ECONOMIC REPORT OF THE PRESIDENT

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Index (2008:Q1=100) 115 Figure 3-6 Real GDP, 2008–2015 110 105 100 95 90 United States (2015:Q4) Germany (2015:Q3) United Kingdom (2015:Q4) GIIPS (2015:Q3) Euro ex. Germany and GIIPS (2015:Q3) 85 2008 2010 2012 2014 2016 Note: GIIPS includes Greece, Ireland, Italy, Portugal, and Spain. Source: National Sources via Haver Analytics. throughout 2015, though its rate of contraction eased late in the year following the resolution of the acute problems in July with financial support from the European Union, other euro-area members, and accommodations from the European Central Bank (ECB) coinciding with progress on reforms. Euro-area inflation was low in 2015, despite the labor market recovery in some countries, further evidence that domestic demand remains weak. Figure 3-8 shows that euro-area inflation remains well below the ECB’s goal for the inflation rate of close to but not exceeding 2-percent. As inflation continued to slow, the ECB increased its monetary stimulus in 2015, purchasing 60 billion euro in sovereign bonds each month (quantitative easing) and lowering a key policy rate of interest to minus 0.3 percent. Despite the ECB’s additional stimulus, a key challenge remained that interest rates were highest in countries where unemployment was highest. The inability to target monetary stimulus limits the ECB’s ability to help countries with the greatest economic slack and may prevent convergence across regions. Thus, monetary policy alone is not sufficient to address the challenge of weak demand. One reason that the United States has recovered more quickly than other advanced economies is its combination of accommodative monetary policy, quick action to recapitalize the financial sector, and aggressive demand management through countercyclical fiscal policy. In contrast, The Global Macroeconomic Situation | 131
Percentage Points 35 30 Figure 3-7 Euro Area Sovereign Interest Rate Spreads Over Germany, 2007–2015 Greece Draghi: "Whatever it takes" (Jul-2012) 25 20 15 10 Spain 5 Dec-2015 Portugal Italy France 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Bloomberg Professional Service. Figure 3-8 Core and Overall Inflation in the Euro Area, 2007–2015 12-Month Percent Change 5 4 CPI 3 2 1 Core CPI Inflation Target Dec-2015 0 -1 2007 2009 2011 2013 2015 Source: Eurostat; Haver Analytics. 132 | Chapter 3
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ECONOMIC REPORT OF THE PRESIDENT To
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C O N T E N T S ECONOMIC REPORT OF
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economic report of the president To
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when a hardworking American loses h
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the annual report of the council of
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C O N T E N T S CHAPTER 1 INCLUSIVE
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CHAPTER 5 TECHNOLOGY AND INNOVATION
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APPENDIXES A. Report to the Preside
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3.4. Percent Gap Between Actual and
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6.6. Relationship between Output Gr
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C H A P T E R 1 INCLUSIVE GROWTH IN
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To promote inclusive growth, both c
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Percent 20 15 Figure 1-1 Share of I
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Table 1-1 Increase in Income Share
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Figure 1-3 Distribution of Househol
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narrows the pool of human capital t
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over the past several decades has b
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Figure 1-6a The "Great Gatsby Curve
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Figure 1-7 Change in Employment by
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and sellers—consumer and producer
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Percent 15 10 Figure 1-9 Corporate
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Percent 30 Figure 1-11 Share of Wor
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Figure 1-12 Real Construction Costs
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promoting equality of opportunity;
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the division of rents, they can red
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C H A P T E R 2 THE YEAR IN REVIEW
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cold weather.1 The economy rebounde
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Box 2-1: Impact of Oil Price Declin
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Roughly speaking, the decline in th
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Percent of GDP 10 Figure 2-3 Federa
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Figure 2-5 Government Purchases as
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13 percent of GDP. Until 1990, Stat
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of new purchases.2 The increase in
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Figure 2-8 Actual and Consensus For
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Figure 2-10 Rates of Part-Time Work
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less than a tenth of the overall de
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Business fixed investment grew 3.1
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Percent 10 Figure 2-14 Personal Sav
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BEA revises the official statistics
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Index* 100 Figure 2-16 Real Income
Page 86 and 87: Box 2-5: Are Official Estimates of
Page 88 and 89: of consumer surplus, which should,
Page 90 and 91: Figure 2-19 National House Price In
Page 92 and 93: Box 2-6: Constraints on Housing Sup
Page 94 and 95: and also was estimated in recent re
Page 96 and 97: market. Nevertheless, the construct
Page 98 and 99: Figure 2-23 Net Investment as a Sha
Page 100 and 101: Percent 80 Figure 2-25 Total Payout
Page 102 and 103: Figure 2-28 Foreign Real GDP and U.
