Economic Report of the President

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C O N T E N T SPageoverview............................................................................................. 17chapter 1. the year in review and the years ahead....................... 31Developments in 2004 and the Near-Term Outlook........................ 31Consumer Spending.................................................................... 33Residential Investment ................................................................ 34Business Fixed Investment........................................................... 34Business Inventories .................................................................... 35Government Purchases ................................................................ 36Exports and Imports ................................................................... 36Employment ............................................................................... 38Productivity................................................................................. 39Wages and Prices......................................................................... 39Financial Markets........................................................................ 42The Long-Term Outlook Through 2010.......................................... 42Growth in GDP over the Long Term .......................................... 43Interest Rates over the Long Term............................................... 47The Composition of Income over the Long Term....................... 47Conclusion....................................................................................... 48chapter 2. expansions past and present .......................................... 49Overview of the Current Expansion ................................................. 50Consumption.............................................................................. 51Investment .................................................................................. 52Exports........................................................................................ 53Labor Market .............................................................................. 54Summary..................................................................................... 56Symmetry in Recessions and Expansions.......................................... 57Real GDP ................................................................................... 57Components of Real GDP .......................................................... 58The Labor Market....................................................................... 58A Possible Explanation: The Financial Accelerator ...................... 59Summary..................................................................................... 61Stabilization Policy ........................................................................... 61Business Cycles: Causes............................................................... 61Economic Policy.......................................................................... 62Policy Design: Challenges ........................................................... 63Fiscal Policy................................................................................. 6411
Monetary Policy .......................................................................... 67Conclusion....................................................................................... 70chapter 3. options for tax reform .................................................. 71Why Do We Need Tax Reform?....................................................... 71The Direct Burden of the Tax System: Taxes Paid ....................... 71High Compliance Costs .............................................................. 73Effects on Behavior and Excess Burden ....................................... 74Income Taxation Versus Consumption Taxation............................... 77Fairness ....................................................................................... 78Effects on Growth of the Economy............................................. 80Simplification.............................................................................. 82Tax Reform Prototypes..................................................................... 82Consumption Tax Prototypes ...................................................... 82Reform Within the Current System ............................................ 87Conclusion....................................................................................... 91chapter 4. immigration..................................................................... 93Immigration and Economic Growth ................................................ 94Immigrants and Employment Growth ........................................ 94Immigrants and Regional Growth ............................................... 95How Many Immigrants? ............................................................. 96Legal and Illegal Immigrants ....................................................... 96From Which Tempest-Tossed Shores?.......................................... 97Immigrant Education and Earnings ............................................ 99The Role of Labor Market Institutions............................................. 100Institutions and Immigrant Unemployment................................ 101Benefits and Costs of Immigration................................................... 104Labor Market Impact of Immigration ......................................... 104Fiscal Impact of Immigration ...................................................... 106Immigrants and Public Assistance ............................................... 107Immigrants and Social Security ................................................... 108Additional Benefits to Immigration............................................. 108Immigration Policy........................................................................... 109Current U.S. Immigration Policy ................................................ 110Employment-Based Immigration................................................. 111Undocumented Immigration....................................................... 113Conclusion....................................................................................... 115chapter 5. expanding individual choice and control.................. 117The Meaning of Property Rights...................................................... 118The Economic Effects of Property Rights......................................... 118The Success of Property Rights in Addressing Policy Issues.............. 12112 | Economic Report of the President
Page 1 and 2: Economic Reportof the PresidentTran
Page 3 and 4: C O N T E N T SECONOMIC REPORT OF T
Page 5 and 6: ECONOMIC REPORT OF THE PRESIDENTTo
Page 7 and 8: the playing field is level for our
Page 9: LETTER OF TRANSMITTALCOUNCIL OF ECO
Page 13 and 14: Encouraging FDI ...................
Page 15 and 16: 3-4. The Equivalence of Sales Taxes
Page 17 and 18: Real GDP expanded by 3.7 percent du
Page 19 and 20: Options for Tax ReformChapter 3, Op
Page 21 and 22: and better Nation for it. A compreh
Page 23 and 24: Innovation and the Information Econ
Page 25 and 26: ecause they do not expect family me
Page 27 and 28: The Administration has pushed aggre
Page 29 and 30: C H A P T E R 1The Year in Review a
Page 31 and 32: Consumer SpendingConsumer spending
Page 33 and 34: easons for this correlation are dis
Page 35 and 36: 2003, a number of countries that to
Page 37 and 38: ProductivityRecent productivity gro
Page 39 and 40: The projected path of inflation as
Page 41 and 42: strengthen. The forecast is based o
Page 43 and 44: The growth rate of the economy over
Page 45 and 46: In sum, potential real GDP is proje
Page 47 and 48: C H A P T E R 2Expansions Past and
Page 49 and 50: The behavior of real GDP is similar
Page 51 and 52: of faltering may be attributable to
Page 53 and 54: most recent expansions have shown r
Page 55 and 56: middle of 2003. The more moderate r
Page 57 and 58: 1.2 percent. Employment continued t
Page 59 and 60: SummaryModerate recessions are foll
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permanent cuts should permanently r
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and the Jobs and Growth Tax Relief
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Federal government revenues had bee
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Fiscal policy played an especially
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C H A P T E R 3Options for Tax Refo
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High Compliance CostsThe complexity
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a reasonable estimate is that a 10
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Excess BurdenBecause taxes distort
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Box 3-3 — continuedThe bottom 40
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more uniform or pure version of the
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of being collected all at once at t
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would have to differ from state tax
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owner claimed it was for business,
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The current set of saving incentive
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the current system. In addition, so
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C H A P T E R 4ImmigrationIn recent
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TABLE 4-1.— Foreign-Born Share of
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immigrants (also called illegal or
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largest group of immigrants was bor
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employment costs, including wage fl
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Chapter 4 | 103
