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

Preliminary AEO2018 Macroeconomic Results

For

Macroeconomic Working Group

July 20, 2017 | Washington, DC

By

Macroeconomic Analysis Team
Key preliminary results

• Preliminary AEO2018 real GDP grows an average of 2.1% from 2017-2050, 

similar to AEO2017 and other projections/forecasts

• Preliminary AEO2018 manufacturing output grows 2.2% per year on average 

from 2017-40, nonmanufacturing 1.5%; both similar to AEO2017

• Preliminary AEO2018 employment growth is concentrated in services and 

construction

Macroeconomic Working Group, 

Washington, DC, July 20, 2017 Do NOT cite or distribute 2
Macroeconomic Working Group, 

Washington, DC, July 20, 2017

Summary of the Macroeconomic Activity Module (MAM) in the 

National Energy Modeling System (NEMS)

3

NEMS

MAM

NEMS macro 

baseline variables

NEMS energy 

variables

Other NEMS modules

MAM variables used 

as inputs in NEMS

Macroeconomic submodule runs 

the New Scenario using new Energy 

Inputs from NEMS

Industrial submodule runs the New 

Scenario of values of shipments by 

industry sectors

Employment submodule runs the 

New Scenario of employment by 

sector

Commercial floorspace 

submodule

MAM applies the 

ratios of the 

New Scenario 

values more 

than the 

Baseline values 

onto the Macro 

Baseline 

variables to 

obtain solution

Regional submodule

Do NOT cite or distribute
Key changes from last AEO

• Added 70 energy-related variables to the U.S. model 

• Aggregated employment model for industries to higher-level NAICS 

designations

• Improved the regional industrial output model

• Updated historical data

• Planned for testing:

– Industrial feedback model

– Technology side case model

Macroeconomic Working Group, 

Washington, DC, July 20, 2017 Do NOT cite or distribute 4
2.4%

2.7%

3.8%

1.0%

4.8%

5.1%

2.1%

2.2%

3.0%

1.2%

3.9%

3.7%

0.0 1.0 2.0 3.0 4.0 5.0 6.0

Real GDP

Consumption

Fixed Nonresidential Investment

Fixed Residential Investment

Exports

Imports

Projected 33 Year Growth (2017 to 2050)

average annual percent growth

Macroeconomic Working Group, 

Washington, DC, July 20, 2017

Growth in GDP and most of its components is slower in the 

preliminary AEO2018 projection than history

Source: AEO2018 Preliminary run

Do NOT cite or distribute 5

Previous 27 Year Growth (1989 to 2016)
2.1%

2.2%

3.0%

1.2%

3.9%

3.7%

2.1%

2.3%

3.1%

1.2%

4.2%

3.9%

2.2%

2.3%

3.2%

1.6%

4.3%

3.8%

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0

Real GDP

Consumption

Fixed Nonresidential Investment

Fixed Residential Investment

Exports

Imports

average annual percent growth

Macroeconomic Working Group, 

Washington, DC, July 20, 2017

The preliminary AEO2018 projection for GDP and its components is 

similar to recent projections

Source: AEO2018 Preliminary run

Do NOT cite or distribute 6

AEO2018 (2017-50)

AEO2017 (2017-40)

AEO2016 (2015-40)
real trade-weighted GDP of major trading partners

percent

real trade-weighted exchange rate, USD: major currencies

2009 = 1.0

Macroeconomic Working Group, 

Washington, DC, July 20, 2017

Economic growth in major trading partners slows over the projection 

period while the dollar gradually depreciates

Source: AEO2018 Preliminary run

7

0.8

0.9

1

1.1

1.2

1.3

1.4

1.5

1.6

1990 2000 2010 2020 2030 2040 2050

0.4%

-0.5%

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

1990 2000 2010 2020 2030 2040 2050

2.0%

1.7%

Do NOT cite or distribute

AEO2018

AEO2018

AEO2017

AEO2017
population

million persons

Macroeconomic Working Group, 

Washington, DC, July 20, 2017

Demographic factors are an important component of the 

macroeconomic projections

Source: AEO2018 Preliminary run

8

0

50

100

150

200

250

300

350

400

450

1995 2007 2017 2030 2050

aged

16-65

18%

22%

60%

18%

21%

61%

21%

13%

66%

23%

13%

64%

aged

over 65

aged

under 16

20%

16%

64%

Do NOT cite or distribute
-2

0

2

4

6

8

10

12

-1

0

1

2

3

4

5

6

1990 2000 2010 2020 2030 2040 2050

2.4%

3.7%

CPI inflation

percent

10-year Treasury yield

percent

Macroeconomic Working Group, 

Washington, DC, July 20, 2017

Inflation remains moderate throughout the projection and bond yields 

gradually rise from historic lows

Source: AEO2018 Preliminary run

Do NOT cite or distribute 9
5.1

-2.7

-0.2

-0.7

-0.5

4.2

3.1

2.8

-4.5

2.0

5.6

5.3

1.5

-3.5

2.1

5.0

5.0

-6 -4 -2 0 2 4 6 8

Consumption

Government

Nonresidential Investment

Residential Investment

Inventories

Import

Export AEO2017 (2017-40)

