Economic Report President

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Chief of Staff and General CounselMichele M. JolinSenior EconomistsSteven N. Braun ...................Douglas W. Elmendorf...........Elise H. Golan........................Stephen Polasky ....................Cordelia W. Reimers ..............Nouriel Roubini......................Robert F. Schoeni ...................Howard A. Shelanski.............Charles F. Stone ....................Director, Macroeconomic ForecastingMacroeconomics and Financial MarketsAgriculture and Natural ResourcesEnvironment and Natural ResourcesLabor, Social Policy, and EducationInternational EconomicsLabor, Social Policy, and WelfareRegulation, Industrial Organization, andAntitrustMacroeconomics and Editor,Weekly Economic Briefing of the PresidentSenior Advisor to the CouncilJoseph E. Aldy........................Global Environment and Natural ResourcesSenior StatisticianCatherine H. FurlongStaff EconomistsRyan D. Edwards...................Quindi C. Franco ...................Nora E. Gordon ......................Bert I. Huang .........................Matthew R. McBrady ............MacroeconomicsEnvironment and Natural ResourcesLabor and Social EconomicsLabor and MicroeconomicsInternational EconomicsResearch AssistantsAndrew R. Feldman...............Raymond P. Guiteras.............Summer L. Scott ....................Weekly Economic Briefing of the Presidentand LaborWeekly Economic Briefing of the Presidentand International EconomicsMacroeconomicsStatistical OfficeMrs. Furlong directs the Statistical Office. The Statistical Officemaintains and updates the Council’s statistical information, overseesthe publication of the monthly Economic Indicators and the statisticalappendix to the Economic Report, and verifies statistics in Presidentialand Council memoranda, testimony, and speeches.316
Susan P. Clements ................Linda A. Reilly ......................Brian A. Amorosi ..................StatisticianStatisticianResearch AssistantAdministrative OfficeCatherine Fibich....................Administrative OfficerOffice of the ChairmanAlice H. Williams...................Sandra F. Daigle....................Lisa D. Branch.......................Francine P. Obermiller..........Executive Assistant to the ChairmanExecutive Assistant to the Chairman andAssistant to the Chief of StaffExecutive Assistant to Dr. FrankelExecutive Assistant to Dr. BlankStaff SecretariesMary E. Jones........................Rosalind V. Rasin...................Mary A. Thomas.....................International Economics, Labor, andHealth CareEnvironment, Industrial Organization, andPublic FinanceMacroeconomicsMrs. Thomas also served as executive assistant for the WeeklyEconomic Briefing of the President.Michael Treadway provided editorial assistance in the preparationof the 1999 Economic Report. Michael A. Toman, Resources for theFuture, served as a consultant during the year.Anne M. Piehl and Timothy Waidmann provided expertise in thepreparation of a report prepared by the Council for the President’sInitiative on Race entitled Changing America: Indicators of Social andEconomic Well-Being by Race and Hispanic Origin. Jenepher W.Moseley provided editorial assistance in the preparation of this report.Student interns during the year were Robert P. Bamsey, Gregory A.Bedard, Carol L. Capece, Michael A. Egner, Heather L. Jambrosic, JasonK. Nuzzo, Jenny E. Pippin, Annette M. Richter, Rachel E. Rubinfeld,Kristen M. Scarafia, Jasmin K. Sethi, and Matthew C. Weinzierl. Thefollowing student interns joined the Council in January to assist with thepreparation of the Economic Report: Enrique J. Alonso, David S. Felman,Matthew S. Milner, and Nathaniel F. Stankard.DEPARTURESThe Council’s senior economists, in most cases, are on leave ofabsence from faculty positions at academic institutions or from othergovernment agencies or research institutions. Their tenure with theCouncil is usually limited to 1 or 2 years. Many of the senioreconomists who resigned during the year returned to their previous317
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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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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
Page 262 and 263: Chart 6-10 Current Account Deficit
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Page 274 and 275: ADOPTION OF MEASURES TO REFORM THEI
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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.
Page 314 and 315: affiliations. They are Christopher
Page 316 and 317: C O N T E N T SNATIONAL INCOME OR E
Page 318 and 319: B-71. Aggregate reserves of deposit
Page 320 and 321: General NotesDetail in these tables
Page 322 and 323: TABLE B-1.—Gross domestic product
Page 324 and 325: TABLE B-2.—Real gross domestic pr
Page 326 and 327: TABLE B-4.—Percent changes in rea
Page 328 and 329: TABLE B-5.—Contributions to perce
Page 330 and 331: TABLE B-6.—Chain-type quantity in
Page 332 and 333: TABLE B-7.—Chain-type price index
Page 334 and 335: TABLE B-9.—Real gross domestic pr
Page 336 and 337: Year orquarterGrossdomesticproductT
Page 338 and 339: YearBased on1972 SIC:TABLE B-13.—
Page 340 and 341: TABLE B-15.—Output, costs, and pr
Page 342 and 343: TABLE B-17.—Real personal consump
Page 344 and 345: TABLE B-19.—Real private gross fi
Page 346 and 347: TABLE B-21.—Real government consu
Page 348 and 349: TABLE B-23.—Real inventories and
Page 350 and 351: TABLE B-25.—Real exports and impo
Page 352 and 353: TABLE B-27.—Relation of national
Page 354 and 355: TABLE B-28.—National income by ty
Page 356 and 357: TABLE B-29.—Sources of personal i
Page 358 and 359: TABLE B-31.—Total and per capita
Page 360 and 361: 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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