RSM US Real GDP Index
Index points to sub-2 percent growth
THE REAL ECONOMY |
RSM’s monthly forecast model for real GDP growth in the U.S. economy continues to point to a return to below-2 percent growth during the next two years. After a year of above-average growth, our projections assume that growth rates of the economic indicators included in our model will revert over the course of 2019. As a result, real GDP growth will ultimately move toward a yearly pace of 1.8 to 2 percent.
The historically long expansion will continue to slow, hampered by several factors: continued threats of global supply chain disruptions; investment uncertainty due to rising interest rates (both at the front-end of the yield curve as the Federal Reserve continues its program of normalizing interest rates, and at the long-end as the market begins pricing in the impact of servicing an outsized budget deficit); and as the unwinding of this year’s fiscal stimulus becomes a drag on growth.
The model forecast, in line with our current base case estimate for 2019 and 2020 growth, was derived after applying forecasts of key economic indicators to determine baseline projections for U.S. real GDP growth for the coming two years.
The RSM monthly index of real gross domestic product (GDP) growth in the U.S. economy is based on a subset of monthly economic indicators used by the National Bureau of Economic Research to determine the beginning and end of U.S. business cycles. The advantage of using this data over the quarterly national accounts values of real GDP growth is the timeliness of monthly indicators that are, for the most part, accessible and understandable to all market and industry participants. The index is included in monthly issues of The Real Economy. The six indicators, and their sources, used in the index model include:
Industrial production - Federal Reserve, Manufacturing and trade sales - United States Census Bureau, Real consumer spending - Bureau of Economic Analysis, Real disposable personal income - Bureau of Economic Analysis, Aggregate hours worked - Bureau of Labor Statistics, Number of payroll employees - Bureau of Labor Statistics.