Page 104 and 105: Figure 2-30 Sources of Productivity
Page 106 and 107: Figure 2-32 Nominal Wage Growth Ove
Page 108 and 109: Figure 2-35 Long-Term Inflation Exp
Page 110 and 111: Percent 18 Figure 2-36 Nominal 10-Y
Page 112 and 113: Table 2-1 Selected Interest Rates,
Page 114 and 115: are close to those projected by the
Page 116 and 117: International Economics (Petri and
Page 118 and 119: History Forecast 1953:Q2 to 2015:Q3
Page 120 and 121: inflation up to 2007 and then expec
Page 122: Upside and Downside Forecast Risks.
Page 125 and 126: earlier forecasts. Figure 3-1 shows
Page 127 and 128: Real GDP/WAP Growth 2011-2014 Figur
Page 129 and 130: economists would expect capital dee
Page 131 and 132: Figure 3-i Actual and Forecasted Wo
Page 133 and 134: affected the demographic trajectory
Page 135: over the first three quarters of 20
Page 139 and 140: the President for a discussion of t
Page 141 and 142: Box 3-2: Market Volatility in the S
Page 143 and 144: potential for rapid spillovers betw
Page 145 and 146: absorb unexpectedly high losses. In
Page 147 and 148: Box 3-3: Commodity Prices and Infla
Page 149 and 150: In November 2015, the IMF voted to
Page 151 and 152: Billions of U.S. Dollars 250 200 15
Page 153 and 154: U.S. exports are 12.5 percent of th
Page 155 and 156: Box 3-4: The Importance of the Tran
Page 157 and 158: The challenging environment for U.S
Page 159 and 160: child’s environment. Despite the
Page 161 and 162: and Rossin-Slater 2015).5 These adv
Page 163 and 164: Figure 4-2 Official Poverty Rate fo
Page 165 and 166: Figure 4-3 Likelihood of Scoring Ve
Page 167 and 168: Percent 100 90 80 70 60 50 40 30 20
Page 169 and 170: Figure 4-7 Achievement Gap is Large
Page 171 and 172: Hours per Week 24 22 20 Figure 4-9
Page 173 and 174: Percent 65 Figure 4-11 Preschool En
Page 175 and 176: Box 4-1: Gender Differences in Earl
Page 177 and 178: Card and Rothstein 2007; Dickerson
Page 179 and 180: depend on how parents choose to inv
Page 181 and 182: y many factors, which makes it diff
Page 183 and 184: Box 4-3: Federal Early Childhood Pr
Page 185 and 186: program served over 45 million Amer
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Reauthorization Act of 2015, signed
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document that desegregation of hosp
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to alleviate hunger by supplementin
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adulthood (Hoynes, Schanzenbach, an
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of preschoolers support their child
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program and up to 15 years after co
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a longer period than is true of mos
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to be higher today than in the past
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Figure 4-18 Most Early Childhood Pr
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the preschool programs in Georgia a
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test scores by 6 to 9 percent of a
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Figure 4-20 Increase in Probability
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increased earnings by 31 percent (F
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Figure 5-1 Labor Productivity Growt
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Competition and Dynamism Play a Cri
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adopts pre-existing technology or k
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Figure 5-2 Quantity and Volume of V
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Box 5-2: Occupational Licensing One
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in consumer welfare as they erode t
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Finally, some workers may acquire s
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Box 5-3: Major Research Initiatives
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Figure 5-5 Federal and Nonfederal R
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Figure 5-7 Federal Research and Dev
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Figure 5-10 Percent of Patent Appli
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percent of all cases in 2009 to ove
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(Bloom, Sadun, and Van Reenen 2012)
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Figure 5-12 Estimated Annual Shipme
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was relatively flat through the 200
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In contrast, recent papers by Autor
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services, such as 4G LTE. At the sa
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Box 5-5: The On-Demand Economy “O
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vision of services that may not hav
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Figure 5-17 Household Income and Ho
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about half since ConnectED was laun
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C H A P T E R 6 THE ECONOMIC BENEFI
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enefits to a wide set of consumers
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Figure 6-1 Composition of Public Sp
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Age, Years 29 27 Figure 6-3 Average
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Type CAN FRA DEU ITA JPN GBR USA 20
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Box 6-1: Clean Energy and Transport
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Industry Government Investment Dire
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infrastructure investment is crucia
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Box 6-2: Elasticity of Output to Pu
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and output ignore potential inter-t
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Thus, ideas are exchanged, workers
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kilometers of road) in 1983 resulte
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Prospects for Increased Infrastruct
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Figure 6-6 Relationship between Out
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there is a clear demand for an infr
