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Deutsche Bank

Research
United States

Economics

Date
15 June 2015
Peter Hooper
Chief Economist
(+1) 212 250-7352
peter.hooper@db.com

Global Economic Perspectives


Sluggish recovery in US productivity
and potential growth

Michael Spencer
Chief Economist
(+852) 2203 8303
michael.spencer@db.com

The growth of US labor productivity has slowed dramatically in the past


decade, averaging only modestly above zero for the past five years, and
helping to depress near-term US potential growth.

The most important factors contributing to this slowdown have been sharp
decelerations in the business capital stock and innovation. Measurement
error may have contributed as well, but we suspect it is not a major factor.

While a surprising rebound in innovation is possible in the near term, it will


likely take a number of years to get investment in business capital and
R&D expenditures back to levels that will return productivity growth to
more normal levels even by recent historical standards.

Fed projections appear to assume a fairly rapid bounceback in productivity


growth. If our view of a slower recovery holds, the labor market is in for
considerably more tightening over the next couple years than the FOMC is
currently projecting. This points to a faster recovery of wage and price
inflation and a more rapid ascent of policy interest rates down the road
than currently build into the Feds dots chart.

Torsten Slok
Chief Economist
(+1) 212 250-2155
torsten.slok@db.com

Potential growth may not bounce back quite as quickly as generally assumed
%y/y

%y/y

Labor force growth + productivity growth (4-yr MA)


Potential GDP growth, CBO estimate

5.25

5.25

4.50

4.50

3.75

3.75

3.00

3.00

Forecast

2.25

2.25

1.50

1.50

0.75

0.75

0.00

0.00
75

80

85

90

95

00

05

10

15

20

25

Source: CBO, BLS, Haver Analytics, Deutsche Bank Research.

________________________________________________________________________________________________________________
Deutsche Bank Securities Inc.
DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 124/04/2015.

15 June 2015
Global Economic Perspectives: Sluggish recovery in US productivity and potential growth

Key Economic Forecasts


Real GDP
% growthb

CPI
% growthc

Current a/c
% GDPd

Fiscal balance
% GDP

2014

2015F

2016F

2014

2015F

2016F

2014F

2015F

2016F

2014F

2015F

2016F

2.4

2.2

3.0

1.6

0.2

2.5

-2.6

-3.2

-3.8

-2.8

-2.7

-2.4

-0.1

1.1

1.8

2.7

0.9

1.0

0.5

2.9

2.7

-5.9

-5.3

-4.4

0.9

1.4

1.6

0.4

0.0

1.4

2.4

3.3

2.6

-2.4

-2.1

-1.7

Germany

1.6

1.6

1.7

0.8

0.2

1.7

7.6

8.0

7.8

0.7

0.6

0.7

France

0.2

1.1

1.6

0.6

0.1

1.1

-1.0

-0.5

-0.8

-4.0

-4.0

-3.4

-0.4

0.6

1.3

0.2

0.1

1.1

1.9

2.5

2.7

-3.0

-2.7

-2.2

1.4

2.8

2.4

-0.2

-0.6

1.5

0.8

1.4

1.0

-5.8

-4.5

-3.9

UK

2.8

2.4

2.3

1.5

0.4

1.9

-5.3

-4.1

-2.9

-5.0

-4.0

-2.0

Sweden

2.4

2.8

2.8

-0.2

0.5

1.5

6.3

5.5

5.0

-1.9

-1.2

-0.6

Denmark

1.1

1.7

1.8

0.6

1.0

1.5

6.2

6.0

6.0

-1.0

-2.5

-2.5

Norway

2.3

2.0

2.2

2.0

2.0

2.0

8.5

8.0

7.5

9.1

9.0

8.5

Poland

3.4

3.4

3.5

0.0

-0.7

1.4

-1.4

-1.6

-1.7

-3.2

-2.9

-2.7

Hungary

3.6

2.7

2.4

-0.2

-0.1

2.6

3.9

3.0

3.1

-2.6

-2.7

-2.4

Czech Republic

2.0

2.7

2.5

0.4

0.5

2.0

0.6

0.2

0.0

-1.9

-1.8

-1.6

Australia

2.7

2.5

3.1

2.5

1.9

2.6

-2.8

-2.8

-2.7

-2.8

-2.4

-2.2

Canada

2.4

2.5

2.7

2.0

1.2

2.2

-2.0

-1.7

-1.4

-0.8

0.0

0.3

Asia (ex Japan)

US
Japan
Euroland

Italy
Spain

6.4

6.4

6.3

3.4

2.6

3.5

2.3

2.7

2.2

-2.3

-2.8

-2.8

India

7.1

7.5

7.5

6.7

5.1

5.7

-1.4

-1.2

-1.6

-4.0

-3.9

-3.8

China

7.4

7.0

6.7

2.0

1.6

2.7

3.1

3.4

3.3

-2.1

-3.0

-3.0

0.8

0.2

1.9

12.5

13.0

12.8

-2.7

-3.4

-3.3

-5.7

-4.8

-4.2

0.1

-1.4

0.6

6.3

8.5

6.0

-4.5

-4.5

-4.5

-6.2

-5.4

-4.7

2.3

1.2

2.2

6.0

8.5

5.8

1.9

-1.2

-0.4

-2.0

-5.3

-3.2

0.6

-3.2

-0.4

7.8

15.2

6.9

3.1

3.6

4.3

-0.5

-3.0

-1.2

G7

1.7

1.8

2.4

1.5

0.3

2.0

Worlde

3.4

3.3

3.8

3.6

3.3

3.9

Latin America
Brazil
EMEA
Russia

Forecasts: G7 quarterly GDP growth


% qoq saar/annual: %yoy

Q1 14

Q2 14

Q3 14

Q4 14

Q1 15

Q2 15F

Q3 15F

Q4 15F

2014

2015F

2016F

-2.1

4.6

5.0

2.2

-0.7

2.5

3.2

3.1

2.4

2.2

3.0

Japan

4.4

-6.8

-2.0

1.2

3.9

1.0

1.9

2.0

-0.1

1.1

1.8

Euroland

1.1

0.3

0.7

1.3

1.6

1.4

1.7

1.4

0.9

1.4

1.6

US

Germany

3.1

-0.3

0.3

2.8

1.1

1.8

1.9

1.1

1.6

1.6

1.7

France

-0.6

-0.3

0.8

0.1

2.2

1.6

1.6

1.6

0.2

1.1

1.6

Italy

-0.8

-0.5

-0.4

0.0

1.2

1.3

1.3

1.3

-0.4

0.6

1.3

UK

3.6

3.4

2.5

2.5

1.2

2.3

2.1

2.1

2.8

2.4

2.3

Canada

1.0

3.4

3.2

2.2

-0.6

3.0

2.3

3.2

2.4

2.5

2.7

G7

0.1

1.7

2.6

1.9

0.6

2.1

2.5

2.5

1.7

1.8

2.4

a) Euroland forecasts as at the last forecast round on 27/03/15. Bold figures signal upward revisions, bold, underlined figures signal downward revisions. (b)GDP figures refer to working day adjusted data, except
Germany. (c) HICP figures for euro-zone countries and the UK (d) Current account figures for Euro area countries include intra regional transactions. e) The world aggregate has been calculated based on the IMF weights
released in April 2015.
Sources: National authorities, Deutsche Bank Research

Page 2

Deutsche Bank Securities Inc.

15 June 2015
Global Economic Perspectives: Sluggish recovery in US productivity and potential growth

Sluggish recovery in US productivity


and potential growth
Introduction
US productivity growth has been anemic over the past decade. Real output per
hour in the business sector has averaged 1.4% growth per year over this
period, the slowest 10-year rate of growth in more than six decades, excluding
a brief dip below these levels in the early 1980s. Over the past five years, the
growth of labor productivity for total GDP has averaged less than 0.3%. While
the financial crisis has contributed to this weak performance, slow productivity
growth is not just the result of recent cyclical forces. The downtrend in
productivity growth was in place several years before the start of the financial
crisis, suggesting that structural forces are also contributing.
These developments have sparked a vigorous debate about prospects for
future productivity growth and, by extension, the long-term outlook for US
economic growth. Some have argued that we have exhausted the major
productivity-enhancing innovations that once led to persistent surges in
productivity. This would imply that the US economy has entered a new and
persistent low-growth regime that will continue for some time.1 On the other
hand, others have argued that prospects for future productivity growth remain
benign given recent trends and that, for technical reasons, recent productivity
trends may be underestimated.2 But in perhaps a sign that the discussion
about prospects for productivity has tilted in favor of a pessimistic outlook,
even those that forecast a pickup do not foresee a return to the high
productivity growth regimes of the past as the most likely scenario. 3 When
combined with demographic forces that point to subdued labor force growth
over the next several decades, the average growth rate of the US economy is
likely to be significantly lower than historical experience.
The outlook for productivity growth has far-reaching implications for the US
and global economies and global financial markets. Ultimately, productivity
growth is crucial because it is the primary driver of per capita income and
improving living standards over time. But these trends are important for
markets for several additional reasons. In the near term, a continuation of slow
productivity growth will likely allow for significant further progress in the labor
market, including further reduction in labor market slack and accelerating
wages. Over the longer term, a continuation of recent trends in productivity
growth would likely mean that the ultimate level of the fed funds rate is likely
to be lower than suggested by historical experience for some time to come.
Interestingly, in this way, an outlook for slow productivity growth, if correct,
has conflicting implications for markets depending on the time horizon
considered: Slower productivity growth likely means an earlier and more rapid
ascent of the fed funds rate during the initial stage of normalization, while at
the same time arguing for a lower terminal fed funds rate.

