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October 22, 2014

L.I.F.T. Off

Research and Analysis

Current Trends Outlook

L - Labor Market. Job growth has been accelerating.  The national unemployment rate is 5.9% in September 2014. Long-term unemployment, labor force participation, and real wage growth need to improve.          
Outlook: As participation rates rise, the unemployment rate stabilizes. Unemployment averages 5.7 percent in 2015.

I - Income. Income Growth has been tepid at best. Real GDP should grow about 2% in 2014. Real Median Household Income has stopped falling, but is still substantially below the peak reached in 1999.  Inequality remains a major issue.           
Outlook: Real GDP Growth of 3.3% in 2015.

F - Fixed Investment. Fixed Investment as a share of total GDP is about 2 percentage points below average.  Residential fixed investment accounts for almost the entire shortfall.          
Outlook: Housing Starts rise to 1.2 million in 2015.

T - Trust and confidence. Consumer and business confidence have been rallying, but from a low base.  Michigan's survey of consumer sentiment hit a seven-year high in September. A global growth slowdown and declining stock prices could weigh on sentiment.        
Outlook: Confidence continues to grow as labor markets strengthen … and these low gas prices are also helping.

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