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Vermont Consensus Forecast Update (Jan. 2019)


On January 22, 2019, Jeffrey Carr of EPR presented the updated consensus revenue forecast for the State of Vermont before the Vermont Emergency Board.  Click below to download a copy of the Forecast Update Report.


BLS Releases December 2018 Consumer Price Index Report (Jan 2019)


The Consumer Price Index report, released by the U.S. Bureau of Labor Statistics, provides the latest evidence that inflation is more or less in line with where the Federal Reserve Bank wants it to be.  The Consumer Price Index for all urban consumers (CPI-U) declined by 0.1 percent in December.  Over the last 12 months, the all items index increased by 1.9 percent before seasonal adjustment.

The seasonally adjusted decline was caused by a sharp decrease in the gasoline index, which fell by 7.5 percent in December, more than offsetting increases in other indexes including shelter, food, and other energy components.  The energy index declined overall by 3.5 percent, as gasoline and fuel oil indexes fell, but natural gas and electricity indexes increased.  Food indexes—food at home and food away from home—increased by 0.4 percent in December. 

Core inflation—all items minus food and energy—rose 0.2 percent in December the same increase in both October and November.  Indexes for shelter, recreation, medical care, and household furnishings and operations increased in December; in contrast, airline fares, used cars and trucks, and motor vehicle insurance declined during the month. 

The all items index increased 1.9 percent over the last 12 months ending in December; marking the first time the 12-month change has been under 2.0 percent since August 2017.  Core inflation rose 2.2 percent over the last 12 months.  The energy index decreased by 0.3 percent, marking the first decline in the 12-month energy index since the period ending September 2016, while the food index increased by 1.6 percent over the last 12 months. 

The full press release can be found via the link below.

Next release is Wednesday, February 13, 2019, for the January 2019 Consumer Price Index.


BLS Releases December 2018 Employment Data (Jan. 2019)


Nonfarm employers posted strong employment growth, adding 312,000 jobs; the unemployment rate rose slightly to 3.9 percent; and hourly wages posted continued growth in December.  With an upward revision to the job growth reported for the prior two months, the three-month average was 254,000 jobs, more than the 220,000 average monthly rate for calendar year 2018.

Job gains occurred across a wide range of sectors in December including health care, food services and drinking places, construction, manufacturing, and retail trade.  Health care added 50,000 jobs, largely among ambulatory health care services.  Employment in food services and drinking places increased by 41,000.  Construction added 38,000 jobs, manufacturing added 32,000 jobs, and retail trade added 24,000 jobs in December.  Professional and business services with 43,000 jobs added in December, finished 2018 adding 583,000 jobs over the last 12 months.  Health care added 346,000 year-over-year.  Both continued to be the biggest drivers of job growth; with solid gains over the year also coming from manufacturing (284,000) and construction (280,000).

Despite strong nonfarm jobs growth, the unemployment rate increased to 3.9 percent in December, from 3.7 percent in November, as the strong labor market conditions pulled more people into the labor market.  During the month, the labor force participation rate rose by 0.2 percentage points.  The employment rate—or employment-to-population ratio (EPOP or the percentage of adults with jobs) remained unchanged in December at 60.6, a high for the recovery. 

The tighter labor market is showing some dividends in wage growth.  The average hourly wage is up 3.2 percent over the last year; over the last three months (October, November, and December), the annualized rate was up 3.2 percent.  With the core rate of inflation at 2.2 percent, increased hourly wages translate to modest real wage gains.   

In sum, this is mostly a positive jobs report.  The pace of job growth that began seven years ago is continuing, with the economy adding a total of 2.6 million jobs during 2018.  This growth rate is pulling more workers into the labor market, which is now tight enough to produce real wage gains. 

The full BLS press release on the December 2018 employment situation can be accessed in the pdf below:

The next employment situation report for January 2019 will be released on Friday, February 1, 2019. 



Livingston Survey—December 2018 Release (Dec. 2018)


The Philadelphia Federal Reserve Bank’s Livingston Survey represents the oldest survey of economists’ expectations.  The survey—dating from 1946—is published twice a year (June and September) and summarizes forecasts of economists from industry, banking, government and academia.  In December 2018, 23 economists participated in the survey operated by the Federal Reserve Bank of Philadelphia.  [EPR’s senior economist Robert A. Chase is a participant.]

The December 2018 survey results include:

  • Forecasters predict slightly lower Gross Domestic Product (GDP) growth and steady unemployment for 2019.  Real GDP is slated to grow at an annual rate of 3.0 percent in the second half of 2018; with slowing growth of 2.4 percent (annual rate) in the first half of 2019 and 2.3 percent in second half of 2019.  The unemployment rate is pegged to be 3.7 percent in December 2018; and decline and remain steady at 3.5 percent through 2019. 

  • Consumer Price Index and Producer Price Index inflation projections are expected to hold steady in 2019.  CPI inflation is expected to be 2.3 percent in 2019 and decrease slightly to 2.2 percent in 2020.  PPI inflation is projected to be 2.5 percent in 2019 and fall further to 2.1 percent in 2020. 

  • Forecasters predict a stronger outlook for short-term rates but weaker outlook for long-term rates.  Three-month Treasury bills are expected to increase to 2.80 percent by June 2019 and 3.01 percent by the end of 2019.  Ten-year Treasury bonds are predicted to be 3.42 percent by mid-year and increase to 3.51 percent by December 2019. 

  • For the long-term horizon of 10 years, forecasters predict that inflation (as measured by the CPI) will average 2.23 percent annually and annual average real GDP growth at 2.07 percent. 

The next Livingston Survey—based on June 2019 responses—will be published by the Philadelphia Fed in late June/early July. 

The full report can be reviewed at the link below.


BEA Releases Third Estimate of Third Quarter GDP and Revised Estimate of Third Quarter Corporate Profits (Dec. 2018)


Real gross domestic product (GDP) increased at an annual rate of 3.4 percent in the third quarter of 2018, according to the “third” estimate released by the Bureau of Econoimc Analysis.  In the second quarter, real GDP increased 4.2 percent.  The GDP estimate released today is based on more complete source data than were available for the “second” estimate issued last month.  In the second estimate, the increase in real GDP was 3.5 percent.  With this third estimate for the third quarter, personal consumption expenditures (PCE) and exports were revised down, and private inventory investment was revised up; the general picture of economic growth remains the same.  The increase in real GDP in the third quarter reflected positive contributions from exports and residential fixed investment.  Imports, which are a subtraction to the calculation of GDP, increased.  The deceleration in real GDP growth in the third quarter from the second primarily reflected a downturn in exports and decelerations in nonresidential fixed investment and PCE.  Imports increased in the third quarter after decreasing in the second.  These movements were partly offset by an upturn in private inventory investment.


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BLS Releases October...

The Consumer Price Index for All Urban Consumers (CPI-U) was unchanged in October on a seasonally adjusted basis after rising 0.2 percent in September, the U.S. Bureau of Labor Statistics reported today. Over the last...

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