ECONOMIC REPORT OF THE PRESIDENT

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fell 80 percent from September 2014 to May 2016, but has grown since May. The partial rebound in the rig count has moderated the decline in mining employment, which has edged down 0.9 percent from June to November. The Energy Information Agency (EIA) forecasted in November that U.S. natural gas production during 2016 will fall 1.9 percent below its 2015 pace, which would be the first decline in average annual production since 2005 (EIA 2016). However, the EIA expects U.S. natural gas production to increase 3.8 percent in 2017. employment), while falling steadily, remained above its pre-recession average through November 2016 and could indicate continued underutilization of labor. Between December 2007 and December 2009, the share of the labor force working part-time rose from 15.7 to 18.0 percent, driven by a large rise in the share of people working part-time for economic reasons. As the recovery progressed, the share of the labor force working part-time for economic reasons began to recede and, in 2016, fell a further 0.3 percentage point (Figure 2-8)9. As of November, the rate stood at 3.6 percent, 2.4 percentage points below its peak in 2010, but still above its pre-recession average of 3.0 percent. The persistence in the rate of part-time work for economic reasons, especially relative to other measures of slack, is largely responsible for the continued elevation of the U-6 “underemployment” rate. The underemployment rate uses a broader concept of labor market slack than the official unemployment rate (also known as U-3), by including discouraged workers who have given up looking for a job, others who are marginally attached to the labor force, and those employed part-time for economic reasons. In November 2016, the U-6 rate was 9.3 percent, 7.8 percentage points below its recession peak, but still 0.2 percentage points above its pre-recession average. In the 12 months through November 2016, the U-6 rate declined 0.6 percentage point (Figure 2-9). The labor force participation rate has been roughly stable since October 2013. By CEA estimates, demographic pressure from the aging of 9 Care must be taken when comparing the share of workers who are part-time for economic reasons before and after the 1994 redesign of the Current Population Survey. CEA used the multiplicative adjustment factors reported by Polivka and Miller (1998) in order to place the pre-1994 estimates of the part-time for economic reasons rate on a comparable basis with postredesign estimates. For the part-time series for which Polivka and Miller do not report suitable adjustment factors, the pre- and post-redesign series were spliced by multiplying the pre-1994 estimates by the ratio of the January 1994 rate to the December 1993 rate. This procedure generates similar results to the Polivka and Miller factors for series for which multiplicative factors are available. The Year in Review and the Years Ahead | 79
Figure 2-6 Actual and Consensus Forecast Unemployment Rate, 2008–2020 Unemployment Rate 11 10 9 8 7 6 5 Actual 2010 Forecast 2011 Forecast 2012 Forecast 2013 Forecast 2014 Forecast 2015 Forecast 2016 Forecast 4 2008 2010 2012 2014 2016 2018 2020 Note: Annual forecasts are current as of March of the stated year. Black dashed line represents November 2016 value (4.6 percent). Shading denotes recession. Source: Bureau of Labor Statistics, Current Population Survey; and Blue Chip Forecasts Figure 2-7 Unemployment Rate by Duration, 1990–2016 Percent of Labor Force 8 7 6 5 Unemployed for 26 Weeks or Less 4 3 Nov-2016 2 1 Unemployed for 27 Weeks or More 0 1990 1995 2000 2005 2010 2015 Note: Shading denotes recession. Dashed lines represent averages over 2001–2007. Source: Bureau of Labor Statistics, Current Population Survey. 80 | Chapter 2
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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
Page 34 and 35: Figure 1-6 Household Net Worth in t
Page 36 and 37: Figure 1-8 Global Trade Flows in th
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 86 and 87: Figure 2-8 Rates of Part-Time Work,
Page 88 and 89: Figure 2-v Prime-Age Male Labor For
Page 90 and 91: Output Real GDP grew 1.6 percent ov
Page 92 and 93: Figure 2-11 Compensation and Consum
Page 94 and 95: Table 2-i Optimal Weighting for Hou
Page 96 and 97: esults suggest that, to a first app
Page 98 and 99: Figure 2-viii Real GDP, Average and
Page 100 and 101: Figure 2-13 Consumer Sentiment and
Page 102 and 103: Figure 2-xi Household Debt Service,
Page 104 and 105: Ratio to Annual DPI 1.10 1.05 Figur
Page 106 and 107: Figure 2-17 National House Price In
Page 108 and 109: Index 220 Figure 2-19 Housing Affor
Page 110 and 111: Figure 2-21 Composition of Growth i
Page 112 and 113: Figure 2-23 Capital Services per Un
Page 114 and 115: Box 2-7: Explanations for the Recen
Page 116 and 117: Figure 2-xv Business Fixed Investme
Page 118 and 119: Figure 2-26 Foreign Real GDP and U.
Page 120 and 121: somewhat generalizable (Box 2-8), b
Page 122 and 123: prices weakened and the global econ
Page 124 and 125: inadequate demand has contributed t
Page 126 and 127: Figure 2-31 Nominal Wage Inflation
Page 128 and 129: Figure 2-33 Real Hourly Wage Growth
Page 130 and 131: Index 6 Figure 2-36 Financial Condi
Page 132 and 133: 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
Page 406 and 407:
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
Page 497 and 498:
Chetty, Raj, et al. 2014. “Where
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NBER Working Paper 22170. Cambridge
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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
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McWilliams, J. Michael. 2016. “Ch
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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
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Interagency Working Group on the So
Page 547 and 548:
Office of Management and Budget (OM
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A P P E N D I X A REPORT TO THE PRE
Page 553 and 554:
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
Page 560 and 561:
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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