inter-industry linkages and the outlook fo r the nation. Our attempts to peer into a mist-shrouded future are based on these assumptions. The economic relationships between the U.S. economy, world economy and regional economy ar e intertwined and implicitly included in the regional forecast by virtue of the economic equations formulated in the regional economic model. Economic clusters that exist in the region are also considered. Inter-industry linkages, that is the relationships am ong different sectors of the region, are folded into the calculati ons of the regional forecast by inter-industry demand variables (behaves as an input- output parameter among industry sectors).
The future forecast for the region is based on an outlook of global and national conditions that are expected to materialize over the next 20 years, as well as economic relationships

8 

### Policies today may encourage economic trends such as economic development. Other policies today may tend to redirect or dampen economic growth, but are in place to mitigate externalities that an open and competitive market may not have the mechanisms to properly control, such as environmental externalities.

### 8 

## that have formed over the past decades. The set of U.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 Po rtland State University intercensal estimates)



## New immigration trend information for the 1990’s



## Updated demographic assump tions of future households , migration, birth and death rates



## Revised employment data from th e state employment departments



## New and revised U.S. Bureau of Econo mic Analysis income and wage data



## 9/11 economic impacts



## Macroeconomic recession assumptions from DRI-WEFA



## Global macroeconomic and i ndustry detailed growth a ssumptions from DRI-WEFA

The DRI-WEFA national forecast is a trended forecast. This means that after the current recession is played out for the U.S., an expected growth rate is assumed by DRI-WEFA that presumably models an average growth path which bisects the peaks and valleys associated with recessions and a business cycle. The chart (right) of real U.S. GDP from DRI-WEFA exemplifies the trended approach of the national and regional forecast.
Alternate Regional Forecasts. Three regional population and job growth scenario s are packaged together in this regional outlook report. This report in cludes a baseline (mid-growth scenario), high (optimistic scenario) and low (pessimistic scenario) growth projections. A baseline growth forecast is prepared first. This baseline regional forecast represents a middle growth scenario and is representative of the region’s most likely economic and population trends. The baseline regional forecast is characterized by playing out the current business cycle and with regional growth tapering off in later years. Future growth beyond this point assumes a trend projection based on “averaging out” peak growth periods with future downturns in order to model the region’s funda mental economic growth path.
The baseline assumes that the economy suffe rs no major mishaps between now and the end of the forecast horizon in 2030. The base line scenario is based on economic and demographic characteristics that represents neither an extremely high or low set of assumptions. This trended scen ario assumes the absence of major economic disruptions. Such disruptions include large oil price shocks, unanticipated policy swings, or excessively rapid changes in supply or demand. U.S Gross Domestic Product (inflation adjusted)

-2.0% 0.0% 2.0% 4.0% 6.0% 8.0%

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

### 9 

## Separate high and low regi onal growth scenarios are prepared for the region. These alternative growth forecasts are constructe d based on respective high and low growth national forecasts taken from DRI-WEFA’s na tional model of U.S. growth. Additionally, more optimistic or pessimistic regional demographic parameters are assumed in coordination with the corresponding alternate growth scenario. For example, the high growth regional scenario assumes greater migration rates than the baseline or low growth scenario. The high and low growth regional forecasts produced in conjunction with the baseline provides an alternate range of growth projections that the region could achieve given the range of assumptions. The alternative forecasts bracket growth and offers a different timeline for when a certain level of growth could be achieved given each set of assumptions.
Both the optimistic and pessimistic growth scenarios have been constructed in a way that assumes economic and de mographic factors on the extreme ends of the spectrum. In the case of the optimistic scenario, demographic factors were adjusted to reflect faster population growth parameters than the baseline assumption set. Economic factors were assumed to change more rapidly than in the baseline trend projection. Output is projected to climb much faster and economic va riables exhibit more rapid growth.
Conversely, the pessimistic scen ario switches the demographic factors to a slower setting. For example, birth rates are lower, life expectancy is lower, and net migration is much less than the baseline. Economic variables were reset to w eaker settings. Productivity and output are assumed to increase at a slower rate than either the baseline and the optimistic scenario.
In terms of the economic growth path that eventually might materialize, we characterize the range between the high and low scenario s as approximately acc ounting for 90 percent of all possible outcomes. Therefore, ther e is only a 10 percent chance of growth exceeding or underperforming beyond the grow th bands of the respective optimistic and pessimistic scenarios.
Forecast Methodology Summary. The Metro Regional Forecast is prepared usin g a state-of-the-art econometric model with over 100 endogenous equations and 200 exog enous and identity/accounting equations and variables. Stochas tic behavioral equations describe each significant industry category in the manufacturing and nonmanufacturing sect ors. Income equations for every major income category are modeled. Wage equati ons for aggregate groupings of industries project future wage rates. Inter-industry linkages between di fferent parts of the regional economy are expressed with fee dbacks and interactions that represent the mix of regional economic relationships and gr owth patterns. The equations for employment, income, wages and population are compiled together to describe the growth rate anticipated for the Portland-Vancouver area economy.
Specifically, inter-industry dema nd variables (IDV) are empl oyed in each employment equation to reflect the implicit input-output a ssociations which exist among each regional industry. Industries with significant traded demand, typically sect ors in manufacturing

### 10 

## and some traded-sector nonmanufacturing classifications (e.g., transportation & warehousing and creative services) include additional industry de mand drivers, for example, variables that pr oxy specified industry-level national demand. Non-traded industries, typically classified in nonmanuf acturing sectors, incl ude demand variables triggered by growth in population and income related variables. Productivity assumptions and projected wage rate incr eases are employed in each i ndustry employment equation to reflect the labor force and pr ice variations that co-det ermine employment demand from the factor input side. Employ ment equations represent the heart of the Metro Regional Economic Model and desc ribe in the greatest possible deta il the structure of the regional economy.
Population change is estimated by five-year age groups. A cohort-component method of projecting future population changes in the re gion is employed. Population statistics are projected for individual fi ve-year age cohorts. The Me tro Regional Ec onomic Model includes estimates of fertility and the number of births. Mortality rates are also assumed and the number of deaths in each age cohor t is estimated in each forecast year. The difference between births and deaths from th ese projections represents the expected natural increase in the regional population. A dding in a forecast of migration (net of inflows and outflows of residents) by age cohort, we are able to arrive at an estimate of population in future years. A net-migration forecast is prepared using a stochastic equation which models the relationship identified between migration and relative economic growth comparisons. Essentially, migration levels increase when economic growth in the region increase on a relative basis significantly faster than the economies of California, Washington and the U.S. population gr owth in the region is tied directly into the Regional Forecast by the amount of migrati on and the ability of the region to draw in migrants based on the strength of regional economic growth.
Future growth assumptions also include econo mic growth projections for the U.S. and the global economy. National vari ables include components of gross domestic product (consumption and investment tr ends), fiscal and monetary variables, exchange rates, inflation, productivity, housing vari ables, and labor force data. These future year growth expectations provide the backdrop for Metro’s Regional Economic Forecast.
Report Organization. The regional forecast begins in year 2002 through 2030. Year 2001 data through the 3 rd 

## quarter represents the last actual data point with the 4 th 

## quarter still a preliminary estimate. The geographic coverage of the Re gional Forecast is a five-county PortlandVancouver metropolitan area th at includes Multnomah, Cl ackamas, Washington and Yamhill counties in Oregon plus Clark count y, Washington. For purposes of comparison and additional geographic c overage, less detailed “sate llite models” also forecast individually the employment, income, and population for Columbia, Yamhill, and the Salem MSA (Marion and Polk counties). These other county projections are separate from the detailed Portland-Va ncouver MSA (five counties) . Subtracting the Yamhill county forecast from the five-county Regional Fo recast, an officially adopted Regional Forecast with just the four-county area is employed for Urban Growth reporting purposes.

### 11 

## The U.S. economic forecast and most other a ssumptions in this report are based on data released through the month of October 2001. Regional and national statistics which are usually tabulated on a monthly or quarterly frequency have been seasonally adjusted using the Census X-11 method. U.S. hist orical data are also through the 3 rd 

## quarter.
Regional income data which co mes annually from the U.S. Bu reau of Economic Analysis (BEA) reflect historical data through 1999. M onthly current employme nt statistics (CES) from the State of Oregon include data th rough October 2001. Annua l population statistics are updated to 2001 based on Ce nsus 2000 enumerations a nd county population estimates derived from Portland State University, Cent er for Population Research and Census (CPRC) and Washington State Office of Financ ial Management (OFM). Other historical data series (e.g., self empl oyment, wages and components of personal income) used in this report are at least through 1999.
Detailed statistical information describing the baseline regional forecast is tabulated in the Appendix of this report. The main text of this report provides a summary description of the assumptions, results a nd conclusions contained in th e baseline regional forecast.
Details of the high and low growth regional forecast scenarios are also included in the Appendix which compares the three alternativ e forecast scenarios for selected economic variables.
DRI-WEFA’s detailed explanation of its U. S. long-term economic outlook is also found in the Appendix of this report. A brief description of the DRI-WEFA U.S. forecast is incorporated into the main text of the report. Additional forecast tables are included in the appendix which offer more deta iled information about the U. S. macroeconomic trend and the optimistic and pessimistic national scenarios. Excerpts of the DRI-WEFA 25-year focus of the U.S. economy is included.
Additional forecast years beyond 2030 were prepared as part of this regional forecast, but the reliability of these projections is significantly diminished from the prior year projections. The later forecast years, bey ond 2030, were developed as a convenience for extreme long-range facility planning effort s and to address ques tions about potential future growth patterns in 2040 and 2060.

# to the

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 11 th 

### 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’seconometric model (MARIO – Metro Area Region IntegratedIndustry Outlook model). MARIO translates the nationalassumptions through a modeled economic structure of the 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 of the 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 of the Regional Forecast in future years.

### 13 

# 2000-2030 Regional Forecast

U.S. Economy in Review. It’s official! – the National Bureau of Economic Research (NBER) last November determined that the U.S. economy peaked in business activity in March 2001. With that announcement 9 

## , the current U.S. recession began and the longest uninterrupted expansion since World War II ended – exactly 10 years after it had begun (March 1991). Inflation-adjusted GDP estimates finally confirm the NBER’s declaration. In the fourth quarter of 2001, real GDP in the U.S. fell 1.3 percent. Signs of a slowdown were appearing long before. Producers began cutting production in 2000Q4. Investments in domestic plant and equipment began declining in 2001Q1. Employment cuts soon followed as one after another economic driver sta lled. Weak consumer confidence and fears of more unemploym ent caused consumers to retrench as consumption fell to 1.0 percent gr owth in the fourth quarter.
Every recession in the U.S. starts out differe ntly and this one has been no different. The primary reason for the decline in U.S. output can be traced to the steep deceleration in manufacturing and inve stment spending.

Steep draw-downs in retail and industrial inventories combined with cutbacks in industrial production

Severe fall-offs in capital investments

Struggling economies in Japan, Canada and Mexico hit U.S. shores just as the nation’s own domestic industries began to decline

9 

### The Business-Cycle Peak of March 2001, Business Cycle Dating Committee, NBER, Nov. 26, 2001. TheNBER bases its recession determination on industrial production, employment, real income, and wholesaleretail trade activity when as a group these indicators show “significant decline”. Gross Domestic Product (inflation adjusted)

-2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

98q1 99q1 00q1 01q1 02q1 03q1 04q1

Investment in Information Processing Equip. (inflation adjusted)

-30.0% -20.0% -10.0%

0.0% 10.0% 20.0% 30.0% 40.0%

98q1 99q1 00q1 01q1 02q1 03q1 04q1

Manufacturing Employment Durable

-12.0% -10.0% -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0%

98q1 99q1 00q1 01q1 02q1 03q1 04q1

### 14 

## Now a worldwide recession and Japan in its third recession in 10 y ears have severely hampered U.S. exports. A relatively strong U. S. dollar has not helped U.S. exports, which have fallen more steeply than imports.
The impact of this recession has been uneven across different geographic regions of the country and industry sectors. The Pacific Northwes t has been hit the hardest by this recession. Employment in nonmanufacturing s ectors has held steady with only narrow declines in many industries. Oregon’s unemployment rate (7.3%) is the worst in the U.S.
U.S. unemployment in total has risen only m odestly since the recession – to 5.8 percent from 4.0 percent a year ago. The manufacturin g sector has endured the brunt of the current recession. On an annualized basis, U. S. manufacturing jobs fell 6.3 percent in the last quarter. High-technology manufacturing employment is down almost 10 percent. Transportation equipment is off nearly 6 per cent. For the most part, durable producers are hurting much more than nondurable manufacturers.
Unlike previous recessions, many other nati onal variables remain in good standing. Interest rates have been falling as the Federal Reserve (FED) and Chairman Alan Greenspan had attempted to stave off the recession with earlier cuts in interest rates. Since mid-2000, there have been 11 consecutive interest rate cuts. More recently, the FED has signaled a change in its interest rate bias to a neutral position – neither expecting to cut nor raise rates in the immediate future.
Along with a favorable interest rate climate, inflation has remained in check for much of the latter decade thanks to a balanced budg et and an acceleration in productivity. Low real energy prices have al so aided in taming inflation.

Favorable Economic Factors Unfavorable Econ omic Factors



## Early & deep interest rate cuts



## Unusually well-timed Federal spending initiatives and tax cuts



## Low fuel prices



## Decline in U.S. imports



## Steady housing demand



## Strong consumer auto purchases 

## Vulnerable capital goods cycle



## Global recession



## Steep drop in U.S. exports



## Weak state & local budgets



## Poor business profits



## Inventory draw downs

Housing demand and consumer purchases of au tomobiles – now a strength – could easily become a negative factor. Higher housing pr ices could easily tilt U.S. housing production down. And auto purchases could be at risk if consumers decide to not buy as many cars as rebate incentives evaporate.

On the other hand, businesses w ill soon have to restock stor e shelves and bolster their inventories as economic spirits begin to lift. Inventory growth would accelerate GDP.

### 15 

## National Forecast Overview. The main question for most everyone has been “when can we expect the U.S. economy to rebound?”. Estimates by most ec onomic observers believe a turn-around could begin as soon as the start of summer, while others think it might not happen until early autumn. Most recessions have, on average, a peak to trough timeline of between 12 and 15 months. If indeed the U.S. economy fell in to recession in March 2001, the U.S. should begin climbing out of its doldrums in the next few months –which would place the recovery in about June 2002.
Monetary conditions are in place for a recove ry, but there are concerns that the rebound could be weaker than normal and slower to develop. Howe ver, over the long-run, U.S. economic growth is expected to be robust – more in line with growth during the 1990’s than the low growth, low productivity, high in terest, and inflationa ry 1970’s and 80’s. A couple of factors will tend to undercut a sharp recovery in the near term.



## Housing starts and sale s have remained at relatively hi gh levels, so expectations are mild for a strong run-up in additional housing starts. Low interest rates help, but the FED is unlikely to cut any deeper anytime soon.



## U.S. domestic auto sales ha ve remained relatively str ong throughout the downturn. Price rebates have s timulated strong demand despite the recession. A sharp rise in auto purchases in late-2001 may restrain auto sales growth in the near future, just as a recovery is beginning.
As a consequence, these two large sectors of the economy are not expected to offer much bounce to an early recovery. The U.S. will have to look to other sectors of the economy for leadership during the recovery.
And so. . .once again, consumers will have to step it up in order to boost U.S. GDP. Nascent signs are emerging to suggest the consumers are ready and willing, but there are worries that high consumer debt levels may hamper a stronger recovery.
Consumers will have to lead, before conditions ripen enough for producers to gain the confidence to gear up production. U.S. Business Inventories (inflation adjusted - $billions)

-75 -50 -25

0 25 50 75 100 125

Q1 98 Q1 99 Q1 00 Q1 01 Q1 02 Q1 03 Q1 04 Federal Reserve Funds Rate Target (percent)

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0

1/00 3/00 5/00 7/00 9/00 11/00 1/01 3/01 5/01 7/01 9/01 11/01 1/02 The Federal Reserves cuts the Fed fund rate below 2% for the first time in 40 years

### 16 

## A couple of other factors favor a recovery in the near future. The first was the “economic stimulus” in the fall of 2001. Though this “tax rebate” was not initially billed as an economic stimulus, the refunds came at a very serendipitous time in the business cycle. For all intents and purposes, its timing and size has acted as a positive stimulus.
Second, in hindsight it is clear producers and retailers saw a recession in the making in late 2000. Inventory accumulation began slowin g in 2000, and by 2001 everyone was slashing inventories. As we begin 2002, manufacturers and re tailers alike will have to rebuild their depleted inventories, whic h should add an additional bump of about 1⁄2 percent to domestic GDP growth. Stronger consumer demand in th e second quarter will provide all the signal needed to boost inventories.

The U.S. macroeconomic forecast predicts consumer spending will bounce back in the second quarter of 2002 and accelerate to 4.1 percent by the 2003 Q1. Investments in fixed plant and equipment will lag behind consumption by another quarter before accelerating up to 11 percent by the end of 2003.
A one quarter lag in nonresidential fixed inve stments is further reflected in industrial production, where output will not ramp up un til the third quarter of 2002. Industrial production peaks in 2003 before settling into a tr end growth path between 2 and 3 percent growth per year.
Consumer confidence will be a key indicator of where the U.S. economy is in the business cycle. Consumer confidence hit bottom in September with the terrorist attacks on New York and Washington D.C. Since October the University of Michigan consumer sentiment index has been steadily rising, with a relatively large percentage jump in December 2001. Consumer Sentiment Index (1966:2 = 100)

50 60 70 80 90 100 110 120

Jan90 Jan91 Jan92 Jan93 Jan94 Jan95 Jan96 Jan97 Jan98 Jan99 Jan00 Jan01 Consumer Expenditures (inflation adjusted)

-2.0% 0.0% 2.0% 4.0% 6.0% 8.0%

Q1 98 Q1 99 Q1 00 Q1 01 Q1 02 Q1 03 Q1 04

Industrial Production - total

-8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0%

Q1 98 Q1 99 Q1 00 Q1 01 Q1 02 Q1 03 Q1 04

### 17 

## As this index continues to rise, and with expectations for employment gains just over the horizon, the U.S. recovery should begin to be felt as soon as summer arrives. However, it may still be a long wait – perhaps 2003 - before a complete thawing and the U.S. economy returns to warmer conditions. Economic conditions surely will begin to improve, but employment growth won’t likely return to anywhere n ear pre-recession le vels until mid-2003.

Global Setting. World trade is important to the U.S. economy. U.S exports currently contribute about 12 percent to the total Gross Domestic Product. Over the long-haul, the national forecast calls for exports to grow faster than other components of GDP. By 2030 the share of exports to U.S. GDP rises above 22 percent. In ternational trade very much is expected to favor the U.S..
The U.S. carries a significant current account deficit, due to its own export deficit. However, due to the strength of the U.S. economy and the confidence this generates with respect to the rest of the world, the value of the U.S. dollar is expected remain relatively strong. This tends to dampen exports, but not by an inordinate amount, and exports are still expected to grow. The rest of the world will continue to expand and to drive up demand for U.S. goods, especially services. In th e long-run, a flat or somewhat declining exchange rate will tend to help U.S. ma nufacturers export their goods to the world. U.S. Nonfarm Employment (millions)

124 126 128 130 132 134 136 138

Q1 98 Q1 99 Q1 00 Q1 01 Q1 02 Q1 03 Q1 04

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

0 20 40 60 80 100 120 140 160

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

Share of Exports/GDP

0% 5% 10% 15% 20% 25%

60 65 70 75 80 85 90 95 00 05 10 15 20 25

### 18 

## DRI-WEFA World Economy Forecast. This section reprinted from DR I-WEFA Global Forecast, February 2002.

DRI-WEFA World Market Overview Recovery is in the air, at least in North America and Europe. Parts of Asia will follow along, but much of the region is struggling with the consequences of not following through on economic reforms. The region also has its share of political crises, many related to the war on terrorism. China, Russia, and most of the other former states of the 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 la rgely domestic political and economic problems. 

### Projected Growth Rates of Real GDP

(Percent) Average 2001 2002 2003 2004-06 United States 1.1 1.0 4.0 3.0 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, Ma laysia, 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 quarter of 2002, 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 of 2001 will provide stimulus over the 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, GDP may have contracted modestly in the fourth quarter of 2001, following minimal growth in the previous two quarters, as the negative economic repercussions of the September 11 terrorist atta cks on the United States had an increased impact. Even before the atta cks, the slowdowns in the U.S. ec onomy, in particular, and elsewhere in the global economy had already had a substantial dampening effect on Eurozone activity. Following the terrorist atta cks, 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 that the downturn has bottomed out. Indeed, the service sector now appears to be expanding again. On the assumption that the U.S. economy starts to recover in early 2002, we believe Eurozone activity should pick up modestly as the first half of 2002 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 GDP 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 of adverse external conditions. The U.S. recession buffeted Mexico's exporting sector, which had been the one of the 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 that will not give the government the extra resources it needs. We do not expect any of the aforementioned factors to improve significantly in the first half of 2002, and some will remain negative through the entire year. Nevertheless, the recovery of the U.S. economy in the second half of 2002 will allow the Mexican economy—and especially its exporting sector—to rebound. As a result, GDP should expand 2.0% in 2002, a clear improvement from the 0.4% contraction in 2001.

### 19 

## DRI-WEFA Forecast Summary of the U.S. Economy. This section reprinted from DRI-WEFA U.S. Executive Summary, January 2002.

2001:2 2001:3 2001:4 2002:1 2002:2 2002:3 2000 2001 2002 2003 2004 2005

–––––– –––––– –––––– –––––– –––––– –––––– –––– –––– –––– –––– –––– –––– Composition of Real GD P (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 Nonres. 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 Nonres. 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 Government 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 of control in 2000, and we project only a slow recovery in 2002. The good news is that, even at its low, high-tech spending will still account for 47% of total spending on equipment and software and 4% of GDP. This direct spending—still much higher than in most other countries and higher than 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 or priced 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 rece ssion, 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 r easonable risk calculations, consumer s pending 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’ c ontending 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 nor too 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 of the business cycle trough 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.

### 20 

## Long-range U.S. Macroeconomic Outlook. Recessions make up only a small “blip” in economic trends. Th ere have been 10 recessions since World War II. On average, U. S. recessions have la sted between 12 to 15 months, with the most severe lasting as long as 18 months. Even with recessions sprinkled over the last 55 years, real GDP rose an average of 3.5 percent a year. Despite fears of global terrorism and the tragic aftermath of 9/11, the current recession will have very little impact over the long-run. The U. S. economy is expected to bounce back, perhaps a little more tired and more cautious, but eventually it will have vigor and vitality to similar before the recession.
A recession, although hurtful to selected segmen ts of the economy that bear the brunt of its force, is not always a bad thing. Recessi ons serve to root out weak firms and sagging industries. They weed out poor business pr actices and reveal ill-conceived business ventures. In the end, it leaves the economy stronger and better able to forge ahead, populated with healthier companies.
In peering into a hazy long range horizon nece ssary for regional planning, it is useful to view economic and population forecasting not in terms of ‘Did the forecast accurately predict all growth?’, but rath er, to think instead about when we might achieve a certain level of growth, plus or minus 2 or 3 years. This turns forecasting on a different axis, and allows planning to proceed, without getting diverted by questions about the “right number”. Planning may be viewed as the accommodation of growth up to a certain range, with policies that speed into implementation sooner when gr owth is faster and growth management strategies de ferred when the economy is growing more slowly.
The current U.S. recession is expected to bottom-out in the 2 nd 

## or 3 rd 

## quarter of 2002. U.S. Gross Domestic Product (GDP) is antic ipated to accelerate through 2003-04, before moderating and tapering off to a more sustaina ble long run rate – ab sent of any additional business cycles. The DRI-WEFA national forecast calls for long-term inflation adjusted U.S. GDP to settle into an annual grow th rate of between 3.0 and 3.5 percent.
The fundamental underpinnings for the long r un growth path of the U.S. depend on the projected growth rate of the labor force and increases in productivity.
U.S. long-run growth fundamentals: Annual Average Growth Rates History (1970-00) 25 Year Forecast Gross Domestic Product 3.1 percent 3.2 percent Productivity 1.0 percent 2.1 percent Labor Force 1.7 percent 1.2 percent

Source: DRI-WEFA, Winter 2002 U.S. Economy outlook as derived by Metro Data Resource Center

### 21 

## The national forecast from DRI-WEFA calls for annual productivity rates to double, increasing to 2.1% from its historical rate of 1.0%. Productivity incr eases are assumed, as more and more U.S. and intern ational firms continue to take advantage of automation and information processing resources. The current U.S. forecast view continues to incorporate significant amounts of “New Economy” grow th into the long run macroeconomic forecast. Unlike the technology wave in pr ior decades, which replaced manual and less efficient means of producing goods and serv ices, this second wave of information technology is creating innovation of a differe nt sort. In the new economy paradigm, new technology assumes the form of new ideas and new products, wh ich lift the overall wealth of the nation.
The significant increases in industrial plan t and equipment growth forecasted for the investment in the computers and software cat egory support this view. Over the long haul, the national outlook for high-technology investme nts is very robust – with an annualized growth rate of 6.8 percent per year. This is slower than the break-neck pace of hightechnology investments of the 1990’s, whic h saw rates shoot up to 22 percent and average over 16 percent a year. This projected investment in high-technology and other innovation will help to bolster productivity in the long run. This allows the nation to create more goods and serv ices at lower costs.
At the same time, employment in high-tec hnology represents a bright spot in the manufacturing sector. Most other manufacturing industries are expected to slowly shed employment as more labor intensive pr oduction processes are shipped overseas. In addition, corporate outsourcing is expected to continue along its present path as moreemployment functions are reclassified into services. Higher productivity rates allow firms to do more with fewer people. With the exception of the current recession, employment growth in the technology sector continues to see expansion on the order of under 0.5 percent per year. For the 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 in the labor force. The U.S. labor force is not expected to grow as rapidly in the next 30 year s as it has in the last. This slower rate of increase tends to dampen potential GDP grow th. One factor which offsets the potential decline is immigration from abroad, which is expected to be higher than previously assumed. Retention of older workers in the workforce also serves to ameliorate the effect of the slowing of labor force growth.
An economy’s growth rate can fluctuate year-to- year with the rise and fall of the business cycle, but the long range trend of GDP grow th is not likely to waver too far from its U.S. Manufacturing Employment

0 5 10 15 20 25

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

### 22 

## expected trend. Changes in monetary or fi scal policy, an unforeseen global recession, changes in capacity utilization, investments and inventory fluctuations are likely to cause economic growth to change as some of thes e factors play out in the current economic malaise. But these variables are transitory a nd will tend to fade into the background in the long-run. Determinants of the long-run are pr imarily the labor for ce and its productivity.

U.S Gross Domestic Product (inflation adjusted)

-2.0% 0.0% 2.0% 4.0% 6.0% 8.0%

70 75 80 85 90 95 00 05 10 15 20 25 30 U.S Productivity

-2.0% 0.0% 2.0% 4.0% 6.0% 8.0%

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

U.S Labor Force

-2.0% 0.0% 2.0% 4.0% 6.0% 8.0%

70 75 80 85 90 95 00 05 10 15 20 25 30 U.S. Foreign Exchange Rate Index (trade weighted to 18 largest trading partners)

0 20 40 60 80 100 120 140 160

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

30 Year Treasury Bond Rates

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0%

70 75 80 85 90 95 00 05 10 15 20 25 30 Consumer Price Index (Inflation)

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0%

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

Consumer Confidence Index (right axis)

Consumer Consumption (left axis)

-2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0%

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

0 20 40 60 80 100 120 U.S. Housing Starts (in millions)

0.00 0.50 1.00 1.50 2.00 2.50 3.00

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

### 23 

# Portland-Vancouver Economic Forecast (5 counties – Multnomah, Clackamas, Washington, Yamhill and Clark)



## Recent Trends. Economic conditions in the region during the pa st year have been much worse than the U.S. as a whole. In fact, Oregon brings up th e rear in state unemployment rates with an unemployment rate of 7.5 percent 10 

## . And it’s not just Oregon; the entire Northwest is suffering. In Washington State unemployment hit 7.1 percent. Things were so bad in November 2001 that for a brief while the Portland metro regiona l unemployment topped the State’s unemployment rate.
Nonfarm employment growth slowed in 1998-99, before seeing a modest rebound in 2000. In 2001, the previous year’s brief growth spurt turned negative. Employment news has not been this bad since 1991. Total nonfarm employment lost ground in 2001 as annual job figures for the region fell 0.34 percentage points (or a net loss of 3,200 jobs). The average number of unemployed rose to near 60,000, with peak unemployment soaring to 75,000 unemployed workers in November and December 2001.
The last four years of economic expansion – dating back to 1991 – have been much more turbulent than the previous six. Regiona l nonfarm job growth slowed for consecutive years in 1998 and 1999, with growth reaching only 1.8 and 1.4 percent, respectively. Theroots for this region’s economic slowdown can be traced to the world-wide hightechnology slump happening then. The regi on’s higher proportion of manufacturing – especially its concentration of high technolog y – made the region more susceptible to the so-called “Asian Flu”. And the region’s pr oportionally greater exposure to the Pacific Rim caused growth in the late 1990’s to decelerate.
In 2000 employment growth exhibited a mini-rebound across the board. Manufacturing jobs edged up 1.5 percent and nonmanufacturin g rose 2.5 percent. As 2001 drew nearer, it seemed at first possible that the region woul d be able to skirt th e latest recession, as it had in 1990-91, but events unraveled and the terrorist attacks on September 11 th 

## were the last straw for an economy that was on the brink of a downturn. Even by mid-2001, most economic pundits were still hopeful that a regional bounce could be possible by September. Those hopes were destroyed.

