ECONOMIC REPORT OF THE PRESIDENT

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Figure 6-13 Repo and Reverse Repo, 1995–2015 Trillions of U.S. Dollars Outstanding 8 7 Reverse Repo Repo 6 5 4 2015 3 2 1 0 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Source: Federal Reserve Bank of New York. Figure 6-14 Commercial Paper, 2000–2016 Billions of U.S. Dollars Outstanding 2,400 2,100 1,800 1,500 1,200 All Commercial Paper 900 600 300 Asset-Backed Commercial Paper Nov-2016 0 2000 2002 2004 2006 Note: Shading denotes recession. 2008 2010 2012 2014 2016 Source: Federal Reserve Board. Strengthening the Financial System | 387
systemic footprint. In April 2015, one of these firms, General Electric Capital Corporation (GE Capital), announced that it would be selling off most of its financing arm to “create a simpler, more valuable company,” and committed to working with the FSOC and the Federal Reserve to “take the actions necessary to de-designate GE Capital as a Systemically Important Financial Institution” (General Electric 2015). These actions resulted in the FSOC rescinding the “systemically important financial institution” designation for GE Capital on June 28, 2016. Private funds can contribute to systemic risk in similar ways to other large financial institutions.11 Losses at a large private fund may result in default to creditors and the financial institutions with which the fund does business. In addition, private funds often employ high levels of leverage. Although leverage is not a perfect proxy for risk, there is ample evidence that the use of leverage, in combination with other factors, can contribute to risks to financial stability. These risks are likely to be greater if an elevated level of leverage is employed; borrowing counterparties are large, highly interconnected financial institutions; counterparty margining requirements are limited or lax and positions are infrequently marked to market; the underlying assets are less liquid and price discovery is poor; or other financial institutions with large positions are involved in similar trading strategies.12 In 2011, the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) adopted new Form PF, required by the Dodd-Frank Act to help the SEC, CFTC, and the FSOC monitor hedge funds and other private funds, and identify potential systemic risks associated with their activities. The SEC makes available a summary report each quarter of the information reported on Form PF. As seen in Figure 6-15, the number of private funds reported on Form PF has risen from just over 20,000 to more than 26,000 including almost 9,000 hedge fund filings. In addition to using these reports to identify systemic risks within the United States, the SEC has provided certain aggregated, non-proprietary Form PF data to the International Organization of Securities Commissions (IOSCO) on large hedge funds to provide it with a more complete overview of the global hedge fund market. 11 Private Funds are excluded from the definition of an investment company and are, therefore, not registered under the Investment Company Act of 1940. Private funds may be excluded from the definition of an investment company by having fewer than 100 shareholders or only being open to “qualified purchasers” (such as institutional investors or high-net worth individuals) as defined by the SEC. Examples of private funds include hedge funds and private equity funds. 12 See Financial Stability Oversight Council Update On Review of Asset Management Products and Activities at (https://www.treasury.gov/initiatives/fsoc/news/Documents/FSOC%20 Update%20on%20Review%20of%20Asset%20Management%20Products%20and%20Activities. pdf) 388 | Chapter 6
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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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eforms in history. Banks have sharp
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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: EIGHT YE
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. THE ECONOMIC RATIONALE FOR FEDERA
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2.4. Government Purchases as Share
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4.iii. Premium for the Benchmark Pl
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6.18. Systemic Risk (SRISK) 2005-20
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C H A P T E R 1 EIGHT YEARS OF RECO
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Figure 1-1 Actual and Consensus For
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Figure 1-3 Real Hourly Wage Growth
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Figure 1-4 Real GDP per Capita: Eur
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Figure 1-6 Household Net Worth in t
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Figure 1-8 Global Trade Flows in th
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Subsequent revisions to fourth-quar
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Percent 6 Figure 1-9 Fiscal Expansi
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substantial costs to the Federal Go
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worked to promote innovation and in
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expansion, a period of low producti
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The 2017 Economic Report of the Pre
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Chapter 4: Reforming the Health Car
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to the ACA and other factors. The A
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than 98 percent of Americans should
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Figure 1-13 Borrowers in Income Dri
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success of the financial rescue and
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einforced U.S. leadership in the ru
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Partnership (OGP), a global partner
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Figure 1-16 Labor Productivity Grow
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Labor Force Participation Household
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number of steps to ensure that econ
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C H A P T E R 2 THE YEAR IN REVIEW
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Percent 11 Figure 2-1 Unemployment
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allowing for additional investments
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Percentage Point 0.6 0.4 Figure 2-3
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public, largely highway constructio
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The size of the Federal Reserve’s
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Figure 2-5 Private-Sector Payroll E
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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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Page 344 and 345: Box 5-5: Making Sure Students Enter
Page 346 and 347: prior, the early FAFSA reform helps
Page 348 and 349: Figure 5-ii Number of Institutions
Page 350 and 351: Figure 5-23 Gainful Employment Earn
Page 352 and 353: Additionally, Pell Grants can be be
Page 354 and 355: C H A P T E R 6 STRENGTHENING THE F
Page 356 and 357: with no easy way to get the funds f
Page 358 and 359: public has limited information, run
Page 360 and 361: value added of the sector has gradu
Page 362 and 363: managers. Thus, after fees, savers
Page 364 and 365: Too Many Resources in Finance? Beyo
Page 366 and 367: of the firm after the purchase affe
Page 368 and 369: Percent 100 Figure 6-2 Mortgage Ori
Page 370 and 371: Figure 6-4 Case-Shiller Home Price
Page 372 and 373: Figure 6-7 Global OTC Derivative Ma
Page 374 and 375: consumer and investor protections.
