Economic Report President

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Chart 4-9 Living Arrangements of Elderly WidowsBetween 1940 and 1990, the share of elderly widows living alone increased sharply,and the share living with adult children fell.Percent120100Alone With adult children In an institutionOther arrangement8060402001880 1900 1910 1920 1940 1950 1960 1970 1980 1990Source: Kathleen McGarry and Robert Schoeni, "Social Security, <strong>Economic</strong> Growth, and the Rise inIndependence of Elderly Widows in the 20th Century," National Bureau of <strong>Economic</strong> ResearchWorking Paper No. 6511, 1998.composed about one-fifth of income. The share of income comprised oflabor earnings has declined substantially, as is to be expected given thedecline in elderly labor force participation during this period. Thesechanges took place during a period when the median incomes of bothmarried and single elderly persons nearly doubled.The composition of income looks quite different at different incomelevels. Among elderly households in the bottom fifth of the income distributionin 1996, Social Security accounted, on average, for 81 percent ofincome, public assistance for 11 percent, and asset income and pensionsfor only 3 percent each (Chart 4-11). Clearly, a large segment of the elderlyhave saved relatively little for their retirement. Elderly households in thetop quintile of the income distribution rely fairly evenly on Social Security,asset income, pensions, and labor market earnings.Saving Social SecuritySocial Security plays an important and unique role among thesources of income for the elderly. As discussed in Chapter 1, it is afamily protection plan as well as a pension system, providingAmericans for more than half a century with income in retirement andprotection against loss of family income due to disability or death. Inparticular, by providing a lifetime annuity, it offers a level of incomesecurity difficult to obtain in private markets. Through its specialcontribution to the well-being of the elderly, survivors, and thedisabled, Social Security has been an extremely successful socialprogram. Yet the demographic pressures of population aging,155
Chart 4-10 Composition of Income Among the ElderlyThe share of income from earnings has declined over time for persons aged 65 andolder and their spouses, while the share from pensions has increased.Percent120100Social Security Asset income Pensions EarningsWelfare and other8060402001962 1967 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996Note: Data are for elderly persons and their spouses.Source: Department of Commerce (Bureau of the Census).Chart 4-11 Composition of Income by Quintile Among the Elderly, 1996The composition of income differs for lower versus higher income elderly. SocialSecurity is the main source of income for poorer households.Percent120100Social SecurityPublic assistanceAsset incomeOther IncomePensionsEarnings806040200Bottom quintile 2nd quintile 3rd quintile 4th quintile Top quintileNote: Data are for elderly persons and their spouses.Source: Department of Commerce (Bureau of the Census).156
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EconomicReportof thePresidentTransm
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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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Once we have saved Social Security,
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THE ANNUAL REPORTOF THECOUNCIL OF E
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C O N T E N T SPageCHAPTER 1. MEETI
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PageCHAPTER 5. REGULATION AND INNOV
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Page2-3. Accounting for Growth in R
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Page6-5. Terms of Trade ...........
