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Coverage of Gases and Industries .................................................. 253The American Clean Energy and Security Act ............................. 254International Action on Climate Change Is Needed ....... 255Partnerships with Major Developed and EmergingEconomies ....................................................................................... 256Phasing Out Fossil Fuel Subsidies ................................................. 257Conclusion ......................................................................................... 257CHAPTER 10. FOSTERING PRODUCTIVITY GROWTHTHROUGH INNOVATION AND TRADE ......................................... 259The Role of Productivity Growth in Driving LivingStandards ........................................................................................... 261Recent Trends in Productivity in the United States ..................... 262Sources of Productivity Growth ..................................................... 264Fostering Productivity Growth Through Innovation ... 266The Importance of Basic Research ................................................ 267Private Research and Experimentation ........................................ 269Protection of Intellectual Property Rights ..................................... 270Spurring Progress in National Priority Areas .............................. 272Increasing Openness and Transparency ....................................... 272Trade as an Engine of Productivity Growth andHigher Living Standards ............................................................. 274The United States and International Trade ................................. 275Sources of Productivity Growth from International Trade ......... 276Encouraging Trade and Enforcing Trade Agreements ................ 280Ensuring the Gains from Productivity GrowthAre Widely Shared ......................................................................... 282Conclusion ......................................................................................... 284REFERENCES ............................................................................................. 285appendixesA. Report to the President on the Activities of the Council ofEconomic Advisers During 2009 .................................................. 305B. Statistical Tables Relating to Income, Employment, andProduction ...................................................................................... 31920 | Annual Report of the Council of Economic Advisers
list of figures1-1. House Prices Adjusted for Inflation ............................................. 271-2. Monthly Change in Payroll Employment .................................... 281-3. Personal Consumption Expenditures as a Share of GDP .......... 301-4. Actual and Projected Budget Surpluses in January 2009under Previous Policy ..................................................................... 311-5. Real Median Family Income .......................................................... 331-6. Total Compensation Including and Excluding HealthInsurance ........................................................................................... 341-7. Mean Years of Schooling by Birth Cohort ................................... 361-8. R&D Spending as a Percent of GDP ............................................. 372-1. House Prices Adjusted for Inflation ............................................. 402-2. Income and Consumption Around the 2008 Tax Rebate ......... 422-3. TED Spread and Moody’s BAA-AAA Spread ThroughDecember 2008 ................................................................................. 432-4. Assets on the Federal Reserve’s Balance Sheet ............................ 482-5. TED Spread and Moody’s BAA-AAA Spread ThroughDecember 2009 ................................................................................. 572-6. S&P 500 Stock Price Index ............................................................. 582-7. Monthly Gross SBA 7(a) and 504 Loan Approvals .................... 602-8. 30-Year Fixed Rate Mortgage Rate ............................................... 612-9. FHFA and LoanPerformance National House Price Indexes ... 632-10. Real GDP Growth ............................................................................ 642-11. Real GDP: Actual and Statistical Baseline Projection ............... 652-12. Contributions to Real GDP Growth ............................................. 662-13. Average Monthly Change in Employment .................................. 682-14. Estimated Effect of the Recovery Act on Employment .............. 692-15. Contributions to the Change in Employment ............................. 712-16. Okun’s Law, 2000-2009 ................................................................... 743-1. Interbank Market Rates .................................................................. 833-2. Nominal Trade-Weighted Dollar Index ....................................... 853-3. OECD Exports-to-GDP Ratio ....................................................... 873-4. Vertical Specialization and the Collapse in Trade ...................... 883-5. Cross-Border Gross Purchases and Sales of Long-TermAssets ................................................................................................. 903-6. Industrial Production in Advanced Economies .......................... 913-7. Industrial Production in Emerging Economies .......................... 923-8. Headline Inflation, 12-Month Change ......................................... 933-9. Policy Rates in Economies with Major Central Banks ............... 94Contents | 21
Page 1 and 2: e c o n o m i cr e p o r to f t h e
Page 4 and 5: C O N T E N T SECONOMIC REPORT OF T
Page 6 and 7: economic report of the presidentTo
Page 8 and 9: Because of these and other steps, w
Page 11 and 12: usinesses and farmers. And by harne
Page 13 and 14: the annual reportof thecouncil of e
Page 15 and 16: C O N T E N T SPageCHAPTER 1. TO RE
Page 17 and 18: Commercial Real Estate ............
