July 7th, 2011
Econintersect: The Chicago Federal Reserve reported that its annual Automotive Outlook Symposium participants believe solid growth will occur in 2011 and 2012. The symposium was held on June 2–3, 2011, and more than 90 economists and analysts from business, academia, and government attended.
The graphic insert below summarizes the predictions of the participants:
The narrative version:
The economy is forecasted to grow at a solid pace in 2011 and 2012. The growth rate of real GDP is predicted to be 2.6% in 2011 and 2.9% in 2012. The quarterly pattern shows the annualized rate of real GDP growth to be between 2.6% and 3.2% over the forecast horizon (2011:Q2–2012:Q4). This rate of growth is considered to be right around the historical trend. The unemployment rate is predicted to edge lower through the end of 2012: It is expected to fall to 8.5% by the fourth quarter of 2011 and then ease to a still very high 8.2% by the final quarter of 2012. Inflation, as measured by the CPI, is expected to rise quite a bit in 2011, to an annual rate of 2.6%, but this anticipated rise is largely due to increases in energy prices in the early part of 2011. Oil prices are predicted to peak in the second quarter of 2011, at $104 per barrel, and then remain relatively flat. Inflation is then anticipated to fall slightly to 2.2% in 2012. Real personal consumption expenditures are forecasted to expand at a solid rate of 2.8% in 2011 and at a slightly lower rate of 2.6% in 2012. Light vehicle sales are expected to rise to 13.2 million units this year and then improve to 14.4 million units next year. Real business fixed investment is predicted to record strong growth rates of 7.7% in 2011 and 6.8% in 2012. Industrial production is forecasted to grow at a rate of 5.4% this year and at a still solid rate of 4.1% next year.
The housing sector is predicted to improve over the forecast horizon. Real residential investment is anticipated to grow in 2011, at a rate of 3.8%, and surge in 2012, at a rate of 16.2%. Housing starts are expected to increase to 0.59 million units in 2011 and 0.78 million units in 2012.
The long-term interest rate (ten-year Treasury rate) is forecasted to increase 84 basis points in 2011, to 3.70%, and 50 basis points in 2012, to 4.20%. The short-term interest rate (one-year Treasury rate) is expected to rise 12 basis points this year, to 0.38%, and 98 basis points next year, to 1.36%. The trade-weighted U.S. dollar is predicted to edge down this year, at a rate of –0.3%, and then increase in 2012, at a rate of 0.7%. The trade deficit (net exports of goods and services) is predicted to remain unchanged this year and next.
It was an automotive event, and this is what Jeff Schuster, executive director, J. D. Power and Associates believes:
....that 2011 began with strong global sales for light vehicles, which he anticipated to continue in the coming years. Though the global selling rate did pull back in recent months because of the Japanese disaster and a slowing Chinese economy, Schuster expected global sales to reach 76 million this year, up 6% from 2010, and to eventually cross 100 million by 2015. Most of this growth will come from emerging markets, such as China. In 2010, emerging markets’ share of global light vehicle sales surpassed 50% for the first time (51%); by 2015, this share is expected to account for 60%. In North America, sales are climbing back toward pre-crisis levels. According to Schuster, U.S. total light vehicle sales are expected to reach 13.0 million in 2011, up from 11.6 million in 2010, and continue rising to 16.5 million by 2015.
source: Chicago Fed