ECONOMIC REPORT OF THE PRESIDENT

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Figure 5-16 Share of Information and Communications Technology (ICT) in Value Added, 2011 Percent of Value Added 14 12 10 8 6 4 2 0 Austria Norway Portugal Poland Iceland Belgium Spain Slovenia Greece Italy Netherlands Canada France Germany Denmark Czech Rep. Slovakia OECD Finland Sweden Estonia Luxembourg United States Hungary United Kingdom Switzerland Japan Korea Ireland Source: OECD Factbook. of online craft markets means that many craft artisans are able to increase exposure in multiple markets, leading to increased scale and ultimately productivity growth, much in the same way that higher exports from international trade leads to productivity growth. These business models also introduce new competitive dynamics into established industries. The Digital Divide Challenge Broadband access has become a nearly indispensable component of modern life, used for everything from engaging in personal communication, to searching for a job, and streaming online educational content to engaging in civic affairs (National Telecommunications and Information Administration and Economics and Statistics Administration 2013). Thus, access to the Internet has become an essential resource for many nascent entrepreneurs to reach potential customers. Customers who access the Internet can benefit from the array of new products and services offered by certain types of entrepreneurial new firms. However, a digital divide (for example, the fact that certain groups of individuals and businesses lack access to the Internet) means that some would-be entrepreneurs cannot compete, and some would-be customers cannot access these new products and services. Technology and Innovation | 241
Box 5-5: The On-Demand Economy “On-demand economy platforms” are online and mobile platforms that match consumers to providers for the purpose of purchasing goods or services on a “one-off” basis. This intentionally broad definition includes the following types of platforms: • Rental platforms most commonly involve homeowners renting out their homes to business and vacation travelers. Other assets can also be rented through similar arrangements, such as car and bicycle rentals. • Craft platforms allow individuals and small businesses who produce or collect craft-oriented goods to sell these goods to consumers. • Financing platforms allow individuals and small firms to obtain financing from lenders, in exchange for fixed payments, equity, or rewards. • “Gig” platforms allow individual providers to provide their labor services, which might be tied to a specialized physical asset, such as a car in the case of transportation-network companies (TNCs), or a specialized human asset, such as the ability to code, to individual consumers and small firms. Because they are so nascent, relatively little economic research has been done on these models. Moreover, many of these activities cannot be isolated in official economic statistics and, in some cases, may in fact be omitted from these statistics. At present, this portion of the economy still appears relatively small—estimates suggest that it represents less than 1 percent of the working-age population and only accounts for a miniscule portion of the economy as a whole; PricewaterhouseCoopers estimated global revenues for the on-demand economy to be $15 billion in 2014 (PWC 2015). However, these business models are growing rapidly, and McKinsey Global Institute predicts these business models will increase global GDP by $2.7 trillion by 2025 (Manyika et al. 2015). These platforms are already forcing incumbents to respond in several industries—notably the taxi industry in which TNCs have rapidly gained popularity and the lodging industry. For example, one independent study found that entry of an online housing rental platform led to lower hotel prices in Texas (Zervas, Proserpio, and Byers 2015). As noted above on the dual role of startups, there do not need to be many startups in an industry before the incumbents in that industry start to undertake changes to guard against business losses. These actions could take the form of innovative activity, which would boost both firm-level and overall economic productivity, or dropping prices, which would improve consumer welfare. Medallion prices in New York City and Chicago have fallen substantially since the introduction of TNCs, which is indicative of 242 | Chapter 5
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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
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Box 2-5: Are Official Estimates of
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of consumer surplus, which should,
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Figure 2-19 National House Price In
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Box 2-6: Constraints on Housing Sup
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and also was estimated in recent re
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market. Nevertheless, the construct
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Figure 2-23 Net Investment as a Sha
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Percent 80 Figure 2-25 Total Payout
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Figure 2-28 Foreign Real GDP and U.
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Figure 2-30 Sources of Productivity
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Figure 2-32 Nominal Wage Growth Ove
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Figure 2-35 Long-Term Inflation Exp
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Percent 18 Figure 2-36 Nominal 10-Y
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Table 2-1 Selected Interest Rates,
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are close to those projected by the
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International Economics (Petri and
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History Forecast 1953:Q2 to 2015:Q3
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inflation up to 2007 and then expec
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Upside and Downside Forecast Risks.
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earlier forecasts. Figure 3-1 shows
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Real GDP/WAP Growth 2011-2014 Figur
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economists would expect capital dee
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Figure 3-i Actual and Forecasted Wo
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affected the demographic trajectory
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over the first three quarters of 20
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Percentage Points 35 30 Figure 3-7
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the President for a discussion of t
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Box 3-2: Market Volatility in the S
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potential for rapid spillovers betw
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absorb unexpectedly high losses. In
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Box 3-3: Commodity Prices and Infla
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In November 2015, the IMF voted to
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Billions of U.S. Dollars 250 200 15
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U.S. exports are 12.5 percent of th
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Box 3-4: The Importance of the Tran
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The challenging environment for U.S
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child’s environment. Despite the
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and Rossin-Slater 2015).5 These adv
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Figure 4-2 Official Poverty Rate fo
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Figure 4-3 Likelihood of Scoring Ve
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Percent 100 90 80 70 60 50 40 30 20
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Figure 4-7 Achievement Gap is Large
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Hours per Week 24 22 20 Figure 4-9
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Percent 65 Figure 4-11 Preschool En
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Box 4-1: Gender Differences in Earl
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Card and Rothstein 2007; Dickerson
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depend on how parents choose to inv
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y many factors, which makes it diff
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Box 4-3: Federal Early Childhood Pr
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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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Page 213 and 214: Figure 5-1 Labor Productivity Growt
Page 215 and 216: Competition and Dynamism Play a Cri
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Page 219 and 220: Figure 5-2 Quantity and Volume of V
Page 221 and 222: Box 5-2: Occupational Licensing One
Page 223 and 224: in consumer welfare as they erode t
Page 225 and 226: Finally, some workers may acquire s
Page 227 and 228: Box 5-3: Major Research Initiatives
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Page 231 and 232: Figure 5-7 Federal Research and Dev
Page 233 and 234: Figure 5-10 Percent of Patent Appli
Page 235 and 236: percent of all cases in 2009 to ove
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Page 239 and 240: Figure 5-12 Estimated Annual Shipme
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Page 243 and 244: In contrast, recent papers by Autor
Page 245: services, such as 4G LTE. At the sa
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Page 251 and 252: Figure 5-17 Household Income and Ho
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Page 256 and 257: C H A P T E R 6 THE ECONOMIC BENEFI
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Page 260 and 261: Figure 6-1 Composition of Public Sp
Page 262 and 263: Age, Years 29 27 Figure 6-3 Average
Page 264 and 265: Type CAN FRA DEU ITA JPN GBR USA 20
Page 266 and 267: Box 6-1: Clean Energy and Transport
Page 268 and 269: Industry Government Investment Dire
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Page 272 and 273: Box 6-2: Elasticity of Output to Pu
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Page 292 and 293: Recent Legislation In December 2015
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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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