Page 19: CHAPTER 8. STRENGTHENING THE AMERIC
Page 23 and 24: 7-3. Child and Infant Mortality Acr
Page 25 and 26: C H A P T E R 1TO RESCUE, REBALANCE
Page 27 and 28: Figure 1-1House Prices Adjusted for
Page 29 and 30: emain in achieving a full recovery.
Page 31 and 32: esult of this rebalancing will be a
Page 33 and 34: Rebuilding a Stronger EconomyEven b
Page 35 and 36: Chapter 7 describes the actions the
Page 37 and 38: slowing the emission of greenhouse
Page 39 and 40: C H A P T E R 2RESCUING THE ECONOMY
Page 41 and 42: The DownturnHouse prices began to d
Page 43 and 44: Figure 2-3TED Spread and Moody’s
Page 45 and 46: The basic reason for these policies
Page 47 and 48: Monetary PolicyThe first line of de
Page 49 and 50: The flip side of the large increase
Page 51 and 52: There were two other key components
Page 53 and 54: would be spent by the end of the th
Page 55 and 56: In November, the Worker, Homeowners
Page 57 and 58: stimulus. And both direct estimates
Page 59 and 60: the mortgage market. Another market
Page 61 and 62: composition of mortgage finance. In
Page 63 and 64: 105Figure 2-9FHFA and LoanPerforman
Page 65 and 66: Figure 2-11Real GDP: Actual and Sta
Page 67 and 68: market policies were surely importa
Page 69 and 70: One can again use the VAR described
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Initial unemployment insurance clai
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Table 2-2Forecast and Actual Macroe
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appears to have contracted somewhat
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Box 2-1, continuedThe normal or pot
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The Administration has also support
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C H A P T E R 3CRISIS AND RECOVERYI
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Figure 3-1Interbank Market RatesPer
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avoid risky investments at the heig
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The Collapse of World TradeDespite
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strongly correlated with the extent
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strong and swift in most countries
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to be 5.5 percent over 2009 and is
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sheet on a similar scale. 5 While i
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were fully collateralized with fore
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appear to have adopted less discret
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The second G-20 leaders’ summit t
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downward through the winter and spr
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Figure 3-13Outperforming Expectatio
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losses in the level of output in th
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asset prices in those economies. Th
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former levels but rather that they
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This chapter lays out a picture of
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Indeed, some of the factors should
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Percent, seasonally adjusted14Figur
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saving rate will eventually stabili
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Figure 4-6Homeownership RatePercent
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new investment in this sector. Firs
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mortgage-backed securities (CMBS),
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Percent, seasonally adjusted6.5Figu
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and unemployment was low. In a boom
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The Current Account in the Recovery
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Figure 4-11Growth of U.S. Exports a
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C H A P T E R 5ADDRESSING THE LONG-
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The key message of the figure, howe
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Figure 5-3Budgetary Cost of Previou
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substantial assets in preparation.
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The Effects of Budget DeficitsTwo f
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grows. Thus, the key to a sustainab
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2 percent per year, nominal GDP gro
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ate of roughly 6 percent during the
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Figure 5-7Top Statutory Tax RatesPe
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with different incomes—the differ
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The Administration understands that
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a strategic plan. Throughout this p
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will decide to use the money for so
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Figure 6-3Share of Financial Sector
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These private mortgage pools issue
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or the failure of a major bank. The
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taking a macroprudential approach,
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Classic bank runs were commonplace
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Figure 6-6Coordination ContagionNEG
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economy if they failed. No regulato
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justifiable. In particular, the gro
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thrifts eventually followed suit, w
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The Current State of theU.S. Health
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with the growth eventually turning
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common sense suggest that purchasin
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When individuals are healthy, their
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compared with an average of 80.7 in
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Figure 7-4Insurance Rates of Non-El
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prohibitively high for them. Furthe
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Small Businesses. As described earl
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in private health insurance coverag
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Enrollment (millions)5251Figure 7-9
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legislation lays the groundwork for
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obtain and provide insurance, and w
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Senate bills, subsidies would be av
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Both bills also include measures th
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price competitively. And to the ext
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C H A P T E R 8STRENGTHENING THEAME
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ut have given up looking for work a
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years, backed by a union that barga
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Figure 8-4Share of Pre-Tax Income G
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Reform of the immigration system ca
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widespread expansion of state colle
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Box 8-1, continuedfunding is being
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Mean scale score out of 50032017-ye
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many aid-eligible students from eve
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Box 8-2, continued(GED) preparation
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Providing incentives for schools id
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C H A P T E R 9TRANSFORMING THE ENE
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to atmospheric concentrations. And
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typhoons is likely to grow, as are
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Box 9-1, continuedAlthough warmer t
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Jump-Starting the Transition to Cle
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keep it from entering the atmospher
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Other Domestic Actions toMitigate C