10 

### Seasonally adjusted. Source: Local Area Unemployment Statistics, Bureau of Labor Statistics, www.bls.gov/web/lauhsthl.htm Unemployment Rates

3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0

Jan 2000 Mar 2000 May 2000 Jul 2000 Sep 2000 Nov 2000 Jan 2001 Mar 2001 May 2001 Jul 2001 Sep 2001 Nov 2001(percent) Portland U.S. Oregon

### 24 

## The greatest weaknesses in the region’s current economic state lies in its manufacturing sector. Employment declines appeared acro ss almost every major industry group. Overall manufacturing jobs fell by 2.3 percent in 2001 w ith the steepest declines in transportation equipment, machinery, me tals, and food processing.

Regional Expectations. The conditions that created the recession in the region may provide the possibility as well as the initial surge for a strong rebound in 2003 and 2004. However, until then, the regional economy will have to wa it. We anticipate the recession to continue to exert its power over employment and re gional growth through much of 2002. Prospects for a rapid rebound in 2002 are quite slim for the region, as a rebound for the nation is not expected until mid-2002. We anticipate a recovery for the region after the U.S., and growth rates to rebound more sharply as compared to the U.S.

This recession has been one that has been marked by a slumping high-technology industry. Negative returns triggered by the collapse in Internet companies and rapid decline in information processing and software investments started what will be a three year decline in the non-electri cal machinery and “second-dip” in the region’s electronics and instrument industry. High-technology, wh ich had been a mainstay for the region’s rapid rise during the mid-1990’s, has become this region’s Achilles heel. For this reason, the regional economy has dipped lower than that of the U.S., but we anticipate a stronger resurgence in the region’s high-tech sector than for the nation as a whole.
Moreover, this region’s greater dependence on manufacturing firms to supply employment opportunities has turned into a manufacturers recession, with retail and other service sector industries being dragged down by the producer sector’s weaknesses. As the region recovers, what was once a source of weakness will again become a source of strength for the region’s future.
Despite current weakness in the economy, regionwide population estimates through this period have been surprisingly strong. Population growth had been slowing since 1998 with the regional economy winding down. High-Tech Manufacturing Employment (Portland-Vancouver MSA)

-8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

Q1 98 Q1 99 Q1 00 Q1 01 Q1 02 Q1 03 Q1 04

Population, total Portland-Vancouver Metropolitan Area

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0%

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05

### 25 

## Forecast Summary for the Portland- V ancouver Region Annual Av g 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 Labor Force 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 Transfer Payments 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 Housing Price – 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 -0.4 1.7 2.5 2.4 2.6 N onfarm – Wage & Salary, total 1.4 2.4 -0.3 -0.4 2.7 3.5 3.4 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 3.4 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 -10.4 -4.5 -6.4 0.0 3.2 3.1 4.1 1.3 Electronic Equipment -1.3 8.4 5.0 -1.3 3.5 6.4 5.9 1.3 Transport. Equipment 7.2 -3.4 -20.7 -5.4 3.6 3.0 3.5 0.8 Other Nondurables -6.3 -0.6 -5.4 -3.8 1.2 2.7 4.1 2.3 Other Durables 2.2 1.1 3.2 -1.7 3.4 2.7 2.7 1.6 N onmanufacturing 2.2 2.5 0.0 -0.2 2.6 3.3 3.4 2.1 Construction -0.5 0.6 -1.4 0.4 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 -0.4 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 1.4 Health Services 1.5 -0.1 1.8 2.1 3.5 3.4 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 the recession upon the region, populati on still grew 1.6 percent in 2000 and 1.5 percent in 2001. The last time population growth came anywhere close to 1 percent was back in the mid-1980’s – which was a partic ularly weak period for the region. Stimulus from relatively moderate populati on increases in the last two years has helped bolster regional employment in industries that are strongly dependent on population growth, such as retail, services and government. This re latively strong employment growth, compared

### 26 

## to our neighboring states, has in turn a ttracted more than 300,000 new residents since 1990 11



## .

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 2000 than originally estima ted. Higher levels of in-migration account for this larger population total. Migr ants tend to be younger and of working age, which in turn raises the employment totals. The demographic composition of the region’s population is also not exactly as we had anticipated. The downward trend in household size (i.e., persons per household) seems to have stabilized during the decade of the 1990’s, instead of fa lling as previously expected. The region’s

11 

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



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

POPULATION EMPLOYMENT Old Forecast 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 Employment figures includes proprietors or self employed workers. Manufacturing Emp.* Non-manufacturing Emp.* Old Forecast New Forecast Diff. Old Forecast 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 salary jobs.

HOUSEHOLDS PER CAPITA 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 Growth Report) 2000-2030 Regional Forecast (new forecast for Dec. 2002 Urban Growth Report )

### 27 

## average household size in 1990 was 2.57 people. Today, it is estimated to be near that same level. However, the new forecast returns to the longer run secular trend of declining household sizes, but assumes a less precipitous drop-off. As a consequence, the number of new households formed in the future as a result of regionwide population growth is actually less than previously predicted. Household sizes by 2020 are expected to stabilize at around 2.5 persons per household, as compar ed to 2.4 persons per household in the previous regional forecast.
Population growth from decade to decade has fluctuated up and down with major migrations of Americans, coming west ove r the Oregon Trail in the mid-1800’s and moving to the north and west soon after World War II. More recently, in the 1990’s people moved to the Portland area in search of a better place to live or a greater number of job opportunities. This was especi ally true for high-tech workers.
During the 1990’s, about two-thirds of new residents had never lived in the Portland area before. Net in-migration will still be a force driving population growth in the future, but a lesser one. Only about half of the region’s population increase during the next 20 years will come from migration; the remainder will be from residents having child ren and grandchildren.
The shape of future population growth in the region will depend on the quality of life here in the region and the ability to ge nerate good paying jobs for future workers. We anticipate population growth to shadow the future employment trends for the region. 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. Population will increase more rapidly in the near term as current conditions favor an economic rebound, which will attract greater number ofmigrants. Over the longhaul, though, the average growth rate per year will start to taper o ff as regional economic growth moderates. Population

at end of

period Avg. Growth 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% 1920-30 477,073 1.9% 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% 1970-80 1,297,926 2.1% 1980-90 1,477,895 1.3% 1990-00 1,874,449 2.4% Source: U.S. Census and PSU Persons per Household

2.44 2.46 2.48 2.50 2.52 2.54 2.56 2.58 2.60 2.62 2.64

90 95 00 05 10 15 20 25 30

### 28 

## Industry Details and Long-term Forecast Outlook.

The Regional Economy . The regional economy is appro aching a crossroad. The current land supply situation is becoming tighter as more buildable land inside the UGB is absorbed by businesses and housing, but as yet is not a limiting factor. This forecast assumes that current land ma rket conditions and regional transportation accessibility do not interrupt growth trends that are evident today.
Total nonfarm employment for the region is exp ected to rise an average of 1.9 percent per year as compared to 1.1 percent in the U.S.. This is somewhat slower employment growth than in the previous 30 years, which saw 3 percent average growth in the region. To a great extent, slower labor force growth is the culprit behind slower job growth. As the labor force participation rate of women eventu ally reaches and exceeds male participation rates in the future, the rate of growth of th e work force slows with the slowdown in labor force participation.
Productivity is projected to rise steadily over the next 30 years, but productivity is a “two-edged sword”. On the one hand, productivity helps lift corporate profits, wages and salaries without causing additional inflation, but it also tends to cut into employment. On the other hand, when productivity can also bolster output and create new de mand, this type of innovation makes employees more productive and valuable and has the effect of bolstering employment growth.
In older manufacturing situa tions, productivity does indeed reduce the need for more employment. When new machinery and i nnovative processes simply replace human activity without a corresponding increase in the demand for additional goods or services, then the need for labor is reduced and employment growth in that industry stalls. In this region, traditional industries such as food processing, metals, and other resource extractive industries are projected to improve their productivity by replacing people with machinery. Output may stay the same or increase, but pr ojected employment declines. U.S Productivity

-2.0% 0.0% 2.0% 4.0% 6.0% 8.0%

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

High-Tech Wage & Salary Employment (in thousands)

0 10 20 30 40 50 60 70 80 90 100

72 75 78 81 84 87 90 93 96 99 02 05 08 11 14 17 20 23 26 29

### 29 

## On the other hand, when productivity and innovation can boost output and create new demand, the need for workers – particular ly skilled ones – will become increasingly significant in these industries. The “New Economy” presupposes that high-tech industries such as computers, information proce ssing, software, telecommunications and biotechnology firms will lead employment grow th. The regional firms are well situated to take advantage of computer, information pr ocessing and software developments. These regional industries are one of two classifications in manufacturing that will see employment actually increase from today’s levels.
The combined high-tech industries in the region employed approximately 60,000 workers in 2001. The ranks of the high-tech workforce in the region are expected to swell to 94,000 by 2030. This represents an addition of tw o high-tech companies the size of Intel today. Possibly, some of this growth will be from an agglomeration of smaller firms, but in order to facilitate this level of growth the region may perhaps attract another major high-tech player. However, the majority of i ndustry growth will likely be attributed to the internal expansion and vitality of existing firms in the region.
The total number of regional jobs, includi ng self-employed workers, is about 61,000 higher in 2000 in the new forecast than was previously forecasted. Job growth in hightech electronics and semiconduc tors, construction, and the service sector showed the widest deviations. This is to be expected, given that the old forecast was completed before the wave of high-tech expansion a nd construction. Unanticipated service sector job growth can be attributed to faste r-than-predicted populati on increases, and the economic downstream effect of more high-tech workers in the region. This new forecast incorporates these latest trends.

Nondurable Manufacturing. Industries which are included in nondurable manufacturing are Food Processing (SIC 20), Textile and Apparel (SIC 22 & 23), Paper (SIC 26), Printing and Publishing (SIC 27). Except for printing and publishing, the major nondurable industries are expected to see falling employment levels during the next 25 years. A combination of anticipat ed productivity gains, overseas competition, limited supplies, and relocation of production capacity abroad spells an overall trend to declining jobs.
Our view on the printing and publishing industry assumes job growth to continue in this industry but at a slower pace than during th e last 30 years. Employment growth is expected to achieve an average rate of 1.4 pe rcent per year as compared to 3.4 percent in the decades before. Manufacturing Employment

0 20 40 60 80 100 120 140 160 180 200

70 75 80 85 90 95 00 05 10 15 20 25 30 0 5 10 15 20 25

Durable - Region Non-dur - Region US thousands millions

### 30 

## Durable Manufacturing. Industries classified in this category include Lumber & Wood Products (SIC 24), Metals (SIC 33 & 34), M achinery & Computer equipment (SIC 35), Electrical Machinery, Semiconductors and Instruments (SIC 36 & 38), and Transportation Equipment (SIC 37). The res ource based industries (l umber and paper) are projected to experience stead y decreases in employment as productivity and competition from other regional sources erode the region’s competitiveness.
The business cycle for metals and transportati on is not dead. Transportation equipment in the near term is expected to remain weak because of travel fears. However a delayed rebound is expected even after the travel industry recovers a nd the global recession retreats due to the weakness in the airline ma rket. The region’s metals industry, include primarily aluminum makers and scrap metal re-producers, is projected to remain flat in employment. Long-term, regional employment in this sector is projected to be about the same level of employment as today. However, the path into the future for both industrial sectors is likely to suffer through wide swin gs in employment with fluctuating global change.

Nonmanufacturing Employment Trends. The steady shift in focus of the workforce to nonmanufacturing is expected to continue. J ob growth in the nonmanufacturing sector is projected to exceed 2 percent per year on av erage. The nonmanufactur ing sector created over 800,000 jobs in 2000 as compared to 300,000 in 1970. This total is expected to reach 1.46 million by 2030.
The largest component continues to be th e service sector, which employs almost 280,000 workers. A fast growing segment of the service sector includes business services, computer software developmen t and health services. Health services alone comprises more than 22 percent of service sector jobs . With the average age of the U.S. population growing older, more resources are expected to be diverted towards health care. A generally older population will tend to have greater accumula ted wealth and is more likely to purchase more services than today. Regional job growth in total services is projected to reach an average of 2.8 percent growth per year.
Business services, and temporary help services in particular, is likely to be a relatively fast growth segment as more and more firms out-source temporary help as well as ancillary business functions such as acc ounting, printing, and human resources.
Software development is expected to be anot her strong growth segment in services. With long-run investments in computer and busine ss equipment steadily growing, software to manage and control these new devices will be aided by the advancement in technology.
The transportation services sector is expected to see relatively stronger growth than its companion communication and utility sector workforce. While the transportation sector continues to press its compar ative advantage as a regiona l distribution hub in Portland, the communication and utility sector is exp ected to see limited expansion opportunities. Overall, the transportation, communication a nd utilities industry (TCU ) is projected to growth at near the region’s rate of population growth (1.5 percent APR).

### 31 

## The retail and wholesale trade sectors in the re gion are expected to al so increase at about the rate of population growth. Retail trade employment is forecasted to grow an average of 1.9 percent APR while wholesale trade is ex pected to grow a bit slower at 1.7% APR. The region’s proximity to Asian markets and as distribution hub for the Northwest will play a key role in aiding wholesale trade empl oyment to continue to add to job growth in the region.
The region’s finance sector has been weakened in the wake of merg ers and acquisition in the banking community that has led to a sign ificant number of corpor ate headquarter jobs relocating to other states. Th e prospects for well-paying co rporate level finance positions have diminished and as a result the forecast refl ects significantly slower job growth in the finance, insurance, and real estate sector. The cyclical weakness in the region has hampered job growth in the insurance and r eal estate sectors. These industry segments tend to ebb and flow with changes in popula tion and income. Right now, these factors are down. Over the long haul, we expect thes e economic factors to rebound. In total, the average percent rate of growth is exp ected to run about 1.4 percent per year.

The construction sector has historically been an early indicator of business 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 of the highest unemployment rates of metropolitan areas in th e nation. The regional forecast calls for construction jobs to rebound after the recovery and for growth to be moderate instead of a sharp rebound. The for ecast anticipates the region’s construction industry to experience job growth similar to the average in population – 1.6 percent.
Employment in state and local government is projected to increase by a small margin slower than population growth. The assumption is that tight state and local budgets will limit job growth in government. Non-manufacturing Employment

0 200 400 600 800 1,000 1,200 1,400 1,600

70 75 80 85 90 95 00 05 10 15 20 25 30 0 20 40 60 80 100 120 140 160 180

Region US thousands millions

### 32 Total Non-Farm Wage & Salary Employment

400.0 600.0 800.0 1000.0 1200.0 1400.0 1600.0

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025Employment (in thousands)

0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0 180.0 200.0Employment (in millions)

2025 Forecast 2017 Forecast U.S. Forecast Total Manufacturing Employment

75.0 100.0 125.0 150.0 175.0 200.0

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025Employment (in thousands)

0.0 5.0 10.0 15.0 20.0 25.0Employment (in millions)

2025 Forecast 2017 Forecast U.S. Forecast

Food Processing Employment

0.0 2.0 4.0 6.0 8.0 10.0 12.0

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025Employment (in thousands)

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00Employment (in millions)

2025 Forecast 2017 Forecast U.S. Forecast Textile & Apparel Employment

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025Employment (in thousands)

0.00 0.50 1.00 1.50 2.00 2.50Employment (in millions)

2025 Forecast 2017 Forecast U.S. Forecast

Lumber & Wood Products Employment

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025Employment (in thousands)

0.00 0.20 0.40 0.60 0.80 1.00 1.20Employment (in millions)

2025 Forecast 2017 Forecast U.S. Forecast Paper & Allied Products Employment

0.0 2.0 4.0 6.0 8.0 10.0

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025Employment (in thousands)

0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80Employment (in millions)

2025 Forecast 2017 Forecast U.S. Forecast

Printing & Publishing Employment

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025Employment (in thousands)

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80Employment (in millions)

2025 Forecast 2017 Forecast U.S. Forecast Metals Industry Employment

0.0 5.0 10.0 15.0 20.0 25.0

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025Employment (in thousands)

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50Employment (in millions)

2025 Forecast 2017 Forecast U.S. Forecast

### 33 Electrical Machinery, Semiconductors & Instruments Employment

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025Employment (in thousands)

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50Employment (in millions)

2025 Forecast 2017 Forecast U.S. Forecast Transportation Equipment Employment

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025Employment (in thousands)

0.00 0.50 1.00 1.50 2.00 2.50Employment (in millions)

2025 Forecast 2017 Forecast U.S. Forecast

Other Durable Goods Employment

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025Employment (in thousands)

0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8

2025 Forecast 2017 Forecast U.S. Forecast Other Nondurable Goods Employment

0.0 2.0 4.0 6.0 8.0 10.0 12.0

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025Employment (in thousands)

0.00 0.50 1.00 1.50 2.00 2.50 3.00Employment (in millions)

2025 Forecast 2017 Forecast U.S. Forecast

Transportation, Communications, Utilities Employment

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025Employment (in thousands)

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0Employment (in millions)

2025 Forecast 2017 Forecast U.S. Forecast Wholesale Trade Employment

0.0 20.0 40.0 60.0 80.0 100.0 120.0

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025Employment (in thousands)

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0Employment (in millions)

2025 Forecast 2017 Forecast U.S. Forecast

Retail Trade Employment

0.0 50.0 100.0 150.0 200.0 250.0 300.0

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025Employment (in thousands)

0.0 5.0 10.0 15.0 20.0 25.0 30.0Employment (in millions)

2025 Forecast 2017 Forecast U.S. Forecast Finance, Insurance & Real Estate Employment

0.0 20.0 40.0 60.0 80.0 100.0 120.0

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025Employment (in thousands)

0.0 2.0 4.0 6.0 8.0 10.0 12.0Employment (in millions)

2025 Forecast 2017 Forecast U.S. Forecast

### 34 Health Services Employment

0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025Employment (in thousands)

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0Employment (in millions)

2025 Forecast 2017 Forecast U.S. Forecast Other Services Employment

0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0 400.0 450.0

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025Employment (in thousands)

0.0 10.0 20.0 30.0 40.0 50.0 60.0Employment (in millions)

2025 Forecast 2017 Forecast U.S. Forecast

State & Local Government Employment

0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025Employment (in thousands)

0.0 5.0 10.0 15.0 20.0 25.0Employment (in millions)

2025 Forecast 2017 Forecast U.S. Forecast

### 35 

# Alternate Regional Growth Scenarios

Introduction.
Regional forecasts are constructed based on num erous assumptions. Prior sections of this economic report focused on the mid-growth or baseline regional growth forecast and its assumptions. The baseline forecast represents, in our opinion and those of peer review panels, the most likely and reasonable growth projection for the Portland region over the next 20+ years. Knowing that forecasts can change as world events unfold, we have prepared seperate high and a low growth scenarios. For policy makers, these two scenarios delineate a range of possibilities in case economic and demographic conditions change drastically from the baseline assumptions.
We have prepared two alternative forecas ts: a pessimistic scenario and an optimistic scenario. Each scenario begins with th e regional baseline for ecast and tilts all the economic drivers in one direc tion or another. The pessimistic scenario assumes economic and population will grow much more slow ly. The pessimistic regional scenario incorporates DRI-WEFA’s pessimistic U.S. growth projections in which all the key economic variables are “dialed” to a lower growth setting, and also assumes the Census Bureau’s high mortality and low fertility assumptions. The optimistic regional 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 that ha ve been developed for the region represent extreme bandwidths for regional growth. It is estimated that over the next 20+ years of the forecast that there is over a 90 percen t probabililty that regi onal growth will fall within the range of these two scenarios. However, the baseline regional forecast remains as the best approximation of the re gion’s most appare nt growth trend.
The Regional Growth Alternatives.

Regional Overview. The low growth (pessimistic scenario) forecast for the region is characterized by substantially slower employ ment growth than its baseline counterpart. Total wage and salary employ ment growth comes in at an anemic 1.3 percent APR over the duration of the forecast. Manufacturing employment within the region stalls and in particular high technolgy jobs grow at very low levels (0.5 percen t APR in pessimistic, 1 percent in the baseline, 1.5 percent in optimistic). Other regi onal industries suffer significant job losses as indus trial production nationwide is a ssumed to contract in many resource and labor intensive indus trial sectors. As a result of this national pessimissm, the consumer sector takes a significant beating as consumption falls well be low historic rates.
Not only is the economic sector battered by weaker regional economic performances, the population and labor trends for the pessimistic scenario assu mes much slower increases too. The pessimistic scenario restricts labor force growth because of lower net migration into the region and lower birth rates and lower life expectancies. These factors combine to slow the future rate of population growth. In turn, the lower demographic factors force

### 36 

## employment growth in population serving industr ies to cut back employment growth too. Generally, in the traded sector industries, a dimmer outlook for national growth dampens regional economic activity relative to the base trend. Over all, the potential output for the region is significantly diminished as compared to the region’s baseline forecast.
Other economic factors in the low growth re gional scenario also grow more slowly – including the housing stock, housing values appreciate much less, and the ability of governments to generate re venue from taxes is lower ( but demand for government services may be less in some areas but more in others, such as welfare and other low income aid.) because personal income in th e region will also be substantially less.
In the case of the regional high growth (optimistic scenario) fo recast, economic and demographic assumptions are “dialed up at a higher rate”. Nationa l economic conditions are all assumed to favor more rapid economic expansion worldwide. This U.S. forecast is characterized by higher GDP, lower inflation, lo wer interest rates, lower exchange rates, lower oil prices and at the same time empl oyment and industry pr oduction rates are to grow more rapidly. Demographic conditions in the optimistic case is characterized by a greater migration rates that corresponds to greater overall populati on, labor force, and employment growth. The national outlook that drives the high scenario assumes annual U.S. population growth averages 1.3 percent pe r year (1.0 percent in the baseline trend, 0.5 percent for the pessimistic scenario).
Because the optimistic scenario assumes a high er growth trend for the U.S., the region shares in the greater bounty. Birth rates ar e higher, life expectan cies are higher, and regional migration hits greater heights wh ich in turn drives up regional population growth. The region’s population growth averag es 2 percent per year during the forecast (1.5 percent in the baseline tr end, 0.8 percent for the pessimistic scenario). The higher population trend pushes the adu lt population higher which dir ectly affects the regional labor force. More people in the labor force and better economic conditi ons lead to higher job growth in the region. Regionwide wage a nd 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 region 12 

## grows from 1,874,400 residents in 2000 (s ource: Census sf1) to 2,647,000 by year 2022. In comparison, the optimistic scenario grows to 2,822,300; whereas the pessimistic scenario reaches a level of 2,212,100 residents in the same period of time. The difference between scenarios as compared to the baseline is a matter of minus 4 years for the optimistic regional scenario and plus 10 years in the pessimistic regional scenario 13



## . The baseline population growth trend is charact eristic of birth, deat h and migration trends consistent with emerging trends in the re gion and of national demo graphic expectations.

12 

### Includes Multnomah, Clackamas, Washington, Yamhill and Clark counties 13 

### In other words, the optimistic scenario reaches the 2022 population mark in the baseline trend 4 years sooner and in the case of the pessimistic scenario, over 10 years later.

### 37 

## Regional population trends assumed in the optimistic case are characteristic of migration patterns experienced in the Portland region dur ing a sustained period of very high inmigration levels. The variation in migration levels in the optimistic scenario mimic those experieced during the late- 1980’s and 1990’s in the Portla nd region, but over the entire forecast, the average growth rate in the optimis tic case is below the re gional trend rate in the 1990’s (history: 2.4 percent, forecast: 2.0 pe rcent). In addition, we assume higher fertility and life expectancies for residents living in the region.
A population rate that mimics national growth rates is assumed in the pessimistic scenario. This scenario represents an extr emely low population rate for the region and is highly uncharaceteristic of past trends. At no point in history has the region ever experienced over 20 years of re pressive population trends as exhibited in this pessimistic regional scenario. The only period in regional history that saw population growth slow to near 1 percent APR was the 10-year pe riod that included the 1930 era Depression. Clearly, the region is unlikely to experi ence 20 years of depression-style population growth and so this scenario represents the lower bounds of this region’s population trends.

Bandwidth Forecasts for Selected Regional Population Characteristics

In the pessimistic scenario, we wanted to characterize what could be a lower bound of population if we assumed very little regional in-migration, low natural increases in regional population and how these factor woul d impact regional employment growth. The population growth rate in the pessimistic scenar io is similar to the growth rate that DRIWEFA has forecasted for the U.S. in its baseline trend projection.
Similarly, the optimistic scenario for the region is as equally unlikely, but is illustrative of a higher bound of this region’s population trend. It is improba ble that this region would achieve 20 years in a row of population growth that copied what this region experienced Population Growth Scenarios

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

70 75 80 85 90 95 00 05 10 15 20 25 30 high low mid

Crude Birth Rates

(births per 1,000)

10 11 12 13 14 15 16 17 18

70 75 80 85 90 95 00 05 10 15 20 25 30 high low mid Crude Death Rates (births per 1,000)

6 7 7 8 8 9 9 10 10

70 75 80 85 90 95 00 05 10 15 20 25 30 high low mid Net Migration Scenarios

-30 -20 -10

0 10 20 30 40 50

70 75 80 85 90 95 00 05 10 15 20 25 30 high low mid

### 38 

## during the 1990’s. It is also unlikely that another $12 billion of high-tech investments would be repeating itself in next 20 year s – especially so soon after the 1990’s boom.

Economic Comparisons. In part, employment growth dr ives off of population because of the labor force characteristics derived from each growth alternative. Labor force conditions in the optmistic scenario call for growth to average 2.1 percent per year (1.6 percent in the base, 1 percen t in pessimistic). Because at the national level, the adult population is expected to grow faster in th e optimistic case, more working age adults are expected to migrate into the region seeking jobs. Also, faster internal population growth from natural increases will also add to the region’s labor force. The expectation in the high growth scenario calls for regional employ ment to rise an average of 2.2 percent per year (1.8 percent in the baseline trend, 1.3 percent for the pessimistic scenario).
Wage and salary employment growth is expected to exceed the change in the labor force in part due to the expectation that labor force participation rates will continue to edge up modestly in all scenarios
In the optmistic case, regional income growth is expected to rise more sharply than the baseline trend scenario. However, because popul ation growth rises fa rily rapidly and the inflation rate in the high growth scenario is greater, the region forecast exhibits a quirky situation in which per capita income growth in real dollars is slower in the optimistic case than the base case. Otherwise, in current do llars, regional per capita income grows and is higher in the optimistic case.
In all cases, wage and salary disbursements still represent over half of all earned and unearned income. Interestingly, the amount of transfer payments coming to the region in the optimistic case is less than transfer paymen ts received in the baseline forecast. This results from the region achieving greater economic prosperity in the high growth case as to offset income transfers to medicare/me dicaid recipients, unemployment benefits, and social security, aid for dependent children and welfare payments.
Home prices appreciate more rapidly (average 4.8 percent per year in the optimistic, 3.8 percent in base case, 2.0 percent in pess imistic) in the optmistic case. Higher housing prices are indicative of an economy that exhibits hefty ga ins in population, employment and income as in the optmistic scenario. Mo re population fuels the labor force which in turn leads to employment gains. Robust em ployment and relativel y greater productivity in the future combine to boost the rate of income growth. More in come and more people add up to more demand for housing. In the short run, production of housing falls behind the demand for housing, home prices appreciat e in the short run because of deficts. However, over the long run the consisten tly higher demand shifts the demand curve higher resulting in higher home prices. The oppos ite occurs in the pessimistic scenario for the region. Thus, a lower reving regional economy generates less housing demand, and so home prices don’t appreciate as readily.

### 39 

## Bandwidth Forecasts for Selected Regional Economic Characteristics

National Overview. Regional growth is directly a ffected by the national outlook. The regional baseline forecast is derived from DR I-WEFA’s trend outlook for the U.S. The optimistic and pessimistic regional alternatives derive from DRI-WEFA’s respective optimistic and pessimistic national scenarios.
A U.S. economic outlook that presents a mu ch more robust forecast creates economic incentives and downstream benefits for regiona l industries and households. In the case of the DRI-WEFA optimistic U.S. forecast, higher GDP, productivity, employment, and other favorable economic conditions spur a faster pace of regional 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. Wage & Salary Job Growth Scenarios

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000

70 75 80 85 90 95 00 05 10 15 20 25 30 high low mid

Labor Force Growth Scenarios

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000

90 95 00 05 10 15 20 25 30 high low mid Manufacturing Job Growth Scenarios

0 50 100 150 200 250

70 75 80 85 90 95 00 05 10 15 20 25 30 high low mid

Non-Manufacturing Job Growth Scenarios

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800

70 75 80 85 90 95 00 05 10 15 20 25 30 high low mid

Consumer Price Index

0 100 200 300 400 500 600

90 95 00 05 10 15 20 25 30 high low mid Single Family Median Home Price

0 100 200 300 400 500 600 700 800

70 75 80 85 90 95 00 05 10 15 20 25 30 high low mid

Personal Income, Nominal $

0 50,000,000 100,000,000 150,000,000 200,000,000 250,000,000 300,000,000 350,000,000 400,000,000

90 95 00 05 10 15 20 25 30 high low mid Per Capita Income, Nominal $

0 20,000 40,000 60,000 80,000 100,000 120,000

90 95 00 05 10 15 20 25 30 high low mid

### 40 

## The following table highlights major sectors of the U.S. economy as well as demographic and economic factors which affect the pace of long-run economic activity for the region.
U.S. Economic and Demogr aphic Summary Details. (Average Annual Percent Change)


## History 30-Year Forecast 1970-00 Optimistic Baseline Pessimistic Population and Labor Force

Total Population 1.0% 1.3% 1.1% 0.5% Labor Force 1.7 1.1 1.0 0.8 Total Wage & Salary Jobs 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 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 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 ($1996) 2.6 3.5 3.0 2.7 Output and Productivity Output 2.9 3.5 3.0 2.4 Productivity 0.8 2.6 2.4 1.9 Inflation and Prices CPI 5.2 2.5 3.1 3.9 GDP price deflator 4.4 2.3 2.8 3.6 Oil Price ($/ 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 Source: DRI-WEFA, Winter U.S. forecast as compiled by Metro DRC



## Early Risks to the Regional Forecast.
The regional forecast assumes that the U.S. economy is in a mild recession, but that the monetary and fiscal boosts succeed in turning it around in early 2002. The regional forecast also assumes that, by spring 2002, c onsumers have shaken off their fears of flying and large crowds. Fina lly, it assumes that there are no further direct terrorist attacks on the United States, and that military action ends with the defeat of the Taliban, the rout of al Quaeda, and stability in the middle east. Any or all of these assumptions could prove too rosy.

