Economic Report of the President 1994 - The American Presidency ...

More documents

Recommendations

Info

TABLE 2-2.— Administration ForecastsItem 1993 1994 1995 1996 1997 1998 1999Percent change, fourth quarter to fourth quarterReal GDPGDP implicit deflator .Consumer price index(CPI-U)2.82.22.73.02.73.02.72.83.22.72.93.32.63.03.42.63.03.42.53.03.4Calendar year averageUnemployment rate(percent)Old basisNew basisInterest rate, 91-dayTreasury bills(percent)Interest rate, 10-yearTreasury note(percent)Nonfarm payroll employment(millions)6.83.05.9110.26.3(6.6-7.2)3.45.7112.35.9(6.2-6.8)3.85.7114.35.7(6.0-6.6)4.15.7116.25.6(5.9-6.5)4.45.7118.25.5(5.8-6.4)Sources: Council of Economic Advisers, Department of the Treasury, and Office of Management and Budget.4.45.7120.05.5(5.8-6.4)from accelerating. Health care reform should help rein in the spiralingcosts that have plagued that huge sector of the economy andthus help control overall inflation.The Administration's forecast is in line with private sector forecastsfor 1994 and the mid-1990s. It assumes no dramatic shift inaggregate economic performance beyond the trends clearly establishedover 1993—low inflation, low long-term interest rates, andhealthy investment spending. It also assumes that the historical(Okun's law) relationship between output and unemployment continuesto hold.RISKS TO THE FORECASTAs always, there are risks to this forecast. First, foreign economicactivity may not pick up as expected, especially if other governmentsremain reluctant to stimulate their economies by easing interestrates or pursuing countercyclical fiscal policies. It is also possiblethat the kind of industrial restructuring that the UnitedStates has endured over the past decade may prove to be a biggerhurdle than realized for key European trading partners and Japan.Also, the timetable for the correction of the Japanese speculativebubble of the late 1980s is unclear and could take longer than expected.The better the Group of Seven countries coordinate theirmacroeconomic policies over the next couple of years, the lower therisk of a prolonged pause in industrial-country growth.4.45.7121.992
A second risk is that long-term interest rates could take backmore of their declines of 1993. Such a move could crimp the interest-sensitivesectors that provided the economy with most of itsgrowth in 1993. Housing and business fixed investment would likelybe the most vulnerable sectors.A stalling out of consumer demand cannot be ruled out either.Consumers have been increasing their spending by a larger percentagethan their incomes have been rising over the past year,and they could turn pessimistic about the future again. Indeed,they have already done so several times in this business cycle expansion.An unexpected cutback in consumer spending would leadto higher than desired inventory levels, which would in turn reverberateback through the economy in the form of lower orders andperhaps lower employment in manufacturing.But economic growth could also exceed this forecast in the shortrun. The U.S. output gap widened sharply over the 1990-91 recession,and the economy could grow faster than its noninflationarypotential for a couple of years as part of a catchup process. Certainlygrowth of 4 percent would not be unprecedented during sucha phase. Among the factors that might contribute to faster than expectedgrowth are a faster than expected rebound of economicgrowth in Europe, Japan, and the rest of the industrial world,which would sharply boost U.S. exports; oil prices remaining relativelylow and giving a healthy boost to real disposable incomes;and the possibility that Americans have more pent-up demandthan realized for houses, automobiles, and other durable goods.SOURCES OF LONG-RUN GROWTHThe long-run rate of real