Gordon, Robert J. (August 2012), Is US economic growth over? Faltering innovation confronts the six
headwinds.
NBER
Working
Paper
Series,
Working
Paper
18315.
(http://economics.weinberg.northwestern.edu/robertgordon/Is%20US%20Economic%20Growth%20Over.pdf)
2

See Byrne, David M., Stephen D. Oliner and Daniel E. Sichel (March 2013), Is the information
technology
revolution
over?
Finance
and
Economics
Discussion
Series,
2013-36.
(http://www.federalreserve.gov/pubs/feds/2013/201336/201336pap.pdf)
3

See Fernald, John (June 2014), Productivity and potential output before, during and after the Great
Recession. Federal Reserve Bank of San Francisco Working Paper Series, Working Paper 2014-15.
(http://www.frbsf.org/economic-research/publications/working-papers/wp2014-15.pdf)

Deutsche Bank Securities Inc.

Page 3

15 June 2015
Global Economic Perspectives: Sluggish recovery in US productivity and potential growth

This weeks GEP assesses the outlook for productivity growth. Rather than
focus on intractable and unpredictable questions such as the outlook for
innovation growth over the next several decades, we instead focus on a more
modest goal. By decomposing changes in productivity growth over time, we
first show that a lack of business capital spending has been at least as
important as slow innovation growth in explaining recent developments. We
then analyze the pickup in capex required to boost productivity growth enough
to return the real potential growth rate of the economy to 2%. Previewing our
results briefly, we find that 6% average growth of real capital spending is
required to return the economy to 2% real potential growth in five years, and
that a quicker return to 2% potential growth, as projected by the CBO, requires
quite optimistic assumptions about a rebound in capex and/or innovation that
are not the most likely outcomes in our view. We begin by discussing recent
productivity trends in a historical context.

The recent productivity slowdown in a historical context


The initial rebound in productivity growth following the financial crisis was
consistent with historical recoveries. Two years after the start of the recession,
real output per hour in the business sector had risen by about 10%, in line with
the median experience during all previous recoveries (Chart 1). However, after
this brief initial rebound, productivity growth has been tepid over the past five
years. Real output per hour in the business sector has experienced the slowest
cumulative growth at this point in the recovery relative to all previous
recoveries. While productivity is typically about 20% above its pre-recession
level at this point of the average recovery, productivity is only about 10%
above its pre-crisis level currently. Productivity for total GDP has grown at an
average rate of less than 0.3% over the past five yearsthe slowest pace on
record outside the drop recorded during the severe recession of 1980-82.
Chart 1. After its initial rebound, productivity growth has lagged all past
recoveries
Real output per hour of all persons

Index
0.4

Index
0.4

Median of all past recession


episodes

0.3

0.3

Max of all past recession


episodes

0.2

0.2

Min of all past recession


episodes

Current recession episode

0.1

0.1

0.0

0.0

-0.1

-0.1

-0.2

-0.2
-20

-16

-12

-8

-4

12

16

20

24

28

Quarters since recession start date


Source: BLS, Haver Analytics, Deutsche Bank Research

But recent weak productivity growth is not only due to the financial crisis. In
fact, productivity growth has slowed noticeably since the mid-2000s (Chart 2).
Over the past 60 years the US economy has experienced two episodes of
sustained high productivity growth (i.e., about 3%: 1948-1973 and 1996-2003),
Page 4

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15 June 2015
Global Economic Perspectives: Sluggish recovery in US productivity and potential growth

and two slower productivity growth periods (i.e., about 1.5%: 1973-1995 and
2004-present). Chart 2 also splits the more recent slow-growth episode into
three subperiods: (1) prior to the crisis (2004-2007), (2) the recession and initial
cyclical rebouond (2008-2010), and (3) the subsequent anemic productivity
growth experience. This division makes it clear that the slowdown in
productivity growth predated the financial crisis and is thus not simply a result
of the financial crisis.
Chart 2. Breakdown of business output growth during historical episodes
%Chg annual rate

Hours

Labor productivity

%Chg annual rate

5.0
4.0

5.0
Breakdown of 2004-present

4.0

3.0

3.0

2.0

2.0

1.0

1.0

0.0

0.0

-1.0

-1.0

-2.0

-2.0

-3.0

-3.0

-4.0

-4.0

Source FRBSF, Haver Analytics, Deutsche Bank Research

What are the forces behind these longer-term trends? Following analysis from
the San Francisco Fed, we decompose historical productivity growth into four
components: changes in labor quality, shifts in the utilization rates of labor and
capital, growth of the capital stock relative to labor (commonly referred to as
capital deepening), and the remaining residual component (commonly referred
to as innovation growth).4 Two differences are evident between the high and
low productivity growth periods. First, the high productivity growth regimes
are marked by significantly faster innovation growth (Chart 3). During the high
growth periods innovation accounted for about 2% points of the almost 3.5%
aggregate productivity growth rate. Conversely, innovation growth averaged
less than % point contribution during the slow growth regimes. Second, the
minimal contribution from capital deepening during the slow productivity
growth periods, especially over the past four years, is also striking. Having
contributed about 1% point to productivity growth in the high growth regimes,
capital deepening added about half that to productivity growth in the 19731995 period, and has actually subtracted from productivity growth over the
past four years, as subdued capex spending has been insufficient to keep pace
with the faster growth in labor input. This anemic performance is certainly
reflected in the very sluggish recovery of growth in the business capital stock,
which continues to grow at previous historic lows despite some recovery from
extreme lows reached during the crisis (Chart 4).

Specifically, we decompose productivity growth as follows: output per hour = capitals share of
income*(capital input growth + labor quality growth + hours growth) + labor quality growth + utilization
growth + innovation growth. For a similar decomposition see Fernald (2014).

Deutsche Bank Securities Inc.

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15 June 2015
Global Economic Perspectives: Sluggish recovery in US productivity and potential growth

Chart 3. Slow productivity growth caused by soft capex spending and slow
innovation growth
%Chg annual rate

%Chg annual rate


Labor quality
4.0
Capital deepening(capex)

Utilization
Innovation

4.0
3.5

3.5

Breakdown of 2004-present

3.0

3.0

2.5

2.5

2.0

2.0

1.5

1.5

1.0

1.0

0.5

0.5

0.0

0.0

-0.5

-0.5

Source: FRBSF, Haver Analytics, Deutsche Bank Research

Chart 4. Business capital stock growth still running very low


%y/y
6

%y/y
6

Real net stock: private fixed nonresidential asset

0
45

50

55

60

65

70

75

80

85

90

95

00

05

10

15

Source: BEA, Haver Analytics, Deutsche Bank Research

Thus, the recent period of slow productivity growth is primarily due to two
factors: weak innovation growth and weak growth in business capital
spending (relative to the growth of labor input). The latter factor has been
particularly important over the past four years. While innovations contribution
to this slowdown has been larger, it has also been more volatile historically,
and its outlook is more complex to understand and predict, as it is the residual
of the productivity equation. For this reason, we focus on the outlook for
capexs contribution to productivity growth over the next several years. In the
next section we investigate how fast real business fixed investment spending
must grow to be consistent with 2% potential growth for the economy.
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15 June 2015
Global Economic Perspectives: Sluggish recovery in US productivity and potential growth

What is required to achieve 2% potential growth?


This section provides an assessment of the likely path for potential economic
growth going forward. We divide our assessment into two stages. First, it is
necessary to determine the pace of business capital growth that is required to
achieve 2% potential economic growth. Second, we determine the pace of
growth in real capital spending that is consistent with the expansion of the
capital stock needed to achieve potential growth of 2%.
Capital input growth
To estimate the pace of capital growth that is consistent with 2% real potential
GDP growth we first divide real GDP growth into its business and non-business
components. Next, we subdivide these components into hours growth and
productivity growth.5 We use assumptions for non-business output growth
(0.85%), business hours growth (0.64%), and labor quality growth (0.0%)
consistent with Fernald (2014) and the CBOs projections. We further assume
that capitals share of output (0.39%) and innovation growth (0.43%) remain
constant at their most recent values. The only remaining unknown then is to
solve for the pace of growth of business sector productivity and capital that is
consistent with 2% real output growth.
If innovation growth remains at current subdued levels, then 1.72%
productivity growth in the business sector and 3.3% capital stock growth is
required to return potential output growth to 2% (Chart 5).6 Alternatively, if
innovation growth rebounds to the 0.7% growth rate observed during the
initial rebound in productivity following the financial crisis from 2008-2010,
then 2.8% capital stock growth is required to return potential output growth to
2%.
Chart 5.Capital stock must grow 3.3% to be consistent with 2% potential
growth
Real potential GDP growth

2.00

Business hours growth

0.64

Non-business growth

0.85

Labor quality growth

0.00

Capital share

0.39

Innovation growth

0.43

Business sector share

0.76

Implied business output per hour growth

1.72

Required capital growth

3.30

Source: Deutsche Bank Research

For historical context, 3.3% capital stock growth is consistent with the average
experience for the 50 years between 1950 and 2000, while the slower capital
stock growth (2.8%) required if innovation growth rebounds is consistent with
the slower pace of capital stock growth observed since the mid-1980s
(Chart 6).