### 41 

## On the other hand, the regional forecast c ould be overly pessimis tic. Businesses may have overreacted to the plunge in spending that followed the September 11 attacks. This scenario carries its own risks. If activity is about to turn around on its own, the huge amount of monetary and fiscal stimulus in the pipeline could prove excessive. Rather than grease the wheels of the recovery, it w ould set up the conditions for a return of inflation and speculative investment. Nonetheless, in our estimation there is more downside risk than upside growth potential at this juncture of the business cycle.

See Appendix Sections for further details :



## Appendix A: Table 14: “Alte rnate Forecasts for the Po rtland-Vancouver, OR-WA” for a summary table of key variables in the regional forecast.



## Appendix B: “A Range of Possiblities: The Optimistic and Pessimistic Projections” for DRI-WEFA’s description of the national alternatives.

# Appendix A: Regional Economic Forecast DetailsTable 1

**Portland Vanc. OR**  **WA Pct.**  **Chg. Salem Pct.**  **Chg. Yamhill Pct.**  **Chg. Columbia Pct.**  **Chg. Oregon Pct.**  **Chg. California Pct.**  **Chg. U.S.**  **(in mil.) Pct.**  **Chg. 1970**  1,049.3 186.7 40.2 28.8 2,091.0 20,039.0 205.1 **1971** 1,075.8 2.5% 192.6 3.2% 41.5 3.1% 29.9 3.8% 2,151.0 2.9% 20,346.0 1.5% 207.7 1.3% **1972** 1,072.5 -0.3% 194.3 0.9% 42.2 1.8% 30.1 0.7% 2,197.3 2.2% 20,585.0 1.2% 209.9 1.1% **1973** 1,092.6 1.9% 200.1 3.0% 43.4 2.9% 30.2 0.4% 2,241.9 2.0% 20,869.0 1.4% 211.9 1.0% **1974** 1,117.5 2.3% 205.0 2.4% 44.0 1.4% 31.2 3.2% 2,285.0 1.9% 21,174.0 1.5% 213.9 0.9% **1975** 1,145.8 2.5% 207.5 1.2% 44.9 2.0% 31.8 2.1% 2,329.7 2.0% 21,538.0 1.7% 216.0 1.0% **1976** 1,171.7 2.3% 214.7 3.5% 45.7 1.8% 32.4 1.9% 2,378.3 2.1% 21,936.0 1.8% 218.0 1.0% **1977** 1,203.6 2.7% 219.7 2.3% 47.2 3.3% 33.3 2.8% 2,446.7 2.9% 22,352.0 1.9% 220.2 1.0% **1978** 1,234.8 2.6% 231.6 5.4% 51.8 9.6% 33.9 1.8% 2,518.3 2.9% 22,836.0 2.2% 222.6 1.1% **1979** 1,266.0 2.5% 237.0 2.3% 53.6 3.5% 34.9 2.9% 2,588.0 2.8% 23,257.0 1.8% 225.1 1.1% **1980** 1,297.9 2.5% 249.9 5.4% 55.3 3.3% 35.7 2.1% 2,633.1 1.7% 23,782.0 2.3% 227.7 1.2% **1981** 1,314.8 1.3% 256.4 2.6% 56.3 1.8% 36.2 1.4% 2,668.0 1.3% 24,278.0 2.1% 230.0 1.0% **1982** 1,325.6 0.8% 252.4 -1.5% 56.6 0.5% 36.2 0.1% 2,664.9 -0.1% 24,805.0 2.2% 232.2 1.0% **1983** 1,316.9 -0.7% 250.5 -0.8% 56.2 -0.7% 36.0 -0.6% 2,653.1 -0.4% 25,337.0 2.1% 234.3 0.9% **1984** 1,329.6 1.0% 255.0 1.8% 57.0 1.4% 36.2 0.6% 2,666.6 0.5% 25,816.0 1.9% 236.4 0.9% **1985** 1,342.3 1.0% 258.1 1.2% 57.6 1.1% 36.1 -0.3% 2,672.7 0.2% 26,403.0 2.3% 238.5 0.9% **1986** 1,355.2 1.0% 254.8 -1.3% 57.1 -0.9% 36.1 0.0% 2,683.5 0.4% 27,052.0 2.5% 240.7 0.9% **1987** 1,369.5 1.1% 260.3 2.2% 58.4 2.3% 36.1 0.0% 2,701.0 0.7% 27,717.0 2.5% 242.8 0.9% **1988** 1,398.6 2.1% 266.3 2.3% 59.8 2.4% 36.8 1.9% 2,741.3 1.5% 28,393.0 2.4% 245.0 0.9% **1989** 1,428.4 2.1% 271.8 2.1% 60.7 1.5% 37.3 1.4% 2,790.6 1.8% 29,142.0 2.6% 247.3 0.9% **1990** 1,477.9 3.5% 278.0 2.3% 65.6 8.0% 37.6 0.7% 2,842.3 1.9% 29,811.4 2.3% 249.9 1.0% **1991** 1,502.0 1.6% 287.9 3.6% 67.9 3.6% 37.8 0.6% 2,918.8 2.7% 30,414.1 2.0% 252.7 1.1% **1992** 1,552.0 3.3% 294.5 2.3% 69.2 1.9% 38.8 2.6% 2,973.9 1.9% 30,875.9 1.5% 255.4 1.1% **1993** 1,597.4 2.9% 301.0 2.2% 70.9 2.5% 38.8 0.0% 3,034.5 2.0% 31,147.2 0.9% 258.1 1.1% **1994** 1,643.4 2.9% 307.2 2.1% 72.8 2.7% 39.4 1.5% 3,087.1 1.7% 31,317.2 0.5% 260.7 1.0% **1995** 1,681.1 2.3% 313.4 2.0% 74.6 2.5% 39.7 0.8% 3,141.4 1.8% 31,493.5 0.6% 263.0 0.9% **1996** 1,723.9 2.5% 319.1 1.8% 77.5 3.9% 40.1 1.0% 3,195.1 1.7% 31,780.8 0.9% 265.2 0.8% **1997** 1,772.7 2.8% 324.4 1.7% 79.2 2.2% 41.5 3.5% 3,243.3 1.5% 32,217.7 1.4% 267.6 0.9% **1998** 1,812.0 2.2% 331.6 2.2% 81.9 3.4% 42.3 1.9% 3,282.1 1.2% 32,682.8 1.4% 269.9 0.9% **1999** 1,844.6 1.8% 335.4 1.1% 83.1 1.5% 42.7 0.8% 3,316.2 1.0% 33,145.1 1.4% 272.2 0.8% **2000** 1,874.5 1.6% 347.2 3.5% 85.0 2.3% 43.6 2.1% 3,421.4 3.2% 33,871.6 2.2% 274.5 0.8% **2001** 1,902.5 1.5% 352.6 1.5% 86.4 1.6% 43.5 -0.2% 3,465.8 1.3% 34,456.6 1.7% 276.8 0.8% **2002** 1,934.3 1.7% 358.6 1.7% 88.2 2.0% 43.9 1.0% 3,504.5 1.1% 35,127.7 1.9% 279.1 0.8% **2003** 1,963.7 1.5% 364.6 1.7% 89.9 1.9% 44.4 1.0% 3,533.7 0.8% 35,771.6 1.8% 281.3 0.8% **2004** 2,007.7 2.2% 370.6 1.6% 91.4 1.7% 44.8 1.1% 3,583.0 1.4% 36,549.6 2.2% 283.6 0.8% **2005** 2,049.2 2.1% 376.4 1.6% 92.9 1.6% 45.3 1.1% 3,629.6 1.3% 37,337.6 2.2% 285.9 0.8% **2006** 2,091.0 2.0% 382.2 1.5% 94.3 1.5% 45.8 1.1% 3,674.9 1.2% 38,087.1 2.0% 288.2 0.8% **2007** 2,132.8 2.0% 387.4 1.4% 95.6 1.3% 46.3 1.1% 3,720.5 1.2% 38,904.6 2.1% 290.5 0.8% **2008** 2,170.1 1.8% 392.7 1.4% 96.8 1.3% 46.8 1.1% 3,762.3 1.1% 39,715.2 2.1% 292.9 0.8% **2009** 2,203.0 1.5% 398.2 1.4% 98.2 1.4% 47.4 1.1% 3,798.8 1.0% 40,469.0 1.9% 295.3 0.8% **2010** 2,233.9 1.4% 404.2 1.5% 99.6 1.4% 47.9 1.1% 3,832.8 0.9% 41,159.9 1.7% 297.7 0.8% **2011** 2,264.5 1.4% 410.7 1.6% 101.0 1.5% 48.4 1.1% 3,866.8 0.9% 41,818.7 1.6% 300.1 0.8% **2012** 2,294.6 1.3% 417.2 1.6% 102.6 1.5% 49.0 1.1% 3,900.8 0.9% 42,447.5 1.5% 302.6 0.8% **2013** 2,324.7 1.3% 423.9 1.6% 104.1 1.5% 49.5 1.1% 3,935.0 0.9% 43,082.3 1.5% 305.1 0.8% **2014** 2,357.9 1.4% 430.7 1.6% 105.6 1.5% 50.0 1.1% 3,972.6 1.0% 43,678.7 1.4% 307.6 0.8% **2015** 2,394.1 1.5% 437.5 1.6% 107.2 1.5% 50.6 1.1% 4,013.5 1.0% 44,251.8 1.3% 310.2 0.8% **2016** 2,429.5 1.5% 444.3 1.6% 108.8 1.5% 51.1 1.1% 4,053.4 1.0% 44,827.5 1.3% 312.7 0.8% **2017** 2,464.2 1.4% 451.1 1.5% 110.4 1.5% 51.7 1.1% 4,092.7 1.0% 45,420.6 1.3% 315.2 0.8% **2018** 2,499.5 1.4% 458.1 1.5% 112.1 1.5% 52.2 1.1% 4,132.5 1.0% 45,972.1 1.2% 317.7 0.8% **2019** 2,534.9 1.4% 465.1 1.5% 113.7 1.5% 52.8 1.1% 4,172.4 1.0% 46,526.6 1.2% 320.2 0.8% **2020** 2,571.1 1.4% 472.2 1.5% 115.4 1.5% 53.4 1.1% 4,213.2 1.0% 47,139.7 1.3% 322.7 0.8% **2021** 2,608.4 1.5% 479.4 1.5% 117.2 1.5% 53.9 1.1% 4,255.0 1.0% 47,680.1 1.1% 325.2 0.8% **2022** 2,647.0 1.5% 486.6 1.5% 119.0 1.5% 54.5 1.0% 4,298.2 1.0% 48,187.2 1.1% 327.7 0.8% **2023** 2,687.0 1.5% 494.0 1.5% 120.8 1.5% 55.1 1.0% 4,342.6 1.0% 48,754.4 1.2% 330.2 0.7% **2024** 2,727.6 1.5% 501.4 1.5% 122.6 1.5% 55.6 1.0% 4,387.7 1.0% 49,342.9 1.2% 332.6 0.7% **2025** 2,768.2 1.5% 508.9 1.5% 124.5 1.5% 56.2 1.0% 4,432.6 1.0% 49,893.6 1.1% 335.0 0.7% 

## Total Population of Selected Metropolitan Areas, Counties, States, and U.S.

In Thousands A-1 Source: Metro DRC Metro01.xls 10/7/02Table 2

**Population Percent**  **Change Change Births Deaths**  **Natural Increase Net Migration**  **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 

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

A-2 Source: Metro DRC Metro01.xls 10/7/02Table 3**0 - 4 5 - 9 10 - 14 15 - 19 20 - 24 25 - 29 30 - 34 35 - 39 40 - 44 45 - 49 50 - 54 55 - 59 60 - 64 65 - 69 70 - 74 75 - 79 80 - 84 85 + Total** **1990**108.9 109.8 103.6 95.5 98.2 120.6 136.2 139.1 123.1 89.8 65.5 55.3 55.4 54.8 44.9 35.4 22.8 19.1**1,477.9 1991** 111.1 110.8 105.3 97.5 99.5 119.5 135.6 139.8 125.9 94.4 69.0 56.9 55.5 54.8 45.8 36.0 23.7 19.8**1,535.4 1992** 114.7 113.2 108.0 101.2 104.5 120.7 135.7 141.0 129.7 101.3 74.7 59.8 55.9 54.6 46.7 36.7 24.8 20.9**1,566.2 1993** 117.7 116.0 111.0 105.1 110.0 123.4 136.6 142.3 133.3 107.7 80.6 63.3 56.9 54.6 47.5 37.5 25.9 22.0**1,608.4 1994** 120.5 118.9 114.0 108.9 115.2 126.6 138.0 143.7 136.5 113.5 86.5 67.2 58.4 54.8 48.2 38.3 26.8 23.1**1,638.6 1995** 122.7 121.3 116.6 112.0 119.0 129.1 138.9 144.5 139.0 118.6 92.3 71.4 60.2 55.3 48.7 39.0 27.6 24.1**1,670.7 1996** 124.8 123.7 119.2 115.0 122.7 131.9 140.2 145.4 141.2 123.2 97.8 75.8 62.5 56.0 49.2 39.6 28.4 25.1**1,706.7 1997** 127.6 126.5 122.1 118.5 127.5 135.9 142.5 146.9 143.5 127.5 103.3 80.5 65.3 57.1 49.8 40.3 29.2 26.1**1,737.7 1998** 130.2 128.9 124.7 121.4 131.0 139.1 144.5 148.1 145.3 131.3 108.4 85.2 68.3 58.5 50.5 40.9 29.8 27.1**1,773.0 1999** 132.2 130.7 126.7 123.6 132.9 141.0 145.8 148.9 146.7 134.4 113.0 89.8 71.5 60.0 51.3 41.5 30.4 27.9**1,798.6 2000** 132.1 135.0 132.5 127.4 125.4 144.8 148.2 153.8 156.3 149.6 126.9 88.3 61.1 48.5 46.2 42.1 30.0 26.4**1,874.5 2001** 136.0 133.3 129.6 126.7 134.6 142.5 146.9 149.4 148.1 138.8 120.5 98.1 77.9 63.6 53.0 42.5 31.4 29.5**1,902.5 2002** 138.7 135.2 131.4 128.5 135.4 143.1 147.5 150.0 149.1 141.1 124.2 102.4 81.6 66.0 54.4 43.3 32.0 30.3**1,934.3 2003** 140.8 136.9 133.0 130.1 136.7 143.9 148.2 150.5 149.8 142.8 127.4 106.4 85.2 68.5 55.8 44.1 32.6 31.1**1,963.7 2004** 144.0 139.9 135.5 132.8 140.5 147.2 150.5 152.1 151.1 144.8 130.6 110.5 89.1 71.4 57.5 45.1 33.2 31.9**2,007.7 2005** 147.0 142.6 137.9 135.3 143.5 150.2 152.8 153.6 152.4 146.6 133.6 114.3 92.9 74.4 59.4 46.2 33.9 32.7**2,049.2 2006** 149.9 145.4 140.3 137.7 146.5 153.1 155.1 155.3 153.7 148.3 136.3 118.0 96.7 77.5 61.5 47.4 34.7 33.5**2,091.0 2007** 152.8 148.2 142.8 140.2 149.4 156.0 157.5 157.1 155.1 150.0 138.8 121.4 100.5 80.7 63.8 48.8 35.5 34.3**2,132.8 2008** 155.3 150.7 145.1 142.3 151.3 158.1 159.5 158.7 156.4 151.4 141.0 124.5 104.0 83.9 66.1 50.3 36.4 35.1**2,170.1 2009** 157.4 152.8 147.2 144.1 152.5 159.5 161.0 160.0 157.5 152.7 142.9 127.3 107.3 87.1 68.6 51.8 37.3 36.0**2,203.0 2010** 159.3 154.8 149.2 145.8 153.5 160.5 162.2 161.1 158.5 153.8 144.7 129.9 110.4 90.2 71.1 53.5 38.3 36.9**2,233.9 2011** 161.0 156.8 151.1 147.6 154.6 161.5 163.4 162.3 159.6 155.0 146.3 132.4 113.4 93.3 73.6 55.3 39.4 37.8**2,264.5 2012** 162.7 158.7 153.1 149.3 155.8 162.5 164.5 163.5 160.6 156.1 147.8 134.6 116.3 96.3 76.3 57.2 40.6 38.8**2,294.6 2013** 164.4 160.5 155.0 151.1 157.1 163.5 165.6 164.6 161.7 157.2 149.3 136.7 119.0 99.2 78.9 59.2 41.9 39.8**2,324.7 2014** 166.2 162.6 157.1 153.2 159.1 165.1 167.1 166.0 162.9 158.4 150.7 138.7 121.6 102.1 81.6 61.2 43.2 40.9**2,357.9 2015** 168.4 164.8 159.4 155.5 161.6 167.3 168.9 167.6 164.4 159.7 152.2 140.7 124.1 105.0 84.3 63.4 44.7 42.1**2,394.1 2016** 170.5 167.0 161.6 157.7 163.9 169.4 170.8 169.2 165.8 161.0 153.7 142.6 126.5 107.7 86.9 65.5 46.2 43.3**2,429.5 2017** 172.6 169.1 163.8 159.9 166.1 171.5 172.6 170.9 167.2 162.3 155.1 144.3 128.8 110.3 89.6 67.7 47.8 44.6**2,464.2 2018** 174.8 171.3 166.0 162.2 168.4 173.7 174.5 172.6 168.8 163.7 156.5 146.0 130.9 112.9 92.1 70.0 49.4 46.0**2,499.5 2019** 177.0 173.5 168.2 164.4 170.8 175.9 176.5 174.3 170.3 165.1 157.9 147.7 133.0 115.3 94.7 72.2 51.0 47.4**2,534.9 2020** 179.3 175.7 170.4 166.7 173.2 178.2 178.6 176.2 171.9 166.5 159.3 149.3 134.9 117.6 97.1 74.4 52.7 49.1**2,571.1 2021** 181.6 178.0 172.7 169.0 175.7 180.7 180.8 178.1 173.6 168.0 160.7 150.8 136.8 119.9 99.5 76.6 54.4 51.4**2,608.4 2022** 184.1 180.3 175.0 171.4 178.3 183.3 183.2 180.2 175.4 169.6 162.2 152.4 138.7 122.0 101.9 78.8 56.2 54.1**2,647.0 2023** 186.6 182.8 177.4 173.8 181.0 186.1 185.7 182.4 177.3 171.2 163.7 153.9 140.4 124.1 104.1 80.9 57.9 57.3**2,687.0 2024** 189.3 185.3 179.8 176.2 183.7 188.9 188.3 184.7 179.3 172.9 165.2 155.5 142.2 126.1 106.3 83.0 59.7 61.1**2,727.6 2025** 191.9 187.8 182.3 178.7 186.4 191.7 191.0 187.0 181.3 174.7 166.8 157.0 143.9 128.1 108.5 85.1 61.4 64.9**2,768.2 Population by Age for Portland-Vancouver, OR-WA** In ThousandsDetails may not add due to roundingA-3Source: Metro DRCMetro01.xls 10/8/02

### Table 4

**under 25 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** 65.8 176.2 194.1 193.4 171.8 142.5 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 39.2 **1,104.2** 2.51 **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 **2028** 70.2 188.1 205.7 203.0 176.8 154.7 104.1 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 

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

In Thousands 

### A-4 Source: Metro DRC Metro01.xls 10/7/02Table 5

**Industry 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Total Nonfarm Employ.**  **/1**
Portland-Vancouver /2 891.5 902.2 916.1 944.4 996.2 1,038.8 1,084.5 1,124.8 1,150.1 1,175.1 1,217.0 1,215.8 1,211.3 %change 4.0% 1.2% 1.5% 3.1% 5.5% 4.3% 4.4% 3.7% 2.3% 2.2% 3.6% -0.1% -0.4% U.S. (millions) 118.1 117.1 117.2 119.7 123.1 126.1 128.6 131.7 134.8 137.7 140.4 140.8 140.2 %change 1.4% -0.9% 0.1% 2.1% 2.9% 2.4% 2.0% 2.5% 2.3% 2.1% 2.0% 0.3% -0.5% **Nonfarm Self-Employ.** Portland-Vancouver 168.0 176.3 176.6 178.9 196.5 201.1 208.1 210.8 220.4 232.9 252.2 254.3 253.3 %change 5.5% 4.9% 0.2% 1.3% 9.8% 2.4% 3.5% 1.3% 4.5% 5.7% 8.3% 0.8% -0.4% U.S. (millions) 8.7 8.9 8.6 9.0 9.0 8.9 9.0 9.1 9.0 8.8 8.7 8.6 8.5 %change 1.3% 1.5% -3.1% 4.5% 0.5% -1.1% 0.8% 1.0% -1.1% -1.9% -1.4% -0.9% -1.2% **Wage and Salary Emp. /3** 
Portland-Vancouver 715.2 717.5 731.5 757.8 792.3 830.5 869.3 906.9 923.0 935.7 958.0 954.8 951.3 %change 3.6% 0.3% 1.9% 3.6% 4.6% 4.8% 4.7% 4.3% 1.8% 1.4% 2.4% -0.3% -0.4% U.S. (millions) 109.4 108.3 108.6 110.7 114.1 117.2 119.6 122.7 125.8 128.9 131.8 132.2 131.7 %change 1.4% -1.1% 0.3% 1.9% 3.1% 2.7% 2.0% 2.6% 2.6% 2.4% 2.2% 0.4% -0.4% **Manufacturing** Portland-Vancouver 121.7 119.8 118.9 121.9 126.7 134.9 139.2 145.0 147.0 142.9 145.5 142.2 140.4 %change 2.4% -1.6% -0.8% 2.5% 3.9% 6.5% 3.2% 4.2% 1.4% -2.8% 1.8% -2.3% -1.3% U.S. (millions) 19.1 18.4 18.1 18.1 18.3 18.5 18.5 18.7 18.8 18.6 18.5 17.7 16.9 %change -1.6% -3.5% -1.6% -0.2% 1.4% 1.1% -0.2% 1.0% 0.7% -1.3% -0.5% -4.2% -4.8% **Nondurable Manuf.** Portland-Vancouver 36.4 36.8 37.2 38.2 39.4 40.3 39.8 39.6 39.2 37.7 38.1 37.2 37.1 %change 3.1% 1.1% 1.1% 2.6% 3.3% 2.2% -1.3% -0.4% -1.1% -3.7% 0.9% -2.2% -0.3% U.S. (millions) 8.0 7.8 7.8 7.9 7.9 7.8 7.7 7.7 7.6 7.4 7.3 7.1 6.9 %change -0.4% -1.6% -0.1% 0.4% 0.3% -0.4% -1.7% -0.5% -0.8% -2.1% -1.5% -3.7% -2.4% **Food Processing** Portland-Vancouver 9.9 9.9 9.7 9.7 9.8 10.1 10.0 9.8 9.7 9.1 8.9 8.5 8.4 %change 6.1% -0.6% -1.3% -0.3% 0.8% 3.2% -0.8% -1.7% -1.7% -6.3% -1.4% -4.9% -1.6% U.S. (millions) 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 %change 1.0% 0.4% -0.3% 1.1% -0.1% 0.9% -0.1% -0.4% -0.1% 0.0% -0.2% 0.0% 0.6% **Textiles & Apparel** Portland-Vancouver 4.8 4.7 4.6 4.8 5.0 4.9 4.6 4.4 4.3 3.8 3.4 3.5 3.5 %change 2.8% -2.2% -2.7% 3.6% 4.4% -1.5% -7.0% -3.1% -3.0% -11.5% -10.1% 3.8% -0.8% U.S. (millions) 1.7 1.7 1.7 1.7 1.7 1.6 1.5 1.4 1.4 1.2 1.2 1.0 1.0 %change -3.8% -3.0% 0.3% -1.0% -0.7% -3.2% -6.6% -3.6% -5.4% -8.3% -7.1% -10.3% -7.7% **Paper & Pulp** Portland-Vancouver 7.2 6.8 6.9 7.0 7.1 7.1 6.5 6.3 6.3 6.1 6.7 6.7 6.6 %change 1.1% -5.2% 1.3% 1.7% 1.5% -0.2% -8.1% -3.7% 0.9% -2.9% 9.6% -1.2% -0.6% U.S. (millions) 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.6 0.6 %change 0.1% -1.3% 0.4% 0.2% 0.1% 0.1% -1.3% -0.1% -0.9% -1.3% -1.2% -3.0% -3.1% **Printing & Publishing** Portland-Vancouver 8.7 9.6 9.6 9.9 10.0 10.2 9.9 10.1 10.4 10.8 11.1 11.0 11.4 %change 4.7% 9.6% 0.5% 3.1% 1.1% 1.2% -3.0% 2.2% 3.0% 3.6% 2.8% -0.3% 3.4% U.S. (millions) 1.6 1.5 1.5 1.5 1.5 1.5 1.5 1.6 1.6 1.6 1.6 1.5 1.5 %change 0.9% -2.1% -1.9% 0.7% 1.3% 0.6% -0.3% 0.7% 0.8% -0.8% -0.1% -3.9% -2.7% **Nondur. Goods, other** Portland-Vancouver 5.8 5.9 6.4 6.8 7.6 8.1 8.8 9.0 8.5 8.0 8.0 7.5 7.2 %change -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. (millions) 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.2 2.2 %change 0.4% -1.9% 0.7% 0.7% 0.6% -0.2% -0.7% 0.4% 0.4% -1.0% -0.5% -3.1% -1.8% **Durable Manufacturing** Portland-Vancouver 85.3 83.0 81.7 83.7 87.3 94.6 99.4 105.4 107.8 105.1 107.4 105.0 103.3 %change 2.0% -2.7% -1.6% 2.5% 4.3% 8.4% 5.1% 6.0% 2.3% -2.4% 2.2% -2.3% -1.6% U.S. (millions) 11.1 10.6 10.3 10.2 10.4 10.7 10.8 11.0 11.2 11.1 11.1 10.6 10.0 %change -2.5% -4.9% -2.7% -0.6% 2.2% 2.3% 1.0% 2.0% 1.8% -0.8% 0.3% -4.5% -6.4% **Lumber & Wood** Portland-Vancouver 9.3 8.2 7.8 7.9 7.9 7.8 7.7 8.1 7.9 7.5 7.6 7.5 7.5 %change -4.6% -11.6% -5.0% 0.8% 0.0% -0.7% -1.2% 4.8% -2.9% -4.6% 1.5% -2.2% 0.8% U.S. (millions) 0.7 0.7 0.7 0.7 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 %change -3.1% -7.9% 0.7% 4.3% 6.3% 2.0% 1.2% 2.3% 2.3% 2.6% -0.6% -4.8% 1.3% **Metals** Portland-Vancouver 18.3 17.1 16.5 16.1 17.1 18.6 19.0 19.8 20.6 20.2 19.9 19.0 18.5 %change -2.4% -6.6% -3.5% -2.5% 6.3% 9.1% 2.3% 3.9% 4.2% -2.0% -1.3% -4.6% -2.7% U.S. (millions) 2.2 2.1 2.0 2.0 2.1 2.1 2.2 2.2 2.2 2.2 2.2 2.1 2.0 %change -1.9% -4.5% -2.6% -0.1% 3.2% 3.0% 0.5% 1.3% 1.6% -0.2% 0.9% -4.9% -5.2% **Electronics, total** Portland-Vancouver 40.1 40.5 39.9 41.7 44.2 49.4 54.2 58.0 58.9 56.0 58.7 59.7 59.2 %change 2.7% 1.1% -1.4% 4.3% 6.1% 11.8% 9.6% 7.1% 1.4% -4.9% 5.0% 1.7% -1.0% U.S. (millions) 4.8 4.6 4.4 4.4 4.4 4.5 4.6 4.7 4.8 4.7 4.7 4.5 4.1 %change -2.5% -4.4% -3.9% -0.8% 1.6% 2.6% 2.1% 2.0% 1.3% -2.5% 0.6% -4.5% -8.7% **Nonelectrical Mach.** Portland-Vancouver 14.1 15.1 14.7 16.0 17.0 18.7 19.9 20.9 19.8 17.8 17.0 15.9 15.9 %change 3.3% 7.4% -2.9% 9.1% 5.7% 10.5% 6.4% 4.8% -5.0% -10.4% -4.5% -6.4% 0.0% U.S. (millions) 2.1 2.0 1.9 1.9 2.0 2.1 2.1 2.2 2.2 2.1 2.1 2.0 1.8 %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 26.0 25.4 25.2 25.6 27.2 30.7 34.2 37.1 39.0 38.2 41.7 43.8 43.2 %change 2.4% -2.2% -0.5% 1.5% 6.3% 12.6% 11.6% 8.5% 5.0% -2.2% 9.4% 5.0% -1.3% U.S. (millions) 2.7 2.6 2.5 2.4 2.4 2.5 2.5 2.6 2.6 2.5 2.6 2.5 2.3 %change -3.3% -4.3% -4.2% -1.5% 0.4% 1.5% 1.9% 1.6% 1.0% -2.1% 1.7% -3.9% -5.7% **Transportation Equip.** Portland-Vancouver 10.2 10.0 10.1 10.2 10.2 10.6 10.4 11.1 12.2 13.1 12.7 10.1 9.5 %change 16.3% -1.9% 1.0% 1.2% 0.1% 3.8% -1.8% 6.8% 10.1% 7.2% -3.4% -20.7% -5.4% U.S. (millions) 2.0 1.9 1.8 1.8 1.8 1.8 1.8 1.8 1.9 1.9 1.9 1.8 1.6 %change -3.0% -5.0% -3.1% -4.0% 0.3% 1.6% -0.3% 3.4% 2.6% -0.3% -2.0% -5.4% -6.9% Employment for Portland-Vancouver, OR-WA and U.S.