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wages fall in response to immigrati
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immigrants from Latin America do re
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addition, as migrants leave the cou
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include siblings and adult children
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despite the tremendous growth in th
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The TWP would allow new foreign wor
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C H A P T E R 5Expanding Individual
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This phenomenon, known as the “tr
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producing more of that good. Simila
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In 2002, the President proposed “
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provide evidence of increased profi
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schools are four times as efficient
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low administrative costs, estimated
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Box 5-2: The Benefits of Land Title
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development plan designed by others
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C H A P T E R 6Innovation and theIn
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E-mail is the most common online ac
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Changed circumstances, such as new
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Illegal Acts on the InternetThe Int
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or develop new markets, which can l
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inflation factor for the price cap
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U.S. households connecting to local
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garbling their transmissions. To li
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from 51.3 percent in December 1999
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for their property rights. The Admi
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C H A P T E R 7The Global HIV/AIDS
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Chart 7-1 Estimated HIV Infection L
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There is no cure for HIV/AIDS, thou
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AIDS is more damaging to a househol
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and risk reduction have helped redu
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only one price, the drug companies
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Box 7-1 — continuedfocused on the
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Box 7-2 — continuedenhancing coor
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ConclusionThe United States and cou
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Good Two. In Ricardo’s simple mod
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The Impact of Trade on Labor Market
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The U.S. Advantage in Services Trad
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U.S. firms is associated with a cor
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anked the second-best country out o
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the Chinese government agreed to el
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Trade LiberalizationTariffs and oth
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ConclusionThe United States is the
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LETTER OF TRANSMITTALCOUNCIL OF ECO
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Report to the President on theActiv
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The Council continued its efforts t
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The Staff of the Council of Economi
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John List and Ted Gayer provided co
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Appendix BSTATISTICAL TABLES RELATI
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PageB-32. Gross saving and investme
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PageB-94. Relation of profits after
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NATIONAL INCOME OR EXPENDITURETABLE
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TABLE B-2.—Real gross domestic pr
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TABLE B-3.—Quantity and price ind
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TABLE B-5.—Contributions to perce
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TABLE B-6.—Chain-type quantity in
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TABLE B-7.—Chain-type price index
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TABLE B-8.—Gross domestic product
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TABLE B-10.—Gross value added by
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TABLE B-12.—Gross domestic produc
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TABLE B-13.—Real gross domestic p
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TABLE B-14.—Gross value added of
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TABLE B-16.—Personal consumption
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TABLE B-18.—Private fixed investm
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TABLE B-20.—Government consumptio
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TABLE B-22.—Private inventories a
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TABLE B-24.—Foreign transactions
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TABLE B-26.—Relation of gross dom
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TABLE B-28.—National income by ty
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TABLE B-29.—Sources of personal i
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TABLE B-30.—Disposition of person
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Year or quarterTABLE B-32.—Gross
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TABLE B-33.—Median money income (
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TABLE B-35.—Civilian population a
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TABLE B-36.—Civilian employment a
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TABLE B-38.—Unemployment by demog
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TABLE B-40.—Civilian labor force
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TABLE B-42.—Civilian unemployment
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TABLE B-44.—Unemployment by durat
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TABLE B-46.—Employees on nonagric
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TABLE B-47.—Hours and earnings in
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Year orquarterTABLE B-49.—Product
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PRODUCTION AND BUSINESS ACTIVITYTAB
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Year ormonthTABLE B-53.—Industria
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Year or monthTABLE B-55.—New cons
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TABLE B-57.—Manufacturing and tra
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TABLE B-59.—Manufacturers’ new
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Year ormonthTABLE B-61.—Consumer
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TABLE B-62.—Consumer price indexe
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TABLE B-64.—Changes in consumer p
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TABLE B-65.—Producer price indexe
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TABLE B-67.—Producer price indexe
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TABLE B-68.—Changes in producer p
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TABLE B-70.—Components of money s
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TABLE B-71.—Aggregate reserves of
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TABLE B-73.—Bond yields and inter
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TABLE B-74.—Credit market borrowi
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TABLE B-75.—Mortgage debt outstan
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TABLE B-77.—Consumer credit outst
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TABLE B-79.—Federal receipts, out
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TABLE B-81.—Federal receipts, out
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TABLE B-83.—Federal and State and
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TABLE B-85.—State and local gover
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End of yearor monthTABLE B-87.—U.
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End of monthTABLE B-89.—Estimated
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TABLE B-91.—Corporate profits by
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TABLE B-93.—Sales, profits, and s
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YearComposite(Dec. 31,2002=5,000) 3
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YearAGRICULTURETABLE B-97.—Farm i
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TABLE B-99.—Farm output and produ
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Year ormonthTABLE B-101.—Agricult
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INTERNATIONAL STATISTICSTABLE B-103
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TABLE B-104.—U.S. international t
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TABLE B-106.—U.S. international t
Page 330 and 331:
TABLE B-108.—Industrial productio
Page 332 and 333:
TABLE B-110.—Foreign exchange rat
Page 334:
TABLE B-112.—Growth rates in real
show all

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