Page 376 and 377: Figure 6-iv Top 5 Banks as Share of
Page 378 and 379: cult to replace with services from
Page 380 and 381: Are U.S. Banks Too Big? The questio
Page 382 and 383: The three federal banking agencies
Page 384 and 385: Risk Taking The Dodd-Frank Act took
Page 386 and 387: Box 6-3: The Performance of Communi
Page 388 and 389: Figure 6-ix Return on Assets of Ban
Page 390 and 391: egulators can take a more holistic
Page 394 and 395: Figure 6-15 Private Funds Reporting
Page 396 and 397: Days 60 Figure 6-16 Weighted-Averag
Page 398 and 399: Figure 6-18 Systemic Risk (SRISK),
Page 400 and 401: In the absence of another financial
Page 402 and 403: lower funding costs in 2007-09, “
Page 404 and 405: through the Dodd-Frank Act and othe
Page 406 and 407: Prior to the financial crisis, one
Page 408 and 409: asis.24 One of the advantages of ce
Page 410 and 411: findings from the NRSRO examination
Page 412 and 413: Prior to the crisis, enforcement of
Page 414 and 415: Box 6-5: Addressing the Problem of
Page 416 and 417: Table 6-i Sources of Investment Adv
Page 418 and 419: financial system and the systems of
Page 420 and 421: Box 6-6: The JOBS Act While it was
Page 422 and 423: Figure 6-23 S&P 500, 2003-2016 Inde
Page 424 and 425: Figure 6-27 Mortgage Delinquency an
Page 426: It created the FSOC to consider ris
Page 429 and 430: energy efficient and lower greenhou
Page 431 and 432: of domestic actions to reduce green
Page 433 and 434: people and vegetation (U.S. Global
Page 435 and 436: investment are much higher than the
Page 437 and 438: Delaying Action on Climate Change I
Page 439 and 440: uses and land management activities
Page 441 and 442: 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
Page 493 and 494:
D’Amico, Stefania, et al. 2012.
Page 495 and 496:
______. 2016. “Chapter 3: Develop
Page 497 and 498:
Chetty, Raj, et al. 2014. “Where
Page 499 and 500:
NBER Working Paper 22170. Cambridge
Page 501 and 502:
American Hospital Association and H
Page 503 and 504:
Cantor, Joel C., et al. 2012. “Ea
Page 505 and 506:
______. 2012a. “Direct Spending a
Page 507 and 508:
Dranove, David, Craig Garthwaite, a
Page 509 and 510:
Wars: Global Solutions for Developi
Page 511 and 512:
Huang, Jidong, and Frank J. Chaloup
Page 513 and 514:
McWilliams, J. Michael. 2016. “Ch
Page 515 and 516:
Pinkovskiy, Maxim. 2014. “The Imp
Page 517 and 518:
______. 2016. “Certification of M
Page 519 and 520:
Arcidiacono, Peter, V. Joseph Hotz,
Page 521 and 522:
Bulman, George, and Caroline Hoxby.
Page 523 and 524:
______. 2015a. “Economic Costs of
Page 525 and 526:
Dobbie, Will, and Roland G. Fryer J
Page 527 and 528:
Committee on Health, Education, Lab
Page 529 and 530:
Jepsen, Christopher, Kenneth Troske
Page 531 and 532:
Marcotte, Dave E., et al. 2005. “
Page 533 and 534:
Reynolds, Arthur J., et al. 2011.
Page 535 and 536:
Chapter 6 Acharya, Viral. V., Deniz
Page 537 and 538:
Fama, Eugene F., and Kenneth R. Fre
Page 539 and 540:
Wheelock, David C., and Paul W. Wil
Page 541 and 542:
______. 2016a. “The Economics of
Page 543 and 544:
______. 2016c. Short Term Energy Ou
Page 545 and 546:
Interagency Working Group on the So
Page 547 and 548:
Office of Management and Budget (OM
Page 550:
A P P E N D I X A REPORT TO THE PRE
Page 553 and 554:
Council Members and Their Dates of
Page 556 and 557:
Report to the President on the Acti
Page 558 and 559:
consulting with a wide variety of o
Page 560 and 561:
In October, the Council released a
Page 562 and 563:
Research Economists David Boddy . .
Page 564:
A P P E N D I X B STATISTICAL TABLE
Page 567 and 568:
GOVERNMENT FINANCE, INTEREST RATES,
Page 569 and 570:
Year or quarter Table B-1. Percent
Page 571 and 572:
Table B-2. Gross domestic product,
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Table B-3. Quantity and price index
Page 575 and 576:
Table B-5. Real exports and imports
Page 577 and 578:
Year Total Table B-7. Real farm inc
Page 579 and 580:
Table B-9. Median money income (in
Page 581 and 582:
Labor Market Indicators Table B-11.
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Year or month Table B-12. Civilian
Page 585 and 586:
Table B-14. Employees on nonagricul
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Year or month Table B-15. Hours and
Page 589 and 590:
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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