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LETTER OF TRANSMITTALCOUNCIL OF ECONOMIC ADVISERS,Washington, D.C., December 31, 1999.MR. PRESIDENT:The Council of Economic Advisers submits this report on its activitiesduring the calendar year 1999 in accordance with the requirements of theCongress, as set forth in section 10(d) of the Employment Act of 1946 asamended by the Full Employment and Balanced Growth Act of 1978.Sincerely,Martin N. Baily, ChairmanRobert Z. Lawrence, MemberKathryn L. Shaw, Member-NomineeAppendix A | 287
Council Members and Their Dates of ServiceName Position Oath of office date Separation dateEdwin G. Nourse ........................... Chairman ...................................... August 9, 1946 ......................... November 1, 1949.Leon H. Keyserling ....................... Vice Chairman .............................. August 9, 1946 .........................Acting Chairman ........................... November 2, 1949 ....................Chairman ...................................... May 10, 1950 ........................... January 20, 1953.John D. Clark ............................... Member ........................................ August 9, 1946 .........................Vice Chairman .............................. May 10, 1950 ........................... February 11, 1953.Roy Blough ................................... Member ........................................ June 29, 1950 .......................... August 20, 1952.Robert C. Turner .......................... Member ........................................ September 8, 1952 ................... January 20, 1953.Arthur F. Burns ............................ Chairman ...................................... March 19, 1953 ......................... December 1, 1956.Neil H. Jacoby .............................. Member ........................................ September 15, 1953 ................. February 9, 1955.Walter W. Stewart ........................ Member ........................................ December 2, 1953 .................... April 29, 1955.Raymond J. Saulnier .................... Member ........................................ April 4, 1955 .............................Chairman ...................................... December 3, 1956 .................... January 20, 1961.Joseph S. Davis ............................ Member ........................................ May 2, 1955 ............................. October 31, 1958.Paul W. McCracken ...................... Member ........................................ December 3, 1956 .................... January 31, 1959.Karl Brandt .................................. Member ........................................ November 1, 1958 .................... January 20, 1961.Henry C. Wallich .......................... Member ........................................ May 7, 1959 ............................. January 20, 1961.Walter W. Heller ........................... Chairman ...................................... January 29, 1961 ..................... November 15, 1964.James Tobin ................................. Member ........................................ January 29, 1961 ..................... July 31, 1962.Kermit Gordon ............................. Member ........................................ January 29, 1961 ..................... December 27, 1962.Gardner Ackley ............................ Member ........................................ August 3, 1962 .........................Chairman ...................................... November 16, 1964 .................. February 15, 1968.John P. Lewis ............................... Member ........................................ May 17, 1963 ........................... August 31, 1964.Otto Eckstein ............................... Member ........................................ September 2, 1964 ................... February 1, 1966.Arthur M. Okun ............................ Member ........................................ November 16, 1964 ..................Chairman ...................................... February 15, 1968 .................... January 20, 1969.James S. Duesenberry ................. Member ........................................ February 2, 1966 ..................... June 30, 1968.Merton J. Peck ............................. Member ........................................ February 15, 1968 .................... January 20, 1969.Warren L. Smith ........................... Member ........................................ July 1, 1968 .............................. January 20, 1969.Paul W. McCracken ..................... Chairman ...................................... February 4, 1969 ...................... December 31, 1971.Hendrik S. Houthakker ................ Member ........................................ February 4, 1969 ...................... July 15, 1971.Herbert Stein ............................... Member ........................................ February 4, 1969 ......................Chairman ...................................... January 1, 1972 ....................... August 31, 1974.Ezra Solomon ............................... Member ........................................ September 9, 1971 ................... March 26, 1973.Marina v.N. Whitman ................... Member ........................................ March 13, 1972 ........................ August 15, 1973.Gary L. Seevers ............................ Member ........................................ July 23, 1973 ............................ April 15, 1975.William J. Fellner ......................... Member ........................................ October 31, 1973 ...................... February 25, 1975.Alan Greenspan ........................... Chairman ...................................... September 4, 1974 .................. January 20, 1977.Paul W. MacAvoy ......................... Member ........................................ June 13, 1975 ........................... November 15, 1976.Burton G. Malkiel ......................... Member ........................................ July 22, 1975 ............................ January 20, 1977.Charles L. Schultze ....................... Chairman ...................................... January 22, 1977 ..................... January 20, 1981.William D. Nordhaus .................... Member ........................................ March 18, 1977 ........................ February 4, 1979.Lyle E. Gramley ............................ Member ........................................ March 18, 1977 ........................ May 27, 1980.George C. Eads ............................ Member ........................................ June 6, 1979 ............................. January 20, 1981.Stephen M. Goldfeld .................... Member ........................................ August 20, 1980 ....................... January 20, 1981.Murray L. Weidenbaum ............... Chairman ...................................... February 27, 1981 .................... August 25, 1982.William A. Niskanen ..................... Member ........................................ June 12, 1981 .......................... March 30, 1985.Jerry L. Jordan ............................. Member ........................................ July 14, 1981 ........................... July 31, 1982.Martin Feldstein .......................... Chairman ...................................... October 14, 1982 ..................... July 10, 1984.William Poole ............................... Member ........................................ December 10, 1982 .................. January 20, 1985.Beryl W. Sprinkel ......................... Chairman ...................................... April 18, 1985 ........................... January 20, 1989.Thomas Gale Moore ..................... Member ........................................ July 1, 1985 .............................. May 1, 1989.Michael L. Mussa ......................... Member ........................................ August 18, 1986 ....................... September 19, 1988.Michael J. Boskin ........................ Chairman ...................................... February 2, 1989 ...................... January 12, 1993.John B. Taylor .............................. Member ........................................ June 9, 1989 ............................. August 2, 1991.Richard L. Schmalensee .............. Member ........................................ October 3, 1989 ....................... June 21, 1991.David F. Bradford ........................ Member ........................................ November 13, 1991 .................. January 20, 1993.Paul Wonnacott ........................... Member ........................................ November 13, 1991 .................. January 20, 1993.Laura D’Andrea Tyson ................. Chair ............................................. February 5, 1993 ...................... April 22, 1995.Alan S. Blinder ............................. Member ........................................ July 27, 1993 ............................ June 26, 1994.Joseph E. Stiglitz ......................... Member ........................................ July 27, 1993 ............................Chairman ...................................... June 28, 1995 ........................... February 10, 1997.Martin N. Baily ............................ Member ........................................ June 30, 1995 ........................... August 30, 1996.Alicia H. Munnell ......................... Member ........................................ January 29, 1996 ..................... August 1, 1997.Janet L. Yellen ............................. Chair ............................................. February 18, 1997 .................... August 3, 1999.Jeffrey A. Frankel ........................ Member ........................................ April 23, 1997 .......................... March 2, 1999.Rebecca M. Blank ........................ Member ........................................ October 22, 1998 ..................... July 9, 1999.Martin N. Baily ............................. Chairman ...................................... August 12, 1999 .......................Robert Z. Lawrence ...................... Member ........................................ August 12, 1999 .......................288 | Economic Report of the President
Page 1 and 2:
E C O N O M I CR E P O R TO F T H E
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C O N T E N T SPageECONOMIC REPORT
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ECONOMIC REPORT OF THE PRESIDENTTo
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my State of the Union address, I pr
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hard-pressed families—with additi
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LETTER OF TRANSMITTALCOUNCIL OF ECO
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PageSources of Business Cycle Moder
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PageHeterogeneity in Abatement Bene
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Page2-3. Net Worth and the Personal
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PageLIST OF BOXES2-1. The CPI-U-RS,
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These successes notwithstanding, th
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$33,740, Americans today can acquir
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those in the highest decile rose 0.
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Data on poverty also show progress.
