ECONOMIC REPORT OF THE PRESIDENT

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Figure 1-8 Global Trade Flows in the Great Depression and Great Recession Index, 1929/2008=100 120 2008=100 110 100 90 1929=100 80 70 60 0 12 24 36 48 60 72 84 96 Months from January 1929/2008 Note: Orange markers represent annual averages. Source: CPB World Trade Monitor; Statistical Office of the United Nations; CEA calculations. tax incentives to encourage business investment. The value of the cuts in the Act totaled $124 billion over 11 years, with nearly all of the cuts concentrated in FY 2008. The Act was designed to counteract a short recession by providing brief, temporary support to consumer spending—including electronic payments to households that began less than three months after passage of the Act—but it was insufficient to reverse the emerging distress and, by design, did not have long-lasting effects. In December 2008, then-President-elect Obama proposed an outline of what would become the American Recovery and Reinvestment Act of 2009, also known as the Recovery Act or “ARRA.” The Recovery Act was the first bill introduced in the House of Representatives just days after the President’s inauguration, and the President signed it into law less than a month after he took office. As the name of the Act suggests, the intention was for the bill to both generate recovery from the crisis and to be an important investment in the future of the economy. Several principles guided the new Administration’s fiscal policy. First, the fiscal effort was to be implemented quickly. Second, it should be large, given the scope of the economic problem. Finally, it should be a sustained effort that would not only provide immediate fiscal support over the first two years, but would also provide smaller levels of temporary support Eight Years of Recovery and Reinvestment | 31
Box 1-1: Revisions to Crisis-Era Data Policymakers face a number of challenges in assessing the state of the economy in real time. First, macroeconomic indicators are only available on a lagged basis, since it takes time for the Federal statistical agencies—such as the Census Bureau, the Bureau of Economic Analysis (BEA), and the Bureau of Labor Statistics (BLS)—to collect and analyze the data underlying their estimates. Initial estimates of gross domestic product (GDP) for a given quarter, for example, are released several weeks after that quarter ends. Second, more timely data generally tend to be incomplete and can only present a partial snapshot of the economy. Third, and perhaps most importantly, though subsequent revisions to macroeconomic data—particularly estimates of employment and output—often do not receive the same attention as initial estimates, they can often be large and economically meaningful, especially around turning points in the business cycle (when extrapolations and assumptions underlying some initial estimates can turn out badly wrong). These challenges confronted the Obama Administration in determining the response to the 2008 crisis. When President Obama took office on January 20, 2009, BEA had not yet released its advance estimate of GDP growth in the fourth quarter of 2008, a critical measure for understanding how much the financial crisis had affected real economic activity. Yet what data were available at that point showed an economy facing a substantial and protracted decline in economic output, and the incoming Administration had proposed the contours of what would become the American Recovery and Reinvestment Act in December 2008. When BEA released its advance estimate of GDP growth for the fourth quarter of 2008 in late January 2009—a contraction of 3.8 percent at an annual rate, the largest quarterly decline since 1982—it confirmed the need for a vigorous response from the Federal Government. Table 1-i Revisions to Crisis-Era Output Data Real GDP Growth, 2008:Q4 Estimate Date (Percent, Annual Rate) January 2009 (Advance Estimate) -3.8 February 2009 (Second Estimate) -6.2 March 2009 (Third Estimate) -6.3 July 2009 -5.4 July 2010 -6.8 July 2011 -8.9 July 2013 -8.3 July 2014 -8.2 Source: Bureau of Economic Analysis, National Income and Product Accounts. 32 | Chapter 1
Page 1 and 2: ECONOMIC REPORT OF THE PRESIDENT To
Page 4: C O N T E N T S ECONOMIC REPORT OF
Page 8 and 9: economic report of the president To
Page 10 and 11: eforms in history. Banks have sharp
Page 12: the annual report of the council of
Page 16 and 17: C O N T E N T S CHAPTER 1: EIGHT YE
Page 18 and 19: . THE ECONOMIC RATIONALE FOR FEDERA
Page 20 and 21: 2.4. Government Purchases as Share
Page 22 and 23: 4.iii. Premium for the Benchmark Pl
Page 24 and 25: 6.18. Systemic Risk (SRISK) 2005-20
Page 26 and 27: C H A P T E R 1 EIGHT YEARS OF RECO
Page 28 and 29: Figure 1-1 Actual and Consensus For
Page 30 and 31: Figure 1-3 Real Hourly Wage Growth
Page 32 and 33: Figure 1-4 Real GDP per Capita: Eur
Page 34 and 35: Figure 1-6 Household Net Worth in t
Page 38 and 39: Subsequent revisions to fourth-quar
Page 40 and 41: Percent 6 Figure 1-9 Fiscal Expansi
Page 42 and 43: substantial costs to the Federal Go
Page 44 and 45: worked to promote innovation and in
Page 46 and 47: expansion, a period of low producti
Page 48 and 49: The 2017 Economic Report of the Pre
Page 50 and 51: Chapter 4: Reforming the Health Car
Page 52 and 53: to the ACA and other factors. The A
Page 54 and 55: than 98 percent of Americans should
Page 56 and 57: Figure 1-13 Borrowers in Income Dri
Page 58 and 59: success of the financial rescue and
Page 60 and 61: einforced U.S. leadership in the ru
Page 62 and 63: Partnership (OGP), a global partner
Page 64 and 65: Figure 1-16 Labor Productivity Grow
Page 66 and 67: Labor Force Participation Household
Page 68 and 69: number of steps to ensure that econ
Page 70 and 71: C H A P T E R 2 THE YEAR IN REVIEW
Page 72 and 73: Percent 11 Figure 2-1 Unemployment
Page 74 and 75: allowing for additional investments
Page 76 and 77: Percentage Point 0.6 0.4 Figure 2-3
Page 78 and 79: public, largely highway constructio
Page 80 and 81: The size of the Federal Reserve’s
Page 82 and 83: Figure 2-5 Private-Sector Payroll E
Page 84 and 85: fell 80 percent from September 2014
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Figure 2-8 Rates of Part-Time Work,