In thousands A-5 Source: Metro DRC Metro01.xls 12/5/02**Industry Total Nonfarm Employ.**  **/1**
Portland-Vancouver /2
%change U.S. (millions) %change **Nonfarm Self-Employ.** Portland-Vancouver %change U.S. (millions) %change **Wage and Salary Emp. /3** 
Portland-Vancouver %change U.S. (millions) %change **Manufacturing** Portland-Vancouver %change U.S. (millions) %change **Nondurable Manuf.** Portland-Vancouver %change U.S. (millions) %change **Food Processing** Portland-Vancouver %change U.S. (millions) %change **Textiles & Apparel** Portland-Vancouver %change U.S. (millions) %change **Paper & Pulp** Portland-Vancouver %change U.S. (millions) %change **Printing & Publishing** Portland-Vancouver %change U.S. (millions) %change **Nondur. Goods, other** Portland-Vancouver %change U.S. (millions) %change **Durable Manufacturing** Portland-Vancouver %change U.S. (millions) %change **Lumber & Wood** Portland-Vancouver %change U.S. (millions) %change **Metals** Portland-Vancouver %change U.S. (millions) %change **Electronics, total** Portland-Vancouver %change U.S. (millions) %change **Nonelectrical Mach.** Portland-Vancouver %change U.S. (millions) %change **Electrical Mach. & Instr.** Portland-Vancouver %change U.S. (millions) %change **Transportation Equip.** Portland-Vancouver %change U.S. (millions) %change Table 5

**2003 2004 2005 2010 2015 2020 2025 70-00 90-00 00-05 05-10 10-15 15-25** 

1,240.8 1,280.1 1,320.8 1,484.0 1,631.9 1,795.6 1,979.4 3.2% 3.2% 1.7% 2.4% 1.9% 1.9%

2.4% 3.2% 3.2% 2.1% 1.8% 1.9% 1.9% 142.2 145.0 147.2 156.1 163.7 171.7 178.9 2.1% 1.7% 0.9% 1.2% 1.0% 0.9%

1.4% 2.0% 1.5% 1.3% 1.0% 1.0% 0.8%

257.7 264.2 270.7 308.5 352.0 401.2 457.2 4.0% 4.2% 1.4% 2.7% 2.7% 2.6%

1.7% 2.5% 2.4% 2.5% 2.6% 2.5% 2.6% 8.5 8.5 8.6 8.7 8.7 8.8 8.8 1.7% -0.1% -0.3% 0.3% 0.1% 0.1%

0.1% 0.2% 0.4% 0.2% 0.0% 0.1% 0.1%

976.5 1,009.3 1,043.5 1,168.7 1,273.1 1,387.7 1,515.5 3.0% 3.0% 1.7% 2.3% 1.7% 1.8%

2.6% 3.4% 3.4% 2.1% 1.6% 1.8% 1.7% 3.0% 2.0% 1.8% 1.5% 133.7 136.5 138.6 147.4 155.0 162.9 170.1 2.1% 1.9% 1.0% 1.2% 1.0% 0.9%

1.5% 2.1% 1.5% 1.4% 1.0% 1.1% 0.8%

144.3 149.4 154.7 165.9 168.9 172.8 177.2 1.7% -4.9% 1.2% 1.4% 0.4% 0.5%

2.8% 3.6% 3.5% 0.9% 0.4% 0.5% 0.5% 17.0 17.2 17.3 17.5 17.1 16.9 16.8 -0.2% -0.3% -1.3% 0.2% -0.5% -0.2%

0.8% 1.4% 0.6% -0.8% -0.5% 0.1% -0.5%

37.8 38.6 39.3 40.5 40.5 40.7 40.5 0.6% 0.4% 0.6% 0.6% 0.0% 0.0%

1.8% 2.3% 1.8% 0.0% 0.1% 0.1% -0.2% 7.1 7.2 7.3 7.3 7.1 7.0 6.9 -0.4% -0.8% -0.1% -0.1% -0.5% -0.2%

2.5% 2.5% 0.7% -0.7% -0.6% 0.0% -0.6%

8.4 8.5 8.5 8.2 7.7 7.2 6.7 -0.7% -1.0% -0.9% -0.8% -1.2% -1.4%

0.6% 1.2% 0.4% -1.6% -1.3% -1.2% -1.6% 1.7 1.8 1.8 1.7 1.6 1.6 1.6 -0.2% 0.1% 0.8% -0.5% -0.8% -0.2%

1.8% 1.7% 0.0% -1.2% -0.6% 0.0% -0.6%

3.7 3.9 4.0 3.6 3.1 2.6 2.2 -1.8% -3.4% 3.1% -2.0% -3.1% -3.3%

6.3% 5.1% 1.3% -2.7% -3.2% -3.0% -3.5% 1.0 0.9 0.9 0.9 0.8 0.8 0.8 -2.3% -3.9% -4.1% -1.5% -0.9% -0.9%

0.0% -2.1% 0.0% -1.1% 0.0% 0.0% 0.0%

6.6 6.7 6.8 6.6 6.2 5.9 5.5 -0.4% -0.6% 0.1% -0.5% -1.1% -1.3%

0.0% 1.4% 0.9% -1.1% -1.1% -1.2% -1.4% 0.6 0.7 0.7 0.6 0.6 0.6 0.6 -0.2% -0.5% -0.3% -0.6% -1.0% -0.5%

1.6% 3.2% 0.0% -1.6% -1.6% 0.0% -1.7%

11.7 12.0 12.2 13.1 13.5 13.7 13.8 3.4% 2.4% 2.0% 1.4% 0.5% 0.2%

2.8% 2.4% 2.0% 0.8% 0.4% 0.2% 0.0% 1.5 1.6 1.6 1.7 1.6 1.6 1.6 1.1% -0.1% 1.0% 0.6% -0.6% -0.3%

4.1% 5.3% 2.5% -0.6% -1.2% 0.0% -0.6%

7.3 7.5 7.8 9.0 10.1 11.3 12.3 2.5% 3.3% -0.3% 2.7% 2.3% 2.1%

1.2% 2.7% 4.0% 2.1% 2.5% 2.2% 1.5% 2.2 2.3 2.3 2.4 2.4 2.4 2.4 0.0% -0.1% 0.3% 0.3% 0.0% 0.0%

3.2% 3.1% 0.4% 0.0% 0.0% 0.0% -0.4%

106.5 110.8 115.3 125.5 128.4 132.1 136.7 2.2% 2.3% 1.4% 1.7% 0.5% 0.6%

3.1% 4.0% 4.1% 1.2% 0.4% 0.7% 0.7% 9.9 10.0 10.0 10.2 10.0 9.9 9.9 0.0% 0.0% -2.1% 0.4% -0.5% -0.1%

-0.4% 0.5% 0.6% -0.9% -0.5% 0.2% -0.5%

7.5 7.4 7.4 6.8 5.9 5.0 4.2 -0.7% -2.0% -0.6% -1.6% -2.8% -3.3%

-0.3% -1.9% 0.4% -2.9% -3.1% -3.1% -3.9% 0.8 0.9 0.9 0.9 0.9 0.8 0.8 0.8% 1.2% 1.2% 0.0% -0.5% -1.0%

3.7% 3.6% 2.3% 0.0% -1.1% -1.2% -1.3%

19.1 19.6 20.1 20.3 19.6 19.1 18.8 1.3% 0.9% 0.1% 0.3% -0.7% -0.4%

3.1% 2.8% 2.3% -0.1% -0.6% -0.3% -0.5% 2.1 2.1 2.2 2.1 1.9 1.8 1.6 -0.8% 0.3% -0.6% -0.7% -1.9% -1.5%

3.5% 2.4% 1.4% -1.4% -2.6% -0.6% -1.8%

61.2 64.5 68.0 76.6 80.1 84.1 88.7 3.6% 3.9% 3.0% 2.4% 0.9% 1.0%

3.4% 5.5% 5.4% 1.8% 0.9% 1.1% 1.0% 3.9 3.8 3.8 4.2 4.2 4.4 4.5 0.2% -0.2% -4.0% 2.0% 0.0% 0.7%

-4.4% -2.6% 0.3% -0.7% 0.5% 0.9% 0.4%

16.4 16.9 17.6 20.2 20.8 21.8 22.9 2.6% 1.9% 0.7% 2.7% 0.6% 0.9%

3.2% 3.1% 4.1% 1.8% 0.8% 1.0% 0.9% 1.5 1.5 1.5 1.7 1.7 1.8 1.8 0.2% 0.1% -7.1% 3.1% 0.2% 0.6%

-12.5% -3.9% -0.7% 3.6% 0.6% 0.6% 0.5%

44.8 47.6 50.4 56.4 59.3 62.4 65.8 4.1% 4.9% 3.8% 2.3% 1.0% 1.0%

3.5% 6.3% 5.9% 1.9% 1.0% 1.1% 1.1% 2.4 2.3 2.4 2.5 2.5 2.6 2.7 0.2% -0.4% -1.8% 1.3% -0.2% 0.8%

1.7% -1.7% 0.9% -3.5% 0.4% 1.2% 0.4%

9.9 10.2 10.5 11.5 11.7 12.0 12.4 2.1% 2.2% -3.7% 1.8% 0.4% 0.6%

3.6% 2.9% 3.4% 0.9% -0.1% 0.6% 0.6% 1.7 1.7 1.7 1.6 1.6 1.5 1.5 0.0% -0.7% -2.1% -1.4% 0.0% -0.2%

1.2% 1.2% -0.6% -1.3% -0.6% 0.0% -0.7% Employment, Portland-Vancouver OR-WA and U.S.

In thousands A-6 Source: Metro DRC Metro01.xls 12/5/02Table 5

**Industry 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002** Employment for Portland-Vancouver, OR-WA and U.S.

**Durable Goods, other** Portland-Vancouver 7.5 7.2 7.4 7.9 7.9 8.2 8.1 8.3 8.2 8.3 8.5 8.7 8.6 %change 1.6% -3.9% 2.1% 7.8% 0.1% 2.8% -1.1% 3.2% -1.6% 1.9% 1.5% 3.2% -1.7% U.S. (millions) 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.5 1.5 1.5 1.5 1.5 1.4 %change -2.5% -5.3% -0.2% 1.8% 3.1% 1.0% -0.3% 1.5% 2.2% 1.1% 1.7% -2.6% -4.7% **Nonmanufact. (exc. military)**  Portland-Vancouver 593.5 597.7 612.6 635.9 665.6 695.6 730.1 761.9 776.0 792.8 812.5 812.5 810.9 %change 3.9% 0.7% 2.5% 3.8% 4.7% 4.5% 5.0% 4.4% 1.9% 2.2% 2.5% 0.0% -0.2% U.S. (millions) 90.3 89.8 90.5 92.6 95.8 98.7 101.1 104.0 107.0 110.3 113.3 114.5 114.8 %change 2.1% -0.5% 0.7% 2.4% 3.5% 3.0% 2.5% 2.9% 2.9% 3.1% 2.7% 1.1% 0.3% **Constr. & Mining** Portland-Vancouver 36.3 35.3 33.7 35.2 40.1 45.0 51.5 54.5 53.8 52.8 53.9 53.1 53.3 %change 14.1% -2.6% -4.5% 4.4% 13.8% 12.2% 14.6% 5.8% -1.3% -1.9% 2.0% -1.4% 0.4% U.S. (millions) 5.8 5.3 5.1 5.3 5.6 5.7 6.0 6.3 6.6 7.0 7.2 7.4 7.3 %change -0.5% -8.4% -4.1% 2.9% 5.8% 3.0% 4.3% 4.8% 5.1% 5.2% 4.1% 2.6% -2.0% **Private Service Producers 4** 
Portland-Vancouver 459.2 461.9 474.7 495.6 519.4 542.5 567.2 594.5 606.4 619.3 631.6 631.9 630.5 %change 3.2% 0.6% 2.8% 4.4% 4.8% 4.4% 4.6% 4.8% 2.0% 2.1% 2.0% 0.0% -0.2% U.S. (millions) 66.2 66.1 66.7 68.5 71.1 73.6 75.7 78.2 80.6 83.2 85.4 86.2 86.4 %change 2.1% -0.1% 0.9% 2.7% 3.8% 3.5% 2.8% 3.3% 3.1% 3.2% 2.6% 1.0% 0.2% **Transport., Comm., & Util.** Portland-Vancouver 41.6 42.0 42.5 43.3 44.9 47.8 49.4 51.7 53.1 54.2 55.4 54.8 54.5 %change 3.6% 1.0% 1.1% 2.0% 3.7% 6.4% 3.4% 4.8% 2.5% 2.2% 2.2% -1.1% -0.5% U.S. (millions) 5.8 5.8 5.7 5.8 6.0 6.1 6.3 6.4 6.6 6.8 7.0 7.1 7.0 %change 2.9% -0.4% -0.6% 1.6% 3.0% 2.5% 2.0% 2.5% 3.2% 3.4% 2.7% 0.7% -0.4% **Trade, total** Portland-Vancouver 183.4 183.9 186.3 191.4 201.6 208.8 216.7 225.5 229.0 232.3 235.4 233.7 232.4 %change 2.7% 0.3% 1.3% 2.7% 5.3% 3.6% 3.8% 4.0% 1.5% 1.5% 1.3% -0.7% -0.5% U.S. (millions) 25.8 25.4 25.4 25.8 26.7 27.6 28.1 28.6 29.1 29.8 30.3 30.5 30.2 %change 0.4% -1.6% 0.0% 1.6% 3.5% 3.4% 1.9% 1.9% 1.7% 2.3% 1.9% 0.6% -0.9% **Retail Trade** Portland-Vancouver 128.2 128.6 130.9 134.8 142.1 147.0 153.1 157.6 160.1 164.9 168.1 168.1 167.4 %change 3.1% 0.3% 1.8% 3.0% 5.4% 3.5% 4.1% 2.9% 1.6% 3.0% 2.0% 0.0% -0.4% U.S. (millions) 19.6 19.3 19.4 19.8 20.5 21.2 21.6 22.0 22.3 22.9 23.3 23.5 23.3 %change 0.6% -1.6% 0.4% 2.2% 3.7% 3.3% 1.9% 1.7% 1.5% 2.5% 2.0% 0.8% -0.9% **Wholesale Trade** Portland-Vancouver 55.2 55.4 55.5 56.6 59.6 61.8 63.6 67.9 68.9 67.5 67.2 65.6 65.0 %change 1.7% 0.4% 0.1% 2.1% 5.2% 3.8% 3.0% 6.8% 1.4% -2.1% -0.3% -2.5% -0.9% U.S. (millions) 6.2 6.1 6.0 6.0 6.2 6.4 6.5 6.6 6.8 6.9 7.0 7.0 7.0 %change -0.2% -1.5% -1.4% -0.3% 3.0% 3.5% 1.7% 2.6% 2.3% 1.6% 1.6% -0.1% -0.9% **Fin., Ins., & Real Est.** Portland-Vancouver 52.1 53.8 55.6 59.0 61.1 59.8 63.0 66.3 66.7 66.2 64.5 64.6 64.5 %change -3.0% 3.3% 3.3% 6.1% 3.7% -2.2% 5.4% 5.2% 0.5% -0.7% -2.6% 0.1% -0.1% U.S. (millions) 6.7 6.6 6.6 6.8 6.9 6.8 6.9 7.1 7.4 7.6 7.6 7.6 7.7 %change 0.6% -0.9% -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 182.2 182.1 190.3 201.9 211.7 226.1 238.0 250.9 257.7 266.5 276.3 278.9 279.1 %change 5.5% -0.1% 4.5% 6.1% 4.8% 6.8% 5.3% 5.4% 2.7% 3.4% 3.7% 0.9% 0.1% U.S. (millions) 27.9 28.3 29.0 30.2 31.6 33.1 34.5 36.0 37.5 39.0 40.5 41.0 41.5 %change 3.8% 1.5% 2.5% 3.9% 4.6% 4.9% 4.0% 4.6% 4.1% 4.1% 3.6% 1.4% 1.1% **Health** Portland-Vancouver 49.0 49.7 50.6 52.6 54.3 56.1 57.7 60.2 61.3 62.9 62.2 63.3 64.6 %change 4.3% 1.6% 1.8% 4.0% 3.2% 3.4% 2.8% 4.4% 1.7% 2.6% -1.2% 1.8% 2.0% U.S. (millions) 7.8 8.2 8.5 8.8 9.0 9.2 9.5 9.7 9.9 10.0 10.1 10.3 10.7 %change 4.7% 4.7% 3.7% 3.1% 2.7% 2.6% 2.7% 2.4% 1.5% 1.3% 1.2% 2.4% 3.3% **Nonhealth** Portland-Vancouver 133.2 132.4 139.7 149.3 157.4 169.9 180.3 190.7 196.5 203.7 214.2 215.6 214.5 %change 6.0% -0.6% 5.6% 6.8% 5.4% 8.0% 6.1% 5.7% 3.0% 3.7% 5.1% 0.7% -0.5% U.S. (millions) 20.1 20.2 20.6 21.4 22.6 23.9 25.0 26.3 27.7 29.1 30.4 30.7 30.8 %change 3.5% 0.2% 2.0% 4.3% 5.3% 5.8% 4.6% 5.4% 5.1% 5.0% 4.4% 1.1% 0.4% **Govt., Fed. Civilian** Portland-Vancouver 18.1 17.7 18.3 18.1 17.6 17.6 17.5 17.8 17.9 17.6 18.5 17.9 18.1 %change 2.5% -2.0% 3.5% -1.3% -3.0% 0.2% -0.7% 1.7% 0.6% -1.7% 5.5% -3.6% 1.5% U.S. (millions) 2.1 2.0 2.1 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.2 2.0 2.0 %change 6.0% -4.2% 0.2% -0.4% 0.1% -0.2% -1.3% -0.7% 1.0% 0.4% 6.0% -7.0% 1.0% **Govt., Fed. Military** Portland-Vancouver 8.3 8.4 8.0 7.7 7.3 7.1 7.1 7.1 6.8 6.6 6.8 6.7 6.6 %change 1.8% 1.2% -4.5% -3.0% -5.1% -2.7% -0.8% 0.2% -4.3% -3.4% 3.5% -1.3% -1.3% U.S. (millions) 1.0 0.9 0.9 0.9 0.8 0.8 0.7 0.7 0.7 0.6 0.6 0.6 0.6 %change -2.3% -3.2% -0.4% -5.1% -5.2% -5.6% -5.0% -5.7% -4.7% -3.8% -1.6% -1.6% 0.0% **Govt., State & Local** Portland-Vancouver 79.9 82.8 85.8 86.9 88.6 90.6 93.9 95.1 97.9 103.1 108.5 109.7 109.0 %change 3.9% 3.6% 3.6% 1.3% 1.9% 2.2% 3.7% 1.3% 2.9% 5.4% 5.2% 1.1% -0.6% U.S. (millions) 15.2 15.4 15.7 15.9 16.2 16.5 16.6 16.9 17.1 17.5 17.9 18.3 18.5 %change 2.9% 1.4% 1.5% 1.5% 2.1% 1.4% 1.1% 1.2% 1.6% 2.3% 2.1% 2.0% 1.3%

In thousands A-7 Source: Metro DRC Metro01.xls 12/5/02**Industry Durable Goods, other**  Portland-Vancouver %change U.S. (millions) %change **Nonmanufact. (exc. military)**  Portland-Vancouver %change U.S. (millions) %change **Constr. & Mining** Portland-Vancouver %change U.S. (millions) %change **Private Service Producers 4** 
Portland-Vancouver %change U.S. (millions) %change **Transport., Comm., & Util.** Portland-Vancouver %change U.S. (millions) %change **Trade, total** Portland-Vancouver %change U.S. (millions) %change **Retail Trade** Portland-Vancouver %change U.S. (millions) %change **Wholesale Trade** Portland-Vancouver %change U.S. (millions) %change **Fin., Ins., & Real Est.** Portland-Vancouver %change U.S. (millions) %change **Services, total** Portland-Vancouver %change U.S. (millions) %change **Health** Portland-Vancouver %change U.S. (millions) %change **Nonhealth** Portland-Vancouver %change U.S. (millions) %change **Govt., Fed. Civilian** Portland-Vancouver %change U.S. (millions) %change **Govt., Fed. Military** Portland-Vancouver %change U.S. (millions) %change **Govt., State & Local** Portland-Vancouver %change U.S. (millions) %change Table 5

**2003 2004 2005 2010 2015 2020 2025 70-00 90-00 00-05 05-10 10-15 15-25**  Employment, Portland-Vancouver OR-WA and U.S.

8.9 9.1 9.4 10.3 11.1 11.9 12.8 0.8% 1.2% 2.0% 1.9% 1.5% 1.4%

3.4% 2.7% 2.7% 1.7% 1.2% 1.5% 1.4% 1.4 1.5 1.5 1.5 1.5 1.4 1.4 0.1% 2.2% -0.4% 0.0% -0.4% -0.5%

1.4% 3.5% 0.7% -0.7% 0.0% 0.0% -1.4%

832.2 859.9 888.9 1002.8 1104.3 1214.9 1338.3 3.4% 3.2% 1.8% 2.4% 1.9% 1.9%

2.6% 3.3% 3.4% 2.3% 1.8% 1.9% 1.9% 116.7 119.3 121.3 129.9 137.9 146.0 153.3 2.7% 2.6% 1.4% 1.4% 1.2% 1.1%

1.6% 2.2% 1.7% 1.7% 1.2% 1.2% 1.0%

55.5 57.2 59.3 67.7 71.8 76.3 81.0 3.8% 4.0% 1.9% 2.7% 1.2% 1.2%

4.0% 3.2% 3.6% 2.2% 0.4% 1.6% 0.8% 7.3 7.5 7.7 8.3 9.0 9.4 9.6 1.8% 2.2% 1.2% 1.6% 1.5% 0.7%

0.8% 2.7% 1.7% 2.5% 1.2% 0.9% 0.0%

649.6 675.6 700.5 794.8 883.3 978.8 1,085.3 3.6% 3.2% 2.1% 2.6% 2.1% 2.1%

3.0% 4.0% 3.7% 2.4% 2.0% 2.0% 2.0% 88.1 90.5 92.2 99.8 107.4 114.4 121.2 3.0% 2.6% 1.6% 1.6% 1.5% 1.2%

2.0% 2.7% 2.0% 1.9% 1.4% 1.2% 1.2%

55.2 56.7 58.4 64.9 69.9 75.2 80.9 2.0% 2.9% 1.0% 2.1% 1.5% 1.5%

1.2% 2.7% 2.9% 1.7% 1.6% 1.4% 1.5% 7.2 7.5 7.7 8.2 8.6 8.8 8.8 1.5% 2.0% 1.9% 1.3% 0.8% 0.3%

2.8% 3.9% 2.7% 1.5% 0.6% 0.5% 0.1%

238.5 248.3 258.1 288.6 313.5 339.7 367.9 3.1% 2.5% 1.9% 2.3% 1.7% 1.6%

2.6% 4.1% 4.0% 2.0% 1.5% 1.6% 1.5% 30.3 30.9 31.3 32.1 33.7 34.9 35.6 2.4% 1.6% 0.6% 0.5% 0.9% 0.6%

0.4% 1.9% 1.1% 0.8% 1.1% 0.5% 0.5%

170.8 177.7 184.8 207.0 225.6 245.3 266.3 3.4% 2.7% 1.9% 2.3% 1.7% 1.7%

2.0% 4.0% 4.0% 2.0% 1.6% 1.7% 1.6% 23.3 23.7 24.0 24.5 25.7 26.6 27.3 2.5% 1.7% 0.6% 0.4% 0.9% 0.6%

0.1% 1.8% 1.1% 0.8% 1.1% 0.5% 0.6%

67.7 70.6 73.3 81.6 87.9 94.4 101.6 2.5% 2.0% 1.7% 2.2% 1.5% 1.5%

4.1% 4.3% 3.9% 1.9% 1.3% 1.4% 1.4% 7.0 7.2 7.3 7.6 8.0 8.3 8.4 1.9% 1.3% 0.8% 0.9% 1.0% 0.4%

1.3% 2.3% 1.3% 1.1% 1.1% 0.4% 0.4%

64.7 66.2 68.4 74.2 80.1 85.3 90.2 3.2% 2.2% 1.2% 1.6% 1.5% 1.2%

0.3% 2.3% 3.4% 1.5% 1.4% 1.2% 1.1% 7.8 8.0 8.1 8.7 9.1 9.5 9.9 2.5% 1.2% 1.5% 1.2% 1.0% 0.8%

1.3% 2.3% 2.4% 0.9% 0.9% 0.9% 0.8%

291.2 304.5 315.6 367.1 419.8 478.7 546.3 4.7% 4.3% 2.7% 3.1% 2.7% 2.7%

4.4% 4.6% 3.7% 3.0% 2.5% 2.6% 2.6% 42.8 44.1 45.1 50.8 56.1 61.4 67.0 4.3% 3.8% 2.2% 2.4% 2.0% 1.8%

3.1% 3.1% 2.4% 2.8% 1.7% 1.8% 1.7%

66.8 69.1 71.2 82.3 93.5 105.2 118.9 3.5% 2.4% 2.7% 3.0% 2.6% 2.4%

3.5% 3.4% 3.0% 2.8% 2.4% 2.3% 2.5% 11.0 11.2 11.4 12.6 14.5 16.6 19.2 4.1% 2.6% 2.5% 2.0% 2.8% 2.8%

2.6% 2.3% 2.1% 2.1% 3.3% 2.5% 2.6%

224.4 235.4 244.5 284.8 326.3 373.5 427.4 5.2% 4.9% 2.7% 3.1% 2.8% 2.7%

4.6% 4.9% 3.9% 3.0% 2.5% 2.7% 2.7% 31.8 32.9 33.7 38.2 41.6 44.8 47.8 4.3% 4.2% 2.1% 2.5% 1.7% 1.4%

3.2% 3.3% 2.5% 3.0% 1.1% 1.5% 1.3%

18.0 17.9 17.9 19.3 19.4 20.4 21.2 0.9% 0.3% -0.7% 1.5% 0.2% 0.9%

-0.6% -0.7% -0.2% 5.1% 1.0% 0.9% 0.7% 2.0 2.0 2.0 2.0 2.1 2.1 2.2 0.8% 0.1% -1.0% -0.4% 0.5% 0.8%

1.0% 0.0% 0.0% -0.5% 1.0% 0.9% 0.5%

6.6 6.6 6.6 6.8 6.7 6.7 6.7 0.0% -1.9% -0.5% 0.4% -0.3% 0.1%

-0.2% -0.3% 0.5% -0.7% 0.0% 0.0% 0.0% 0.6 0.6 0.6 0.6 0.6 0.6 0.6 -1.7% -4.0% -0.3% -1.3% 0.3% 0.3%

0.0% 0.0% 0.0% -1.7% 0.0% 0.0% 0.0%

109.2 109.1 111.2 121.0 129.7 139.5 150.8 2.6% 3.1% 0.5% 1.7% 1.4% 1.5%

0.2% -0.1% 1.9% 1.3% 1.3% 1.4% 1.6% 18.6 18.6 18.7 19.0 19.2 19.7 20.2 1.8% 1.6% 0.9% 0.4% 0.2% 0.5%

0.6% 0.2% 0.4% 0.3% 0.2% 0.5% 0.5%
1/ Total Employment includes nonfarm wage and salary jobs, military, & self employed (BEA) 2/ Portland-Vancouver (in thousands): Multnomah, Clackamas, Washington, Yamhill in OR and Clark, WA; U.S. (in millions) 3/ Wage and salary employment by place of work - Current Employment Survey (CES). 4/ PSP includes: TCU, Trade, FIRE and all Services TCU: Transportation, Communications & Utilities FIRE: Finance, Insurance & Real Estate

In thousands A-8 Source: Metro DRC Metro01.xls 12/5/02Table 6

**Total (w/Defense)**  **Proprietors** **Plus * Dur. Mfg.** **Non-dur. Mfg. Non-Mfg. Military**  **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** 1,942.2 445.6 135.9 40.6 1,313.4 6.7 **2025** 1,979.3 457.2 136.7 40.5 1,338.2 6.7 **Wage and Salary** 