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Over the years, government support
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asis, the current expansion also sh
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The current expansion, by contrast,
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InflationAccelerating inflation pos
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it was argued, must be shifting the
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is that the direction of technologi
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Challenges for the FutureThis chapt
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in the new labor market. The chapte
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disruptive in some cases. Finally,
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C H A P T E R 2Macroeconomic Policy
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Chapter 2 | 51
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usiness cycle has changed over the
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cent over the four quarters of 1999
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framework that continues to pay dow
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The labor force participation rate
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Box 2-1.—continuedof no substitut
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feed directly into the index. Moreo
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funds rate (the interest rate that
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nesses with below-investment-grade
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From 1989 to 1999, corporate earnin
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ital includes the value of intellec
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of gross personal saving to GDP has
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The beginnings and ends of U.S. bus
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introduced in 1913 and Social Secur
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Of course, it is premature to decla
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Box 2-3.What Did We Learn from the
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TABLE 2-3.— Accounting for the Pr
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future extrapolates long-term trend
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Over the past 6 years, the CPI-U-RS
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work enables job hunters to work wh
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Chart 2-17 shows how this could hap
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of professional economic forecaster
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Administration’s forecast is used
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Innovations during the 20th century
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transformations the Internet and e-
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Another industry that saw major cha
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One example is the “lean” produ
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Box 3-1. Measuring the Economy in a
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Box 3-2. Implementing Local Competi
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of fiber optic cable deployed by te
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How Information Technology IsChangi
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total investment in information tec
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For e-retailers, the Internet repla
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suppliers for surplus quantities of
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However, the same technology that d
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value of each network to its users.
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many possible uses but that depends
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Maintaining CompetitionAnother way
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Similarly, by reducing barriers to
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Formal education was a far less imp
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The Transformation of the Labor Mar
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Americans has risen almost 10-fold
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diploma (Chart 4-5). That same year
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ensuring equal opportunity for all
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those of men (again looking at full
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Box 4-1. The Role of Government Pol
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severe disabilities. For example, a
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Box 4-2.—continuedOther policy in
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equirements of jobs. To right this
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uild and maintain a world-class ele
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Class Size Reduction. Average class
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During this Administration, the Fed
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years ago. In 2000, 13.1 million st
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through a period of unpaid training
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The first major mandatory training
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a 30-year low, labor force particip
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ConclusionTwo key developments—th
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TABLE 5-1.—Contrasting American F
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opened up for women to work and as
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The increased prevalence of single-
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to an increasing share of the popul
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Box 5-1.—continuedAlthough most f
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For the past 50 years, the median i
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gle mothers the median rose from $1
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TABLE 5-3.— Share of Women with C
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income growth over the last 30 year
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consumption patterns have changed,
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Increases in the Minimum WageThe mi
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Box 5-4.The National Strategy to Re
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or older, and of those 85 or older,
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of single-parent families increased
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caregivers for the elderly say thei
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would allow all workers who get tim
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C H A P T E R 6Opportunity and Chal
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Meanwhile innovations in transporta
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But to look at U.S. trade only in t
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Data from the U.S. computer industr
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net indebtedness of about 18 percen