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Figure 2-v Prime-Age Male Labor For
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Output Real GDP grew 1.6 percent ov
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Figure 2-11 Compensation and Consum
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Table 2-i Optimal Weighting for Hou
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esults suggest that, to a first app
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Figure 2-viii Real GDP, Average and
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Figure 2-13 Consumer Sentiment and
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Figure 2-xi Household Debt Service,
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Ratio to Annual DPI 1.10 1.05 Figur
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Figure 2-17 National House Price In
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Index 220 Figure 2-19 Housing Affor
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Figure 2-21 Composition of Growth i
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Figure 2-23 Capital Services per Un
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Box 2-7: Explanations for the Recen
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Figure 2-xv Business Fixed Investme
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Figure 2-26 Foreign Real GDP and U.
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somewhat generalizable (Box 2-8), b
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prices weakened and the global econ
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inadequate demand has contributed t
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Figure 2-31 Nominal Wage Inflation
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Figure 2-33 Real Hourly Wage Growth
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Index 6 Figure 2-36 Financial Condi
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Percent 4.0 Figure 2-38 Nominal Lon
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Dollars per Barrel 80 Figure 2-40 B
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Figure 2-41 IMF World Real GDP Grow
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against the Mexican peso, the Chine
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United Kingdom It has been a turbul
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for example, Japan has grown almost
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Figure 2-45 Credit to Nonfinancial
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Meanwhile, core inflation (excludin
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kept rates low across a wide range
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Investments in surface transportati
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Table 2-2 Supply-Side Components of
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Conclusion The economy continued to
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not increased from 1973 to 2013, in
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developments; individual behavior;
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action affecting income inequality
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have occurred. In doing so, these p
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Percent 24 21 18 15 12 9 6 African
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without the policy response.5 These
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Box 3-2: Income Inequality and the
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unable to obtain insurance at any p
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Figure 3-7B Percent 50 Uninsured Ra
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and have not expanded Medicaid foun
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Box 3-3: Safety Net Policies as Ins
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Millions of People 18 Figure 3-8 Im
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Figure 3-9 Effective Tax Rates for
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Box 3-4: Additional Actions to Make
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$294 million in newly appropriated
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15 10 5 0 -5 -10 -15 Figure 3-12 Pe
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Administration with those of previo
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as a share of potential GDP by Pres
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Figure 3-17 Changes in the Distribu
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30 25 20 15 10 5 0 Single Source: C
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ate on capital gains and dividends
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C H A P T E R 4 REFORMING THE HEALT
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eneficiaries have received cumulati
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form of lower premium costs and ind
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Percent 25 20 Creation of Medicare
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Figure 4-3 Health Insurance Coverag
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90 80 70 60 50 40 30 20 10 0 25 55
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Percent Uninsured 25 CHIP Created 2
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Legislative actions subsequent to C
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Percent Uninsured 40 35 Figure 4-7
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ecause of the ACA’s provision all
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Box 4-2: Dynamics in the Individual
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projected during the debate over th
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whelming majority of Marketplace en
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Figure 4-v Change in Benchmark Prem
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20 Figure 4-10 Share of Workers in
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percent during the decade preceding
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Panel A: Share with a Personal Doct