AEO2018 (2017-50)

1989-2016

Macroeconomic Working Group, 

Washington, DC, July 20, 2017

Consumption’s importance in the demand mix fades as nonresidential investment becomes more important

Source: AEO2018 Preliminary run

change in GDP share

Do NOT cite or distribute 10
annual average growth in real GDP

Macroeconomic Working Group, 

Washington, DC, July 20, 2017

Preliminary AEO2018 real GDP growth is similar to other 

forecasts/projections

Sources: as listed

Do NOT cite or distribute 11

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2015 2020 2025 2030 2035 2040

OASDI

CBO

Oxford

AEO2017

AEO2018

IHSM

Projection 2017-40

AEO 2018 2.2

AEO 2017 2.2

IHSM (May 2016) 2.2

CBO (July 2017) 1.9

OASDI (2017) 2.3

Oxford (July 2017) 1.6
0

10,000

20,000

30,000

40,000

50,000

60,000

2007 2017 2030 2050

billion 2009 dollars

Macroeconomic Working Group, 

Washington, DC, July 20, 2017

Services are the largest sector, metal-based durables grow the fastest

Source: AEO2018 Preliminary run

12

other man.

EI man.

MBD

agriculture

mining

construction

services

CAGR

2017-50

1.9%

1.6%

2.5%

1.1%

1.0%

1.7%

2.3% industrial

sector

Do NOT cite or distribute
4,000

6,000

8,000

10,000

12,000

14,000

16,000

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

History Projection

AEO2018 Prelim

AEO2017

IHSM2018

IHSM2017

billion 2009 dollar

Macroeconomic Working Group, 

Washington, DC, July 20, 2017

Very little change in overall industrial sector output despite revised 

baseline, no price or individual industry updates yet

Source: IHS Markit, AEO2017, AEO2018 Preliminary run; bulk chemicals includes NAICS 3251-3

Do NOT cite or distribute 13
billion 2009 dollar

Macroeconomic Working Group, 

Washington, DC, July 20, 2017

Industrial sector shipments grow fastest in nonenergy-intensive 

manufacturing, primarily due to share loss in energy-intensives

Source: AEO2018 Preliminary run

Do NOT cite or distribute 14

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000

2017

2030

2050

mining

agriculture

other man.

EI man.

MBD

construction

28% 27% 17% 5%6% 17%

31% 26% 17% 5% 6% 17%

34% 25% 17% 4% 5% 16%
0

200

400

600

800

1,000

1,200

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

History Projection AEO2018 Prelim

AEO2017

IHSM2018

IHSM2017

billion 2009 dollar

Macroeconomic Working Group, 

Washington, DC, July 20, 2017

Bulk chemicals output not yet estimated on new energy prices or other 

updates, major changes expected

Source: IHS Markit, AEO2017, AEO2018 Preliminary run; bulk chemicals includes NAICS 3251-3

Do NOT cite or distribute 15
0

50

100

150

200

250

300

350

400

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

History Projection

AEO2018 Prelim

AEO2017 IHSM2018

IHSM2017

billion 2009 dollar

Macroeconomic Working Group, 

Washington, DC, July 20, 2017

Primary metals output also not estimated with updated prices, some 

revision possible

Source: IHS Markit, AEO2017, AEO2018 Preliminary run; primary metals includes all NAICS 331

Do NOT cite or distribute 16
0

1,000

2,000

3,000

4,000

5,000

6,000

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

History Projection

AEO2018 Prelim

AEO2017 IHSM2018

IHSM2017

billion 2009 dollar

Macroeconomic Working Group, 

Washington, DC, July 20, 2017

Metal-based durables output relatively insensitive to price so less 

change expected

Source: IHS Markit, AEO2017, AEO2018 Preliminary run; metal-based durables includes NAICS 332-6

Do NOT cite or distribute 17
million jobs

Macroeconomic Working Group, 

Washington, DC, July 20, 2017

Employment increases most in services and construction

Source: AEO Preliminary run; MBD = metal-based durables, EI = energy-intensive, man. = manufacturing

Do NOT cite or distribute 18

110

115

120

125

130

135

140

145

150

2017 services other man. MBD EI man. construction agriculture mining 2040
Macroeconomic Working Group, 

Washington, DC, July 20, 2017

Regional results reveal manufacturing remains largest in 

Midwest, greatest overall gains in Mountain West

Source: AEO2018 Preliminary run

Do NOT cite or distribute 19

2.4%

2.8%

2.3%

2.6%

2.0%

2.5%

2.5%

1.9%

2.3%

nonmanufacturing

manufacturing

services

2017-40 CAGR
Thank you

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Macroeconomic Working Group, 

Washington, DC, July 20, 2017 20