Specifically, we consider the following equation: real potential output growth = business share of
output*(potential business hours growth + business productivity growth) + non-business share of
output*(potential non-business hours growth + non-business productivity growth), where business
productivity growth is given by the equation in footnote 4.
6

Technically, capital input growth data from the San Francisco Feds dataset differs from the BEAs capital
stock growth. To account for this, we translate the implied capital input growth rate into the more familiar
capital stock growth rate from the BEA as follows: Capital stock growth = 0.3059 + 0.7665*capital input
growth (R-squared = 0.71).

Deutsche Bank Securities Inc.

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15 June 2015
Global Economic Perspectives: Sluggish recovery in US productivity and potential growth

Chart 6. Capital stock growth must rise significantly to be consistent with 2%


potential real output growth
%y/y

Real net stock: private fixed nonresidential assets

%y/y

6
2.8%
3.3%

-2

-2

-4

-4
25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 00 05 10

Source: BEA, Haver Analytics, Deutsche Bank Research

Capex spending growth


Our next step is to translate the implied capital stock growth rate into a
required rate of capex growth. To do this, we must first specify a time horizon
for returning to 2% real potential output. We begin with an assumption that it
will take five years to return to this growth rate.
We find that capital spending growth must average about 6-1/4% on average
over the next five years to return real potential output growth to 2% (Chart 7).
A faster rebound in productivity and potential growth requires a significantly
more rapid pickup in investment spending. For example, capital spending
growth must average more than 8% to return the economy to 2% real potential
output growth in 2017 if innovation growth does not improve. At the extreme,
capex must grow by more than 20% for real potential growth to reach 2% this
year.
Chart 7. Average required growth of investment for 2% potential growth
Reached in 2015

20%

Reached in 2017

8%

Reached in 2019

6%

Source: Deutsche Bank Research

Sustained capex growth of 6.23% appears reasonable, as it would be well


within the range of past experience. But achieving 8.4% growth (which is
required for return to 2% potential growth in 3 years), could be more of a
stretch, as that would be closer to the upper-end of historical experience
(Chart 8).

Page 8

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15 June 2015
Global Economic Perspectives: Sluggish recovery in US productivity and potential growth

Chart 8. Growth in real capital investment has remained relatively subdued


%y/y

Real private nonresidential fixed investment

%y/y

60

60

40

40
20.2%

8.4%

6.2%

20

20

-20

-20

-40

-40
30 35 40 45 50 55 60 65 70 75 80 85 90 95 00 05 10 15

Source: BEA, Haver Analytics, Deutsche Bank Research

Of course, if innovation growth rebounds, then the required growth of the


capital stock and capex spending falls. For example, if innovation growth
rebounds to 0.7% -- its average value from 2008-2010 from its current
growth rate of about 0.4%, then real capex spending only needs to grow by
5% on average to return the economy to a 2% real potential growth rate by
2019 (Chart 9).
Chart 9. Average required growth of investment for 2% potential growth
achieved in 2019
Innovation growth = 0.4%

6%

Innovation growth = 0.7%

5%

Source: Deutsche Bank Research

Prospects for a pickup in innovation growth


Total factor productivity growth (a proxy for innovation) tends to rise with a lag
after spending on R&D has picked up (Chart 10). In the last several quarters,
real business investment spending on R&D has increased from y/y growth
rates in the low single digits to near double-digit rates. This indicates potential
for a significant pickup in innovation-based productivity growth ahead. But
given the length of the lag in this relationship and its variability, it seems
unlikely that we will see a large effect at least within the next year.

Deutsche Bank Securities Inc.

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15 June 2015
Global Economic Perspectives: Sluggish recovery in US productivity and potential growth

Chart 10. Pickup in R&D investment spending should boost innovation-based


growth ahead
%y/y

%chg,AR

Real pvt. Non-resi fixed investment:R&D, 5-yr MA(4 yr lead, ls)

Utilization-adjusted total factor productivity , 5-yr MA (rs)

20

3.75

3.00

16

2.25
12

1.50
8
0.75
4

Correlation: 0.57

0.00

-0.75
50

55

60

65

70

75

80

85

90

95

00

05

10

15

20

Source: FRBSF, BEA, Haver Analytics, Deutsche Bank

When will potential real output growth return to 2%?


Our analysis suggests that a 5-year horizon looks reasonable for potential
growth to return to 2%. This would be consistent with potential growth
returning to 2% in 2019. This outlook is depicted in Chart 11, which shows
Congressional Budget Offices estimate of potential growth and our own based
very simply on the sum of four-year moving averages of labor force growth
and productivity growth.7 The CBOs most recent projection (from this January)
has potential growth returning to 2% in 2016 (Chart 11); we suspect this
projection will be revised down (or later) in the CBOs next update because of
the continued relative sluggishness of overall business fixed investment
growth. That said, it is quite possible that innovation growth will begin to pick
up some of the slack.

To estimate GDP productivity growth we used business productivity growth minus 0.3%pt.
estimate of potential growth abstracts from trends in the hourly workweek.

Page 10

This

Deutsche Bank Securities Inc.

15 June 2015
Global Economic Perspectives: Sluggish recovery in US productivity and potential growth

Chart 11. Potential growth may not bounce back quite as quickly as generally
assumed
%y/y

%y/y

Labor force growth + productivity growth (4-yr MA)


Potential GDP growth, CBO estimate

5.25

5.25

4.50

4.50

3.75

3.75

3.00

3.00

Forecast

2.25

2.25

1.50

1.50

0.75

0.75

0.00

0.00
75

80

85

90

95

00

05

10

15

20

25

Source: CBO, BLS, Haver Analytics, Deutsche Bank Research

Potential measurement issues with productivity growth


Increasing attention has recently been paid to the possibility that our national
accounts data are significantly understating the growth of real output and
therefore productivity. Some observers have argued that many new tech and
intellectual property products are not accurately captured in terms of either
their quality or price8. It is true that historically, real GDP has tended to be
revised upward over time. For example, based on real time data reported by
the Federal Reserve Bank of Philadelphia, real GDP growth during the 1960s,
70s, 80s, and 90s is reported today to be between 0.2 to 0.4 percentage points
faster than it was reported originally at the ends of those decades (compare
numbers in column headed Most recent in Chart 12 with those in the
preceding columns). Over time, new ways will be found to measure real output
that may continue to yield upward adjustments in productivity growth.
However, it may be unrealistic to assume that such revisions will add more
than several tenths to productivity growth, leaving it still relatively subdued in
recent years.
Chart 12. Real GDP growth tends to be revised up over time
Report date:
Real GDP growth for:
Average of 1960s
Average of 1970s
Average of 1980s
Average of 1990s
Average of 2000s
Average of 2010s

1969Q4
4.4
NA
NA
NA
NA
NA

1979Q4
4.2
3.0
NA
NA
NA
NA

1989Q4
4.1
2.8
2.7
NA
NA
NA

1999Q4
4.5
3.3
3.1
3.0
NA
NA

2009Q4
4.5
3.3
3.1
3.2
2.0
NA

Most recent
4.6
3.2
3.1
3.2
1.8
2.2

Source: Philadelphia Fed, Deutsche Bank Research

For example, see Byrne, David and Eugenio Pinto (March 26, 2015), The recent slowdown in high-tech
equipment price declines and some implications for business investment and productivity. FRB FEDS
Notes. (http://www.federalreserve.gov/econresdata/notes/feds-notes/2015/recent-slowdown-in-high-techequipment-price-declines-some-implications-for-business-investment-labor-productivity-20150326.html)

Deutsche Bank Securities Inc.

Page 11

15 June 2015
Global Economic Perspectives: Sluggish recovery in US productivity and potential growth

What does this imply for the Fed?


On the measurement issue, the Fed is constrained to work with the data it has
in hand, and cannot set policy on the basis of speculation about measurement
error. More importantly, as we noted at the outset, the recent slow pace of
productivity growth, if it is sustained, implies a faster pace of tightening in the
labor market and a quicker upturn in wage inflation than may be generally
expected; it also implies some potential further downward revision to the
longer-term neutral level of the Fed funds rate. FOMC projections are
anticipating continued GDP growth at least as fast as we have seen in recent
years, but they are also assuming that the downtrend in unemployment will
slow significantly (indeed cease altogether) over the next year even with labor
force participation remaining roughly unchanged. This implies the assumption
of a significant rebound in productivity growth over the year ahead. Indeed, to
hold unemployment unchanged in the face of 2.5% GDP growth and no
change in labor force participation, nonfarm business productivity would have
to be growing at nearly 2% annual rate, more than a full percentage point
above its recent pace. In fact, at least one Fed staff forecast does see
productivity growth jumping back to more than 2% over the next several
quarters. 9
If productivity growth follows a more gradual ascent, as we expect, the
unemployment rate could fall well below the Feds current estimate of NAIRU
in the low 5s (a reasonable estimate in our view) over the year ahead. This
would imply significant upward pressure on wage inflation. Wage inflation, as
measured by the employment cost index (ECI--the single best measure in our
estimation, and we think the Feds) has been accelerating over the past four
quarters. It still has room to rise further to get back to levels roughly
consistent with the Feds objective for inflation, but that room is not unlimited.
The ECI has been running just over 2-1/2% AR most recently, up more than
% pt over the past year. If trend productivity picks up to 1%, % point
acceleration in wage inflation would move unit labor cost inflation to be in line
with the Feds longer term objective for core inflation. A larger jump in
productivity would give more room for wage inflation to rise. But there are no
guarantees, and the point here is that slack may continue to diminish faster
than the Fed has been expecting.
At the same time, failure of productivity growth to return to more normal levels
does imply a lower level of the neutral level of the fed funds rate in the longer
term; implying a lower terminal fed funds rate. While the relationship between
potential growth and the neutral level for fed funds is not a tight one, this shift
may nevertheless diminish slightly the degree of lifting (of rates) the Fed has to
do down the road.
Peter Hooper (1) 212 250 7352
Matthew Luzzetti (1) 212 250 6161
Torsten Slok (1) 212 250 2155

See James Kahn and Robert Rich, Tracking Productivity in Real Time, updates, Federal Reserve Bank
of New York.