GDP growth can be expressed as thesum of the individual growth rates of four components: (1) thenumber of available workers in the economy (the labor force); (2)the rate at which these workers are employed (the employmentrate); (3) the number of hours worked per year (which is proportionalto the average workweek); and (4) the quantity of goods andservices produced by an hour of labor (labor productivity). Table 2-3 details the contribution of each of these components to real GDPgrowth over several historical time periods and as projected for therest of the decade. Because many of these components vary withthe business cycle, their growth rates are measured from cyclicalpeak to cyclical peak. Estimates in the fourth column are based onactual data through the fourth quarter of 1993 and forecasts by theAdministration through 1999.The projected growth of nonfarm business product from the businesscycle peak in the third quarter of 1990 to the end of 1999 is2.7 percent per year. Underlying this projection is a growth in outputper hour of 1.5 percent per year and growth in hours of 1.2 per-151-444 0 - 9 4 - 493
Page 1:
S : Sf:' ;: W^W't-^WW': ;, S 4 Si :
Page 5:
unitedminds
Page 9 and 10:
Economic Report of the PresidentTo
Page 11:
the Technology Reinvestment Project
Page 14:
formed health care system, increase
Page 19 and 20:
CONTENTSPageCHAPTER 1. A STRATEGY F
Page 21:
PageProviding Comprehensive Benefit
Page 24 and 25:
LIST OF CHARTS—CONTINUEDPage3-5 L
Page 27 and 28:
CHAPTER 1A Strategy for Growth and
Page 29 and 30:
which have left consumers and busin
Page 31 and 32:
that growth in both real compensati
Page 33 and 34:
for inflation was on average roughl
Page 35 and 36:
Box 1-2.—Saving, Investment, and
Page 37 and 38:
investments in human capital; inves
Page 39 and 40:
of the income distribution (Table 1
Page 41 and 42:
Box 1-3.—Credible Deficit Reducti
Page 43 and 44:
Chart 1-7 Correlation of Investment
Page 45 and 46:
Box 1~4*~-A Balanced Budget Amendme
Page 47 and 48: This educational record is not good
Page 49 and 50: fallen markedly since the 1960s (Ch
Page 51 and 52: The development and deployment of n
Page 53 and 54: Earlier rounds of GATT talks had fo
Page 55 and 56: Chart 1-10 Projected Real Growth Ra
Page 57 and 58: are therefore on the public dole. M
Page 59: prise communities and be granted sm
Page 62 and 63: ingredient that should allow the ec
Page 64 and 65: Chart 2-2 National Defense Purchase
Page 66 and 67: Chart 2-3 Growth of U.S. Merchandis
Page 68 and 69: Chart 2-5 Households: Credit Market
Page 70 and 71: THE HEADWINDS ARE MOSTLY CALMINGAs
Page 72 and 73: 1993, real consumer spending increa
Page 74 and 75: RESIDENTIAL INVESTMENTResidential i
Page 76 and 77: smallest annual increase in 20 year
Page 78 and 79: ments with the Internal Revenue Ser
Page 80 and 81: safe-harbor rules for underpayment
Page 82 and 83: Chart 2-9 Alternative Measures of t
Page 84 and 85: Meanwhile, the Mountain States were
Page 86 and 87: inflation is measured by the Blue C
Page 88 and 89: Saving, Investment, and Capital Acc
Page 90 and 91: the future should be reflected in l
Page 92 and 93: Chart 2-15 Dynamic Effects of Defic
Page 94 and 95: joyed healthy average real GDP grow
Page 96 and 97: Chart 2-16 Personal Income Taxes as
Page 100 and 101: TABLE 2-3.— Accounting for Growth
Page 103 and 104: CHAPTER 3Trends and Recent Developm
Page 105 and 106: first quarter of 1991, nonfarm payr
Page 107 and 108: cause defense cutbacks have caused
Page 109 and 110: UNEMPLOYMENT AND NONEMPLOYMENTThe U
Page 111 and 112: Chart 3-3 Civilian Unemployment Rat
Page 113 and 114: Chart 3-6 Employment-to-Population
Page 115 and 116: Chart 3-8 Ratio of White-Collar to
Page 117 and 118: than would be expected given its hi
Page 119 and 120: that the natural rate is falling? M