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CHAPTER 1Meeting Challenges and Bui
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Box 1-1.—The Dating of Business C
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Chart 1-1 Core Inflation and Unempl
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expansion prematurely. In fact, the
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the duration of the typical unemplo
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throughout that decade of peace and
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all individuals aged 65 and older r
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extent that it would reduce Social
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the vulnerability of the internatio
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access. Even so, international agre
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eliminated entirely, because the go
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Nevertheless, adjustment assistance
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CHAPTER 2Macroeconomic Policyand Pe
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Then the chapter explores two other
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target Federal funds rate brought t
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high of 66.8 percent in the third q
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the third-quarter deceleration and
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(that is, excluding food and energy
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probably would have increased by ab
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Equities clearly involve risk as we
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highest level in at least 40 years
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attributed to the lesser liquidity
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971231 980106 980112 980116 980122
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about the potential impact of large
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With respect to leverage, the degre
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noted earlier, investment-grade bor
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Chart 2-8 Corporate Profits and Net
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is attributable to the strong econo
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productivity; the latter is in turn
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the year 2000, mistaking it instead
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Box 2-2.—continuedare not expecte
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construct an accurate forecasting m
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is estimated as the location where
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the recent surge in productivity re
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Box 2-3.—continuedhowever. Import
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Chart 2-12 Three Measures of Core I
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a level of capacity utilization tha
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Box 2-4.—continuedChanges to be i
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Nonfarm manufacturing and trade inv
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has been for the past 3 years. But
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who have traditionally not fared as
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Box 3-1.—continuedas well as full
Page 104 and 105: and been replaced by younger, more
Page 106 and 107: Particularly interesting, however,
Page 108 and 109: Chart 3-5 Median Hourly Wages of Me
Page 110 and 111: In fact, in 1990 immigrants and nat
Page 112 and 113: Box 3-2.—continuedsome firms may
Page 114 and 115: Box 3-3.—continuedmaximum of $3,7
Page 116 and 117: willing to hire welfare recipients
Page 118 and 119: participation. The renewed increase
Page 120 and 121: TANF grants in reserve at the Treas
Page 122 and 123: JOB DISPLACEMENTWorkers are conside
Page 124 and 125: evidence finds that the percentage
Page 126 and 127: their non-labor market activities.
Page 128 and 129: The Administration is especially co
Page 130 and 131: CHAPTER 4Work, Retirement, and theE
Page 132 and 133: Chart 4-1 Life Expectancy at Age 65
Page 134 and 135: Population aging is not just an Ame
Page 136 and 137: Box 4-1.—continuedfor couples and
Page 138 and 139: earlier retirement, by increasing l
Page 140 and 141: uyouts may also have contributed to
Page 142 and 143: Box 4-2.—Social Security RulesThe
Page 144 and 145: available with the same hourly pay,
Page 146 and 147: Box 4-4.—Types of Pension PlansUn
Page 148 and 149: worker—declined. More of these ol
Page 150 and 151: survey) was about 13 percent higher
Page 152 and 153: well-being is that families have di
Page 156 and 157: mentioned earlier in this chapter a
Page 158 and 159: Box 4-7.—The Federal Role in Empl
Page 160 and 161: inequality among retirees who have
Page 162 and 163: whether minorities and women are li
Page 164 and 165: TABLE 4-4.—Poverty Rates Among th
Page 166 and 167: TABLE 4-6.—Family Holdings of Fin
Page 168 and 169: variety of reasons, including the f
Page 170 and 171: the number of patents granted in th
Page 172 and 173: The United States has a decades-lon
Page 174 and 175: matter, depending on various condit
Page 176 and 177: company Roche Holdings, Ltd. Some o
Page 178 and 179: The antitrust authorities’ linkin
Page 180 and 181: espective Writings and Discoveries.
Page 182 and 183: Box 5-3.—Cooperative Innovation a
Page 184 and 185: machine owned by another. The disti
Page 186 and 187: companies begin to offer DSL servic
Page 188 and 189: and compete for customers on the ba
Page 190 and 191: In another part of the Internet mar
Page 192 and 193: technology at hand. But incentive-b
Page 194 and 195: the flexibility to choose lower cos
Page 196 and 197: In contrast to both performance and
Page 198 and 199: The SO 2 experience reveals several
Page 200 and 201: Box 5-7.—The Partnership for a Ne
Page 202 and 203: Consumers’ investment in energy e
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clean-energy projects in developing
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Chart 5-2 Energy Efficiency and Pri
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equipment, and more than 90 percent
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Box 5-9.—Is There an Environmenta
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larger coal plants. In 1994 these t
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around the country, and seven other
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other social goals. The fund would
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greater opportunity, faster growth,
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Chart 6-1 Net Capital Flows to Deve
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Box 6-1.—The Explosive Growth of
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Recent Financial LiberalizationIn m
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and investment (although openness t
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Box 6-2.—Market-Based (Arm’s-Le
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conditionality in the face of unsou
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Box 6-4.—Sovereign Spreads in Eme
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social safety nets in the crisis co
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Box 6-5.—Moral Hazard in Financia
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Empirical studies confirm that, by
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withdrew $26 billion in 1997. Altho
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America, and these linkages partly
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8.5 percent of GDP in 1998. Indones
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sary revenues to meet these extra i
