NABE Outlook June 2015 - Summary

The June 2015 NABE Outlook presents the consensus of macroeconomic forecasts from a panel of 48 professional forecasters (see last page for listing). The survey, covering the outlook for 2015 and 2016, was conducted May 8-20, 2015. The NABE Outlook Survey originated in 1965 and is one of three surveys conducted by NABE; the others are the NABE Business Conditions Survey and the NABE Economic Policy Survey. Founded in 1959, the National Association for Business Economics is the professional association for those who use economics in their work. NABE has over 2,600 members and 42 chapters nationwide. Timothy Gill, National Electrical Manufacturers Association (chair); Robert Kleinhenz, Los Angeles County Economic Development Corporation; Tim Mullaly, FedEx Corporation; Arun Raha, Eaton Corporation; Ken Simonson, Associated General Contractors of America; and Richard Wobbekind, Leeds School of Business, University of Colorado at Boulder, conducted the analysis of survey responses for this report. The views expressed in this report are those of the panelists and do not necessarily represent the views of their affiliated companies or institutions. This report may be reproduced in whole or in part with appropriate citation to NABE.

SUMMARY: “NABE’s June Outlook Survey panelists look for the U.S. economy to expand at a slower rate in 2015 compared to their expectations in March,” according to NABE President John Silvia, chief economist of Wells Fargo. “Their views on economic growth have been tempered by sluggish conditions during the first three months of the year that have persisted into the second quarter. The panel’s median forecast calls for real GDP growth to accelerate to approximately 3% at an annualized rate in the third and fourth quarters of 2015, slightly stronger than in the previous survey. But the annual average growth rate for the year is expected to reach only 2.4%, in line with the pace recorded in 2014. Real GDP is forecasted to grow at a stronger 2.9% clip in 2016, unchanged from the March survey."

“This latest soft patch, coupled with a benign inflation outlook, has led to a shift in expectations regarding monetary policy,” according to NABE Outlook Survey Chair Timothy Gill, deputy chief economist of the National Electrical Manufacturers Association. “Seventy-four percent of panelists believe the Federal Reserve will begin raising short-term interest rates in the third quarter of 2015, with an additional 21% expecting a hike in the fourth quarter of 2015 or later. Only 4% expect a second-quarter 2015 rate increase. In March, one-third of the panel predicted a second-quarter increase, 55% expected a third-quarter increase, and only 12% believed an initial rate hike would come in the fourth quarter of 2015 or later. The federal funds rate is forecasted to reach 0.5% by the end of 2015 and 1.625% at the end of 2016, lower than the estimates of 0.75% and 2.0%, respectively, reported in March. Similarly, the yield on 10-Year Treasury notes is projected to be 3.1% by year-end 2016, lower than the 3.25% projected in March.”

“Despite the disappointing start to 2015, the NABE panel foresees a number of positives in the economic picture,” adds Silvia. “Consumer outlays, residential investment, and government expenditures are all expected to increase at a faster pace in both 2015 and 2016 compared to last year. Payrolls are expected to expand by more than 200,000 per month through the end of next year, and inflation is expected to remain tame.”


The NABE Outlook Survey panel’s median forecast for real GDP growth from the fourth quarter of 2014 to the fourth quarter of 2015 is 2.3%—sharply lower than that reported in the March survey. The median forecast for 2016 is unchanged at 2.9%. The forecast for the annualized growth rate for 2015 is also lower—down to 2.4% from 3.1% in March. The annualized forecast for 2016 is unchanged at 2.9%. These downward revisions to the forecast for 2015 have been influenced by weakness in first-quarter GDP and lower expectations for the second quarter compared to those reported in the March Outlook Survey.

The median forecast for real GDP growth for the second quarter of 2015 fell to 2.5% at a seasonally adjusted annual rate, down from 3.0% in March. Lowered expectations for second-quarter economic activity are consistent with currently available data. Quarterly growth is expected to rebound to 3.2% in the third quarter of 2015 before decelerating to 2.8% throughout 2016. These forecasts are in line with those reported in March.

The survey results reflect a slowing—but still robust—pace of improvement in the labor market. The median forecast for nonfarm payroll growth in 2015 declined from 251,000 in March to 217,000 in June, while the median forecast for 2016 slipped from 216,000 in March to 207,000. Payrolls expanded at a 260,000 monthly clip in 2014. Expectations for unemployment are similar to those expressed in March, with the unemployment rate anticipated to decline to 5.2% on average during the fourth quarter of 2015 and to 4.9% on average during the fourth quarter of 2016.