Economic Report President

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Chart 6-10 Current Account Deficit and Net International Investment PositionAs the United States started to run large current account deficits in the early 1980s,the net international investment position declined.Billions of dollars200150Currentaccount deficit(left scale)Trillions of dollars2.01.51001.0500.500.0-50-0.5-100Net internationalinvestment position(right scale)-1.0-1501976 1979 1982 1985 1988 1991 1994 1997Note: Net international investment position at current cost.Source: Department of Commerce (Bureau of Economic Analysis).-1.5Chart 6-11 Foreign Direct Investment FlowsThe 1980s saw a surge in foreign direct investment into the United States. In the1990s, however, direct investment outflows have again surpassed inflows.Billions of dollars140120100U.S. directinvestment abroad8060Foreign direct investment inthe United States40200-201960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996Source: Department of Commerce (Bureau of Economic Analysis).264
and other industrial countries that deepened the Great Depression.As the crisis economies recover, their demand for U.S. goods and serviceswill increase as well, once again fueling our own exportgrowth.Recognizing the need to maintain open markets worldwide, thePresident has called for a new consensus on trade, to continue toexpand America’s opportunities in the global economy while ensuringthat all of our citizens enjoy the benefits of trade, throughgreater prosperity, respect for workers’ rights, and protection of theenvironment. The President asked the Congress to join him in thisnew consensus by restoring his traditional trade-negotiating authority(so-called fast-track authority), to allow him to pursue an ambitioustrade agenda. At the top of this agenda is a far-reaching newround of global trade negotiations within the World Trade Organizationaimed at shaping the world trading system for the 21st century.CONCLUSIONDuring a period of great turmoil in the global economy, the firstimperative of the Administration has been to work with the internationalcommunity to sustain worldwide growth. That is a prerequisitefor the recovery of the countries now afflicted by crisis. No country, noteven the United States, is an island in the world economy. Thegrowth prospects of all the world’s industrial nations will sufferunless all do their part. The United States and its G-7 partners haveclearly recognized this imperative.The United States remains committed to opening markets tointernational trade, recognizing that an open trade environmentwill be the best policy for domestic growth, support the recovery ofthe crisis-afflicted countries, and ensure the continued growth of theworld economy. At the start of his Administration in 1993, the Presidentdeclared, “The truth of our age is this—and must be this: Openand competitive commerce will enrich us as a nation. . . . And I sayto you in face of all the pressure to do the reverse, we must compete,not retreat.” Now, as then, the Administration remains stronglycommitted to outward-looking, internationalist policies.Beyond working to ensure growth in the industrial world, theUnited States has focused since this crisis began on the need to containfinancial contagion and restore market confidence so that capitalflows can continue, and on the need to promote recovery and alleviatesuffering in the crisis-afflicted countries. The Administrationhas supported the IMF in its mission of providing financial assistanceto those countries in crisis that are willing to implement theoften tough reforms needed to strengthen the underpinnings of theireconomies. At the same time, the Administration is collaborating265
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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
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and been replaced by younger, more
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Particularly interesting, however,
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Chart 3-5 Median Hourly Wages of Me
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In fact, in 1990 immigrants and nat
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Box 3-2.—continuedsome firms may
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Box 3-3.—continuedmaximum of $3,7
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willing to hire welfare recipients
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participation. The renewed increase
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TANF grants in reserve at the Treas
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JOB DISPLACEMENTWorkers are conside
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evidence finds that the percentage
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their non-labor market activities.
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The Administration is especially co
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CHAPTER 4Work, Retirement, and theE
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Chart 4-1 Life Expectancy at Age 65
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Population aging is not just an Ame
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Box 4-1.—continuedfor couples and
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earlier retirement, by increasing l
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uyouts may also have contributed to
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Box 4-2.—Social Security RulesThe
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available with the same hourly pay,
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Box 4-4.—Types of Pension PlansUn
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worker—declined. More of these ol
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survey) was about 13 percent higher
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well-being is that families have di
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Chart 4-9 Living Arrangements of El
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mentioned earlier in this chapter a
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Box 4-7.—The Federal Role in Empl
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inequality among retirees who have
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whether minorities and women are li
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TABLE 4-4.—Poverty Rates Among th
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TABLE 4-6.—Family Holdings of Fin
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variety of reasons, including the f
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the number of patents granted in th
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The United States has a decades-lon
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matter, depending on various condit
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company Roche Holdings, Ltd. Some o
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The antitrust authorities’ linkin
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espective Writings and Discoveries.
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Box 5-3.—Cooperative Innovation a
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machine owned by another. The disti
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companies begin to offer DSL servic
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and compete for customers on the ba
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In another part of the Internet mar
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technology at hand. But incentive-b
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the flexibility to choose lower cos
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In contrast to both performance and
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The SO 2 experience reveals several
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Box 5-7.—The Partnership for a Ne
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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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Page 214 and 215: around the country, and seven other
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Page 220 and 221: Chart 6-1 Net Capital Flows to Deve
Page 222 and 223: Box 6-1.—The Explosive Growth of
Page 224 and 225: Recent Financial LiberalizationIn m
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Page 228 and 229: Box 6-2.—Market-Based (Arm’s-Le
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Page 232 and 233: Box 6-4.—Sovereign Spreads in Eme
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Page 236 and 237: Box 6-5.—Moral Hazard in Financia
Page 238 and 239: Empirical studies confirm that, by
Page 240 and 241: withdrew $26 billion in 1997. Altho
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Page 244 and 245: 8.5 percent of GDP in 1998. Indones
Page 246 and 247: sary revenues to meet these extra i
Page 248 and 249: which is considered a monetary asse
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Page 252 and 253: Chart 6-3 Real Value of the Dollar
Page 254 and 255: The increase in the trade deficit a
Page 256 and 257: Chart 6-6 Current Account BalanceTh
Page 258 and 259: Chart 6-7 Economic Growth and Trade
Page 260 and 261: investment. The U.S. gross investme
Page 264 and 265: with other countries to strengthen
Page 266 and 267: REFORM OF THE INTERNATIONAL FINANCI
Page 268 and 269: about their macroeconomic and finan
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Page 272 and 273: Other measures recommended by the w
Page 274 and 275: ADOPTION OF MEASURES TO REFORM THEI
Page 276 and 277: Another way to improve global surve
Page 278 and 279: Issues Posed by Hedge Funds and Oth
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Page 288 and 289: Box 7-1.—continuedpartner; a stro
Page 290 and 291: Chart 7-1 European Short-Term Inter
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Page 294 and 295: Box 7-2.—continuedthrough an auto
Page 296 and 297: advantages of EMU to U.S. residents
Page 298 and 299: Box 7-3.—How Does the Dollar Rank
Page 300 and 301: connection between the currency in
Page 302 and 303: as an economic superpower early in
Page 304 and 305: Appendix AREPORT TO THE PRESIDENT O
Page 306 and 307: Council Members and Their Dates of
Page 308 and 309: The Chair and Members work as a tea
Page 310 and 311: 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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Economic Report President

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