Page 121 and 122: SLOW INCOME GROWTHIncome trends hav
Page 123 and 124: Chart 3-10 Average Annual Growth of
Page 125 and 126: Box 3-3.—Consequences of Producti
Page 127 and 128: likely that immigration could expla
Page 129 and 130: We do, however, know how many worke
Page 131 and 132: size. No data are available on vola
Page 133 and 134: BENEFITSOne of the concerns raised
Page 135 and 136: edented partnership to develop a nu
Page 137 and 138: CHAPTER 4Health Care ReformTHE UNIT
Page 139 and 140: make cost-conscious decisions. In a
Page 141 and 142: A third rationale for universal cov
Page 143 and 144: Box 4-1.—Moral Hazard and Adverse
Page 145 and 146: ies depending on one's health statu
Page 147 and 148: than people in other countries do,
Page 149 and 150:
sumers are ill equipped to bring st
Page 151 and 152:
By itself, the aging of the populat
Page 153 and 154:
TABLE 4-3.- Sources and Uses of Hea
Page 155 and 156:
about 65 to 70 cents for a typical
Page 157 and 158:
THE ARCHITECTURE OF THE HEALTHSECUR
Page 159 and 160:
etary savings for the Federal Gover
Page 161 and 162:
contribution, within limits. Outsid
Page 163 and 164:
salary income, payments from the em
Page 165 and 166:
TABLE 4-6.—Caps on Premiums by Fi
Page 167 and 168:
An example will illustrate the proc
Page 169 and 170:
TABLE 4-9.—Sources and Uses of Fe
Page 171 and 172:
Chart 4-9 Business Spending on Heal
Page 173:
Health care reform should set the s
Page 176 and 177:
and private sectors, addressing env
Page 178 and 179:
Box 5-1.—Selected National Perfor
Page 180 and 181:
Box 5-2*—Market PowerFirms are sa
Page 182 and 183:
ate regulation. For example, State
Page 184 and 185:
competitiveness of U.S. industry, a
Page 186 and 187:
Box 5-4.—ExternalitiesAn external
Page 188 and 189:
in the habitat of the spotted owl r
Page 190 and 191:
CLIMATE CHANGE ACTION PLANCertain g
Page 192 and 193:
eral, lays a foundation for broader
Page 194 and 195:
The Administration's proposal seeks
Page 196 and 197:
vances in technical know-how have a
Page 198 and 199:
Investments in R&D are risky. Like
Page 200 and 201:
1950s and 1960s, and American compa
Page 202 and 203:
ico and Lawrence Livermore in Calif
Page 204 and 205:
of industry. MOCs will be affiliate
Page 206 and 207:
tiveness. Again, the hoped-for resu
Page 208 and 209:
forts to cut the massive Federal bu
Page 210 and 211:
TECHNOLOGY POLICY, GROWTH, ANDCOMPE
Page 212 and 213:
mitment to an open international tr
Page 214 and 215:
ses, which take such intersectoral
Page 216 and 217:
An important sectoral development i
Page 218 and 219:
TABLE 6-3.—Stock of U.S. Outward
Page 220 and 221:
technical change has been offered a
Page 222 and 223:
ent account is a broader measure of
Page 224 and 225:
TABLE 6-6.—Intrafirm Trade as Sha
Page 226 and 227:
greater access to the Japanese mark
Page 228 and 229:
the transparency of its trade regim
Page 230 and 231:
that if the states of the former So
Page 232 and 233:
Box 6-3.—Mexican Economic Reforms
Page 234 and 235:
1998, while nontariff barriers on a
Page 236 and 237:
ward convergence in environmental a
Page 238 and 239:
Box 6-4.—The Asian "Miracle"Per c
Page 240 and 241:
Box 6-5.—The Economic Impact of t
Page 242 and 243:
development, and environmental clea
Page 244 and 245:
THE TRADE POLICY AGENDABy lowering
Page 246 and 247:
ignated monopolies. It also establi
Page 248 and 249:
The dollar ended 1993 roughly where
Page 250 and 251:
Box 6-7.—Exchange-Rate Volatility
Page 252 and 253:
Chart 6-5 French Franc-Deutsche Mar
Page 254 and 255:
Besides bringing these endeavors to
Page 257 and 258:
LETTER OF TRANSMITTALCOUNCIL OF ECO
Page 259 and 260:
Report to the President on the Acti
Page 261 and 262:
duction budget package, the North A
Page 263 and 264:
Working Group studying cost-benefit
Page 265 and 266:
prepares the Economic Indicators an
Page 267:
Appendix BSTATISTICAL TABLES RELATI
Page 270 and 271:
POPULATION, EMPLOYMENT, WAGES, AND
Page 272 and 273:
AGRICULTURE:PageB-96. Farm income,
Page 274 and 275:
NATIONAL INCOME OR EXPENDITURETABLE
Page 276 and 277:
TABLE B-2.—Gross domestic product
Page 278 and 279:
TABLE B-3.—Implicit price deflato
Page 280 and 281:
TABLE B-4.—Fixed-weighted price i
Page 282 and 283:
TABLE B-5.—Changes in gross domes
Page 284 and 285:
TABLE B-7.—Cross domestic product
Page 286 and 287:
TABLE B-9.—Gross domestic product
Page 288 and 289:
TABLE B-ll.—Gross domestic produc
Page 290 and 291:
TABLE B-13.—Gross domestic produc
Page 292 and 293:
TABLE B-15.—Personal consumption
Page 294 and 295:
TABLE B-17.—Gross and net private
Page 296 and 297:
TABLE B-19.—Inventories and final
Page 298 and 299:
TABLE B-21.—Foreign transactions
Page 300 and 301:
TABLE B-23.—Relation of gross dom
Page 302 and 303:
TABLE B-25.—National income by ty
Page 304 and 305:
TABLE B-26.—Sources of personal i
Page 306 and 307:
TABLE B-27.—Disposition of person
Page 308 and 309:
TABLE B-29.—Gross sating and inve
Page 310 and 311:
TABLE B-31.—Median money income (
Page 312 and 313:
TABLE B-33.—Population and the la
Page 314 and 315:
TABLE B-34.—Civilian employment a
Page 316 and 317:
TABLE B-36.—Unemployment by demog
Page 318 and 319:
TABLE B-38.—Civilian labor force
Page 320 and 321:
TABLE B-40.—Civilian unemployment
Page 322 and 323:
TABLE B-42.—Unemployment by durat
Page 324 and 325:
TABLE B-44.—Employees on nonagric
Page 326 and 327:
TABLE B-45.—Hours and earnings in
Page 328 and 329:
TABLE B-47.—Productivity and rela
Page 330 and 331:
PRODUCTION AND BUSINESS ACTIVITYTAB
Page 332 and 333:
TABLE B-51.—Industrial production
Page 334 and 335:
TABLE B-53.—New construction acti
Page 336 and 337:
TABLE B-54.—New housing units sta
Page 338 and 339:
Year or monthTABLE B-56.—Manufact
Page 340 and 341:
TABLE B-58.—Manufacturers' new an
Page 342 and 343:
TABLE B-60.—Consumer price indexe
Page 344 and 345:
TABLE B-61.—Consumer price indexe
Page 346 and 347:
TABLE B-63.—Changes in consumer p
Page 348 and 349:
TABLE B-64.—Producer price indexe
Page 350 and 351:
TABLE B-66.—Producer price indexe
Page 352 and 353:
TABLE B-67.—Changes in producer p
Page 354 and 355:
TABLE B-69.—Components of money s
Page 356 and 357:
TABLE B-70.—Aggregate reserves of
Page 358 and 359:
TABLE B-72.—Bond yields and inter
Page 360 and 361:
TABLE B-73.—Total funds raised in
Page 362 and 363:
TABLE B-74.—Mortgage debt outstan
Page 364 and 365:
TABLE B-76.—Consumer credit outst
Page 366 and 367:
TABLE B-78.—Federal receipts, out
Page 368 and 369:
TABLE B-79.—Federal budget receip
Page 370 and 371:
TABLE B-81.—Federal and State and
Page 372 and 373:
TABLE B-83.—State and local gover
Page 374 and 375:
TABLE B-85.—Interest-bearing publ
Page 376 and 377:
TABLE B-87.—Estimated ownership o
Page 378 and 379:
TABLE B-89.—Corporate profits by
Page 380 and 381:
TABLE B-91.—Sales, profits, and s
Page 382 and 383:
TABLE B-93.—Sources and uses of f
Page 384 and 385:
TABLE B-95.—Business formation an
Page 386 and 387:
19481949195019511952195319541955195
Page 388 and 389:
TABLE B-99.—Indexes of prices rec
Page 390 and 391:
TABLE B-101.— Farm business balan
Page 392 and 393:
TABLE B-103.—U.S. international t
Page 394 and 395:
TABLE B-104.—U.S. merchandise exp
Page 396 and 397:
TABLE B-106.—U.S. merchandise exp
Page 398 and 399:
TABLE B-108.—Industrial productio
Page 400 and 401:
TABLE B-110.—Foreign exchange rat
Page 402 and 403:
NATIONAL WEALTHTABLE B-l 12.—Nati
Page 404:
SUPPLEMENTARY TABLETABLE B-114.—S
show all

Economic Report of the President 1994 - The American Presidency ...

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?