Page 12

Deutsche Bank Securities Inc.

15 June 2015
Global Economic Perspectives: Sluggish recovery in US productivity and potential growth

Central Bank Watch


G3

Figure 1: G3 policy rates

US
In the wake of recent signs of firmer data, Fed liftoff requires only moderate
further confirmation that the economy is still on an above-trend growth path,
with further improvement in the labor market and reasonable prospects that
inflation will eventually move to the Fed's 2% inflation target. We think that the
FOMCs current expectation is for a September liftoff, and the probabilities
remain solidly on that date. A June liftoff would be a huge surprise at this point,
and July seems unlikely (but by no means impossible) for commencing rate
hikes. We expect two 25 bp hikes this year, with the second one coming most
likely in December. We expect the rate of ascent to remain slow well into 2016,
but then to pick up as the labor market continues to tighten.
Japan
Rising wages and a tightening labor market give the BoJ confidence that
inflation will start heading higher later this year, although the Bank's forecast
for when inflation hits 2% has been postponed slightly. So as long as the labor
market continues to tighten, we expect the current policy stance to be
maintained. In any event, we don't expect any tapering off of asset purchases
until after the April 2017 consumption tax increase.

8%
6
4
2
0
2001

2004

2007

Fed

2010

2013

BoJ

ECB

Current Jun-15 Sep-15 Dec-15 Mar-16

Fed

0.13

0.13

0. 38

0.63

0.88

BoJ

0.10

0.10

0.10

0.10

0.10

ECB

0.05

0.05

0.05

0.05 0.05

Source: Deutsche Bank Research

Euroland
The risk of an early reconsideration of the EUR60bn per month for 18 months
QE programme is low. Unless Greek-related contagion erupts, we think it will
be the end of the year at the earliest before the ECB will be able to judge the
appropriateness, one way or the other, of the current QE plan.

Other European countries

Figure 2: Key European policy rates

UK
Our view remains for lift-off in Bank of England policy rates from May next year.
This would be consistent with our call on the Fed (Sep 2015); typically the BoE
moves rates around 9 months after the US.
Sweden
The Riksbank loosened policy in April, increasing the size of its modest QE to
just over 2% of GDP. Recent news suggests against more easing for now.

8%
6
4

2
0
2001
-2

Switzerland
The SNB shocked the markets by abandoning the CHF peg, causing a sizable
jump in CHF vs. the EUR. We expect EUR/CHF to rise to 1.10 by year-end.

2004

UK

2007

2010

Sweden

2013

Switzerland

Current Jun-15 Sep-15 Dec-15 Mar-16

BoE

0.50

0.50

0.50

0.50

SRB

-0.25

-0.25

-0.25

-0.25

0.50
-0.25

SNB

-0.75

-0.75

-0.75

-0.75

-0.75

Source: Deutsche Bank Research

Deutsche Bank Securities Inc.

Page 13

15 June 2015
Global Economic Perspectives: Sluggish recovery in US productivity and potential growth

Dollar bloc

Figure 3: Dollar bloc policy rates

Canada
In line with the Bloomberg Finance LP/DB consensus, the Bank of Canada left
its target for the overnight rate unchanged at 0.75% for the second
consecutive policy rate announcement. In its press release, the Bank
highlighted the fact that headline inflation is "near the bottom of (its) 1 to 3
percent inflation control range due to the transitory impact of sharply lower
energy prices". The Bank also reiterated that it considers the core inflation rate
(currently 2.3%) to be above 2 percent largely due to pass-through effects of
the lower Canadian dollar and some other one time factors.
Australia
The RBA has left the cash rate unchanged, as was widely expected, leaving the
focus on whether or not the Bank re-introduced any explicit forward guidance.
It did not the final paragraph of the post-meeting statement suggests that the
Bank has maintained its neutral stance on forward guidance.
New Zealand
On June 11, The RBNZ announced that it has decided to lower the OCR by
25bps to 3.25%. This was in line with our expectations. The rationale for policy
easing articulated in their Assessment, and elaborated in the full MPS, was as
exactly as we had outlined when we made our call in early May, and reiterated
in our Data Flash published on 3rd June previewing the meeting i.e. given
developments on the supply and demand side of the economy it was not
possible for the Bank to project an acceptable path for inflation back to 2%
without assuming a policy easing and associated marked weakening of the
exchange rate.

BRICs

10%
8
6
4

2
0
2001

Brazil
In light of hawkish COPOM minutes reinforcing the BCBs commitment to
bring inflation to the 4.5% target in 2016, we expect another 50bp rate hike in
June.

2007

2010

2013

Australia

NZ

Current Jun-15 Sep-15 Dec-15 Mar-16

BoC

0.75

0.75

0.75

0.75

1.00

RBA

2.00

2.00

2.00

2.00

2.00

RBNZ

3.25

3.25

3.25

3.00

3.00

Source: Deutsche Bank Research

Figure 4: BRICs policy rates

China
China has entered a significant policy easing cycle since end March. After the
April 100bp RRR cut, the PBoC cut one-year benchmark rates by 25bp on 11
May. We revise our interest rate call and expect two further cuts in 2015 the
next cut in June and another cut in Q3. Fiscal policy also started loosening as
the government removed constraint on local government financing vehicles.
We maintain our view that growth may slow to 6.8% in Q2, and rebound to
7.0% in Q3 and 7.2% in Q4.
India
The Reserve Bank of India cut the policy repo rate by 25bps to 7.25% in the
June meeting, as expected, while signaling that it may be done with rate cuts
for the time being. Having cut rates by a cumulative 75bps this year, the RBI is
seeing room for further easing erode. However, we think the growth-inflation
mix will turn supportive for RBI to consider another 25bps rate cut in this
calendar year.

2004
Canada

30%

20

10

0
2001

2004

China

2007
India

2010

2013

Brazil

Russia

Current Jun-15 Sep-15 Dec-15 Mar-16

PBoC

2.25

2.00

RBI

7.25

7.25

1.75

BCB

13.25

13.25

13.75 13. 75 13.75

CBRF

11.50

11.50

10.50

7.00

1.75

1.75

7.00

7.00

9.00

8.50

Source: Deutsche Bank Research

Russia
On 15 June, the CBR cut the key rate from 12.5% to 11.5% for the fourth time
in a row (from 17% introduced in December 2014) due to the shift in the
balance of risks towards the support to the economic growth vs. lower
inflation environment. The CBR noted that it is ready to continue with policy
easing in case inflation expectations decline further.
.
Page 14

Deutsche Bank Securities Inc.