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emission allowances. These allowanc
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prices above certain thresholds tri
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Box 9-3, continuedfirms subject to
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International Action on Climate Cha
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analysis under clearly defined guid
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C H A P T E R 1 0FOSTERING PRODUCTI
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For too many years, our Nation has
Page 259 and 260:
A more subtle message is that the a
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workers and capital are likely to b
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Box 10-1, continuedThe second is a
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Private Research and Experimentatio
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system of patents and copyrights th
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in governmental policymaking proces
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While the act of specializing shoul
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currently exports on net and instea
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use less advanced technology and pr
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Administration has continued pressi
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who do not benefit from these advan
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REFERENCESChapter 1To Rescue, Rebal
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Sahm, Claudia R., Matthew D. Shapir
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Benartzi, Shlomo, and Richard Thale
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————. 2009g. A Preliminary
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————. 2009b. Letter to the
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Sisko, Andrea, et al. 2009. “Heal
Page 293 and 294:
Hair, Elizabeth, et al. 2006. “Ch
Page 295 and 296:
Rouse, Cecilia, et al. 2007. “Fee
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Intergovernmental Panel on Climate
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————. 2002. “Sources of U
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letter of transmittalCouncil of Eco
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Council Members and Their Dates of
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The Members of the CouncilThe other
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Many of the reports issued by the C
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Christopher D. Carroll ............
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Benjamin N. Dennis (Department of t
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C O N T E N T SNATIONAL INCOME OR E
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PRODUCTION AND BUSINESS ACTIVITYB-5
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AGRICULTURE—ContinuedB-101. Agric
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National Income or ExpenditureTable
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Table B-2. Real gross domestic prod
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Table B-3. Quantity and price index
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Table B-5. Contributions to percent
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Table B-6. Chain-type quantity inde
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Table B-7. Chain-type price indexes
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Table B-8. Gross domestic product b
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Table B-10. Gross value added by se
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Table B-12. Gross domestic product
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Table B-13. Real gross domestic pro
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Table B-14. Gross value added of no
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Table B-16. Personal consumption ex
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Table B-18. Private fixed investmen
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Table B-20. Government consumption
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QuarterTable B-22. Private inventor
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Table B-24. Foreign transactions in
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Table B-26. Relation of gross domes
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Table B-28. National income by type
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Year or quarterPersonalincomeTable
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Table B-30. Disposition of personal
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Table B-32. Gross saving and invest
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Table B-33. Median money income (in
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Table B-35. Civilian population and
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Table B-36. Civilian employment and
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Table B-38. Unemployment by demogra
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Table B-40. Civilian labor force pa
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Table B-42. Civilian unemployment r
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Table B-44. Unemployment by duratio
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Table B-46. Employees on nonagricul
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Table B-47. Hours and earnings in p
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Table B-49. Productivity and relate
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Production and Business ActivityTab
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Table B-53. Industrial production i
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Table B-55. New construction activi
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Table B-57. Manufacturing and trade
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Table B-59. Manufacturers’ new an
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Table B-61. Consumer price indexes
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Table B-62. Consumer price indexes
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Table B-64. Changes in consumer pri
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Table B-65. Producer price indexes
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Table B-67. Producer price indexes
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Year ormonthTable B-68. Changes in
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Table B-70. Components of money sto
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Table B-71. Aggregate reserves of d
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Table B-73. Bond yields and interes
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Table B-74. Credit market borrowing
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Table B-75. Mortgage debt outstandi
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Table B-77. Consumer credit outstan
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Table B-79. Federal receipts, outla
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Table B-81. Federal receipts, outla
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Table B-83. Federal and State and l
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Table B-85. State and local governm
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Table B-87. U.S. Treasury securitie
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Table B-89. Estimated ownership of
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Table B-91. Corporate profits by in
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Table B-93. Sales, profits, and sto
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Table B-95. Historical stock prices
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YearTotal 1AgricultureTable B-97. F
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Table B-99. Farm output and product
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Table B-101. Agricultural price ind
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Year or quarterExportsInternational
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Table B-104. U.S. international tra
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Table B-106. U.S. international tra
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Table B-108. Industrial production
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Period456 | Appendix BTable B-110.
Page 451:
Table B-112. Growth rates in real g
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