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

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

**Total W & S (exc. defense)**  **Constr. and**  **Mining Manuf. Transp.**  **Com. & Utilities Whsle. Retail**  **Finance, Insur., &**  **Real E. Service State &**  **Local Fed. Civ. 1970**  390.1 17.6 88.6 30.5 32.4 62.1 25.3 69.6 49.9 14.1 **1971** 395.7 18.2 86.8 30.2 32.7 63.5 25.6 72.5 51.7 14.4 **1972** 420.7 21.4 91.4 31.0 34.5 67.2 29.6 77.6 53.3 14.6 **1973** 442.8 21.8 99.2 32.1 36.0 71.6 31.6 81.6 54.5 14.5 **1974** 457.6 21.7 102.0 32.2 37.0 74.3 32.3 85.5 57.8 14.8 **1975** 453.4 18.7 93.8 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 **1977** 502.2 23.4 103.5 32.5 39.5 87.6 37.9 98.8 64.1 15.0 **1978** 541.9 26.9 112.8 34.3 43.2 95.0 41.7 105.2 67.2 15.7 **1979** 570.7 28.8 120.8 36.3 45.8 99.4 45.4 110.5 67.8 15.9 **1980** 572.6 26.0 118.8 37.1 46.0 99.5 46.6 114.2 68.1 16.4 **1981** 562.5 21.9 112.5 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 **1983** 536.4 17.4 99.7 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 **1985** 578.3 21.4 107.4 36.8 48.5 102.2 45.0 131.4 69.2 16.6 **1986** 597.5 22.7 106.4 36.8 49.2 105.8 47.6 141.3 71.1 16.7 **1987** 620.9 23.4 109.6 37.8 50.0 110.1 50.7 149.0 73.4 16.9 **1988** 654.7 26.9 114.7 38.4 51.8 119.2 51.9 159.4 75.0 17.4 **1989** 690.2 31.8 118.9 40.2 54.2 124.3 53.7 172.7 76.9 17.6 **1990** 715.2 36.3 121.7 41.6 55.2 128.2 52.1 182.2 79.9 18.1 **1991** 717.5 35.3 119.8 42.1 55.4 128.6 53.8 182.1 82.8 17.7 **1992** 731.5 33.7 118.9 42.5 55.5 130.9 55.6 190.3 85.8 18.3 **1993** 757.8 35.2 121.9 43.3 56.6 134.8 59.0 201.9 86.9 18.1 **1994** 792.4 40.1 126.8 44.9 59.6 142.1 61.2 211.7 88.6 17.6 **1995** 830.5 45.0 134.9 47.8 61.8 147.1 59.8 226.1 90.6 17.6 **1996** 869.3 51.5 139.2 49.4 63.6 153.1 63.0 238.1 93.9 17.5 **1997** 906.9 54.5 145.0 51.7 67.9 157.6 66.3 250.9 95.1 17.8 **1998** 923.0 53.9 147.0 53.1 68.9 160.1 66.7 257.7 97.9 17.9 **1999** 935.7 52.8 142.9 54.2 67.5 164.9 66.2 266.6 103.1 17.6 **2000** 958.0 53.9 145.5 55.4 67.2 168.1 64.5 276.3 108.5 18.5 **2001** 954.8 53.1 142.2 54.8 65.6 168.1 64.6 278.9 109.7 17.9 **2002** 951.3 53.3 140.4 54.5 65.0 167.4 64.5 279.1 109.0 18.1 **2003** 976.5 55.5 144.3 55.2 67.7 170.8 64.7 291.2 109.2 18.0 **2004** 1,009.3 57.2 149.4 56.7 70.6 177.7 66.2 304.5 109.1 17.9 **2005** 1,043.5 59.3 154.7 58.4 73.3 184.8 68.4 315.6 111.2 17.9 **2006** 1,068.0 60.6 157.7 59.8 75.1 189.5 69.9 323.9 113.5 17.9 **2007** 1,090.4 62.4 159.6 61.2 76.6 193.9 71.3 331.9 115.6 17.8 **2008** 1,120.2 64.7 161.9 62.5 78.4 198.6 72.3 346.0 117.7 18.0 **2009** 1,144.9 66.3 164.5 63.8 80.0 202.9 73.1 356.6 119.4 18.3 **2010** 1,168.7 67.7 165.9 64.9 81.6 207.0 74.2 367.1 121.0 19.3 **2011** 1,190.2 68.6 166.0 65.9 82.9 210.7 75.4 378.7 122.9 19.2 **2012** 1,212.0 70.4 166.5 66.8 84.3 214.9 76.8 388.4 124.7 19.1 **2013** 1,233.7 71.1 167.5 67.8 85.6 218.6 78.0 399.4 126.5 19.1 **2014** 1,253.4 71.5 168.3 68.9 86.8 222.1 79.1 409.6 128.1 19.2 **2015** 1,273.1 71.8 168.9 69.9 87.9 225.6 80.1 419.7 129.7 19.4 **2016** 1,294.8 72.3 169.6 71.0 89.1 229.4 81.2 430.9 131.7 19.6 **2017** 1,316.5 73.1 170.2 72.0 90.4 233.2 82.3 442.1 133.5 19.8 **2018** 1,340.5 74.0 171.0 73.1 91.7 237.2 83.3 454.5 135.6 20.0 **2019** 1,363.8 75.0 171.9 74.1 93.1 241.2 84.3 466.5 137.6 20.2 **2020** 1,387.7 76.3 172.8 75.2 94.4 245.3 85.3 478.6 139.5 20.4 **2021** 1,413.9 77.5 173.8 76.3 95.9 249.6 86.3 492.1 141.8 20.5 **2022** 1,438.6 78.3 174.7 77.4 97.3 253.7 87.3 505.2 144.0 20.7 **2023** 1,463.7 79.3 175.5 78.6 98.7 257.9 88.2 518.5 146.2 20.9 **2024** 1,489.9 80.4 176.4 79.8 100.2 262.1 89.2 532.3 148.4 21.1 **2025** 1,515.5 81.0 177.2 80.9 101.6 266.3 90.2 546.2 150.8 21.2 **Trade Government** 

## Wage and Salary Employment for Portland-Vancouver, OR-WA

In thousands Details may not add due to rounding A-10 Source: Metro DRC Metro01.xls 10/8/02Table 8

**Total (w/Defense)**  **Proprietors** **Plus * Dur. Mfg.** **Non-dur. Mfg.**  **Non-Mfg. Military**  **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** 53.1 9.6 5.0 3.1 35.1 0.3 **2022** 54.0 9.7 5.0 3.1 35.9 0.3 **2023** 54.9 9.7 5.1 3.1 36.8 0.3 **2024** 55.9 9.8 5.1 3.1 37.6 0.3 **2025** 56.8 9.9 5.2 3.1 38.5 0.3 

## Total Employment for Yamhill County, OR **Wage and Salary**

In Thousands, Details may not add due to rounding *Includes partnerships, self-employed, and wage salary workers A-11 Source: Metro DRC Metro01.xls 10/8/02Table 9

**Government Total**  **Wage & Salary**  **Constr. and**  **Mining Manuf.**  **Transp. Com. &**  **Utilities Whsle. &**  **Retail Trade**  **Finance, Insur., &**  **Real Est. Service Fed. Civ.,**  **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 0.4 2.1 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 **1996** 26.1 1.6 6.2 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** 40.0 1.9 7.9 1.6 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 9.1 1.3 13.6 6.1 **2020** 42.3 2.0 8.0 1.6 9.2 1.3 14.0 6.2 **2021** 43.2 2.0 8.0 1.7 9.4 1.3 14.4 6.3 **2022** 44.0 2.1 8.1 1.7 9.5 1.3 14.9 6.4 **2023** 44.9 2.1 8.1 1.7 9.7 1.4 15.4 6.6 **2024** 45.8 2.1 8.2 1.8 9.9 1.4 15.8 6.7 **2025** 46.7 2.2 8.3 1.8 10.0 1.4 16.3 6.8 

## Wage and Salary Employment for Yamhill County, OR

In thousands Details may not add due to rounding A-12 Source: Metro DRC Metro01.xls 10/8/02Table 10

**Total Personal Income**  **Wages & Salaries**  **Other Labor Income**  **Transfer Payments**  **Dividends Interest &** 

**Rents Proprietors’**  **Income Social Ins.**  **Contribution Resident**  **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** 209,725,681 123,311,858 13,782,631 25,539,422 41,581,796 16,792,542 9,504,187 -1,778,382 **2025** 221,160,595 129,559,584 14,600,013 27,434,053 43,117,605 18,384,088 10,057,271 -1,877,478 

## Personal Income by Major Source, Portland-Vancouver OR-WA

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

**Amount (in thous.)**  **Percent Change**  **Infl. Adj. (1996 $)**  **Percent Change Nominal**  **Infl. Adj. (1996 $)**  **U.S. Percent**  **Change Port.-Vanc.**  **OR-WA Percent**  **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% 103,567,344 2.8% 79,894 37,413 **2025** 352.2 3.7% 356.8 2.6% 

### Consumer Price Index, All Earners **Personal Income, Total and Per Capita**

**Per Capita** 

### Portland-Vancouver OR-WA **(1982-84 = 100)**

A-14 Source: Metro DRC Metro01.xls 10/8/02Table 12

**United States Portland-Vancouver OR-WA Avg. Weekly** 

**Earnings Avg. Hourly**  **Earnings Avg. Hours**  **Per Week Avg. Weekly**  **Earnings Avg. Hourly**  **Earnings Avg. Hours**  **Per Week 1970**  $133.83 $3.36 39.8 $145.84 $3.80 38.4 **1971** 141.87 3.56 39.85 155.90 4.04 38.59 **1972** 154.86 3.82 40.54 166.44 4.26 39.07 **1973** 166.38 4.09 40.68 175.96 4.52 38.93 **1974** 177.33 4.43 40.03 191.82 4.94 38.83 **1975** 190.45 4.83 39.43 210.92 5.51 38.28 **1976** 209.43 5.22 40.12 231.49 5.98 38.71 **1977** 228.67 5.67 40.33 247.23 6.45 38.33 **1978** 249.45 6.17 40.43 266.39 6.95 38.33 **1979** 268.80 6.69 40.18 291.90 7.71 37.86 **1980** 288.87 7.28 39.68 325.66 8.57 38.00 **1981** 318.48 7.99 39.86 361.28 9.53 37.91 **1982** 331.50 8.50 39.00 386.77 10.17 38.03 **1983** 354.26 8.83 40.12 406.26 10.34 39.29 **1984** 373.76 9.19 40.67 412.42 10.42 39.58 **1985** 386.56 9.54 40.52 403.68 10.45 38.63 **1986** 396.11 9.73 40.71 425.86 10.85 39.25 **1987** 406.51 9.91 41.02 425.30 10.80 39.38 **1988** 417.18 10.18 40.98 425.20 10.74 39.59 **1989** 428.95 10.48 40.93 431.79 10.89 39.65 **1990** 441.65 10.83 40.78 451.56 11.38 39.68 **1991** 454.69 11.18 40.67 471.74 11.77 40.08 **1992** 470.48 11.45 41.09 496.05 12.42 39.94 **1993** 486.86 11.74 41.47 499.84 12.44 40.18 **1994** 505.68 12.06 41.93 514.88 12.66 40.67 **1995** 514.47 12.37 41.59 521.95 12.84 40.65 **1996** 530.72 12.77 41.56 533.12 13.17 40.48 **1997** 552.46 13.16 41.98 559.76 13.43 41.68 **1998** 564.03 13.50 41.78 588.72 14.44 40.77 **1999** 580.33 13.91 41.72 609.59 15.10 40.37 **2000** 597.07 14.37 41.55 627.17 15.44 40.62 **2001** 604.17 14.83 40.74 608.06 15.70 38.73 **2002** 615.37 15.09 40.78 595.84 15.68 38.00 **2003** 637.31 15.32 41.60 619.77 15.99 38.76 **2004** 661.30 15.87 41.67 643.12 16.52 38.93 **2005** 678.26 16.32 41.56 665.98 17.16 38.81 **2006** 699.92 16.89 41.44 690.05 17.84 38.68 **2007** 725.28 17.54 41.35 715.89 18.58 38.53 **2008** 750.88 18.19 41.28 734.77 19.09 38.49 **2009** 775.23 18.83 41.17 749.01 19.48 38.45 **2010** 800.65 19.49 41.08 779.32 20.30 38.39 **2011** 826.37 20.18 40.95 813.10 21.18 38.39 **2012** 851.13 20.81 40.90 841.29 21.88 38.45 **2013** 880.17 21.52 40.90 864.49 22.46 38.49 **2014** 912.70 22.31 40.91 889.66 23.09 38.53 **2015** 945.96 23.14 40.88 917.73 23.80 38.56 **2016** 981.22 24.02 40.85 946.61 24.53 38.59 **2017** 1,015.51 24.89 40.80 977.34 25.30 38.63 **2018** 1,048.50 25.73 40.75 1,008.13 26.07 38.67 **2019** 1,082.89 26.60 40.71 1,037.82 26.81 38.71 **2020** 1,120.05 27.54 40.67 1,069.00 27.58 38.76 **2021** 1,159.22 28.51 40.66 1,101.92 28.40 38.80 **2022** 1,204.61 29.59 40.71 1,135.78 29.25 38.83 **2023** 1,248.68 30.62 40.78 1,172.88 30.19 38.85 **2024** 1,301.26 31.80 40.92 1,208.62 31.07 38.90 **2025** 1,350.13 32.89 41.05 1,248.23 32.08 38.91



## Average Weekly and Hourly Earnings, Average Work Hours Per Week, **Manufacturing Industries Only**

A-15 Source: Metro DRC Metro01.xls 10/8/02Table 13

**Single Family**  **Change Multi-Family**  **Change U.S.**  **Portland-Vanc. OR-WA**  **Relative Price Index ** * **(1996=100) 1970**  5,500 5,130 $17,243 $18,300 69.4 **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 64,206 63,000 62.4 **1988** 5,980 740 5,080 630 66,941 64,000 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 **1998** 10,620 -40 5,080 630 133,958 155,100 102.3 **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 **2022** 11,000 90 7,450 200 262,559 391,400 169.5 **2023** 11,120 120 7,630 180 269,801 405,120 172.8 **2024** 11,260 140 7,810 180 277,254 419,440 176.4 **2025** 11,340 80 7,940 130 284,953 434,830 180.4 

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

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

**AARG 2000**  **2005 2010**  **2015 2020**  **2025 2030**  **2000-30 (in thousands)**  **Population, total** 1,874.6 2,049.2 2,233.9 2,394.1 2,571.1 2,768.2 2,955.3 **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, 0 to 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, 10 to 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, 15 to 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% 

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

A-17Table 14

**AARG 2000**  **2005 2010**  **2015 2020**  **2025 2030**  **2000-30** 

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

**Age, 40 to 44 years 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, 45 to 49 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 54 years 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, 55 to 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, 75 to 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 84 years 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

**AARG 2000**  **2005 2010**  **2015 2020**  **2025 2030**  **2000-30** 

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

**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

**AARG 2000**  **2005 2010**  **2015 2020**  **2025 2030**  **2000-30** 

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

**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 99.1 112.7 112.8 112.4 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

**AARG 2000**  **2005 2010**  **2015 2020**  **2025 2030**  **2000-30 (in thousands)**  **Employment, total (includes self employed) Base**  1,210.2 1,314.2 1,477.2 1,625.2 1,788.9 1,972.7 2,151.6 1.9% **High** 1,210.2 1,344.3 1,518.3 1,677.3 1,873.4 2,115.9 2,399.9 2.3% **Low** 1,210.2 1,290.0 1,431.0 1,525.7 1,609.1 1,709.4 1,814.2 1.4%

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

**Wage & Salary Base**  958.0 1,043.5 1,168.7 1,273.1 1,387.7 1,515.5 1,641.5 1.8% **High** 958.0 1,068.5 1,202.4 1,321.6 1,459.8 1,627.7 1,823.8 2.2% **Low** 958.0 1,023.9 1,138.0 1,209.3 1,267.8 1,335.8 1,406.0 1.3%

**Manufacturing Base**  145.5 154.7 165.9 168.9 172.8 177.2 182.9 0.8% **High** 145.5 159.1 172.7 181.1 190.0 201.1 214.0 1.3% **Low** 145.5 148.9 157.5 158.4 157.8 157.6 157.6 0.3%

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

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

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

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

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

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

A-21Table 14

**AARG 2000**  **2005 2010**  **2015 2020**  **2025 2030**  **2000-30** 

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

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

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

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

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

**Textile & Apparels Base**  3.4 4.0 3.6 3.1 2.6 2.2 2.0 -1.7% **High** 3.4 3.9 3.9 3.8 3.8 3.8 3.8 0.4% **Low** 3.4 3.5 2.9 2.5 2.3 2.1 1.9 -2.0%

**Paper & Pulp Base**  6.7 6.8 6.6 6.2 5.9 5.5 5.2 -0.9% **High** 6.7 6.8 6.7 6.5 6.3 6.1 5.9 -0.4% **Low** 6.7 6.9 6.6 6.2 5.7 5.3 4.9 -1.1%

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

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

**Nonmanufacturing (except military) Base**  812.5 888.9 1,002.8 1,104.3 1,214.9 1,338.3 1,458.6 2.0% **High** 812.5 909.4 1,029.7 1,140.5 1,269.8 1,426.6 1,609.9 2.3% **Low** 812.5 875.0 980.5 1,050.9 1,109.9 1,178.2 1,248.4 1.4%

A-22Table 14

**AARG 2000**  **2005 2010**  **2015 2020**  **2025 2030**  **2000-30** 

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

**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% **High** 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

**AARG 2000**  **2005 2010**  **2015 2020**  **2025 2030**  **2000-30** 

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

**Other Services Base**  214.2 244.5 284.8 326.3 373.5 427.4 479.8 2.7% **High** 214.2 254.4 295.3 340.9 393.1 452.9 522.6 3.0% **Low** 214.2 243.1 292.3 326.8 357.5 390.6 424.5 2.3%

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

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

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

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

A-24Table 15

**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 **Consumer Services** 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**

**2011 2012 2013 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**

**Annual Avg. Growth Rates for Selected Periods 2022 2023 2024 2025**  **2000-05 2005-10 2010-15 2015-20 2020-25 2000-25 AFF Services & Mining**  8.1 7.2 6.3 5.3 -1.1% -1.3% -3.0% -5.4% -11.1% -4.5% **Construction** 105.8 107.2 108.9 110.0 1.8% 2.7% 1.3% 1.4% 1.4% 1.7% **Nondur. Mfg. less Paper** 35.9 36.0 36.1 36.1 0.6% 0.8% 0.4% 0.4% 0.2% 0.5% **Durable Mfg. plus Paper** 58.1 58.1 58.1 58.1 -0.6% 0.5% -0.2% -0.1% 0.0% -0.1% **Hi-tech Mfg.** 85.9 86.9 88.0 89.0 2.8% 2.4% 1.0% 1.1% 1.2% 1.7% **Transport & Warehouse** 57.9 58.8 59.8 60.7 0.9% 2.2% 1.6% 1.6% 1.6% 1.6% **Comm. & Utilities** 31.2 31.7 32.2 32.8 1.0% 2.2% 1.7% 1.7% 1.7% 1.6% **Wholesale Trade** 109.1 110.9 112.6 114.4 1.6% 2.2% 1.6% 1.6% 1.6% 1.7% **Retail Trade** 307.9 313.4 319.0 324.6 1.8% 2.3% 1.9% 1.8% 1.8% 1.9% **FIRE** 127.8 129.4 131.1 132.7 1.0% 1.7% 1.7% 1.4% 1.3% 1.4% **Consumer Services** 341.6 351.9 362.5 373.2 2.7% 3.3% 3.0% 3.0% 3.0% 3.0% **Health Services (80+83)** 217.8 223.7 229.7 235.9 2.6% 3.1% 2.8% 2.7% 2.7% 2.8% **Bus. & Prof. Services** 160.3 165.1 170.1 175.2 2.7% 3.3% 3.0% 3.0% 3.0% 3.0% **Government (civilian)** 160.3 162.8 165.4 168.1 0.2% 1.7% 1.4% 1.5% 1.6% 1.3% **TOTAL - excl. military 1807.8 1843.1 1879.8 1916.0 1.7% 2.4% 1.9% 1.9% 2.0% 2.0%**

Adjusted to BEA employment levels which includes proprietors. Geographic Extent: Multnomah, Clackamas, Washington and Clark 

### Employment Forecast for Standardized MetroScope Industry Classification

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

### 1 

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

## DRI-WEFA prepares 4 U.S. macroeconomic scenarios:

 

## Trend Projection (a baseline scenario)

 

## Cyclical Projection (a scenario that incorporates business cycles)

 

## Optimistic Projection (a high growth scenario)

 

## Pessimistic Projection (a low growth scenario)
The Metro Regional Forecast assume s the national growth projections from DRI-WEFA’s Trend Projection scenario for the baseline regional forecast. Metro’s optimistic and pessimistic alternative growth forecasts are produced using DRI-WEFA’s corresponding projection alternatives. The DRI-WEFA cyclical projection is not used in any Metro Regional Forecast.

### 25-Year Focus, Winter 2002 1 

# F ORECAST 

# O VERVIEW

This issue of The U.S. Economy, 25-Year Focus presents DRI • WEFA ’ s most recent set of long-range projections. Given the detail available in the current DRI • WEFA model, the projections for the next quarter-centurycover not just the macro concepts such as output, inflation, and unemployment, but also the more disaggregated variables such as production and employment byindustry. This disaggregation provides a variety of concepts for analysts to use in their planning models. Many of these variables serve as inputs to DRI • WEFA ’ s Regional and Energy models. While the long-range outlooks have been of particular interest to utilities and state and local governments, which have relatively long planning horizons, they can be equally relevant to analysts dealing with shorter intervals. This is especially true of the trend scenario,the principal long-range projection. The trend is completely consistent with DRI • WEFA ’ s February shortterm baseline (Control) solution (detailed in the February 2002 issue 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 growthpath. Hence, the transition between the short and longterm forecasts is smooth, making the trend projection an excellent base for ten-year planning purposes and policy simulations. 

## The Four Long-Term Projections

This 25-Year Focus presents four projections: baseline, cyclical, optimistic, and pessimistic.

The trend projection is the baseline scenario. It assumes that the economy suffers no major mishaps between now and 2027. It grows smoothly, in the sense that actual output follows potential output relatively closely. This projection is best described as depicting the mean of all possible paths that the economy could

EXHIBIT 1 

### A Comparison of the 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 Government 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 GDP deflator) 4.0 2.6 3.9 2.1 3.3 Unemployment 6.5 4.9 4.9 4.8 5.1 **Average Percent of 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 projecion period are compound annual growth rates calculated between the years 2001 and 2027. Level Variables are averages for the years 2001 to 2027. Interpretation of the historical figures is similar. Unless otherwise stated, all real data are in chained 1996 dollars.

## F ORECAST 

## O VERVIEW



### 2 DRI • WEFA The U.S. Economy

### follow in the absence of major disruptions. Such disruptions include large oil price shocks, untoward swings in macroeconomic policy, or excessively rapid increases in demand. In all three situations, demographic forces slow the pace of real economic growth after 2010.

The cyclical projection is the primary alternative scenario. It superimposes business-cycle behavior on the trend scenario. Economic growth proceeds in a series ofstarts and stops, with periods of rapid expansion, followed by externally- or policy-induced recessions. The timing of the recessions is merely suggestive. Because it is impossible to predict the exact timing of business cycles much in advance, it is unwise to focus on specific years. It is also inappropriate to calculate average growth rates between different points in the business cycle.

The optimistic projection is the “ upside ” scenario, in which economic growth proceeds smoothly but more rapidly than in the baseline, while prices rise more slowly. In this projection, population, labor force, andcapital stock growth, as well as exogenous technological changes, occur more quickly than in the trend. Potential output thus climbs more rapidly, and because

EXHIBIT 4 

### Contributions to Real Potential GDP 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 0.9 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 Govt. 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 Contributions to 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 0.8 1.0 1.0 0.9 1.0 0.7 1.2 1.2 0.8 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 Potential 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. Labor and capital exc lude labor and capital used to produce energy. 0 2 4 6 8 10

1962 1972 1982 1992 2002 2012 2022
Trend Cycle Optimistic Pessimistic EXHIBIT 3 

### GDP Price Inflation (Percent)

0 5 10 15 20 25

1962 1972 1982 1992 2002 2012 2022
Trend Cycle Optimistic Pessimistic EXHIBIT 2 

### Real GDP (Trillions of chained 1992 dollars)

## F ORECAST 

## O VERVIEW



### 25-Year Focus, Winter 2002 3 

### output is primarily supply-determined in the long run, real GDP grows 0.5 percentage point quicker per year.

The pessimistic projection is the “ downside ” scenario. Here, growth proceeds smoothly, but more slowly than in the baseline, and productivity growth is weaker. In this projection, population, labor force, and capital stock growth, together with exogenous technological changes, occur less rapidly than in the trend. Output thus climbs 0.5 percentage point more slowly per year.


## Probabilities The underlying rate of growth in TREND25YR0202 is consistent with history, as well as with conjecture about the economy ’ s unfolding structure. It can be regarded as the best unbiased projection of the economy. Although any probabilities attached to long-run projections must be highly subjective, DRI • WEFA believes there is only a 10% chance that the economy ’ s underlying path will be outside the “ bandwidth ” encompassed by the optimistic and pessimistic projections. 

## Key Assumptions Demographics. Demographic factors are a primary driving force in any long-term economic projection. The population ’ s growth rate and changes in its compositionhave considerable impacts on the labor force, the fullemployment unemployment rate, housing demand, and other spending categories

— most notably, consumptionof health services and purchases by state and local governments. The population projections in DRI • WEFA ’ s trend and cyclical scenarios are consistent with the Census Bureau ’ s “ middle ” projection for the U.S. population. This projection is based on specific assumptions about immigration, fertility, and mortality rates. The fertility rate (the average number of births per woman upon completion of childbearing) will rise from its current level of 2.0 to about 2.2 in 2027, while the mortality rate should continue to improve

— with life expectancy for men and women rising steadily from 74.1 and 79.8 years, respectively, in 1999 to 77.6 and 83.6 years, respectively, in 2027. Meanwhile, net immigration (including undocumented immigration) is estimated to 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 per year through 2027, down from the 1.0% pace during the last 25 years. Thus total population will rise from 273.1 million in 1999 to 343.0 million in 2027.The age distribution of the population is also an important factor in the long-term outlook. As baby boomers begin to retire, the share of the U.S. population aged 65 years and over will jump from 13% in 2010 to 19% by 2027, pushing up outlays for Social Security, Medicare,and Medicaid. In addition, the growth rate of the working-age population will slow more than that of the overall population. After increasing 1.1% annually over the past 25 years, the population aged 16 to 64 years will grow 0.8% annually during 1999-2014 and just 0.2% per year thereafter. The optimistic and pessimistic alternatives embody population projections different from those in the trend. The optimistic outlook assumes the U.S. population willincrease more quickly because of higher net immigration. Conversely, the pessimistic alternative constricts growth in the labor force because of lower assumed net immigration from the start of the forecast period. As a result, annual population growth averages 1.3% in the optimistic scenario and just 0.5% in the pessimistic scenario. By the end of the forecast interval, the current population increases to 390 million in the optimistic EXHIBIT 5 

### Mortality Assumptions (Ultimate levels by 2050) Trend/Cycle Optim Pessim

–––––––– ––––– ––––– Life Expectancy at Birth (Years) Male 81.2 83.8 79.5 Female 86.7 88.4 84.9

8 10 12 14 16 18 20

1962 1972 1982 1992 2002 2012 2022 EXHIBIT 6 

### The Percentage of the Population Aged 65 and **Older Rises**

## F ORECAST 

## O VERVIEW



### 4 DRI • WEFA The U.S. Economy 

### projection, but to only 310 million in the pessimistic scenario compared with 343 million in the baseline. The Census Bureau has yet to revise its projections to make them consistent with the 2000 census. The revised projections, which will be released in late 2002, will show a larger population; the revised 2000 estimates were raised to 281.4 million, up from 275.3 million. Fiscal Policy. We expect federal spending on defense,transfer payments, and federal aid to state and local governments to consume a larger share of GDP than previously thought. As a result, the federal government should post surpluses in the unified budget, averaging 0.02% of GDP from 2001 through 2027. In the longer run, the baby boomers ’ retirement will cause a gradual disappearance of the surplus, despite some increases in the Social Security tax rate. In the trend scenario, the (unified) surplus falls, but does not return to a deficit until fiscal 2018. Monetary Policy and Inflation. Monetary policy remains important in the long-term projections, not so much in determining the level of output, but rather in determining the rate of inflation. Ultimately, the Federal Reserve decides on the “ steady-state ” rate of inflation. Monetary policy can cause inflation to accelerate bybeing overly accommodative and pushing the unemployment rate temporarily below the rate at which inflation is stable. Alternatively, it can cause inflation todecelerate by being restrictive and pushing the unemployment rate temporarily above the rate at which inflation is stable. The monetary authorities choose to keep short-term interest 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 of inflation

— as measured by the chainweighted GDP price index

— rises from 1.4% in 1999 to 2.2% by 2010 and 3.2% in 2027. Bond yields will generally move parallel to the funds rate over the forecast interval, but run 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 pushes up the ten-year bond rate to 9.6% by 2027. The forecast implies a real federal funds rate of about 2.0% and a real long-term bond rate between 2.5% and 3.0%

— in line with historical averages. In the cyclical scenario, periods of overly expansive monetary policy are followed by intervals of overly restrictive policy, which translates into the periodicacceleration and deceleration of inflation. In the optimistic scenario, the Fed is assumed to keep a tight rein on the money supply, permitting little acceleration of inflation. Conversely, in the pessimistic scenario, thecentral bank is assumed to be reluctant to put the economy through the pain necessary to bring inflation backto baseline levels, choosing instead to tolerate an inflation rate that eventually exceeds 6%. 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6

1963 1973 1983 1993 2003 2013 2023

Trend/Cycle Optimistic Pessimistic EXHIBIT 7 

### Population Growth (Percent)

-6 -5 -4 -3 -2 -1 0 1 2 3

1962 1972 1982 1992 2002 2012 2022 February 2002 Forecast August 2001 Forecast EXHIBIT 8 

### The Federal Surplus Shrinks as the Population **Ages** (Percent of GNP, NIPA basis)

## F ORECAST 

## O VERVIEW



### 25-Year Focus, Winter 2002 5 

### Energy. Except for temporary spikes (such as this year ’ s), DRI • WEFA ’ s Energy Service expects the average acquisition price of foreign oil to remain below $30 per barrel until 2015. With worldwide demand steadily increasing, however, the OPEC cartel will maintain some pricing power. Energy price inflation should thusheat 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 of 2012. Thereafter, the forecast shows oil prices climbing steadily to $59 per barrel by 2027. The West Texas Intermediate price foroil is projected to reach $63.1 per barrel by 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 of imported oil rising from about $20.0 a barrel in 2001 to $27.0 a barrel in 2027.
The oil price path in the cyclical scenario has a major spike in 2020, where oil producers are assumed to mimic their behavior of the 1970s, raising oil prices substantially when the world economy is close to a cyclical peak. In the pessimistic scenario, nominal oilprices are higher than in the trend. In the optimistic scenario, both nominal and real oil prices are below what they are in the trend.