2014

2015

Mar

Apr

May

June

July

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

0.13

0.13

0.13

0.13

0.13

0.13

0.1

0.1

0.1

0.1

0.1

0.1

0.1

0.1

0.1

0.1

0.1

0.1

0.1

0.1

0.1

0.1

0.1

0.1

0.1

Mar

Apr

May

0.1

0.1

0.1

Jun

US

5.25

0.13

0.13 0.13

0.13

0.13

0.13

0.13

0.13

0.13

0.13

0.13

0.13

0.13

Japan

0.50

0.10

0.10

0.1

0.1

0.1

0.1

0.1

0.1

0.1

0.1

0.1

0.1

0.1

Euro area

4.25

0.05

0.75 0.75

0.75

0.75

0.50

0.50

0.50

0.50

0.50

0.50

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.15

0.15

0.15

0.05

0.05

0.05

0.05

0.05

0.05

0.05

0.05

0.05

0.05

UK

5.75

0.50

0.50 0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

Sweden

4.75 -0.25

1.00 1.00

1.00

1.00

1.00

1.00

1.00

1.00

1.00

1.00

1.00

0.75

0.75

0.75

0.75

0.75

0.75

0.75

0.25

0.25

0.25

0.00

0.00

0.00

0.00

-0.10 -0.25

-0.25

-0.25

Denmark

5.50 -0.75

-0.10 -0.10

-0.10

-0.10

-0.10

-0.10

-0.10

-0.10

-0.10

-0.10

-0.10

-0.10

-0.10

-0.10

-0.10

0.05 0.05

0.05

0.05

0.05

-0.05 -0.05

-0.05

-0.05

-0.50

-0.75 -0.75

-0.75

-0.75

Norway

5.75

1.25

1.50 1.50

1.50

1.50

1.50

1.50

1.50

1.50

1.50

1.50

1.50

1.50

1.50

1.50

1.50

1.50

1.50

1.50

1.50

1.50

1.50

1.50

1.50

1.25

1.25

1.25

1.25

1.25

1.25

Switzerland

2.75 -0.75

0.00 0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

-0.25 -0.75

-0.75

-0.75

-0.75

-0.75

Australia

7.25

2.00

3.00 3.00

3.00

3.00

2.75

2.75

2.75

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.25

2.25

2.25

2.00 2.00

Canada

4.50

0.25

1.00 1.00

1.00

1.00

1.00

1.00

1.00

1.00

1.00

1.00

1.00

1.00

1.00

1.00

1.00

1.00

1.00

1.00

1.00

1.00

1.00

1.00

1.00

1.00

0.75

0.75

0.75

0.75

0.75

New Zealand

8.25

2.50

2.50 2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.75

3.00 3.00

3.25

3.50

3.50

3.50

3.50

3.50

3.50

3.50

3.50

3.50

3.50

3.50

0.05

0.05

0.05

0.05

0.1

0.1

3.25

EMEA
Czech
Hungary
Israel
Kazakhstan
Poland
Romania

3.75

0.05

0.05 0.05

0.05

0.05

0.05

0.05

0.05

0.05

0.05

0.05

0.05

0.05

0.05

11.50

1.65

5.50 5.25 5.00 4.75 4.50

4.25

4.00

3.80

3.60

3.40

3.20

3.00

2.85

2.70

2.60

0.05

0.05

0.05

0.05

0.05

0.05

0.05

0.05

0.05

0.05

0.05

2.50 2.40

0.05

2.30

2.10

2.10

2.10

2.10

2.10

2.10

2.10

2.10

1.95

1.80 1.65

0.10

0.10

5.50

5.50

4.50

0.10

1.75 1.75

1.75

1.75

1.50

1.25

1.25

1.25

1.25

1.00

1.00

1.00

1.00

1.00

0.75

0.75

0.75

0.75

0.75

0.50

0.25

0.25

0.25

0.25

0.25

0.25

0.10

11.00

5.50

5.50 5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

6.00

1.50

4.00 3.75 3.25 3.25

3.00

2.75

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.00

2.00

2.00

2.00

2.00

1.50

10.25

1.75

5.25 5.25

5.25

5.25

5.25

5.25

5.00

4.50

4.50

4.25

4.00

4.00

3.75

3.50

3.50

3.50

3.50

3.50

3.50

3.25

3.25

3.00

2.75

2.75

2.50

2.25

2.25

2.00

7.50 7.50

15.00 14.00

14.00

1.50

9.50

5.00

5.50 5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

5.50

7.00

7.50

8.00

8.00

8.00

8.00

9.50

South Africa

12.00

5.00

5.00 5.00

5.00

5.00

5.00

5.00

5.00

5.00

5.00

5.00

5.00

5.00

5.50

5.50

5.50

5.50

5.50

5.50

5.75

5.75

5.75

5.75

5.75

5.75

5.75

5.75

5.75

5.75

Turkey

22.50

4.50

5.50 5.50

5.00 4.50 4.50

4.50

4.50

4.50

4.50

4.50

4.50

10.00 - 10.00

10.00

10.00

9.50 8.75

8.25

8.25

8.25

8.25

8.25

8.25

7.75

7.50

7.50

7.50

7.50

Ukraine

12.00

6.50

7.50 7.50

7.50

7.50

7.50

7.00

7.00

6.50

6.50

6.50

6.50

6.50

6.50

6.50

9.50 9.50

9.50

12.50 12.50

12.50

12.50

14.00 14.00

14.00

19.50 30.00

30.00

Brazil

13.75

7.25

7.25 7.25

7.25

7.50 8.00

8.00

8.50

9.00

9.00

9.50

10.00 10.00

10.50 10.75 10.75

11.00 11.00

Chile

8.25

0.50

5.00 5.00

5.00

5.00

5.00

5.00

5.00

5.00

5.00

4.75

4.50

4.50

4.50

4.25

4.00

10.00

3.00

4.00 3.75 3.25 3.25

3.25

3.25

3.25

3.25

3.25

3.25

3.25

3.25

3.25

3.25

Mexico

8.25

3.00

4.50 4.50

4.00 4.00

4.00

4.00

4.00

4.00

3.75

3.50

3.50

3.50

3.50

Peru

6.50

1.25

4.25 4.25

4.25

4.25

4.25

4.25

4.25

4.25

4.25

4.25

4.00

4.00

4.00

China

4.14

2.25

3.00 3.00

3.00

3.00

3.00

3.00

3.00

3.00

3.00

3.00

3.00

3.00

Hong Kong

6.75

0.50

0.50 0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

India

9.00

4.75

7.75 7.75

7.50 7.50

7.25

7.25

7.25

7.25

7.50

7.75

7.75

Indonesia

9.50

5.75

5.75 5.75

5.75

5.75

5.75

6.00

6.50

7.00

7.25

7.25

7.50

Korea

5.25

1.50

2.75 2.75

2.75

2.75

2.50

2.50

2.50

2.50

2.50

2.50

2.50

Malaysia

3.50

2.00

3.00 3.00

3.00

3.00

3.00

3.00

3.00

3.00

3.00

3.00

3.00

Philippines

7.50

3.50

3.50 3.50

3.50

3.50

3.50

3.50

3.50

3.50

3.50

3.50

3.50

Singapore

3.25

0.17

0.18 0.18

0.18

0.18

0.18

0.18

Sri Lanka

Russia

6.50

17.00 17.00

1.50

0.10
1.50

1.75 1.75

12.50
5.75
30.00

LatAm

Colombia

11.00

11.00

11.00

11.00

11.75 12.25 12.25

12.75 13.25 13.25

13.75

4.00

4.00

3.75

3.50

3.25

3.00

3.00

3.00

3.00

3.00

3.00

3.00

3.00

3.00

3.25

3.50 3.75

4.00

4.25

4.50

4.50

4.50

4.50

4.50

4.50

4.50

4.50

4.50

4.50

3.50

3.50

3.50

3.50

3.00

3.00

3.00

3.00

3.00

3.00

3.00

3.00

3.00

3.00

3.00

3.00

4.00

4.00

4.00

4.00

4.00

3.75

3.75

3.50

3.50

3.50

3.50

3.25

3.25

3.25

3.25

3.25

3.00

3.00

3.00

3.00

3.00

3.00

3.00

3.00

3.00

3.00

2.75

2.75

2.75

2.75

2.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

7.75

8.00

8.00

8.00

8.00

8.00

8.00

8.00

8.00

8.00

8.00

8.00

8.00

7.75

7.75

7.50

7.50

7.50

7.50

7.50

7.50

7.50

7.50

7.50

7.50

7.50

7.50

7.75

7.75

7.75

7.50

7.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.50

2.25

2.25

2.00

2.00

2.00

2.00

2.00

3.00

3.00

3.00

3.00

3.00

3.00

3.00

3.25

3.25

3.25

3.25

3.25

3.25

3.25

3.25

3.25

3.50

3.50

3.50

3.50

3.50

3.50

3.50

3.75

3.75

4.00

4.00

4.00

4.00

4.00

4.00

4.00

4.00

11.25 11.25

3.00

Asia

1.75

2.50

2.25

0.50

0.50

7.50

7.50

7.50

7.50

1.75

1.75

3.25

3.25

4.00

4.00

1.50

0.21 - 0.21

12.00

7.50

9.50 9.50

9.50

9.50

9.00

9.00

9.00

9.00

9.00

8.50

8.50

8.50

8.00

8.00

8.00

8.00

8.00

8.00

8.00

8.00

8.00

8.00

8.00

8.00

8.00

8.00

8.00

7.50 7.50

Taiwan

3.63

1.25

1.88 1.88

1.88

1.88

1.88

1.88

1.88

1.88

1.88

1.88

1.88

1.88

1.88

1.88

1.88

1.88

1.88

1.88

1.88

1.88

1.88

1.88

1.88

1.88

1.88

1.88

1.88

1.88

Thailand

4.75

1.25

2.75 2.75

2.75

2.75

2.50

2.50

2.50

2.50

2.50

2.50

2.25

2.25

2.25

2.25

2.00

2.00

2.00

2.00

2.00

2.00

2.00

2.00

2.00

2.00

2.00

2.00

Vietnam

15.00

6.50

9.00 9.00

8.00 8.00

7.00

7.00 - 7.00

7.00

7.00

7.00

7.00

7.00

7.00

6.50

6.50

6.50

6.50

6.50

6.50

6.50

6.50

6.50

6.50

6.50

6.50

Note: red arrows means rate hike ,green arrow means rate cut.
Source: Deutsche Bank, Central Banks, Haver Analytics

7.25

1.75
6.50

1.88

1.50 1.50
6.50

6.50

1.50

15 June 2015

Max Trough
(2007- policy 2013
2008) rate* Jan Feb

Global Economic Perspectives: Sluggish recovery in US productivity and potential growth

Deutsche Bank Securities Inc.