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Box 4-3: Interpreting Results from
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Fortunately, the OHIE is not the on
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Figure 4-14 Uncompensated Care as a
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Figure 4-15 Uninsured Rate by Popul
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Figure 4-17 Monthly Gain in Private
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Change in Working-Age Employment to
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this cross-sectional relationship b
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ecent discussions of macroeconomic
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Figure 4-23 Life Expectancy at Birt
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Figure 4-24 Mortality Rate vs. Medi
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more to cover Medicare patients tha
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example, through CMMI, the Administ
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orient payment around the entirety
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Percent of Payments 60 Figure 4-26
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covered under ACO contracts at the
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Additional Steps to Reform the Heal
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legislation that overrides the reco
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Figure 4-28 Health Care Price Infla
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Figure 4-30 Trends in Real Prices f
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average growth rate of real per enr
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Figure 4-34 Growth in Real Costs fo
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made a large, readily quantifiable
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in states experiencing weaker and s
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distribution, holding fixed both sp
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individuals among individuals 65 an
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Figure 4-40 Average Real Deductible
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Figure 4-41 Real Per-Enrollee Presc
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educe the growth rate of Medicare s
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improvements will strengthen ACOs
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-5 0 -2 Figure 4-42 Cumulative Perc
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Woolhandler 2015). These analysts a
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productivity on the job. These bene
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Figure 4-46 Premiums and Cost Shari
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(KFF 2016). Another fifth of tradit
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2030 2028 2026 2024 2022 2020 2018
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C H A P T E R 5 INVESTING IN HIGHER
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Gainful Employment regulations. To
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Thousands of 2015 Dollars 900 800 7
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externalities, credit constraints,
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Figure 5-4 Earnings by Age and Educ
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Figure 5-5 Variation in Earnings by
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Box 5-1: Anti-Poverty Efforts and E
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careers. Some of the effects of the
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eligibility cutoff likewise finds s
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Box 5-2: Federal Investments in K-1
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Evaluations of early local Promise
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America’s College Promise Playboo
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Dollars 45,000 40,000 35,000 30,000
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pre-payment penalty. Second, by tyi
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equirements, pushed efforts associa
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Figure 5-16 Size of Outstanding Loa
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Figure 5-17 Average Monthly Payment
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Figure 5-18 Distribution of Key Out
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Figure 5-20 Earnings by Family Inco
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to student needs and improve test s
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Box 5-5: Making Sure Students Enter
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prior, the early FAFSA reform helps
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Figure 5-ii Number of Institutions
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Figure 5-23 Gainful Employment Earn
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Additionally, Pell Grants can be be
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C H A P T E R 6 STRENGTHENING THE F
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with no easy way to get the funds f
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public has limited information, run
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value added of the sector has gradu
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managers. Thus, after fees, savers
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Too Many Resources in Finance? Beyo
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of the firm after the purchase affe
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Percent 100 Figure 6-2 Mortgage Ori
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Figure 6-4 Case-Shiller Home Price
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Figure 6-7 Global OTC Derivative Ma
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consumer and investor protections.