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user fees or shadow tolls.11 Throug
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to transportation facilities caused
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Tax-Exempt Bonds Transportation inf
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Recent Legislation In December 2015
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enefit freight movements. The Act a
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C H A P T E R 7 THE 70 TH ANNIVERSA
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and composition of the labor force,
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it, “[t]he CEA and its chairman h
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jected reductions in the deficit. I
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example, the Environmental Protecti
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Keyserling and the Council particip
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Countercyclical Policy in Other Adm
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In designing the Recovery Act, one
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incorporating risk and discounting
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and Freddie had lots of friends in
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(USEC). USEC was responsible for pr
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can be reported to him as the perce
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By contrast, Keyserling had activel
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goals of the government in their ar
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Gather, Analyze, and Interpret Info
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the unemployment insurance system w
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an informational basis for appropri
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had experience working in governmen
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emained. I joined forces with Budge
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Of course, relying on short-term ac
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Carson, Ann. 2015. “Prisoners in
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Kleiner, Morris M. and Alan B. Krue
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Congressional Budget Office (CBO).
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Kocin, Paul J. and Louis Uccellini.
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Fajgelbaum, Pablo and Amit Khandelw
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World Bank. 2016. “Global Economi
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Belfield, Clive R., Milagros Nores,
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Campbell, Jennifer A., Rebekah J. W
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Council of Economic Advisers. 2014.
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Eissa, Nada and Jeffrey B. Liebman.
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Hastings, Justine S. and Ebonya Was
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Kalil, Ariel, Rebecca Ryan, and Mic
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Maxfield, Michelle. 2013. “The Ef
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Olds, David, John Eckenrode, Charle
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Solon, Gary. 1992. “Intergenerati
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Wherry, Laura R., Sarah Miller, Rob
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Bloom, Nicholas, Mark Schankerman,
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Graham, Stuart JH, Cheryl Grim, Tar
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Melitz, Marc J. 2003. “The Impact
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______. 2015. “Patent Assertions:
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Congressional Budget Office. 2009.
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Peshkin, David G., Todd E. Hoerner,
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______. 2001. Designing U.S. Econom
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Krueger, Alan B. 2000. “Honest Br
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Weidenbaum, Murray L. 1983. “An E
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letter of transmittal Council of Ec
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Council Members and Their Dates of
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The Members of the Council Sandra E
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In May, the Council issued a report
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Nirupama S. Rao . . . . . . . . . .
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Jessica Schumer resigned from her p
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C O N T E N T S GDP, INCOME, PRICES
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General Notes Detail in these table
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Table B-1. Percent changes in real
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Table B-2. Gross domestic product,
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Table B-4. Growth rates in real gro
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Year or quarter Total Table B-6. Co
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Table B-8. New private housing unit
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Table B-10. Changes in consumer pri
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Table B-11. Civilian labor force, 1
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Year or month Table B-13. Unemploym
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Table B-14. Employees on nonagricul
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Year or quarter Table B-16. Product
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Table B-18. Federal receipts, outla
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Table B-20. Federal receipts, outla
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Table B-22. State and local governm
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End of month Table B-24. Estimated
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Table B-25. Bond yields and interes
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