Central Bank policy rate monitor

Page 15

15 June 2015
Global Economic Perspectives: Sluggish recovery in US productivity and potential growth

Global data monitor :Recent developments and near term forecasts


Bbergcode

Q3-14

Q4-14

Q1-15

Q2-15

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

OECD leading indicators


(6M change, %, ann.)
OECD

1.7

1.5

US

OLE3US

2.2

2.0

1.6

1.5
1.9

1.8

1.6

Euro area

OLE3EURA

0.8

0.3

0.3

0.2

0.2

0.3

0.3

Japan

OLE3JAPA

-0.3

-0.7

-0.5

-0.8

-0.7

-0.5

-0.2

China

OLE3CHIN

7.7

7.3

7.0

7.2

7.1

7.0

6.9

India

OLE3INDI

6.7

6.9

6.9

6.9

7.0

6.9

6.9

Russia

OLE3RUSS

3.1

1.8

1.2

Brazil

OLE3BRAZ

2.4

2.5

2.4

-3.9

2.9

-3.5

5.1

-1.0

100.9

101.5

102.3

103.9

103.8

103.8

1.4

6.8

Other business surveys


US dur. goods orders (%pop1)

DGNOCHNG

1.0

-1.6

1.5

Japanese Tankan (LI)

JNTSMFG

13.0

12.0

12.0

Euro area EC sentiment

EUESEMU

101.2

100.9

102.6

103.8

Industrial production (%pop1)


US

IP CHNG

4.1

4.6

-0.7

-0.1

-0.3

-0.1

-0.3

-0.3

0.3

Euro area

EUITEMUM

-0.7

1.6

3.7

0.5

0.0

1.0

-0.4

0.1

0.2

Japan

JNIPMOM

-5.3

3.0

6.4

0.2

4.1

-3.1

-0.8

1.2

US

RSTAMOM

3.2

1.8

-4.0

-0.9

-0.8

-0.5

1.5

0.2

Euro area

RSSAEMUM

0.7

3.3

3.0

0.5

0.3

0.1

-0.6

0.7

1.6

7.1

5.3

0.2

-0.3

0.8

2.4

-5.5

Retail sales (%pop1)

Japan (household spending)

6.9

1.2

Labour market
US non-farm payrolls2

NFP TCH

237

324

202

329

201

266

119

221

Euro area unemployment (%)

UMRTEMU

11.5

11.5

11.2

11.4

11.3

11.2

11.2

11.1

Japanese unemployment (%)

JNUE

3.6

3.5

3.5

3.4

3.6

3.5

3.4

3.3

US

CPICHNG

1.8

1.2

-0.1

Euro area

ECCPEMUY

0.4

0.2

-0.3

Japan

JNCPIYOY

3.3

2.5

2.3

China

CNCPIYOY

2.1

1.6

6.7

4.1

7.7

251

280

CP inflation (%yoy)

India
Russia

RUCPIYOY

Brazil

-0.5

0.8

-0.1

0.0

-0.1

-0.2

0.8

-0.2

-0.6

-0.3

-0.1

0.0

0.3

0.4

2.4

2.4

2.2

2.3

0.6

1.4

1.6

1.6

0.9

1.6

1.6

1.7

5.3

4.6

4.3

5.2

5.4

5.3

4.9

5.0

9.6

16.2

15.7

11.4

15.0

16.7

16.9

16.4

15.8

6.6

6.5

7.7

8.1

6.4

7.1

7.7

8.1

8.2

8.5

-41.3

-42.3

-43.4

-45.5

-42.4

-37.2

-50.6

-40.9

15.6

21.1

21.2

22.6

21.1

22.6

19.7

8.3

9.0

5.1

17.2

10.7

13.9

15.0

13.6

15.0

15.0

62.3

47.8

58.1

55.9

59.5

1.4

Current account (USD bn)3


US (trade balance, g+s)

USTBTOT

Euro area (EUR bn)

XTSBEZ

Japan

1.6

7.8

10.4

China (trade in goods)

128.1

149.5

123.7

Russia (trade in goods)

15.3

14.1

14.5

Other indicators
Oil prices (Brent, USD/b)

EUCRBRDT

101.8

76.4

53.9

FX reserves China (USD bn)

CNGFOREX

3887.7

3843.0

3730.0

61.8

64.1

Quarterly data in shaded areas are quarter-to-date. Monthly data in the shaded areas are forecasts.
%pop=%change in this period over previous period. Quarter on quarter growth rates is annualized.
Pop change in 000, quarterly data averages of monthly changes.
Quarterly data are averages of monthly balances.
Source: Bloomberg Finance LP, Reuters, Eurostat, European Commission, OECD, Bank of Japan, National statistical offices, Markit/JP Morgan, Deutsche Bank Research

Page 16

Deutsche Bank Securities Inc.

15 June 2015
Global Economic Perspectives: Sluggish recovery in US productivity and potential growth

US financial conditions monitor


Chart 1: US FCIs from 1990 through Q1-2015

Chart 2: US FCIs with high frequency estimates for


Q2-2015

Index

DB FCI-16

DB FCI-high frequency

USMPF FCI

Index

Index

-1

-1

-1

-1

-2

-2

-2

-3

-3

-3

96

98

00

02

04

06

08

10

12

-2

-3
11

12

13

14

15

Note: Data for the USMPF FCI for Q1-2015 is an estimate based on available
data.

14

Source: USMPF (2010), Deutsche Bank Research

Q2-2015 estimates
based on high
frequency data

10

-4
94

Index

92

USMPF FCI

90

DB FCI-high frequency

-4

DB FCI-16

Source: USMPF (2010), Deutsche Bank Research

Chart 3: Contributions to change in DB high frequency FCI


Ch an g e f rom Q1- 2015 t o Q2- 2015 est i mat e

Va ria ble s

Ch an g e f rom Q4- 2014 t o Q1- 2015

Contribution

Va ria ble s

Contribution

30-yr Conventional mortgage/ 10yr T-note Spread

0.14

Price of Oil Relative to 2Year MA

0.38

10YrT-note/3monthTbill Spread

0.00

Wilshire 5000

0.13

FedFunds/3monthTBill Spread

-0.02

A CM Term Premium: 10 Year (%)

Wilshire 5000

-0.06

FedFunds/3monthTBill Spread

-0.01

Price of Oil Relative to 2Year MA

-0.23

10YrT-note/3monthTbill Spread

-0.01

Baa/10yr T-note Spread

-0.28

Baa/10yr T-note Spread

-0.04

A CM Term Premium: 10 Year (%)

-0.45

30-yr Conventional mortgage/ 10yr T-note Spread

-0.13

0.05

Source: Deutsche Bank Research

Chart 4: Contributions to change in USMPF FCI


Ch an g e f rom Q1- 2015 t o Q2- 2015 est i mat e
Top 5 p osi t i v e v ari ab l es

Ch an g e f rom Q4- 2014 t o Q1- 2015


Con t ri b u t i on

Top 5 p osi t i v e v ari ab l es

Con t ri b u t i on

Real Broad Trade-Weighted Exchange Value of the US$ (Mar-73=100)

0.10

Total Non-mortgage A BS Issuance (NSA ) Relative to 4Q MA

0.28

Correlation of Returns on Equitities and Treasuries

0.09

VIX Index

0.20

Financial Market Cap (percent of S&P 500)

0.05

Jumbo/30yr Conventional Spread

0.09

A BS Issuers: A ssets; Consumer Credit (NSA , Bil.$)

0.03

A BS Issuance (Relative to 4Q MA )

0.08

A sset-Backed Security Issuers: A sset; Commercial Mortgages (NSA , Bil.$)

0.03

Idiosyncratic Bank Stock Volatility

0.08

Top 5 n eg at i v e v ari ab l es

Top 5 n eg at i v e v ari ab l es

Idiosyncratic Bank Stock Volatility

-0.17

Bank rate on personal loans, 24-month/Two-year Treasury Spread

-0.05

10-Year Treasury Note Yield at Constant Maturity (% p.a.)

-0.05

Financial Market Cap (percent of S&P 500)

-0.04

Loan Performance National House Price Index (SA , Jan.2000=100)

-0.05

10YrT-note/3monthTbill Spread

-0.03

Commercial Paper Outstanding: A ll Issuers (SA , Bil.$)

-0.04

Real Broad Trade-Weighted Exchange Value of the US$ (Mar-73=100)

-0.02

Price of Oil Relative to 2Year MA

-0.03

TED Spread (Using Constant Maturity T-bill)

-0.01

Source: Deutsche Bank Research

Deutsche Bank Securities Inc.

Page 17

15 June 2015
Global Economic Perspectives: Sluggish recovery in US productivity and potential growth

Charts of the Week


Chart 1. In the US, Nonfarm payrolls increased 280K
last month, the largest gain since December.
700

US labour market

Thousands

11.0

10.5

500

JOLTS: total job openings

Thousands
6000

10.0

300

9.5

9.0

100

5250

4500

8.5

-100

8.0

3750

7.5

-300

7.0

-500

3000

6.5
Change in nonfarm payrolls (ls)

-700

6.0

Unemployment rate (rs)

-900
2010

5.0
2011

2012

2013

2014

2015

1500
2001

2003

2005

2007

2009

2011

2013

2015

Source: BLS, Haver Analytics , Deutsche Bank Research

Chart 3. In EU GDP rose by 0.4% in during the first


quarter of 2015, compared with the previous quarter.