International. In all three projections, the major U.S. trading partners are assumed to follow a growth pattern similar to that in the United States, with the pace of growth (in real consumption) averaging 2.45% 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, as well as the maturation of many developing economies. The dollar ’ s exchange rate will depreciate steadily through 2027, in order to keep the country ’ s current account deficit from growing too fast. Variations in the international environment help explain some of the differences among the alternative scenarios. A faster (slower) rate of growth abroad partiallyexplains the higher (lower) level of exports in the optimistic (pessimistic) scenario. Meanwhile, a cycle in the real exchange rate due to swings in domestic interest -8 -6 -4 -2 0 2 4 6 8

1962 1972 1982 1992 2002 2012 2022 EXHIBIT 9 

### Short-Term Interest Rates Will Settle at Their **Equilibrium** (Federal funds rate less nominal GDP growth, percentage points)

10 15 20 25 30

1989 1999 2009 2019 February 2002 Forecast August 2001 Forecast EXHIBIT 10 

### Real Oil Prices Are Higher in the Long Term (Refiners ’ acquisition cost of imported crude, 1996 dollars/barrel)

10 20 30 40 50 60

1976 1986 1996 2006 2016 2026 Trend Cycle Optimistic Pessimistic EXHIBIT 11 

### Oil Price Paths Across the Four Scenarios (Refiners ’ acquisition cost of imported crude, 1996 dollars/barrel)

## F ORECAST 

## O VERVIEW



### 6 DRI • WEFA The U.S. Economy

### rates helps explain the trade pattern in the cyclical scenario.

Demand Mix. Although the overall level of output isdetermined by supply conditions, many mixes of aggregate demand are consistent with that level of output.Over the forecast period, the demand mix will be dominated by the retirement of baby boomers. The consumption share of GDP rises because senior citizens continueto spend, even though they are no longer directly producing GDP. In addition, federal government outlays for Social Security and Medicare explode, further boosting consumption relative to GDP. Between 2011 and 2027, consumption ’ s share of GDP jumps from 69% to more than 72%. The sum of the remaining shares of GDP must declineto make room for the rising share devoted to consumption. Government spending will bear some of the burden

–– between 2011 and 2026, government ’ s share of GDP will decline by more than three percentage points. 

## Methodology over the Short-Term Forecasting Horizon The trend remains consistent with the February Control forecast through 2011. The two bandwidth scenarios, optimistic and pessimistic, take the trend solution as their starting point and immediately diverge from it

— according to their own underlying assumptions

— at the beginning of the solution interval. This ensures that growth is always higher in the optimistic alternative, and lower in the pessimistic alternative. However, while average GDP growth, inflation, unemployment, and interest rates may be higher or lower than in the trend, depending on which is appropriate, these relationships will not necessarily hold for every individual quarter of the forecast period. by Patrick J. Newport, Mike Montgomery and Michael Donnelly 60 62 64 66 68 70 72 74

1962 1972 1982 1992 2002 2012 2022 EXHIBIT 12 

### The Consumption Share Will Keep Rising (Percent of GDP)

## F ORECAST 

## O VERVIEW



### 25-Year Focus, Winter 2002 7 TABLE 1 

### Capsule Summary of the Long-Term Projections

**Trend Cyclical**

**General Outlook** The economy exhibits mild variations in growth and approaches its balanced-growth path. Inflation rises slowly, averaging 3.0%. Typical business-cycle fluctuations.

**I. Principal Exogenous Assumptions** Demographic Projections consistent with the Census Bureau ’ s latest middle-growth forecast, which assumes a leveling off of the fertility rate at 2.2 births, an ultimate mortality rate of 77.6 years for men and 83.6 years for women, and net immigration of 912,000

– 954,000 per year. Energy imports Real oil prices remain stable. No embargoes are assumed. Sharp price hikes occur in periods of peak demand. Food prices Wholesale farm prices average 1.5% annual increases. Wholesale farm prices average 2.9% annual increases. Inflation spikes in 2020.
**II. Principal Policy Dimensions** Tax changes Lower personal income tax rates. Corporate tax falls to 33.0% as the national debt shrinks. Fluctuates with the business cycle.

Growth of federal government purchases Real, +1.2% per year. Real, +12% per year. Growth pattern resembles the trend ’ s. Transfers Real growth of 4.0% per year. Real growth of 4.0% per year. Budget deficit Surplus averages 0.02% of GDP. Deficit averages 0.3% of GDP. Average federal government share of GDP 18.5% 19.2%

Monetary policy Sufficient funds made available to promote stable credit growth. Money (M2) growth averages 5.3%. Fluctuations in monetary policy contribute to severity of cycles. M2 averages 5.6% annual growth.
Federal funds rate Rises gradually over forecast period. Ranges between 1.75% and 9.50%. Nonborrowed reserves Steadily rises over forecast period. Steadily rises over forecast period.

## F ORECAST 

## O VERVIEW



### 8 DRI • WEFA The U.S. Economy **Trend Cyclical**

**III. Behavior of Economic Agents**
Consumers Consumer confidence weakens as inflation picks up. Cyclical swings in confidence, income, and wealth cause large fluctuations in expenditures, particularly on durable goods. Average annual real consumption growth 3.0% 3.2%

Business Decisions made in relatively stable environment. Fluctuations in output, interest rates, and inflation lead to fluctuations in investment. Average fixed investment share in GDP 13.0% 12.4%

Average share of corporate cash flow in GNP 10.9% 10.2%

State and local government Real expenditures dictated by demographics and ability to raise taxes. Average real growth in purchases of 1.7% per year. Average real growth in purchases of 1.7% per year.

Federal budget position (Fiscal years) Surpluses through 2017. Deficits starting in 2013.

International Average annual wholesale price inflation for major trading partners 1.8% (OECD countries) 3.7% (Developing countries) 1.9% (OECD countries) 3.8% (Developing countries)

U.S. exchange rate Declines over forecast period. Declines over forecast period.

**IV. Other Parameters** Average annual productivity growth 2.5% 2.2%

Average annual potential output growth 2.8% 2.5%

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. Periodic demand surges, oil price shocks, and more aggressive wage responses boost the average inflation rate.

Consumer price index Average annual increase Peak annual 3.0% 3.75% (2027) 4.3% 6.7% (2027)
Hourly earnings Average annual rise Peak annual 4.4% 5.0% (2026) 5.6% 7.8% (2027)
Housing market Demographics dictate slower growth of the housing stock after 1998. Cycles in incomes and monetary policy affect the housing sector more severely. Median new home price in 2027 Average annual rise $393,300

3.1% $512,700

4.1%
Unemployment Hovers about 5.0%. Annual rates vary between 3.0% and 7.0%.
Average rate 4.9% 4.9% TABLE 1 (Continued) 

### Capsule Summary of the Long-Term Projections

## F ORECAST 

## O VERVIEW



### 25-Year Focus, Winter 2002 9 **Optimistic Pessimistic**

**General Outlook** High growth. Low growth.

Deviations from trend due to differences in demographic assumptions, productivity growth, and investment.

**I. Principal Exogenous Assumptions** Demographic Projections above the trend are a result of higher net immigration. Projections below the trend due to lower net immigration.

Energy imports By 2027, oil import bill reaches $528 billion. Oil prices rise steadily, reaching $97 per barrel by 2027. Oil import bill reaches $553 billion by 2027.

Food prices Wholesale farm prices rise 1.5% annually. Wholesale farm prices average 2.6% annual increases.

**II. Principal Policy Dimensions**  Tax changes Similar to trend. Similar to trend.
Growth of federal government purchases Real, +1.2% per year. Real, +1.3% per year.

Transfers Real growth of 4.3% per year. Real growth of 3.8% per year. Budget deficit The government runs a surplus through forecast period. Deficits in most years.

Average federal government share of GDP 17.5% 20.6%

Monetary policy Stable and predictable. Tight policies required to contain rising inflationary pressures.
Federal funds rate Settles at 5.0%. Rises continually over forecast period. Nonborrowed reserves 2.4% average growth. 2.0% average growth. TABLE 1 (Continued) 

### Capsule Summary of the Long-Term Projections

## F ORECAST 

## O VERVIEW



### 10 DRI • WEFA The U.S. Economy **Optimistic Pessimistic**

**III. Behavior of Economic Agents**
Consumers Consumer confidence weakens as inflation rises. Lower real incomes depress consumer expenditures, especially on durable goods. Average annual real consumption growth 3.6% 2.6%

Business High demand expectations plus low inflation and interest rates enhance the business environment. Higher inflation, higher interest rates, and weaker demand make investors more cautious. Average fixed investment share in GDP Average share of corporate cash flow in GNP 13.3%

11.1% 12.5%

10.4%

State and local government Average real growth in purchases of 2.1% per year. Average real growth in purchases of 1.5% per year. Federal budget position (Fiscal years) Government runs surplus through forecast period. Deficits after 2001.

International Average annual wholesale price inflation for major trading partners 1.6% (OECD countries) 3.4% (Developing countries) 2.5% (OECD countries) 4.4% (Developing countries)

U.S. exchange rate Declines over forecast period. Declines over forecast period.

**IV. Other Parameters**  Average annual productivity growth 2.7% 2.1%

Average annual potential output growth 3.4% 2.3%

Consumer price inflation Hovers below 3.0%. Inflation accelerates, approaching 6.0% in 2027. Consumer price index Average annual increase Peak annual 2.5% 2.9% (2017) 3.7% 5.7% (2027)
Hourly earnings Average annual rise Peak annual 4.2% 4.7% (2017) 4.7% 6.2% (2027)
Housing market The higher population projections push the housing stock above the trend. Lower real incomes and high cost of funds depress housing starts. Median new home price in 2027 Average annual rise $336,600

2.6% $498,700

4.2%
Unemployment Remains near trend throughout forecast period. Remains near trend throughout forecast period. TABLE 1 (Continued) 

### Capsule Summary of the Long-Term Projections

## T HE 

## F OUR 

## S CENARIOS 

## : T HE 

## T REND 

## P ROJECTION



### 25-Year Focus, Winter 2002 11 

# S LOW 

# G ROWTH AND 

# R ISING 

# I NFLATION 

# : T HE 

# T REND 

# P ROJECTION

Highlights

• Real GDP growth will average 3.1% per year during 2001-27. Growth slows after 2012 as baby boomers retire.

• The outlook for inflation remains moderate. CPIinflation will average 3.0% per year over the forecast period. Core inflation will average 3.0%.

• High investment and a more slowly growing labor force should result in higher productivity growth. Nonfarm business productivity growth averages 2.5% over the forecast period, compared with the 1.7% average experienced since 1975.

• After worsening through 2002, the current account deficit will narrow, but remain negative. The deficit will hover between 3% and 4% of GDP during most of the projection period.

• Real oil prices will creep up over the forecast period. The real price of imported oil rises from about $20.0 a barrel in 2001 to $27.0 a barrel in 2027.

• The labor market will stay tight, with the unemployment rate 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 throughout most of the forecast period. 

## Introduction
Economists focus on the short run. Will the FederalReserve raise interest rates? 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 20 th 

### century, the most striking economic fact that will distinguish it from previous centuries willnot be the 21 recessions, but rather the steady, inexorable rise in per capita income.
The driving force behind rising per capita income is onethat economists still do not quite understand: productivity growth. They agree that new technologies eventually make workers more productive, but many questionsremain under debate. What determines the pace of technological progress? How long does it take for new technologies to catch on? How does an innovation such as the Internet compare with the invention of the 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 of what Alan Greenspan called “ a revolution in information technologies. ” Although productivity growth eased as the economy slowed in 2001,recent data indicate that it is 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 slower than in the second half of the 1990s.


## Long-Term Forecast Assumptions In the trend scenario, we assume an environment free of exogenous shocks. Economic output will convergetowards 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 growthrate of potential 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 and Demographics
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.

## T HE 

## F OUR 

## S CENARIOS 

## : T HE 

## T REND 

## P ROJECTION



### 12 DRI • WEFA The U.S. Economy 

### The population projections do not incorporate the 2000Census estimates. When the Census updates its population projections later this year, the population numbers should be 2-3% higher than currently projected.


## Productivity and Aggregate 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 of the capital stock, and improvements in productivity.

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 for1975-2000. 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 growth rates.


## Government Policy The government sector's share of GDP will decline over the forecast period. Public purchases (both state and local) as a share of GDP will decrease from 18.0% in2001 to 14.3% in 2027. This reduction in the government ’ s share of the economy is concentrated in the federal sector. The reduction in federal spending as a percentage of GDP will largely be the result of a declining defense share. State and local spending as a share of GDP will shrink from 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 average0.2% of GDP over the entire forecast period. Our projections are based upon the assumption that Congress and the executive will find it politically difficult tospend 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.


## Monetary Policy and Financial Markets
The Federal Reserve decides on the “ steady-state ” rate of inflation. Monetary policy can cause inflation toaccelerate by being overly accommodative. Alternatively, it can cause inflation to decelerate by being restrictive. The monetary authorities choose to keep short-term interest rates slightly below their equilibriumlevels throughout the forecast period in the trend projection, causing a slow but steady increase in inflation. Consequently, the rate of inflation

— as measured 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, but run 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 55 57 59 61 63 65 67 69

1962 1972 1982 1992 2002 2012 2022 EXHIBIT 1 

### The Labor-Force Participation Rate Will Drop (Percent) 75 77 79 81 83 85 87

1962 1972 1982 1992 2002 2012 2022 EXHIBIT 2 

### Population Aged 16-65 as a Percent of the Total **Adult Population**

## T HE 

## F OUR 

## S CENARIOS 

## : T HE 

## T REND 

## P ROJECTION



### 25-Year Focus, Winter 2002 13 

### pushes up the ten-year bond rate to 9.6% by 2027. The forecast implies a real fed funds rate of about 2.0% and a real long-term bond rate close between 2.5% and 3.0%

— in line with historical averages.



## Oil Prices Except for temporary spikes (such as this year ’ s), DRI • WEFA ’ s Energy Service expects the average acquisition price of foreign oil to remain below $30 per barrel 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 of 2012. Thereafter, the forecast shows oil prices climbing steadily to $59 per barrel by2027. The West Texas Intermediate price for oil is projected to reach $63.1 per barrel by 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 of imported oil rising from about $20.00 per barrel in 2001 to $27.00./barrel in 2027.


## Foreign Assumptions The major U.S. industrialized trading partners are assumed to follow a growth pattern similar to 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 growingtoo fast. Over the forecast period, the real U.S. tradeweighted dollar with industrialized countries depreciates 0.5% annually.


## Long-Term Forecast Highlights
Real GDP. The trend projection assumes that the U.S. economy experiences no major mishaps between now and 2027. The projection is identical with our February short-term forecast through 2011, and represents EXHIBIT 3 

### Contribution to New Jobs (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

2.0 2.5 3.0 3.5 4.0 4.5 5.0

1965 1975 1985 1995 2005 2015 2025 EXHIBIT 5 

### Potential Output Growth Will Slow (Percent)

5 10 15 20 25 30 35

1962 1972 1982 1992 2002 2012 2022 EXHIBIT 4 

### Manufacturing’s Share of Total Employment **Continues to Slide** (Percent)

## T HE 

## F OUR 

## S CENARIOS 

## : T HE 

## T REND 

## P ROJECTION



### 14 DRI • WEFA The U.S. Economy 

### DRI 

### • WEFA ’ s best estimate of the 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 toshort-term cyclical fluctuations, such as planning capacity additions and evaluating new markets. This projection is also the best base from which to evaluate theeffects of various assumptions about key exogenous elements, such as fiscal policy or energy prices, on the overall economic outlook. 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 fairlywell 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 growth in the future. Total civilian employment will rise at an average annual rate of 1.0% from 2000 to 2005 and will moderate to an average growth rate 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 of 49.7million (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. The broad 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. 0 2 4 6 8 10 12 14

1962 1972 1982 1992 2002 2012 2022 EXHIBIT 6 

### Consumer Price Inflation (Percent)

60 62 64 66 68 70 72 74

1962 1972 1982 1992 2002 2012 2022 EXHIBIT 8 

### The Consumption Share Rises Steadily (Percent of GDP)

0 2 4 6 8 10 12 14 16 18

1962 1972 1982 1992 2002 2012 2022 EXHIBIT 7 

### The Federal Funds Rate (Percent)

## T HE 

## F OUR 

## S CENARIOS 

## : T HE 

## T REND 

## P ROJECTION



### 25-Year Focus, Winter 2002 15 

### Inflation . Over the long run, inflation is a monetary phenomenon. Its future course will be determined bypolicies 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:

• The Fed will attempt to keep inflation contained over the first ten years of the forecast period.

• In the second half of the forecast period, as baby boomers start retiring, labor markets will tighten, putting pressure on wages. We assume that the Fed will allow inflation to creep up rather than slow the economy

— possibly inducing a recession

— to keep 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 created by the aging population


### Consumption. Expenditures, in the long term, are primarily determined by the growth of real permanentincome, demographic influences, and changes in relative prices. The share of personal consumption expenditures in GDP will rise slightly over the forecast interval, and should account for 72% of the overall economy by the end of the forecast horizon. Real consumption expenditure growth will average 3.0% per year 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 pick up again after 2012.
The share of consumption devoted to services will rise, mainly because of rising 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 of increase relative to past performance. Vehicle sales growth will average close to 0.8% over the next 25 years. Light-vehicle sales are forecasted to reach 21.3 million units by 2027. Although the number of vehicles per person has increased significantly in the past 20 years, the United States is approaching a saturation point in the rate of vehicle ownership. Future growth in vehicle sales will 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 N/A N/A 6.9 6.3 1.9 Other Transportation N/A 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.

10 12 14 16 18 20 22

1978 1988 1998 2008 2018 EXHIBIT 10 

### Light-Vehicle Sales (Millions of units)

## T HE 

## F OUR 

## S CENARIOS 

## : T HE 

## T REND 

## P ROJECTION



### 16 DRI • WEFA The U.S. Economy 

### be primarily driven by growth in population and demand for replacement vehicles. Automobile sales should be relatively strong throughout the projectionperiod, averaging 9.2 million units per year. Total lightvehicle sales (cars plus light trucks) reached 145 millionunits in the 1990s and will reach 171 million in the subsequent decade, compared with 135 million during the 1980s. According to DRI 

### • 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 pervehicle should fall for several more years, even if relative energy prices remain flat. Similar considerationsapply to business capital and housing stocks. The ongoing employment shift from manufacturing to services also implies lower energy usage per unit of output.
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 output growth. This does not take into account the rising volume of withdrawals from existing retirement plans.
Housing. Household growth clearly depends on population growth, but real incomes, employment, the age distribution of the population, and societal values also influence it. Net additions to the housing stock areclosely linked to household growth, which is the primary driver of housing starts. Many analysts tend tooverlook another key factor for housing starts: the geographic location of the demand for net additions.

The 25

– 34 age cohort is key for the demand for newhousing. This is the age group where individuals typically purchase their first home. The demand for new housing was boosted by the large gains in this age groupin the late 1960s and 1970s, as the baby-boom generation entered the housing market. Unfortunately for the housing sector, the baby-boom generation began 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 9 10 11 12 13 14 15

1962 1972 1982 1992 2002 2012 2022 EXHIBIT 12 

### Investment’s Share of GDP Will Turn Down After **2015** (Percent of GDP)

1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6

1962 1972 1982 1992 2002 2012 2022 EXHIBIT 11 

### Housing Starts (Millions of units)

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 -0.7

## T HE 

## F OUR 

## S CENARIOS 

## : T HE 

## T REND 

## P ROJECTION



### 25-Year Focus, Winter 2002 17

### 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 over the past 25 years. Thus, housing starts are projected to average 1.7 million unitsannually 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 142.0 million units. 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 of the 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 willremain 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 domesticinvestment throughout the forecast period, although federal deficits clearly hurt it in the later years of the forecast. The government saving projection assumes that state and local governments continue to run modest operating surpluses.
The composition of investment will continue to change in the forecast period; structures ’ share of investment will decline modestly, while equipment ’ s share rises. This is a continuation of a 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 modest unit labor cost growth, will stimulate U.S. exports abroad and result in an eventual 0 2 4 6 8 10 12 14 16 18

1962 1972 1982 1992 2002 2012 2022 EXHIBIT 14 

### Net Interest Paid by the Federal Government (Percent of federal government expenditures, excluding investment)

-5 -4 -3 -2 -1 0 1 2

1962 1972 1982 1992 2002 2012 2022 

### The Goods and Service Trade Balance

-60 -50 -40 -30 -20 -10

0 10 20

1978 1988 1998 2008 2018 

### Net U.S. Investment Position EXHIBIT 15 

### The Trade Outlook (Percent of GDP)

## T HE 

## F OUR 

## S CENARIOS 

## : T HE 

## T REND 

## P ROJECTION



### 18 DRI • WEFA The U.S. Economy 

### improvement in the U.S. current account balance. DRI • WEFA projects that real exports will expand at an average annual rate of 6.9% over the entire forecast period. Real imports, meanwhile, will grow at an average annual rate of 5.8%.

10 20 30 40 50 60 70

1976 1986 1996 2006 2016 2026 EXHIBIT 17 

### Foreign Oil Prices (Dollars per barrel)

90 95 100 105 110 115 120 125 130

1974 1984 1994 2004 2014 2024 EXHIBIT 16 

### Ratio of Manufacturing Output to Real GDP (1996=100)

## T HE 

## F OUR 

## S CENARIOS 

## : T HE 

## T REND 

## P ROJECTION



### 25-Year Focus, Winter 2002 19 TABLE 1 

### Summary for the U.S. Economy--TREND25YR0202

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

–––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– **Composition of Real GDP (Annual percent change)** Gross Domestic Product 1.0 4.0 3.9 3.0 2.9 2.9 3.3 3.4 3.6 3.4 3.4 3.3 3.3 Final Sales 0.3 3.7 3.8 3.2 2.9 2.9 3.3 3.4 3.6 3.4 3.4 3.3 3.3 Gross National Product 1.1 3.7 3.7 3.0 2.8 2.9 3.3 3.4 3.6 3.4 3.3 3.3 3.3 Total Consumption 1.9 3.6 3.3 2.8 2.6 2.6 2.9 3.1 3.3 3.2 3.3 3.3 3.2

Durable Goods -0.6 6.7 4.4 2.5 3.2 3.2 2.9 3.6 4.5 4.4 2.6 4.1 4.8 Nondurable Goods 2.0 3.2 3.2 2.8 2.5 2.4 2.7 2.8 3.0 3.0 3.3 3.3 3.3 Services 2.4 3.1 3.1 2.9 2.6 2.5 3.0 3.1 3.2 3.1 3.4 3.2 3.0 Nonres. Fixed Investment -4.6 6.7 8.5 6.1 5.0 5.5 6.4 6.6 6.7 6.7 7.2 6.3 6.3 Equipment and Software -2.3 8.3 10.4 7.4 6.1 6.3 7.5 7.8 7.8 7.7 7.8 7.5 7.4 Computers 10.8 14.9 18.2 19.9 20.1 19.8 19.1 18.4 17.9 17.2 17.5 17.7 17.2 Software 6.0 8.6 9.0 10.4 10.6 10.6 10.8 10.9 11.0 11.1 11.5 11.2 10.4 Communications Equipment -9.1 8.7 11.1 8.0 8.1 6.7 7.3 7.7 7.5 7.4 7.1 6.1 6.4 Light Vehicles -3.4 8.9 6.7 1.9 2.9 3.4 5.1 5.0 4.8 4.6 4.4 4.1 4.5 Other -6.4 6.7 10.6 5.2 2.0 2.2 4.0 4.4 4.5 4.1 4.0 3.4 3.6 Private Nonres. Structures -11.0 1.9 3.0 2.0 1.2 3.1 3.1 2.9 3.1 3.8 5.3 2.6 2.6 Buildings and Other -9.8 3.4 3.0 2.2 1.6 2.7 3.8 4.0 3.9 4.5 6.2 2.9 2.9 Residential Fixed Investment -0.5 1.3 1.3 1.7 0.5 1.0 2.3 2.0 3.1 3.1 -1.2 -1.9 0.1 Exports -8.6 7.6 9.3 7.9 8.1 7.8 7.4 7.4 7.1 6.9 7.0 7.6 7.7 Imports 0.6 6.5 5.2 4.5 4.1 4.0 4.1 4.5 4.8 4.7 5.4 6.0 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 1.8 2.1 1.8 2.0 1.8 1.5 1.5 1.4 1.4 1.4 1.5 1.6 1.8

**Billions of Dollars** Real GDP (Chained 1996 $) 9416.7 9794.5 10172.5 10480.1 10783.7 11100.7 11470.3 11862.4 12287.2 12709.2 13140.7 13575.2 14029.7 Gross Domestic Product 10431.3 11058.7 11728.4 12339.3 12957.3 13615.6 14360.7 15161.8 16042.4 16979.5 17987.3 19048.4 20212.2
**Prices and Wages (Annual percent change)** GDP Price Index (Chain-Wt.) 1.2 1.9 2.1 2.1 2.1 2.1 2.1 2.1 2.2 2.3 2.5 2.5 2.7 CPI - All Urban Consumers 1.4 2.4 2.5 2.5 2.4 2.4 2.4 2.3 2.4 2.5 2.7 2.8 3.0 Excl. Food & Energy 2.5 2.6 2.6 2.6 2.6 2.5 2.5 2.4 2.5 2.6 2.8 2.9 3.1 Producer Price Index - Fin. Gds. -1.4 0.8 1.4 1.3 1.1 1.0 1.1 1.1 1.2 1.4 1.5 1.6 1.7 Emp. Cost Index - Total Comp. 3.3 2.9 3.0 2.9 3.1 3.2 3.3 3.4 3.6 3.8 4.0 4.1 4.4 Output per Hour 2.8 3.4 2.4 2.3 2.3 2.3 2.4 2.4 2.4 2.3 2.9 2.6 2.4
**Other Key Measures** Industrial Production (% ch) -1.3 7.5 5.7 4.0 3.6 3.7 4.7 4.8 4.8 4.7 4.5 4.3 4.0 Nonfarm Inven. Accumulation (Billion chained 1996 $) 15.6 53.3 58.9 41.8 39.6 40.4 45.4 47.9 52.1 52.4 53.0 54.0 57.0 Consumer Confidence Index 93.2 92.2 94.7 93.7 91.8 91.6 92.2 92.8 94.8 94.8 90.9 91.7 91.9 Housing Starts (Mil. units) 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.7 1.7 1.7 1.6 1.6 1.6 Light-Vehicle Sales (Mil. units) 15.4 16.9 17.3 17.0 17.3 17.5 17.5 17.6 17.9 18.3 18.1 18.4 19.0 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 Payroll Employment (% ch.) -0.4 1.6 2.1 1.6 1.2 1.1 1.2 1.3 1.4 1.2 0.7 0.9 1.1 Federal Budget Surplus (Unified, CY, bil. $) 5.3 -7.4 -20.5 -8.9 32.0 80.4 101.0 130.5 160.8 207.9 128.1 115.3 103.3
**Foreign Trade** Curr. Account Balance (Bil. $) -459.8 -535.5 -567.2 -579.5 -588.3 -590.5 -599.0 -605.7 -618.5 -627.4 -671.3 -701.3 -733.6 Foreign Crude Oil ($ per barrel) 19.6 21.0 22.7 23.8 24.8 25.5 26.1 26.9 27.7 28.7 29.8 30.9 32.1

**Financial Markets** Money Supply (M2, billion $) 5821.9 6136.3 6424.4 6726.3 7043.9 7379.1 7735.7 8115.5 8521.4 8955.3 9396.4 9869.4 10378.0 Percent 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 Thirty-Year Mortgage Rate (%) 7.1 7.4 7.5 7.4 7.4 7.4 7.3 7.3 7.3 7.3 7.7 7.8 7.9 Ten-Year Treasury Note Yield (%) 5.3 5.8 5.9 5.9 5.9 5.9 6.0 6.0 6.1 6.1 6.5 6.6 6.7 Treasury Bill Rate (%) 2.0 3.7 4.6 4.6 4.6 4.6 4.6 4.6 4.7 4.7 5.1 5.1 5.1 Federal Funds Rate (%) 2.2 4.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.5 5.5 5.5 Prime Rate (%) 5.2 7.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.5 8.5 8.5 S&P 500 Stock Index 1161.5 1237.8 1324.7 1423.7 1507.5 1599.0 1692.3 1786.0 1876.8 1973.8 2103.1 2235.8 2376.6

**Incomes** Personal Income (% ch) 2.5 5.3 5.7 4.8 4.7 4.8 5.3 5.4 5.7 5.9 6.0 5.9 6.2 Real Disposable Income (% ch) 2.2 3.5 3.5 2.7 2.3 2.3 3.0 3.1 3.3 3.3 3.4 3.3 3.3 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 Profits After Tax (% chya) 4.8 8.4 1.0 2.2 5.0 5.3 7.4 6.8 7.2 7.1 7.2 7.7 8.7

## T HE 

## F OUR 

## S CENARIOS 

## : T HE 

## T REND 

## P ROJECTION



### 20 DRI • WEFA The U.S. Economy 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 GDP (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 Software 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 Nonres. 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 GDP (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 39063.7 41540.2 44187.4
**Prices and Wages (Annual percent change)** GDP Price Index (Chain-Wt.) 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 Excl. 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 Comp. 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 (% ch) 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 63.1 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 86.6 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 (%) 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 (% 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** Curr. 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 5.4 5.5 5.6 Thirty-Year Mortgage Rate (%) 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 (%) 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 (% ch) 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 After Tax (% 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

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### 25-Year Focus, Winter 2002 21 TABLE 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 2.8 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. Cost of 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 Cost 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

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### 22 DRI • WEFA The U.S. Economy 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 2.8 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 50.8 51.1 51.1 51.5 51.7 Factory Operating Rate 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 Labor Availability 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 Acquisitions (% change) 4.4 3.0 5.2 5.4 5.7 2.8 -0.4 1.3 0.8 1.5 1.7 4.9 5.5 Nominal Corp. Cost of Financial Capital 5.6 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

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### 25-Year Focus, Winter 2002 35 

# A R ANGE OF 

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Highlights

• Real GDP advances 3.7% per year on average over the next 25 years in the optimistic scenario (optim). This is above the 3.2% growth rate recorded between 1975 and 2001, and higherthan the projected averages of 3.1% in the baseline (trend) and 2.7% in the pessimistic scenario (pessim).