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capital flows. Coupled with other d
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forces to play themselves out. In t
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The Benefits of a Global EconomyThe
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Domestic production can expand when
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In short, increased globalization b
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key sectors such as finance, teleco
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international trade is not a zero-s
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As these data suggest, not all WTO
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For example, preferential U.S. trad
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By contrast, in 1998 output fell on
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Box 6-3.The New International Finan
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The key objective of the initiative
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Page 231 and 232: demand for exports. It would be a m
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Page 235 and 236: The past century of experience in a
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Page 239 and 240: Box 7-1.—continuedand energy pric
Page 241 and 242: Box 7-2.—continuedproviding usefu
Page 243 and 244: Incentive-Based Approaches to Addre
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Page 247 and 248: Box 7-4.—continuedroughly 5 to 15
Page 249 and 250: so a system of multipollutant tradi
Page 251 and 252: sulfur dioxide trading program. The
Page 253 and 254: coastal zone. Trades can occur with
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Page 257 and 258: To address the problems associated
Page 259 and 260: Box 7-5. Individual Quotas for Fish
Page 261 and 262: A landmark international agreement
Page 263 and 264: However, the country could cut ener
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Page 269 and 270: Box 7-9.—continuedthe use of ener
Page 271 and 272: C O N C L U S I O NA Century of Cha
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Page 279: Appendix AREPORT TO THE PRESIDENT O
Page 283 and 284: previously served as the New Centur
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Page 287 and 288: with a number of developing countri
Page 289 and 290: Michael Treadway provided editorial
Page 291: Appendix BSTATISTICAL TABLES RELATI
Page 294 and 295: POPULATION, EMPLOYMENT, WAGES, AND
Page 296 and 297: AGRICULTURE:PageB-95. Farm income,
Page 298 and 299: NATIONAL INCOME OR EXPENDITURETABLE
Page 300 and 301: TABLE B-2.—Real gross domestic pr
Page 302 and 303: TABLE B-3.—Quantity and price ind
Page 304 and 305: TABLE B-5.—Contributions to perce
Page 306 and 307: TABLE B-6.—Chain-type quantity in
Page 308 and 309: TABLE B-7.—Chain-type price index
Page 310 and 311: TABLE B-8.—Gross domestic product
Page 312 and 313: Year orquarterGrossdomesticproductT
Page 314 and 315: TABLE B-12.—Gross product of nonf
Page 316 and 317: TABLE B-14.—Personal consumption
Page 318 and 319: TABLE B-16.—Private gross fixed i
Page 320 and 321: TABLE B-18.—Government consumptio
Page 322 and 323: TABLE B-20.—Private inventories a
Page 324 and 325: Year orquarterTABLE B-22.—Foreign
Page 326 and 327: TABLE B-24.—Relation of gross dom
Page 328 and 329: Year orquarterTABLE B-26.—Nationa
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TABLE B-27.—Sources of personal i
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TABLE B-28.—Disposition of person
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TABLE B-30.—Gross saving and inve
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TABLE B-31.—Median money income (
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TABLE B-33.—Civilian population a
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TABLE B-34.—Civilian employment a
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TABLE B-36.—Unemployment by demog
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TABLE B-38.—Civilian labor force
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TABLE B-40.—Civilian unemployment
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TABLE B-42.—Unemployment by durat
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TABLE B-44.—Employees on nonagric
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TABLE B-45.—Hours and earnings in
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Year orquarterOutput per hourof all
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PRODUCTION AND BUSINESS ACTIVITYTAB
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TABLE B-51.—Industrial production
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Year or monthTABLE B-53.—New cons
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TABLE B-55.—Manufacturing and tra
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Year or monthTotalTABLE B-57.—Man
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Year ormonthTABLE B-59.—Consumer
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TABLE B-60.—Consumer price indexe
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TABLE B-62.—Changes in consumer p
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TABLE B-63.—Producer price indexe
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TABLE B-65.—Producer price indexe
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TABLE B-66.—Changes in producer p
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TABLE B-68.—Components of money s
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TABLE B-69.—Aggregate reserves of
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Year andmonthBills(new issues) 13-m
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TABLE B-72.—Credit market borrowi
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TABLE B-73.—Mortgage debt outstan
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TABLE B-75.—Consumer credit outst
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TABLE B-77.—Federal budget receip
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TABLE B-79.—Federal receipts, out
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TABLE B-81.—Federal and State and
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TABLE B-83.—State and local gover
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TABLE B-85.—Interest-bearing publ
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End of monthTABLE B-87.—Estimated
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TABLE B-89.—Corporate profits by
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TABLE B-91.—Sales, profits, and s
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Year or monthTABLE B-93.—Common s
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AGRICULTURETABLE B-95.—Farm incom
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TABLE B-97.—Farm output and produ
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Year ormonthTABLE B-99.—Indexes o
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Year orquarterExportsINTERNATIONAL
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TABLE B-102.—U.S. international t
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TABLE B-104.—U.S. international t
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TABLE B-106.—Industrial productio
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PeriodTABLE B-108.—Foreign exchan
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TABLE B-110.—Growth rates in real
show all

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