Chart 4. Household final consumption expenditure had


a positive contribution to GDP growth in the euro area
1.5

GDP

% qoq

2250

5.5

Source BLS Haver Analytics , Deutsche Bank Research

2.0

Chart 2. Job openings have surged to a new post-crisis


high.

Contributions to % qoq GDP growth

pp

% qoq

1.5
1.0

1.0

1.5

0.5

France

Germany

Italy

Spain

0.5

Euroarea

0.0

1.0

0.0

-0.5

-0.5

0.5

-1.0

-1.0

0.0

-1.5

Consumption (ls)
Government (ls)

-2.0

Investment (ls)

-1.5

Net trade (ls)

-0.5
-1.0

-2.5

GDP (rs)

-2.0

-3.0

-2.5

-3.5

2007

-1.5

2008

2009

2010

2011

2012

2013

2014

2015

Source: Eurostat, Haver Analytics, Deutsche Bank Research

Q3-2011 Q1-2012 Q3-2012 Q1-2013 Q3-2013 Q1-2014 Q3-2014 Q1-2015


Source Eurostat, Haver Analytics, Deutsche Bank Research

Chart 6. In Brazil, soaring inflation remains a major


concern for monetary policy.

Chart 5. Capacity utilization rate in Canada dropped


from 83.6% in Q4/2014 to 82.7%, the lowest point
since the first quarter of 2014.
%

Canada

Firms planning to invest (rs)


Capacity utilisation: manufacturing(ls)

90

Brazil: consumer price index

%y/y
9

40

85

30

80

20

75

10

70

65

-10

60

-20

55

-30

50

-40
00

01

02

03

04

05

06

07

08

09

10

Source: StatCan, BoC, Haver Analytics, Deutsche Bank Research

Page 18

11

12

13

14

15

3
2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Source: IBGE, Haver Analytics, Deutsche Bank Research

Deutsche Bank Securities Inc.

15 June 2015
Global Economic Perspectives: Sluggish recovery in US productivity and potential growth

Global Week Ahead: Tuesday, 16 June Wednesday, 24 June

Dollar Bloc: In the US, the focus will be on the June FOMC meeting which comes out with median projections.
We also have Q1 Real GDP final data coming up later next week. In Canada we have Inflation and Retail sales
data among others.

Europe: In the Eurozone, a series of PMI data is lined up across the region along with Q1 Employment report
and Inflation data for Euroland. We also have the ZEW surveys for Germany. In UK, the data is centered on PPI
and CPI inflation along with ILO unemployment report. In CEE we have the July MPC meeting for Hungary.

Asia incl. Japan: In Japan the focus will be on the BoJ target rate announcement for June and the following
press conference

Country

GMT

Release

DB Expected Consensus

Previous

Tuesday, 16 June
GERMANY
GERMANY
UK
UK
UK
UK
UK
UK
GERMANY
GERMANY
EUROLAND
EUROLAND
EUROLAND
EUROLAND
EUROLAND
BRAZIL
US
US
NEW ZEALAND

06:00
06:00
08:30
08:30
08:30
08:30
08:30
08:30
09:00
09:00
09:00
09:00
09:00
09:00
09:00
12:00
12:30
12:30
22:45

CPI (May)
HICP (May)
Core input PPI (May)
Core output PPI (May)
Input PPI (May)
Output PPI (May)
CPI (May)
Core CPI (May)
ZEW survey (Current situation) (Jun)
ZEW survey (Econ.Sentiment) (Jun)
Core HICP (May)
HICP (May)
ZEW survey (Current situation) (Jun)
ZEW survey (Econ. sentiment) (Jun)
Employment (Q1)
Retail sales (Apr)
Building permits (May)
Housing starts (May)
Current account balance (Q1)

0.1% (0.7%)
0.1% (0.7%)
0.0% (0.1%)
0.0% (-11.8%)
0.2% (-1.5%)
0.2% (0.1%)

(0.9%)
0.2% (0.3%)

0.0% (0.1%)
0.6% (-11.3%)
0.1% (-1.6%)
0.2% (0.1%)
(1.0%)
63.0
37.3
(0.9%)
0.2% (0.3%)

0.4%
1,150.0k
1,145.0k
NZD0.20bn

1,100.0k
1,097.0k
NZD0.24bn

0.1% (0.7%)
0.1% (0.7%)
0.3% (-3.1%)
0.0% (0.1%)
0.4% (-11.7%)
0.1% (-1.7%)
0.2% (-0.1%)
(0.8%)
65.7
41.9
(0.9%)
0.2% (0.3%)
-16.5
61.2
0.7% (0.9%)
-0.9%
1,140.0k
1,135.0k
-NZD3.19bn

Events and meetings: EUROLAND: EUs Home Affairs Ministers meet on migration in Luxembourg 08:00 GMT. EUROLAND: EUs Moscovici to
speak at conference in Brussels 08:15 GMT. EUROLAND: ECBs Mersch to speak on OMT in Brussels 11:00 GMT EUROLAND: EUs Hill to
speak at Friends of Europe in Brussels 16:00 GMT
Wednesday, 17 June
ITALY
UK
EUROLAND
BRAZIL
POLAND
CANADA
US
NEW ZEALAND

08:00
08:30
09:00
11:30
12:00
12:30
18:00
22:45

Trade balance (Apr)


ILO unemployment rate (Apr)
Construction output (Apr)
Economic activity (Apr)
Avg. gross wages (May)
Wholesale sales (Apr)
FOMC rate (Jun)
GDP (Q1)

5.4%

5.5%

-0.5%
0.8%
0.5% (3.0%)

0.3%
0.25%
0.6% (3.3%)

EUR4.06bn
5.5%
0.8% (-2.7%)
-1.1%
(3.7%)
0.8%
0.25%
0.8% (3.5%)

Events and meetings: EUROLAND: EUs Dombrovskis, Timmermans, Rompuy to speak at Think Tank 08:00 GMT. EUROLAND: EUs Dombrovskis
to speak at conference in Brussels 13:15 GMT. US: FOMC rate decision with projections 18:00 GMT
SWITZERLAND
NORWAY
UK
EUROLAND
US
US
US
US
US
RUSSIA
RUSSIA
US

06:00
08:00
08:30
09:00
12:30
12:30
12:30
12:30
12:30
13:00
13:00
14:00

Thursday, 18 June
Trade balance (May)
Norges bank overnight rate (Jun)
Retail sales (May)
Labour costs (Q1)
CPI (May)
Core CPI (May)
Continuing claims (Jun)
Initial jobless claims (Jun)
BoP (Q1)
Retail sales (May)
Unemployment rate (May)
Philly fed (Jun)

0.2% (4.7%)

1.00%
-0.2% (4.3%)

0.3%
0.2%

0.5% (0.0%)
0.2% (1.8%)
2,200.0k
278.0k
-USD117.1bn

8.0

8.0

CHF2.86bn
1.25%
1.2% (4.7%)
(1.1%)
0.1% (-0.2%)
0.3% (1.8%)
2,265.0k
279.0k
-USD113.5bn
(-9.8%)
5.8%
6.7

Events and meetings: EUROLAND: EUs Vestager to speak at Chatham House in London 07:30 GMT. NORWAY: Norges bank June overnight rate
to be announced 08:00 GMT.

Deutsche Bank Securities Inc.

Page 19

15 June 2015
Global Economic Perspectives: Sluggish recovery in US productivity and potential growth

Country

GMT

Release

DB Expected Consensus

Previous

Friday, 19 June
JAPAN
GERMANY
HUNGARY
EUROLAND
UK
UK
CANADA
CANADA
CANADA
CANADA

06:00
07:00
08:00
08:30
08:30
12:30
12:30
12:30
12:30

BOJ target rate (Jun)


PPI (May)
Avg. gross wages (Apr)
Current account (Apr)
PSNB (May)
PSNCR (May)
Retail sales ex auto (Apr)
Retail sales (Apr)
CPI (May)
Core CPI (May)

0.2% (-1.1%)

GBP10.0bn
0.7%
1.0%
0.5% (0.8%)
0.2% (2.0%)

0.3%
0.5%
0.5% (0.8%)

0.10%
0.1% (-1.5%)
(4.9%)
EUR18.6bn
GBP6.0bn
-GBP4.0bn
0.5%
0.7%
-0.1% (0.8%)
0.1% (2.3%)

Events and meetings: JAPAN: BoJ policy statement followed by governor Kurodas press conference 03:00 GMT.
Monday, 22 June
DENMARK
EUROLAND
US

07:00
14:00
14:00

Retail sales (May)


Consumer confidence
Existing home sales (May)

5.20m

-0.20% (0.50%)
-5.5
5.04m

5.23m

Events and meetings: EUROLAND: EUs Dombrovskis to speak at Brussels Think Tank 17:00 GMT. EUROLAND: ECBs Constancio to speak at
Conference in Brussels 08:00 GMT.
AUSTRALIA
FRANCE
FRANCE
FRANCE
GERMANY
GERMANY
GERMANY
EUROLAND
EUROLAND
EUROLAND
POLAND
ITALY
UK
TURKEY
HUNGARY
US
US
US
US
US