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Figure 6-iv Top 5 Banks as Share of
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cult to replace with services from
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Are U.S. Banks Too Big? The questio
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The three federal banking agencies
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Risk Taking The Dodd-Frank Act took
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Box 6-3: The Performance of Communi
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Figure 6-ix Return on Assets of Ban
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egulators can take a more holistic
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Figure 6-13 Repo and Reverse Repo,
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Figure 6-15 Private Funds Reporting
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Days 60 Figure 6-16 Weighted-Averag
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Figure 6-18 Systemic Risk (SRISK),
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In the absence of another financial
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lower funding costs in 2007-09, “
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through the Dodd-Frank Act and othe
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Prior to the financial crisis, one
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asis.24 One of the advantages of ce
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findings from the NRSRO examination
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Prior to the crisis, enforcement of
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Box 6-5: Addressing the Problem of
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Table 6-i Sources of Investment Adv
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financial system and the systems of
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Box 6-6: The JOBS Act While it was
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Figure 6-23 S&P 500, 2003-2016 Inde
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Figure 6-27 Mortgage Delinquency an
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It created the FSOC to consider ris
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energy efficient and lower greenhou
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of domestic actions to reduce green
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people and vegetation (U.S. Global
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investment are much higher than the
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Delaying Action on Climate Change I
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uses and land management activities
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Carbon Pollution Standards for Powe
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a projected range of $16 billion to
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these resulted in insignificant cha
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Figure 7-4 Corporate Average Fuel E
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diesel fuel and jet fuel. The Vehic
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Box 7-3: Building Resilience to Cur
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sources in the oil and gas sector,
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emissions and total greenhouse gas
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Figure 7-7 Energy Intensity of Real
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Figure 7-10 U.S. Petroleum Consumpt
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Figure 7-12 Energy Intensity Transp
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Figure 7-14c Energy Intensity Comme
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Figure 7-16 U.S. Energy Consumption
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2008 to 7 percent in 2015. Figure 7
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Index, 2008 =0 0.1 0.0 -0.1 Figure
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Figure 7-23 Decomposition of Emissi
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three determinants of emissions? If
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Percent 100 80 Figure 7-26 Sectoral
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characteristics, and management tre
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oil and gas sector) were subsequent
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while creating new jobs and raising
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such as using similar methodologies
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Box 7-4: Supporting Increased Penet
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sector, the fee would incentivize p
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to be used to decompose emissions i
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Reinvestment Act.” NBER Working P
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D’Amico, Stefania, et al. 2012.
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______. 2016. “Chapter 3: Develop
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Chetty, Raj, et al. 2014. “Where
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NBER Working Paper 22170. Cambridge
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American Hospital Association and H
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Cantor, Joel C., et al. 2012. “Ea
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______. 2012a. “Direct Spending a
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Dranove, David, Craig Garthwaite, a
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Wars: Global Solutions for Developi
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Huang, Jidong, and Frank J. Chaloup
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McWilliams, J. Michael. 2016. “Ch
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Pinkovskiy, Maxim. 2014. “The Imp
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______. 2016. “Certification of M
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Arcidiacono, Peter, V. Joseph Hotz,
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Bulman, George, and Caroline Hoxby.
Page 523 and 524:
______. 2015a. “Economic Costs of
Page 525 and 526:
Dobbie, Will, and Roland G. Fryer J
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Committee on Health, Education, Lab
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Jepsen, Christopher, Kenneth Troske
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Marcotte, Dave E., et al. 2005. “
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Reynolds, Arthur J., et al. 2011.
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Chapter 6 Acharya, Viral. V., Deniz
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Fama, Eugene F., and Kenneth R. Fre
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Wheelock, David C., and Paul W. Wil
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______. 2016a. “The Economics of
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______. 2016c. Short Term Energy Ou
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Interagency Working Group on the So
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Office of Management and Budget (OM
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A P P E N D I X A REPORT TO THE PRE
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Council Members and Their Dates of
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Report to the President on the Acti
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consulting with a wide variety of o
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In October, the Council released a
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Research Economists David Boddy . .
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A P P E N D I X B STATISTICAL TABLE
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GOVERNMENT FINANCE, INTEREST RATES,
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Year or quarter Table B-1. Percent
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Table B-2. Gross domestic product,
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Table B-3. Quantity and price index
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Table B-5. Real exports and imports
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Year Total Table B-7. Real farm inc
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Table B-9. Median money income (in
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Labor Market Indicators Table B-11.
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Year or month Table B-12. Civilian
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Table B-14. Employees on nonagricul
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Year or month Table B-15. Hours and
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Government Finance, Interest Rates,
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Table B-19. Federal receipts and ou
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Table B-21. Federal and State and l
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Table B-23. U.S. Treasury securitie
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Year and month Bills (at auction) 1
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Year and month Table B-26. Money st
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