• Despite optim's strong growth, inflation asmeasured by the GDP deflator averages a moderate 2.2%. This compares with the averages of 2.6% in the trend and 3.3 % in pessim.

• In optim, the federal budget remains in surplusthroughout 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% of GDP. Investment ’ s share of GDP then declines slowly but steadily, ending at 13.5% by 2027.

• Output per man-hour rises 2.7% in optim, 2.5% in trend, and 2.1% in pessim.
The optimistic scenario is characterized by strong GDP growth and moderate inflation, with higher rates ofgrowth in capital spending and factor-productivity relative to the trend. The pessimistic alternative (whichencompasses opposite assumptions on labor force, capital stock, and factor productivity) exhibits higher inflation than optim, partly because of escalating energy prices.
In the optimistic case, real GDP growth averages 3.7%annually, which is above the 3.2% gains achieved during 1975-2001 (Exhibit 1). Consumer price inflation, onthe other hand, averages only 2.2%, well below the previous 25-year rate of 4.8%. The high-growth, low-inflation environment depicted here is especially favorable to durable-goods spending categories such as business fixed investment, housing construction, and motor vehicles. In contrast, the low-growth environment of the pessimistic projection debilitates these same sectors.For example, in optim, business investment in equipment and software is 11% higher than its trend level by 2027, while in pessim it is 10% lower.


## Projection Detail Participation Rates and the Labor Force. These twoscenarios incorporate different demographic assumptions from those in the trend, leading to varying laborforce growth and participation rates. The optimistic outlook assumes that the U.S. population will grow morequickly because of higher net immigration. The pessimistic alternative constricts growth in the labor force, the result of lower assumed net immigration. As a result, the U.S. population increases from 273 million in 1999 to 392 million by 2027 in the optim, but to just 311 million in the pessim, compared with the 344 million in the trend. Annual population growth averages 1.3% in optim, but only 0.5% in pessim.
Thus, by 2027, the adult population (aged 16 and over) is roughly 11% higher in optim than in the trend, while it is 7% lower in pessim. These results directly affect the

-2 0 2 4 6 8

1962 1972 1982 1992 2002 2012 2022

Trend Optimistic Pessimistic EXHIBIT 1 

### Output Growth Will Weaken (Real GDP, annual percent change)

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### 36 DRI • WEFA The U.S. Economy 

### labor force. By 2027, the civilian labor force is 9% higher in optim and 4% lower in pessim relative to the trend. Labor-force growth averages 1.0% in optim and 0.5% in pessim over the next 25 years, compared with the 0.7% annual gains in the trend. Potential Output. Over the longer term, the economy ’ sactual growth is constrained by the expansion of potential output. The optimistic scenario, with its above-trend supply factors, yields average potential output growth of 3.7% per year through 2027. In the pessimistic scenario, with its slower labor-force and capital-stock growth, potential production is limited to 2.3% gains over the forecast interval (Exhibit 4).

Inflation. The subdued inflation in the optimistic scenario depends on relatively low energy prices and moderate wage increases. When combined with faster productivity growth, consumer price inflation averages 55 57 59 61 63 65 67 69

1962 1972 1982 1992 2002 2012 2022
Trend Optimistic Pessimistic EXHIBIT 2 

### Labor-Force Participation Rates Retreat **After 2010** (Percent)

EXHIBIT 3 

### Bandwith Projections at a Glance (Percent difference from trend in 2027)

2027

–––––––––––––– Optim Pessim Spread

––––– ––––– ––––– Real GDP Growth 4.6 3.7 0.9 CPI Inflation -0.5 2.7 -3.2 Real GDP 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-Wt. Implicit GDP 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 ($/barrel) 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 over the entire foreast period, except where units are given. Data accompanied by units represents the absolute change over the forecast period. All real data are in chained 1996 dollars. 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0

1965 1975 1985 1995 2005 2015 2025
Trend Optimistic Pessimistic EXHIBIT 4 

### Actual Output Growth Will Be Constrained by **Slower Potential Output Gains** (Potential output, percent change)

0 2 4 6 8 10 12 14

1962 1972 1982 1992 2002 2012 2022

Trend Optimistic Pessimistic EXHIBIT 5 

### Consumer Price Inflation (Percent)

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### 25-Year Focus, Winter 2002 37 

### only 2.5% per year through 2027, compared with 3.0% in the trend and 4.5% over the past 25 years (Exhibit 5).
In the pessimistic case, inflation is fanned by higher crude oil prices. Thus, although the GDP deflator recedes to less than 3.0% early in the forecast period, it then reaccelerates to over 5.0% in 2027. Rising energyprices, wages, and import prices combine to push consumer price inflation up to nearly 6.0% annually in 2027. Consumer price inflation averages 3.7% per year through 2027, compared with 3.0% in the trend.

Financial Conditions. The federal funds rate averages 6.7% in pessim and 4.9% in optim, just below as in the trend (Exhibit 6). The rate would be higher in pessim, but the Federal Reserve compromises between fighting the inflationary forces of rising oil prices and pushing the economy into recession. At the long end of the maturity spectrum, the 10-year government bond yield rises to 8.6% in optim and 11.8% in pessim. The steeper yield curve in pessim reflects mounting concerns about the inflationary outlook, given the Fed ’ s accommodative monetary policy and accelerating inflation.
Consumer Spending and Income. Real consumer spending averages 3.6% annual growth in optim, 0.6 percentage point above the trend rate. Real per capita consumption expands an average of 2.3%, compared with its 2.4% annual rate since 1970.


### Income-sensitive durable goods are affected the most (Exhibit 7). Spending on consumer durables rises an average 5.1% per year in optim, 1.0 percentage point stronger than the trend growth rate; in pessim, growth in the same spending category averages just 3.3%. In the optimistic scenario, light-vehicle sales average 21.3 million units per year , pushing the stock of cars and light trucks 15% above its trend level by 2027. Real personal income averages 3.4% annual gains in optim, up from 2.9% in the trend. Income grows only 2.6% per year in pessim. Interest income in pessim isbolstered by higher interest rates and larger federal deficits.
Housing. Since the demographic forces of population growth and household formation are the main long-term determinants of new residential construction, we would expect the housing outlook to be weaker in pessim andstronger in optim relative to the trend. In fact, the disparity between interest rates in the two bandwidth alternatives drives their respective housing outlooks even further apart. The conventional mortgage rate averages 7.91% in optim, below its 9.77% average in pessim and 8.27% average in the trend. 0 2 4 6 8 10 12 14 16 18

1962 1972 1982 1992 2002 2012 2022 Trend Optimistic Pessimistic EXHIBIT 6 

### The Federal Funds Rate (Percent) EXHIBIT 7 

### Personal Consumption (Average annual percent change)

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 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.

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### 38 DRI • WEFA The U.S. Economy 

### Housing starts average slightly more than 2.42 million units per year (or 795,000 units above trend) in optim and 1.08 million (or 539,000 below trend) in pessim (Exhibit 8). By 2027, the housing stock in optim is 12% above the trend level, while in pessim it stands 8% below. Because of the gloomier inflation picture inpessim, the slower economy pushes the average nominal price of a new home to only $608,600 in 2027, compared with $478,000 in the trend and $410,000 in the optimistic alternative.

Business Fixed Investment. The extremely volatile investment sector reacts strongly to the differing assumptions in the alternatives. Business investment suffers long-term damage in pessim, as weak finaldemand and higher interest rates raise the cost of capital, lower the rate of return on investments, and weaken investor confidence (Exhibit 9). The economy ’ s overall sluggishness also hurts the profitability of corporations, limiting the funds available for investment. Thus, real investment in equipment and software grows only 5.8% annually in the pessimistic case, compared with 6.2% in the trend and 6.7% in the optimistic scenario.
Corporations may choose from several options to finance plant and equipment expansion. The type of inflationary environment in which they operate is likely to influence whether they finance by issuing stocks or bonds, selling short-term commercial paper or obtaining bank loans, or using internally generated funds. Thehigher inflation in the pessimistic environment encourages firms to rely more heavily on relatively scarce internal funds to finance investment

— avoiding the payouts associated with stocks, bonds, and bank loans. In addition, high inflation depresses the real value of depreciation allowances, constraining corporate cash flow and, subsequently, business fixed investment.

Government. The taxation policy assumptions in the two bandwidth scenarios are similar to those in thetrend. The government expenditure assumptions are different, however, largely reflecting the different growth paths and demographic assumptions of the optim and pessim projections. In pessim, a weaker economy leads to a higher ratio of federal spending to GDP. Higher interest rates on past debt and larger operating deficits 0.5 1.0 1.5 2.0 2.5 3.0 3.5

1962 1972 1982 1992 2002 2012 2022

Trend Optimistic Pessimistic EXHIBIT 8 

### Demographics and Interest Rates Determine the **Housing Outlook** (Housing starts, millions of units)

9 10 11 12 13 14 15

1962 1972 1982 1992 2002 2012 2022

Trend Optimistic Pessimistic EXHIBIT 9 

### Business Fixed Investment (Percent of GDP) 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 Total Saving 16.0 14.0 13.8 14.0 12.7 12.3 Total Investment 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 Investment12.0 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

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### 25-Year Focus, Winter 2002 39

### boost federal interest payments, exacerbating the persistent shortfalls.
Federal government outlays as a share of GDP average 117.5% in optim and 18.5% in the trend. They are higher, at 20.6% of GDP, in pessim because of the slower economy and the need to make larger transfer payments. The federal budget averages an annual deficit of $6.2 billion in the trend projection and a surplus of $34.6 billion in 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, which is created by economic activity within theirregions. Increases in state and local government purchases average 2.1% in optim, 1.7% in trend, and 1.5% in pessim.

International. The world is assumed to become more open to trade in all the scenarios, but it opens up most quickly in the optimistic alternative and most slowly in the pessimistic projection. In the optimistic outlook, the nation ’ s major trading partners are also assumed to experience strong output growth and low inflation, although the relative performance of the United States improves slightly when compared with the trend. Real export growth averages 7.0% per year in optim, versus

0.75 0.85 0.95 1.05 1.15 1.25

1975 1985 1995 2005 2015 2025

Trend Optimistic Pessimistic EXHIBIT 13 

### The Dollar’s Real Trade-Wtd Exchange Rate (Versus developed-country currencies)

-2500 -2000 -1500 -1000

-500 0

1962 1972 1982 1992 2002 2012 2022 Trend Optimistic Pessimistic EXHIBIT 11 

### Federal Budget Paths Diverge in the Bandwidth **Scenarios** (Billions of dollars)

7 8 9 10 11 12 13 14

1962 1972 1982 1992 2002 2012 2022

Trend Optimistic Pessimistic EXHIBIT 12 

### Corporate Cash Flow as a Percent of GNP

3 4 5 6 7 8 9 10

1962 1972 1982 1992 2002 2012 2022
Trend Optimistic Pessimistic EXHIBIT 14 

### Unemployment Varies Only Slightly Across the **Bandwidth Alternatives** (Percent)

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### 40 DRI • WEFA The U.S. Economy 

### 6.9% in the trend; real import growth averages 6.1% annually in optim, versus 5.8% in the trend.
Industrial Production and Employment. In the pessimistic scenario, the index of industrial production is 13% below the pessim level by 2027. Total nonfarmemployment is 4% lower, consistent with the laborforce participation projections. The pattern of employment losses by industry reflects output differences from trend levels, as well as productivity losses in individual industries.
Over the projection period, total payroll employment rises by 39.8 million in the trend, 52.8 million in optim, and 32.3 million in pessim; the last 25 years saw total payrolls increase by about 54 million workers. Total employment in the optimistic scenario is 7.6% above its trend level by 2027. Manufacturing employment falls from 18.5 million in 2000 to 17.8 million in 2027. In pessim, manufacturing payrolls decline to 14.7 million.
Energy. The optimistic scenario assumes that energyavailability is greater than in the trend, facilitating stronger economic growth by the United States and its major trading partners. Total U.S. energy usage is boosted to 167 quadrillion British thermal units (quads) by 2027 in this scenario, compared with 143 quads in the trend.
EIn the long run, production costs determine energy prices. Technological improvements lower production costs, but drilling deeper holes raises them. In all three scenarios, higher drilling costs win out: in both optim and trend, the real oil price rises to $28 per barrel by theend of the projection period (Exhibit 17). Energy-efficiency gains are made in all scenarios, but lower fuel prices hinder such developments in optim. EXHIBIT 15 

### Production Growth by Industry (Average annual percent change)

History Optim Pessim

–––––––––– –––––––––– ––––––– 1976 1986 2002 2008 2002 2008 -1986 -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 Tobacco 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 scenario for 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

0 20 40 60 80 100

1977 1987 1997 2007 2017 202 7 Trend Optimistic Pessimistic EXHIBIT 17 

### Foreign Oil Prices Rise (Average refiners ’ acquisition price of imported oil, dollars/barrel)

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### 25-Year Focus, Winter 2002 41 TABLE 1 

### Summary for the U.S. Economy - Optimistic Outlook

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

–––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– **Composition of Real GDP (Annual percent change)** Gross Domestic Product 1.5 5.0 4.3 3.7 3.5 3.5 3.9 4.1 4.2 3.8 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 18.1 18.2 18.0 17.3 Software 6.0 8.7 9.2 10.6 10.8 10.8 11.1 11.2 11.3 11.5 11.8 11.4 10.5 Communications -8.5 12.7 14.0 9.3 8.9 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 -9.8 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 -8.7 7.6 9.7 8.1 8.3 7.9 7.3 7.1 6.7 6.4 6.7 7.5 8.1 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 change)** GDP Price Index (Chain-Wt.) 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 (% ch) -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 48.6 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 17.8 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 (Bil. $) -468.6 -570.4 -607.6 -632.6 -654.8 -677.2 -710.7 -747.7 -799.6 -840.7 -883.8 -952.9 -1024.3 Foreign Crude Oil ($ 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 Rate (%) 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 Stock 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** Personal Income (% ch) 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 (% ch) 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 After Tax (% 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

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## P ROJECTIONS



### 42 DRI • WEFA The U.S. Economy 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 GDP (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 Light 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 2.2 2.2 2.2 2.3 2.1 2.2 2.3 2.3 2.3 2.4

**Billions of Dollars** Real GDP (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-Wt.) 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 (% ch) 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** Curr. 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-Year Treasury Note Yield (%) 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 (%) 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 (% ch) 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 (% ch) 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 After 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

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### 25-Year Focus, Winter 2002 43 TABLE 2 

### U.S. Population - Optimistic Outlook

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

–––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– ––––
**Millions of Persons** Total Population 281.2 284.4 287.8 291.3 295.0 298.6 302.4 306.2 310.1 314.1 318.2 322.4 326.7

Under 5 19.2 19.5 19.9 20.2 20.6 21.1 21.5 22.0 22.5 23.0 23.5 23.9 24.4 5 to 15 43.5 43.4 43.5 43.7 43.9 44.2 44.5 44.3 44.1 45.1 46.3 47.0 47.9 16 and Over 218.4 221.4 224.4 227.4 230.4 233.4 236.4 239.9 243.5 246.0 248.4 251.5 254.4 16 to 21 25.0 25.5 25.8 26.2 26.5 26.7 26.9 27.6 28.4 27.8 27.0 26.9 26.8 21 to 64 158.0 160.1 162.4 164.6 166.7 168.8 170.6 172.6 174.7 176.8 178.2 179.9 181.5 65 and Over 35.4 35.8 36.2 36.7 37.2 37.9 38.8 39.7 40.5 41.4 43.2 44.6 46.1
**Annual Rate of Change** Total Population 1.1 1.1 1.2 1.2 1.2 1.2 1.3 1.3 1.3 1.3 1.3 1.3 1.3

Under 5 1.2 1.6 1.8 1.9 2.0 2.1 2.2 2.2 2.2 2.2 2.1 2.0 1.9 5 to 15 -0.5 -0.2 0.3 0.4 0.5 0.6 0.8 -0.5 -0.5 2.4 2.6 1.4 1.9 16 and Over 1.4 1.4 1.4 1.3 1.3 1.3 1.3 1.5 1.5 1.0 1.0 1.2 1.2 16 to 21 3.1 2.2 1.2 1.3 1.2 0.9 0.6 2.8 2.6 -2.1 -2.6 -0.4 -0.7 21 to 64 1.2 1.3 1.4 1.4 1.3 1.3 1.1 1.2 1.2 1.2 0.8 1.0 0.9 65 and Over 0.9 1.1 1.2 1.3 1.4 1.8 2.6 2.2 2.1 2.3 4.2 3.4 3.3
**Population Structure - Percents of Total** Under 5 6.8 6.9 6.9 6.9 7.0 7.1 7.1 7.2 7.3 7.3 7.4 7.4 7.5 5 to 15 15.5 15.3 15.1 15.0 14.9 14.8 14.7 14.5 14.2 14.4 14.6 14.6 14.7 16 and Over 77.7 77.9 78.0 78.1 78.1 78.2 78.2 78.4 78.5 78.3 78.1 78.0 77.9 16 to 21 8.9 9.0 9.0 9.0 9.0 9.0 8.9 9.0 9.1 8.8 8.5 8.4 8.2 21 to 64 56.2 56.3 56.4 56.5 56.5 56.5 56.4 56.4 56.3 56.3 56.0 55.8 55.6 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
**Mortality**

**---------** Percent of Population 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 Impact of Shifts in Population Age Groups Dependency Ratio (a) 0.96 0.95 0.94 0.93 0.93 0.93 0.94 0.93 0.93 0.94 0.96 0.97 0.98 Ratio of Stock of Cars to Driving-Age Population 0.58 0.57 0.56 0.55 0.55 0.54 0.53 0.53 0.52 0.52 0.52 0.51 0.51 Ratio of New Car Sales to Driving-Age Population 0.07 0.08 0.08 0.08 0.08 0.08 0.08 0.08 0.08 0.08 0.08 0.08 0.08 Ratio of Stock of Houses and Mobile Homes to Population 21 and Over 0.62 0.62 0.62 0.63 0.63 0.63 0.63 0.63 0.63 0.63 0.63 0.63 0.63 Ratio of Stock of Multi-Unit Houses to Population 21 and Over 0.17 0.17 0.17 0.17 0.17 0.17 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 the number of people not in the civilian labor force or in the military to the number of people that are.

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### 44 DRI • WEFA The U.S. Economy TABLE 2 Continued) 

### U.S. Population - Optimistic Outlook

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

–––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– ––––
**Millions of Persons** Total 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 5 to 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 258.0 261.5 264.5 267.5 270.4 274.0 277.7 281.3 284.9 288.7 292.6 296.6 300.8 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 5 to 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 21 to 64 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 of Total** 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 5 to 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 16 to 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 Impact of 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 Ratio of New Car Sales 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 Stock of Houses and Mobile Homes to Population 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 to 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 the number of people not in the civilian labor force or in the military to the number of people that are.

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### 25-Year Focus, Winter 2002 45 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. Cost of 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

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### 46 DRI • WEFA The U.S. Economy 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 Performance 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 Manufacturing 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 Labor Availability Civilian 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 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) 4.7 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 (%) 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

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### 25-Year Focus, Winter 2002 47 TABLE 4 

### Summary for the U.S. Economy - Pessimistic Outlook

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

–––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– **Composition of Real GDP (Annual percent change)** Gross Domestic Product 0.6 2.9 3.6 2.6 2.5 2.7 3.0 2.8 3.3 2.8 2.8 2.8 3.0 Final Sales -0.1 2.6 3.5 2.7 2.5 2.7 3.0 2.8 3.2 2.9 2.8 2.8 3.0 Gross National Product 0.7 2.6 3.3 2.6 2.4 2.6 2.9 2.7 3.2 2.8 2.8 2.6 2.8 Total Consumption 1.7 2.8 2.9 2.4 2.2 2.3 2.6 2.5 3.0 2.7 2.8 2.7 2.9

Durable Goods -1.5 3.9 4.6 2.3 3.0 3.4 2.7 1.8 4.5 3.4 1.9 1.9 4.1 Nondurable Goods 1.8 2.8 3.0 2.5 2.1 2.1 2.4 2.3 2.7 2.6 3.0 3.0 3.2 Services 2.3 2.5 2.5 2.3 2.1 2.2 2.7 2.6 2.8 2.7 2.9 2.8 2.7 Nonres. Fixed Investment -5.2 4.1 7.4 5.4 4.5 5.5 6.5 5.8 6.5 6.2 6.6 5.9 6.4 Equipment -2.6 6.4 9.6 7.1 6.1 6.4 7.5 7.2 7.5 7.4 7.4 7.2 7.2 Computers 10.8 14.1 17.5 19.4 19.7 19.3 18.6 17.9 17.3 16.7 17.2 17.4 16.7 Software 6.0 8.3 8.7 10.2 10.4 10.4 10.6 10.7 10.8 10.9 11.4 11.0 10.2 Communications -9.5 5.0 6.1 5.3 8.1 8.1 8.1 7.3 7.2 7.3 6.4 5.5 5.2 Light Vehicles -4.1 5.5 6.7 1.6 2.5 3.6 5.1 3.6 4.8 4.1 3.7 3.5 4.6 Other -6.9 4.4 10.2 5.2 2.0 2.1 4.0 3.7 4.0 3.7 3.3 3.1 3.5 Private Nonres. Structures -12.0 -2.4 0.7 0.1 -0.7 2.4 3.2 1.1 3.1 2.4 3.9 1.4 3.5 Buildings and Other -11.3 -2.4 -0.1 -0.3 -1.0 1.7 3.9 1.6 4.0 2.7 4.6 1.5 4.2 Residential Fixed Investment -4.4 -7.2 2.2 0.5 -0.4 0.6 1.7 0.0 2.6 0.8 -5.6 -1.8 1.1 Exports -8.6 7.6 9.1 7.6 7.7 7.3 6.9 6.9 6.6 6.2 6.4 6.8 6.9 Imports 0.3 5.1 4.9 4.3 4.0 4.1 4.1 4.0 4.8 4.5 5.1 6.0 6.8 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 1.6 1.9 1.5 1.8 1.6 1.2 1.3 1.0 1.2 1.0 1.2 1.3 1.6

**Billions of Dollars** Real GDP (Chained 1996 $) 9377.9 9651.4 9996.4 10253.8 10511.4 10791.4 11118.0 11424.5 11796.6 12132.3 12475.9 12823.3 13212.7 Gross Domestic Product 10384.9 10885.1 11511.0 12068.2 12633.6 13253.9 13968.1 14683.6 15534.7 16407.0 17362.4 18382.3 19566.5
**Prices and Wages (Annual percent change)** GDP Price Index (Chain-Wt.) 1.2 1.9 2.1 2.2 2.1 2.2 2.3 2.3 2.5 2.7 2.9 3.0 3.3 CPI - All Urban Consumers 1.4 2.4 2.5 2.6 2.5 2.5 2.6 2.6 2.7 2.9 3.2 3.3 3.6 Excl. Food & Energy 2.5 2.5 2.6 2.7 2.6 2.7 2.7 2.7 2.8 3.0 3.2 3.4 3.7 Producer Price Index - Fin. Gds. -1.4 0.8 1.3 1.5 1.2 1.2 1.4 1.3 1.5 1.8 2.0 2.1 2.3 Emp. Cost Index - Total Comp. 3.3 2.7 2.7 2.7 2.8 2.9 3.2 3.3 3.5 3.9 4.1 4.2 4.6 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
**Other Key Measures** Industrial Production (% ch) -0.8 6.1 5.4 3.7 3.3 3.3 3.9 3.7 4.0 3.4 3.1 2.8 2.5 Nonfarm Inven. Accumulation (Billion chained 1996 $) 9.2 40.4 55.2 36.8 35.2 37.2 41.1 38.5 47.2 43.2 43.9 45.5 52.6 Consumer Confidence Index 91.6 87.3 91.2 90.0 89.5 90.4 91.2 90.5 94.2 93.4 89.9 88.9 90.3 Housing Starts (Mil. units) 1.391 1.242 1.311 1.306 1.279 1.283 1.284 1.251 1.291 1.238 1.079 1.043 1.046 Light-Vehicle Sales (Mil. units) 15.2 16.1 16.6 16.4 16.6 17.0 17.0 16.8 17.2 17.3 17.1 16.8 17.2 Unemployment 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 Payroll Employment (% ch.) -0.7 0.8 1.5 0.9 0.8 1.0 1.2 0.9 1.5 1.2 0.8 0.6 1.1 Federal Budget Surplus (Unified, FY, bil. $) -5.4 -70.8 -118.8 -131.1 -106.6 -74.3 -56.9 -43.2 -36.3 -35.6 -160.9 -242.5 -320.5
**Foreign Trade** Curr. Account Balance (Bil. $) -454.7 -511.9 -547.2 -557.2 -563.1 -569.2 -582.7 -587.6 -606.0 -621.9 -660.2 -716.9 -796.5 Foreign Crude Oil ($ per barrel) 19.8 21.6 23.8 25.5 27.0 28.3 29.6 31.0 32.6 34.5 36.4 38.5 40.7

**Financial Markets** Money Supply (M2, billion $) 5818.7 6119.9 6395.2 6683.3 6984.1 7300.5 7635.2 7981.6 8347.7 8734.7 9129.9 9541.6 9964.2 Percent 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 Thirty-Year Mortgage Rate (%) 7.1 7.5 7.7 7.6 7.7 7.7 7.7 7.8 7.9 8.0 8.4 8.9 9.3 Ten-Year Treasury Note Yield (%) 5.3 5.8 6.1 6.1 6.2 6.2 6.3 6.5 6.6 6.8 7.2 7.6 8.1 Treasury Bill Rate (%) 2.0 3.7 4.6 4.6 4.6 4.6 4.7 4.9 5.0 5.1 5.5 5.9 6.3 Federal Funds Rate (%) 2.2 4.0 5.0 5.0 5.0 5.0 5.1 5.3 5.4 5.5 5.9 6.3 6.8 Prime Rate (%) 5.2 7.0 8.0 8.0 8.0 8.0 8.1 8.3 8.4 8.5 8.9 9.3 9.8 S&P 500 Stock Index 1152.8 1017.2 1002.5 1105.4 1226.7 1292.2 1362.9 1434.8 1491.1 1554.9 1622.7 1633.1 1649.9

**Incomes** Personal Income (% ch) 2.3 4.4 5.3 4.5 4.5 4.7 5.3 5.2 5.7 5.9 6.1 6.1 6.7 Real Disposable Income (% ch) 1.9 2.9 3.4 2.3 1.8 2.0 2.7 2.5 3.1 3.0 3.1 3.1 3.3 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 Profits After Tax (% chya) 1.9 3.4 1.0 1.5 5.6 5.3 7.1 4.1 7.1 3.9 6.0 4.6 5.5

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### 48 DRI • WEFA The U.S. Economy 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 GDP (Annual percent change)** Gross Domestic Product 2.7 2.8 2.7 2.7 2.5 2.5 2.3 2.4 2.5 2.6 2.6 2.7 2.8 Final Sales 2.7 2.8 2.7 2.7 2.5 2.5 2.3 2.4 2.4 2.6 2.6 2.7 2.8 Gross National Product 2.5 2.7 2.6 2.5 2.4 2.4 2.3 2.2 2.3 2.5 2.4 2.5 2.7 Total Consumption 2.7 2.9 2.8 2.7 2.7 2.6 2.4 2.4 2.5 2.7 2.6 2.8 2.9