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which is considered a monetary asse
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ates at home, they sought higher re
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Chart 6-3 Real Value of the Dollar
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The increase in the trade deficit a
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Chart 6-6 Current Account BalanceTh
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Chart 6-7 Economic Growth and Trade
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investment. The U.S. gross investme
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Chart 6-10 Current Account Deficit
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with other countries to strengthen
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REFORM OF THE INTERNATIONAL FINANCI
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about their macroeconomic and finan
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decisions respond to market signals
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Other measures recommended by the w
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ADOPTION OF MEASURES TO REFORM THEI
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Another way to improve global surve
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Issues Posed by Hedge Funds and Oth
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the best investment opportunities,
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egulation of inflows to banks alone
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complement the role of official fin
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emerging markets will take time to
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Box 7-1.—continuedpartner; a stro
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Chart 7-1 European Short-Term Inter
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members agreed in a separate Growth
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Box 7-2.—continuedthrough an auto
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advantages of EMU to U.S. residents
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Box 7-3.—How Does the Dollar Rank
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connection between the currency in
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as an economic superpower early in
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Appendix AREPORT TO THE PRESIDENT O
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Council Members and Their Dates of
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The Chair and Members work as a tea
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countries. The Council heads the U.
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Chief of Staff and General CounselM
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affiliations. They are Christopher
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C O N T E N T SNATIONAL INCOME OR E
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B-71. Aggregate reserves of deposit
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General NotesDetail in these tables
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TABLE B-1.—Gross domestic product
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TABLE B-2.—Real gross domestic pr
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TABLE B-4.—Percent changes in rea
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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-9.—Real gross domestic pr
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Year orquarterGrossdomesticproductT
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YearBased on1972 SIC:TABLE B-13.—
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TABLE B-15.—Output, costs, and pr
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TABLE B-17.—Real personal consump
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TABLE B-19.—Real private gross fi
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TABLE B-21.—Real government consu
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TABLE B-23.—Real inventories and
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TABLE B-25.—Real exports and impo
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TABLE B-27.—Relation of national
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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-31.—Total and per capita
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TABLE B-32.—Gross saving and inve
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POPULATION, EMPLOYMENT, WAGES, AND
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TABLE B-35.—Civilian population a
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TABLE B-37.—Civilian employment b
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TABLE B-39.—Civilian labor force
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TABLE B-41.—Civilian employment/p
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TABLE B-43.—Civilian unemployment
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TABLE B-45.—Unemployment insuranc
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TABLE B-46.—Employees on nonagric
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TABLE B-48.—Employment cost index
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Year orquarterTABLE B-50.—Changes
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Year or monthTABLE B-52.—Industri
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TABLE B-54.—Capacity utilization
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Year or monthTABLE B-56.—New hous
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TABLE B-58.—Manufacturers’ ship
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PRICESTABLE B-60.—Consumer price
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TABLE B-61.—Consumer price indexe
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TABLE B-63.—Changes in special co
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TABLE B-65.—Producer price indexe
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YearandmonthMONEY STOCK, CREDIT, AN
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TABLE B-70.—Components of money s
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TABLE B-72.—Bank credit at all co
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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-76.—Mortgage debt outstan
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GOVERNMENT FINANCETABLE B-78.—Fed
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TABLE B-80.—Federal receipts and
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TABLE B-82.—Federal Government re
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TABLE B-84.—Federal and State and
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TABLE B-86.—State and local gover
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TABLE B-88.—Maturity distribution
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CORPORATE PROFITS AND FINANCETABLE
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TABLE B-92.—Corporate profits of
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TABLE B-94.—Relation of profits a
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Year or monthTABLE B-96.—Business
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End of yearTotalassetsTABLE B-98.
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YearFarm population,April 1Number(t
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YearTABLE B-102.—U.S. exports and
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TABLE B-103.—U.S. international t
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TABLE B-105.—U.S. international t
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TABLE B-107.—International invest
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TABLE B-109.—Civilian unemploymen
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TABLE B-111.—International reserv
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