01:30
07:00
07:00
07:00
07:30
07:30
07:30
08:00
08:00
08:00
08:00
09:00
10:00
11:00
12:00
12:30
12:30
13:00
14:00
14:00

Tuesday, 23 June
House price index (Q1)
PMI manufacturing
PMI services
PMI composite
PMI composite
PMI manufacturing
PMI services
PMI composite
PMI manufacturing
PMI services
Unemployment rate (May)
Retail sales (Apr)
CBI industrial trends survey (Jun)
MPC meeting (Jun)
MPC meeting (Jul)
Durable goods ex transport (May)
Durable goods (May)
House price index (Apr)
New home sales (May)
Richmond fed (Jun)

0.5%
1.0%

1.50%
0.8%
-0.6%

525.0k

511.0k

1.9% (6.8%)
49.4
52.8
52.0
52.6
51.1
53.0
53.6
52.2
53.8
11.2%
-0.1% (-0.2%)
15.00
7.25%
1.65%
-0.2%% (-1.6%)
-1.0% (-2.8%)
0.30%
517.0k (26.1%)
1.0

Events and meetings: TURKEY: Benchmark repurchase rate for Turkey 11:00 GMT. US: Feds Powell to speak on Monetary Policy in Washington
12:00 GMT. HUNGARY: July MPC meeting for Hungary 12:00 GMT.
HUNGARY
FRANCE
DENMARK
GERMANY
GERMANY
GERMANY
ITALY
CHILE
US
US
US

06:30
06:45
07:00
08:00
08:00
08:00
08:00
12:00
12:30
12:30
12:30

Wednesday, 24 June
Current account balance (Q1)
GDP (Q1)
Consumer confidence (Jun)
IFO - business climate (Jun)
IFO - current assessment (Jun)
IFO - expectations (Jun)
Hourly wages (May)
PPI (May)
Corporate profits (Q1)
GDP deflator (Q1)
GDP (Q1)

-0.1%
0.0%

-0.3%

EUR892.0m
0.1% (0.2%)
13.00
108.5
114.3
103.0
0.2% (1.2%)
1.6%
-1.4% (-0.6%)
0.2% (1.2%)
2.2% (2.4%)

Events and meetings: No events or meetings are scheduled at this date.


Source: Australian Bureau of Statistics; Bank of Canada; Bank of Japan; BEA; BLS; Bundesbank; Bureau of Labor Statistics, U.S Department of
Labor; Cabinet Office, Government of Japan; ECB; Eurostat; Indian Central Statistical Organization; INE; INSEE; ISTAT; ISTAT.IT; Ministry of
Finance Japan; National Association of Realtors; National Bureau of Statistics; National Statistics Office; OECD - Composite Leading Indicator;
People's Bank of China; Reserve Bank of Australia; Reserve Bank of New Zealand; Statistics Canada; Statistics Netherlands; Statistics of New
Zealand; U.S. Census Bureau; U.S. Department of Labor, Employment & Training Administration; U.S. Department of the Treasury; U.S. Federal
Reserve.
Note: Unless otherwise indicated, numbers without parenthesis are either % month-on-month or % quarter-on-quarter, depending on the
frequency of release, while numbers in parenthesis are % year-on-year. * on the release time means indicative release time. * on indicator name
means indicative/earliest release date
Source: Deutsche Bank

Page 20

Deutsche Bank Securities Inc.

15 June 2015
Global Economic Perspectives: Sluggish recovery in US productivity and potential growth

Financial Forecasts
US

Jpn

Euro

UK

Swe*

Swiss*

Can*

Aus*

NZ*

3M Interest

Actual

0.26

0.20

-0.01

0.57

-0.25

-0.75

0.75

2.00

3.25

Jun-15

0.26

0.15

0.00

0.58

-0.25

-0.75

0.75

2.00

3.25

DB forecasts

Dec-15

0.75

0.15

-0.10

0.59

-0.25

-0.75

0.75

2.00

3.00

Mar-16

1.18

0.15

-0.10

0.60

-0.25

-0.75

1.00

2.00

3.00

10Y Govt2

Actual

2.40

0.53

0.85

1.97

n.a.

n.a.

1.81

3.01

3.81

Bond/Yields

Jun-15

2.00

0.40

0.90

2.05

n.a.

n.a.

1.90

2.75

3.75

Spreads3

Dec-15

2.45

0.55

1.00

2.30

n.a.

n.a.

2.60

3.00

4.00

DB forecasts

Mar-16

3.35

0.60

1.10

2.50

n.a.

n.a.

2.80

3.00

4.00

Exchange

Actual

EUR/
USD
1.13

USD/
JPY
123.5

EUR/
GBP
0.72

GBP/
USD
1.55

EUR/
SEK
9.24

EUR/
CHF
1.05

USD/
CAD
1.23

AUD/
USD
0.77

NZD/
USD
0.70

Rates

Jun-15

1.04

121.0

0.72

1.44

9.20

1.07

1.28

0.76

0.75

Dec-15

1.00

125.0

0.74

1.36

8.90

1.10

1.30

0.70

0.70

Mar-16

0.98

126.3

0.74

1.33

8.86

1.10

1.31

0.69

0.69

Rates

(1) Forecasts are the same dates. * indicates policy rates.


(2) Forecasts in this table are produced by the regional fixed income strategists.
(3) US 10Y Govt. bond yield forecasts has been taken from US Fixed Income Weekly.
Sources: Bloomberg Finance LP, Deutsche Bank Research. Revised forecasts in bold type.

US 10Y rates

Euroland 10Y rates


US government bond yields, %

6.0

5.0

5.0
4.0

1.0
2002

2.0

4.0

1.5

3.0

3.0

1.0

2.0

0.5

0.0
10Y
2004

2006

2Y/10Y spread (rhs)


2008

2010

2012

2014

0.0

0.0
2002

-0.5
2004

2006

2008

2010

10Y

-1.0

2012

2014

2016

2Y/10Y spread (rhs)

Source: Deutsche Bank Research, Bloomberg Finance LP

Japan 10Y rates

UK 10Y rates

Japan government bond yields, %

2.0

2.0

1.5

UK government bond yields, %

7.0

3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0

6.0
5.0

1.5
1.0
1.0

0.5

1.0

2016

Source: Deutsche Bank Research, Bloomberg Finance LP

2.5

2.5

4.0

1.0

2.0

Euro government bond yields, %

5.0

2.0
3.0

6.0

4.0
3.0

0.5
10Y

2Y/10Y spread (rhs)

0.0
0.0
2002 2004 2006 2008 2010 2012 2014 2016

Source: Deutsche Bank Research, Bloomberg Finance LP

Deutsche Bank Securities Inc.

2.0
1.0
0.0
2002

10Y

2004

2006

2Y/10Y spread (rhs)

2008

2010

2012

2014

2016

Source: Deutsche Bank Research, Bloomberg Finance LP

Page 21

15 June 2015
Global Economic Perspectives: Sluggish recovery in US productivity and potential growth

Appendix 1
Important Disclosures
Additional information available upon request
*Prices are current as of the end of the previous trading session unless otherwise indicated and are sourced from
local exchanges via Reuters, Bloomberg and other vendors . Other information is sourced from Deutsche Bank,
subject companies, and other sources. For disclosures pertaining to recommendations or estimates made on
securities other than the primary subject of this research, please see the most recently published company report or
visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr

Analyst Certification
The views expressed in this report accurately reflect the personal views of the undersigned lead analyst(s). In addition,
the undersigned lead analyst(s) has not and will not receive any compensation for providing a specific recommendation
or view in this report. Peter Hooper/Michael Spencer/Torsten Slok

(a) Regulatory Disclosures


(b) 1.Important Additional Conflict Disclosures
Aside from within this report, important conflict disclosures can also be found at https://gm.db.com/equities under the
"Disclosures Lookup" and "Legal" tabs. Investors are strongly encouraged to review this information before investing.

(c) 2.Short-Term Trade Ideas


Deutsche Bank equity research analysts sometimes have shorter-term trade ideas (known as SOLAR ideas) that are
consistent or inconsistent with Deutsche Bank's existing longer term ratings. These trade ideas can be found at the
SOLAR link at http://gm.db.com.

Deutsche Bank Securities Inc.

Page 22

15 June 2015
Global Economic Perspectives: Sluggish recovery in US productivity and potential growth

Additional Information
The information and opinions in this report were prepared by Deutsche Bank AG or one of its affiliates (collectively
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15 June 2015
Global Economic Perspectives: Sluggish recovery in US productivity and potential growth

be substantial. As a result of the high degree of leverage obtainable in futures and options trading, losses may be
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15 June 2015
Global Economic Perspectives: Sluggish recovery in US productivity and potential growth

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Page 25

David Folkerts-Landau
Raj Hindocha
Global Chief Operating Officer
Research

Group Chief Economist


Member of the Group Executive Committee
Marcel Cassard
Global Head
FICC Research & Global Macro Economics

Steve Pollard
Global Head
Equity Research

Michael Spencer
Regional Head
Asia Pacific Research

Ralf Hoffmann
Regional Head
Deutsche Bank Research, Germany

Andreas Neubauer
Regional Head
Equity Research, Germany

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