Durable Goods 2.7 4.4 3.1 3.0 3.5 4.4 3.0 3.7 3.7 5.6 4.1 4.9 5.1 Nondurable Goods 3.1 3.2 3.1 3.2 3.1 3.0 2.8 2.7 2.8 2.9 3.0 3.1 3.1 Services 2.6 2.6 2.6 2.5 2.5 2.3 2.2 2.1 2.2 2.3 2.3 2.4 2.6 Nonres. Fixed Investment 5.8 5.3 5.4 5.1 4.2 4.0 4.2 3.5 3.3 3.7 3.7 3.7 3.7 Equipment 6.7 6.4 6.3 5.9 5.3 4.9 4.6 4.4 4.4 4.6 4.4 4.4 4.5 Computers 16.2 15.4 14.4 13.6 13.3 13.1 13.4 13.4 13.5 13.5 13.3 13.2 13.6 Software 9.5 8.7 7.7 6.9 6.1 5.3 4.4 3.5 3.3 3.4 3.2 3.1 3.0 Communications 4.8 4.6 5.9 5.4 4.4 4.4 5.1 5.4 5.0 5.3 5.4 5.4 5.5 Light Vehicles 3.3 3.8 4.1 3.9 3.0 3.4 3.2 3.6 3.4 4.1 3.6 3.8 4.0 Other 3.2 3.0 3.3 3.5 3.2 3.0 3.0 3.5 3.6 3.9 3.8 3.9 4.0 Private Nonres. Structures 2.4 1.3 2.5 2.4 0.3 0.8 2.6 -0.1 -0.7 0.4 0.9 0.8 0.9 Buildings and Other 2.7 1.4 3.0 2.7 0.1 0.8 3.1 -0.3 -1.1 0.2 0.9 0.6 0.7 Residential Fixed Investment 0.1 0.7 0.0 0.1 -0.1 0.3 -0.6 0.0 -0.5 0.8 -0.3 0.2 1.5 Exports 6.5 6.2 6.4 6.8 6.9 6.9 7.1 7.6 7.9 8.0 8.1 8.3 8.5 Imports 6.8 6.9 6.6 6.8 6.9 7.1 6.5 6.5 6.7 7.3 7.0 7.2 7.5 Federal Government 1.0 1.0 1.0 1.0 1.0 1.9 0.3 0.9 1.1 1.1 1.2 1.2 1.2 State and Local Governments 1.5 1.5 1.6 1.8 1.6 1.5 1.5 1.5 1.5 1.6 1.6 1.6 1.7

**Billions of Dollars** Real GDP (Chained 1996 $) 13567.8 13943.9 14326.6 14716.4 15089.5 15466.2 15826.2 16201.9 16600.5 17037.9 17478.3 17956.3 18465.3 Gross Domestic Product 20789.0 22140.5 23612.4 25237.7 26943.6 28777.4 30700.8 32827.1 35149.2 37755.4 40570.7 43717.9 47208.0
**Prices and Wages (Annual percent change)** GDP Price Index (Chain-Wt.) 3.5 3.6 3.8 4.1 4.1 4.2 4.3 4.5 4.5 4.7 4.8 4.9 5.0 CPI - All Urban Consumers 3.8 3.9 4.2 4.5 4.6 4.7 4.8 5.0 5.1 5.3 5.4 5.6 5.7 Excl. Food & Energy 3.9 4.1 4.3 4.6 4.7 4.8 4.9 5.2 5.2 5.4 5.6 5.7 5.9 Producer Price Index - Fin. Gds. 2.4 2.5 2.7 3.0 3.0 3.1 3.2 3.5 3.5 3.7 3.8 4.0 4.1 Emp. Cost Index - Total Comp. 4.7 5.0 5.2 5.3 5.2 5.4 5.3 5.5 5.4 5.6 5.6 5.7 5.7 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
**Other Key Measures** Industrial Production (% ch) 1.4 1.2 1.2 1.3 0.9 0.8 0.8 0.7 1.1 1.5 1.9 2.5 3.3 Nonfarm Inven. Accumulation (Billion chained 1996 $) 47.6 50.9 51.4 53.7 52.4 54.4 53.5 56.5 61.1 68.0 68.9 75.1 80.8 Consumer Confidence Index 88.6 89.1 87.2 86.7 85.4 85.1 83.9 83.7 83.6 84.9 84.0 84.6 84.5 Housing Starts (Mil. units) 1.019 1.019 0.995 0.981 0.961 0.956 0.931 0.920 0.901 0.903 0.873 0.869 0.880 Light-Vehicle Sales (Mil. units) 17.1 17.3 17.1 16.9 16.7 16.8 16.6 16.6 16.5 16.9 16.8 16.9 17.0 Unemployment Rate (%) 4.7 4.6 4.7 4.9 5.1 5.1 5.2 5.2 5.3 5.2 5.2 5.1 5.2 Payroll Employment (% ch.) 0.8 0.8 0.6 0.8 0.7 0.7 0.5 0.7 0.6 1.0 0.8 0.9 1.0 Federal Budget Surplus (Unified, FY, bil. $) -436.0 -543.3 -677.7 -830.3 -1019.2 -1169.0 -1320.0 -1500.4 -1775.3 -2051.7 -2388.6 -2760.1 -3142.5
**Foreign Trade** Curr. Account Balance (Bil. $) -869.4 -945.6 -1045.9 -1163.7 -1273.4 -1398.9 -1513.8 -1656.8 -1811.0 -1993.8 -2205.8 -2443.4 -2694.8 Foreign Crude Oil ($ per barrel) 43.1 45.6 48.3 51.3 54.7 58.4 62.4 66.9 71.8 77.1 83.0 89.3 96.2

**Financial Markets** Money Supply (M2, billion $) 10413.1 10895.1 11405.1 11943.1 12526.9 13154.0 13828.7 14546.4 15318.0 16150.6 17036.7 17997.0 19054.6 Percent 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 Thirty-Year Mortgage Rate (%) 9.7 10.0 10.4 10.8 11.1 11.4 11.6 11.9 12.2 12.5 12.9 13.1 13.3 Ten-Year Treasury Note Yield (%) 8.4 8.7 9.0 9.4 9.7 9.9 10.1 10.4 10.7 11.0 11.3 11.6 11.8 Treasury Bill Rate (%) 6.6 6.8 7.1 7.4 7.6 7.8 7.9 8.2 8.4 8.6 8.8 9.0 9.1 Federal Funds Rate (%) 7.0 7.2 7.5 7.9 8.0 8.2 8.3 8.6 8.8 8.9 9.3 9.4 9.5 Prime Rate (%) 10.0 10.2 10.5 10.9 11.0 11.2 11.3 11.6 11.8 11.9 12.3 12.4 12.5 S&P 500 Stock Index 1669.7 1772.4 1833.7 1864.4 1912.8 2031.7 2170.6 2280.0 2400.3 2589.9 2772.4 2968.1 3212.7

**Incomes** Personal Income (% ch) 6.7 6.9 7.1 7.3 7.3 7.4 7.3 7.5 7.5 7.9 8.0 8.3 8.4 Real Disposable Income (% ch) 3.2 3.1 3.0 3.0 2.9 2.5 2.2 2.3 2.5 2.7 2.6 2.7 2.7 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 Profits After Tax (% chya) 3.5 6.2 5.8 4.8 4.6 3.6 5.1 2.1 4.3 3.7 3.2 5.3 8.3

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## P ESSIMISTIC 

## P ROJECTIONS



### 25-Year Focus, Winter 2002 49 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 18.8 18.7 18.6 18.6 18.5 18.5 18.5 18.6 18.6 18.6 18.7 18.7 5 to 15 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 16 to 21 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 5 to 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 16 to 21 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 21 to 64 0.9 0.9 0.9 0.8 0.7 0.7 0.5 0.5 0.5 0.6 0.1 0.3 0.3 65 and Over 0.5 0.8 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 of Total** 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 5 to 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 16 and Over 77.6 77.8 78.1 78.3 78.6 78.9 79.2 79.1 79.4 79.4 79.7 79.7 80.0 16 to 21 8.8 8.8 8.8 8.9 9.0 9.1 9.2 9.0 9.1 8.8 8.9 8.6 8.7 21 to 64 56.3 56.4 56.6 56.7 56.8 56.9 56.9 56.9 57.0 57.0 56.9 56.8 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 of 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 Ratio (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 Ratio of Stock of Cars to 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 Ratio 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 of Multi-Unit Houses to Population 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 ratio here is defined as the ratio of the number of people not in the civilian labor force or in the military to the number of people that are.

## T HE 

## F OUR 

## S CENARIOS 

## : T HE 

## O PTIMISTIC AND 

## P ESSIMISTIC 

## P ROJECTIONS



### 50 DRI • WEFA The U.S. Economy 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 299.1 300.3 301.5 302.6 303.7 304.8 305.8 306.7 307.7 308.5 309.3 310.1 310.9

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 5 to 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 40.8 16 and Over 239.3 240.3 241.3 243.3 244.3 245.3 246.3 247.3 248.3 249.3 250.3 251.2 252.1 16 to 21 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 21 to 64 169.1 169.3 169.2 169.1 168.9 168.5 168.1 167.5 167.0 166.4 165.8 165.2 164.7 65 and Over 44.8 46.1 47.5 48.9 50.3 51.9 53.5 55.1 56.7 58.3 59.9 61.4 62.8
**Annual Rate of Change** 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 5 to 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 16 and 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 16 to 21 -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 21 to 64 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 of Total** 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 5 to 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 80.0 80.0 80.0 80.4 80.4 80.5 80.6 80.6 80.7 80.8 80.9 81.0 81.1 16 to 21 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 18.0 18.4 18.9 19.4 19.8 20.2
**Mortality**

**---------** Percent of 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 of Shifts in Population Age Groups Dependency Ratio (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 Ratio of Stock of Cars to Driving-Age Population 0.50 0.50 0.49 0.49 0.48 0.48 0.48 0.48 0.47 0.47 0.47 0.47 0.46 Ratio of New Car Sales 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 Population 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 of the number of people not in the civilian labor force or in the military to the number of people that are.

## T HE 

## F OUR 

## S CENARIOS 

## : T HE 

## O PTIMISTIC AND 

## P ESSIMISTIC 

## P ROJECTIONS



### 25-Year Focus, Winter 2002 51 TABLE 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 Performance 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 0.80 0.80 0.81 Labor Availability Civilian Unemployment 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 5.8 -4.5 -0.2 7.5 Nominal Corp. Cost of 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

## T HE 

## F OUR 

## S CENARIOS 

## : T HE 

## O PTIMISTIC AND 

## P ESSIMISTIC 

## P ROJECTIONS



### 52 DRI • WEFA The U.S. Economy 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 4.6 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

# Appendix C: Metro Economic Review Panel

Dennis Yee, chief economist Metro Karen Larson, GIS economist Metro Richard Bolen, DRC manager Metro Robert Anderson, economist Bonne ville Power Administration Thomas Aston, economist U.S. Depa rtment of Housing and Urban Development Betty Atteberry, director Westside Economic Alliance Joe Cortright, consultant Impresa, Inc. Eric Hovee, consultant E. D. Hovee & Company Steve Kelly, senior planner Washington County Gene Leverton, consultant Ge ne Leverton & Associates John McConnaughey, trans portation planner WSDOT Eric Moore, employment economis t Oregon Employment Department Amy Vanderbuilt, employment economis t Oregon Employment Department Hossein Parandvash, chief economist City of Portland Water Bureau Ken Pearrow, GIS demographer Clark County Tom Potiowsky, state economist Oregon Office of Economic Analysis Lynn Peterson, transporta tion planner Tri-Met Tony Rufolo, professor Portland State University

Not in attendance: Barry Edmonston, director Portland State University - CPRC George Hough Jr., demographer Po rtland State University - CPRC Kanhaiya Vaidya, state demographer Oregon Office of Economic 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 of Portland Mike Ogan Portland Development Commission Pam Neal CREDC Renate Mengelberg Clackamas County Shelly Parini Gresham City

The views and economic outlook in this report are the sole responsibility of Metro’s Data Resource Center. The review panels were instructed to offer any insights they may have, critique and then evaluate the accuracy and reasonableness of the regional forecast. The comments of the review committees were considered and incorporat ed into the regional forecast as interpreted by the Metro chief economist.

# Appendix D: Model Documentation Summary



# Metro Regional Economic Model

Presented to the 32 nd 

## Annual Pacific Northwest Economic Conference

May 1998

Dennis Yee 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

Executive Officer Mike Burton

Elaine Wilkerson Director

### 1 

# Metro Regional Economic Model

0. Abstract
Portland Metro presents its version of a regional economic model with embedded input-output coefficients as explanatory variables in the model’s employment sector equations. The Metro model implements the 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 I-O and econometric models. Stover evaluates the efficacy of using Census benchmark I-O tables as technical coefficients for creating the inter-industry demand variables (IDV) in each industry employment equation. Rey clarifies the theoretical underpinnings of the IDV and the use of a national I-O matrix as a proxy for an unavailable regional matrix. The regional model implemented by Metro is based on this integrated approach as described by the literature. This paper describes Metro’s regional model and presents the empi rical 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: integrated regional economet ric and input-output model; inter-industry demand variable; forecasting

1. Introduction.
For metropolitan areas, the federal ISTEA (Intermodal Surface Transportation Efficiency Act) legislation has generated a considerable amount of study into the relationship between urban growth and transportation. ISTEA requires an understanding of how choices made in transportation and land-use simultaneously impact each other. In addition, Metro (the metropolitan planning organization for the Portland, OR metropolitan region) initiated its own 50-year regional planning framework to encourage more compact urban development. Influence from the Metro Region 2040 Framework plan and ongoing interest to link transportation 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 of ISTEA 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 of land-use and transportation. The two m odels taken together are used by Metro planners to forecast regional economic and population growth, future real estate and land prices, and future population or household distributions in each forecast analysis zone.
The focus of this 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 of the integrated econometric and I-O modeling approach for the Metro model’s employment equations, and concluding in section 3 with empirical results and our conclusions.
The region is defined to be the Portland-Vancouver CMSA 14 

### . 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 estimated regional wage rates, components of regional personal income, and non-stochastic equations which estimate regional production (indexed). Also included in the model is a cohort-component population model linked by a stochastic net migration equation to regional economic/employment growth.

14 

### The CMSA includes the Oregon counties of Multnomah, Clackamas, Washington, Yamhill, and the Washington county of Clark.

### 2 2. Metropolitan Regional Model Described
Integration strategies for combining econometric and input-output models for regional forecasting and policy analysis have been gaining attention in regional economic literature. This attention is based on blending the analytical and policy properties found in input-output modeling with the strengths and features available from traditional econometric forecasting models. Input-output models 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 of a structural econometric model with an input-output matrix for regional forecasting and analysis is the marriage of thes e two approaches in an effort to create a combined model that exceeds the capabilities of the traditional models taken individually. However, Metro has so far employed the regional model as a device for forecasting population and employment growth in the region.
The initial theoretical approach of the Metro economic model was fundamentally based on a traditional export-based structural econometric model formulation for the Portland-Vancouver MSA. A structural econometric model of the Portland region had never before been constructed for long-range planning in the history of Metro and its predecessor the Columbia Regional Association of Governments (CRAG). The structural model included detailed stochastic estimates of industry manufacturing and nonmanufacturing employment, wage rates for aggregations for groupings of manufacturing and nonmanufacturing industries, components of regional income, and a net-migration equation linking economic growth with future population increases. A five-year age-cohort survival model provided a nnual estimates of population growth along with changes in employment, wages, and income from the econometric half of the model.
Early testing of the structural model yielded surprisingly effective inter-industry employment impact estimates. However, continued concern over the model’s lack of specific input-output features prompted a make-over in the theoretical formulation of the model. Research into integrating regional econometric models with input-output models revealed three main strategies for combining regional econometric and input-output models : linking, coupling, and embedding strategies. The Portland Metro economic model adopts an embedding integration strategy similar to the one used by the I-SAMIS (integrated-small area modeling of the industrial sector) model from the St. Louis MSA (metropolitan statistical area). This paper describes Metro’s results from its attempt at combining atraditional export-based regional econometric model and the technical coefficients of a national inputoutput matrix.

2.1 Data and Methodology
The input-output table used in the embedding strategy derives from the U.S. Bureau of Economic 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 of industry-commodity flow which match the desired industry employment detail of the Metro economic model. This means that the 90 industries/commodities shown in the national input-output matrix collapses to 20 industries in the desired Metro model.
The procedure combines the input-output matrix to the econometric model using an inter-industry demand variable (IDV) in equations for industry employment in the model. The parameter of the IDV is determined by regression and therefore not pre-determined or fixed as in other embeddding strategies. Generalization of the industry employment equations in the Metro economic model are as follows:

jt n

b bjt bj ajt m

a aj jt j jt 

## R N IDV E      

#  



 1

1 

### where, E jt



### = employment in industry j at time t IDV jt



### = inter-industry dependent variable for industry j at time t N ajt 

### = national variables a 1 

### ...a m 

### for industry j at time t R bjt 

### = national variables b 1 

### ...b n 

### for industry j at time t 

##  j 

### = regression parameter for inter-industry variable for industry j at time t

### 3 

##  aj 

### = parameter estimate for national variables for industry j 

##  aj 

### = parameter estimate for national variables for industry j



## jt 

### = stochastic error term for industry j at time t

. The employment equation represents one of twenty manufacturing or nonmanufacturing industry sector. Explanatory variables for employment in any industry j 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 or output production indexes, etc.
The inter-industry dependent variable is defined as follows:

IDV jt



### = jt n

i j i ij 

## E C 

# 

1 

### where, C ij 

### = commodity by industry direct requirements coefficient

E it



### = employment in industry i at time t The commodity by industry direct requirements coefficient is taken from the 1987 Use of Commodities by Industry Table and groupings of each industry/commodity are collapsed to the desired industry detail. The cross product of the direct requirement coefficients matrix and the industry employment matrix results in an IDV term for an industry j with an historical time-series equal to the number of time periods for the matrix of employment. Thus, the IDV term provides an historical measurement of the inter-industry demand linkage between industry j and all the other industries in the region.

3. Empirical Results
Table 1, nearby, summarizes the employment demand equations from the Metro economic model. In all but one equation, the IDV term is statistically significant at the 1 percent level (except in health services in which the term was not positive and significant). Specification of employment equations with the IDV variable seems to provide both satisfactory statistical fit and explanatory information. (In the following section, we shall compare an ex ante forecast with actual employment data to see how the model equations have performed in an out of sample forecast.)
According to the findings made by Stover, he suggests that “in general, the IDV is a useful explanatory variable in those industrial sectors where the output serves as an input for other local industries.” The health service industry (SIC 80) is certainly an in dustry which serves mostly final demand and has little interaction with other industries in the region, and therefore the IDV term was found to be insignificant and not a useful explanatory variable in the Metro health service employment equation.
Stover goes on to suggest that the estimated coefficient for the IDV term may be an indicator of the degree of inter-industry interactions and a measure of the strength of this relationship 15 

### . In our log-log formulation of each employment equation, the IDV term may be interpreted in terms of an elasticity measurement. The empirical results in each equation sh ow the estimated IDV to be relativ ely inelastic – although some more inelastic than others. Our interpretation is that the more inelastic IDV’s indicate a lesser dependence of the particular industry with all other industries in the regional economy. Generally, the inelastic nature of the IDV term in each of the employment equations suggests to us that the regional in dustries in the Portland MSA are relatively less dependent and have less inter-industry interactions with one another than perhaps in other regional economies. This also suggests that the mix of industries in the Portland MSA may have stronger commodity flow relationships with industry sectors outside of the region.
The empirical findings of the model estimations reveal no major surprises with the use of the IDV as an explanatory term and seems consistent with the recent literature on the matter. The Metro model in all but one equation found satisfactory fits, and in the industry sector that produced unsatisfactory statistics, the IDV term was excluded.

15 

### Rey also agrees so long as the estimation of the empl oyment equations with the IDV term is unrestricted.

### 4 3.1 Equation Listing 

## Table 1. Metro Regional Econom ic Model – Employment Equations

Industry Intercept InterIndustry Demand Variable Real Industry

Wage Rate Other Regional Explanatory Variable(s) Industry Output Index IndustryProductivity Index Other National Explanatory Variable(s) DurbinWatson Adj.- R 2


### Food Processing 0.8951 (4.33) 0.4313 (7.86) 1.43 0.90
Textile & Apparel 1.8235 (3.51) 0.5364 (3.24) 0.6339 (4.10) -0.9456 (4.45) 2.06 0.96

Lumber & Wood Products 3.9579 (6.33) 0.1931 (3.49) -0.7740 (4.45) 0.0392 a 

### (2.52) 0.1665 (2.17) 0.1259 b 

### (1.82) 0.1854 c 

### (3.05) 1.84 0.99

Paper & Pulp 2.8822 (5.37) 0.4538 (6.68) -0.2147 (2.69) Dummy d 

### -0.3167 (2.37) 2.12 0.86

Printing & Publishing -0.8372 (2.36) 0.7828 (12.95) Dummy d 

### 0.5009 (12.95) -0.2917 (1.75) 1.98 0.99

Metals 3.2341 (5.31) 0.6420 (11.08) -0.3558 (2.18) Dummy d 

### 0.2324 e 

### (3.42) -0.1267 f 

### (1.84) Nonelectrical Machinery 0.1343 (0.52) 0.6500 (8.33) 0.2472 (3.98) -0.1664 (2.03) 0.1307 g 

### (2.94) 1.98 0.99

Electrical Mach. & Instruments 1.6767 (2.47) 0.4399 (6.59) 0.4657 (2.88) 0.2203 (2.22) 0.2424 h 

### (2.37) 1.59 0.99

Transportation Equipment 1.5380 (1.63) 0.7122 (8.66) -0.2629 (2.27) -0.3074 f 

### (1.85) 1.94 0.93

Other Durable Goods -1.1273 (2.20) 0.6684 (9.32) 0.3547 (3.11) 1.95 0.98

Other Nondurable Goods -3.6252 (8.87) 0.6360 (7.08) 0.6457 (5.81) 1.87 0.99

Construction & Mining -0.7889 (0.65) 0.4222 (5.91) 0.0490 a 

### (2.25) 0.3062 (4.38) 1.81 0.99
Transp., Comm. & Utilities 1.2896 (6.09) 0.6672 (15.98) -0.0803 (3.00) 1.03 0.99

Wholesale Trade 1.0729 (4.14) 0.5493 (7.65) 0.2121 i 

### (2.60) -0.0934 (2.04) 2.09 0.99

Retail Trade -0.4829 (0.58) 0.2614 (7.46) -0.1976 (4.61) Finance, Ins. & Real Estate 1.1425 (2.38) 0.4526 (3.18) 0.0207 a 

### (2.00) 4.4556 j 

### (1.91) 2.03 0.99

Health Services -4.7777 (7.63) -0.3480 (2.73) 0.40540 k 

### (4.01) 0.4933 l 

### (7.15) 2.13 0.99

Nonhealth Other Services -0.0397 (0.11) 0.3706 (5.76) -0.1535 (1.53) 0.1294 m 

### (4.09) 0.9847 n 

### (7.64) 1.70 0.99

State & Local Government 0.2365 (0.26) 0.2881 (5.21) -0.2537 (4.95) 1.44 0.99

a. Regional building permits, number of dwelling units b. (U.S. fixed investment in nonresidential structures, 1992$)/(Gross Domestic Product, 1992$)

### 5 c. (U.S. fixed investment in residential structures, 1992$)/(Gross Domestic Product, 1992$) d. dummy variable(s) for periods of work stoppages e. (U.S. fixed investment in nonresidential producer durable industrial equipment, 1992$)/(Gross Domestic Product, 1992$) f. 1990$ exchange rate 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 of the lags). g. Exports of Computer 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$ l. Regional proxy of per capita share of U.S. consumption of medical services, 1992$ m. U.S. exports of Services, total, 1992$ n. U.S. Service employment, less employment in health services (SIC 80)
Each employment equation is specified in log-lo g form and estimated using OLS and corrected for autocorrelation. Since the data are quarterly frequency, the Durbin-Watson statistic that we report is modified to detect the existence of a 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

In total, the mean absolute percent error is under 0.8 of a percent for the forecast years 1995 to 1997 for nonfarm wage and salary employment. In particular, the employment equations for nonmanufacturing

16 

### Wallis test for fourth-order autocorrelation; J. Johnston, Econometric Methods , 3 rd 

### Edition, p. 317 1995 1996 1997 MAPE* Wage & Salary Employment Forecast Actual %diff Forecast Actual %diff Forecast Actual %diff 1995-97 Nonfarm, Total 813,288 812,800 0.06% 848,981 851,800 -0.33% 878,852 897,400 -2.07% 0.8% Food Processing 9,875 10,100 -2.23% 9,855 10,000 -1.45% 9,985 9,700 2.94% 2.2% Textile & Apparel 4,967 4,900 1.37% 4,957 4,600 7.76% 4,942 4,500 9.82% 6.3% Lumber & Wood 7,666 7,800 -1.72% 7,449 7,700 -3.26% 7,218 7,800 -7.46% 4.1% Paper & Pulp 6,956 7,100 -2.03% 6,641 6,500 2.17% 6,549 6,300 3.95% 2.7% Printing 10,304 10,200 1.02% 10,469 9,900 5.75% 10,698 10,300 3.86% 3.5% Metals 18,159 18,700 -2.89% 18,770 19,000 -1.21% 18,592 19,600 -5.14% 3.1% Nonelectrical 18,496 18,700 -1.09% 19,032 19,900 -4.36% 19,432 21,300 -8.77% 4.7% Electrical Mach. & Instruments 29,350 30,600 -4.08% 31,728 34,200 -7.23% 34,562 36,900 -6.34% 5.9% Transportation 10,210 10,600 -3.68% 9,884 10,400 -4.96% 9,748 10,900 -10.57% 6.4% Other Durable 10,049 8,200 22.55% 10,192 8,200 24.29% 10,193 8,300 22.81% 23.2% Other Nondurable 7,957 8,000 -0.54% 8,469 8,800 -3.76% 8,669 9,400 -7.78% 4.0% Construction & Mining 44,640 44,900 -0.58% 46,578 51,600 -9.73% 48,920 64,500 -24.16% 11.5% Transp., Comm. & Utilities 46,926 47,800 -1.83% 48,708 49,400 -1.40% 50,461 50,600 -0.27% 1.2% Wholesale Trade 63,077 61,800 2.07% 65,790 63,600 3.44% 67,959 66,700 1.89% 2.5% Retail Trade 147,364 147,000 0.25% 155,832 153,100 1.78% 160,366 160,800 -0.27% 0.8% FIRE 61,392 59,800 2.66% 64,379 63,000 2.19% 67,166 65,900 1.92% 2.3% Health Services 55,847 56,100 -0.45% 57,167 57,700 -0.92% 58,892 59,100 -0.35% 0.6% Nonhealth Services 170,243 169,900 0.20% 180,287 180,300 -0.01% 189,612 189,600 0.01% 0.1% State & Local Government 89,810 90,600 -0.87% 92,794 93,900 -1.18% 94,888 95,200 -0.33% 0.8%



### *Mean Absolute Percent Error

### 6 industries exhibit consistently lower MAPE’s than the manufacturing and producer industry equations. The two highest being other nondurables (includes SIC 25, 32, and 39) and construction and mining. The high MAPE’s do not necessarily point to a misspecification, but could mean that these two particular industries are just subject to wider variance. This is probably more likely in the manufacturing sector than in nonmanufacturing as the results reveal.
During this periods, the Portland Metro area has experienced above average employment growth which has exceeded the U.S. average. The regional model has apparently captured the current trend and seems to have produced reasonably accurate projections for this sh ort term period. Of course as the forecast period extends out, we see increasing volatility from the 1994 base year. Nevertheless, we have deemed the regional forecast to be sufficient for our planning purposes and are generally pleased with the model’s performance and accuracy.
In this paper, we have described the employment sector of the Portland Metro economic model. We took an econometrically estimated structural model and re -estimated each of its employment equations by embedding the technical coefficients of a national input-output table using the so-called inter-industry demand variable. The IDV is purported to indicate the degree of inter-industry trade between a particular industry and all others in the region.
The Metro formulation with the IDV is in log-log specification which in turn easily shows the degree of elasticity of this inter-industry relationship. A higher elasticity in the IDV term suggests greater economic relationship between the particular industry and other industries in the region. More inelastic IDV’s suggest that the particular industry is more highly linked or dependent to national trends and trade conditions. Allthe regional employment IDV’s indicate inelastic coefficients which suggest the latter regional interindustry conditions may exist.
In closing, the IDV appears to be a useful explanat ory variable. Integration of an input-output table produces significant parameter estimates, and also provides reasonable and statistically good fitting model equations overall. Sensitivity tests of the multiplier impacts (incomplete and not reported in this paper) also reveal reasonable results.

## Bibliography

Bureau of Economic Analysis (1994) Survey of Current Business, U.S. Department of Commerce, Bureau of Economic Analysis, U.S. Government Printing Office, Washington D.C.
Coomes P, Olson D, Glennon D (1991) The interindustry employment demand variable: an extension of the I-SAMIS technique for linking input-output and econometric models, Environment & Planning A 23:1063- 1068
Duobinis, S F (1981) An Econometric Model of the Chicago SMSA, Journal of Regional Science 21:293- 319
Johnston J (1984) Econometric Methods, 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 of embedding strategies, Environment & Planning A 29:1057-1072
Stover, M E (1994) A comparison of a nnual and benchmark input-output tables in regional economic modeling, The Annals of Regional Science 28:223-228