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Skriven 2007-02-12 23:31:12 av Whitehouse Press (1:3634/12.0)
Ärende: Press Release (0702122) for Mon, 2007 Feb 12
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Fact Sheet: The Economic Report of the President
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For Immediate Release
Office of the Press Secretary
February 12, 2007

Fact Sheet: The Economic Report of the President


ÿÿÿÿÿ Press Briefing by CEA Chairman Lazear on the 2007 Economic Report of
the President ÿÿÿÿÿ In Focus: Jobs _

"Our economy is on the move and we can keep it that way by continuing to
pursue sound economic policy based on free-market principles."

- President George W. Bush, 2/12/07

Today, The White House Released The Economic Report Of The President.ÿThe
Economic Report of the President is an annual report written by the Council
of Economic Advisors. ÿIt overviews the Nation's economic progress and is
transmitted to Congress no later than 10 days after the submission of the
Budget of the United States Government.
  þ The Full Economic Report Of The President Is Available At:
    http://www.whitehouse.gov/cea/pubs.html.

Chapter 1: The Year In Review And The Years Ahead

Economic Growth In The United States Has Been Above The Historic Average
And Faster Than Any Other Major Industrialized Economy In The World.ÿ The
economic expansion continued for the fifth consecutive year in 2006.ÿ This
economic growth comes despite numerous headwinds, and results from inherent
U.S. economic strengths and pro-growth policies.ÿ Chapter 1 reviews the
past year and discusses the Administration's forecast for the years
ahead.ÿThe key points are:
  þ Real GDP posted above-average 3.4 percent growth in 2006. The
    composition of growth changed, with more coming from exports and
    business structures investment, while residential investment flipped
    from contributing to GDP growth in 2005 to subtracting from it in 2006.
    Consumer spending remained strong.
  þ Labor markets continued to strengthen, with the unemployment rate
    dropping to 4.6 percent and payroll job growth averaging 187,000 per
    month. Real average hourly earnings accelerated to a 1.7 percent
    increase during the 12 months of 2006.
  þ Energy prices rose sharply in the first half of the year, but then
    declined just as sharply in the second half.

Chapter 2: Productivity Growth

Strong Productivity Growth Underlies Much Of The Good Economic News From
The Past Few Years.ÿ Productivity growth rarely makes the headlines, but is
important to the Nation because higher productivity growth improves the
outlook for economic issues such as standards of living, inflation,
international competitiveness, and long-run demographic challenges. Chapter
2 reviews the sources of the recent strength in productivity growth,
highlighting the role that flexible markets and entrepreneurship play in
explaining cross-country differences. It also explains the benefits of
productivity growth and discusses how policymakers can further promote it.
The key points are:
  þ Recent productivity growth has been primarily driven by efficiency
    growth (growth in how well labor and capital inputs are used) and by
    capital deepening (growth in the amount of capital that workers have
    available for use).
  þ Openness to international trade and investment, and improvements in the
    education and training of the U.S. workforce, will continue to be
    important to long-run productivity growth.
  þ Policies that encourage capital accumulation, research and development,
    and increases in the quality of our education system can boost
    productivity growth.

Chapter 3: Pro-Growth Tax Policy

Sound Economic Policy Begins With Low Taxes.ÿChapter 3 discusses the
advantages of adopting a more pro-growth tax system. It reviews recent
changes that have reduced tax distortions on capital investment decisions,
and evaluates options to reduce such distortions further.ÿ The key points
are:
  þ The goal of pro-growth tax policy is to reduce tax distortions that
    hamper economic growth. Most economists agree that lower taxes on
    capital income stimulate greater investment, resulting in greater
    economic growth, greater international competitiveness, and higher
    standards of living.
  þ The tax code contains provisions that discourage investment and create
    distortions that affect the level, distribution, and financing of
    capital investment.
  þ Estimates from research suggest that removing these tax distortions to
    investment decisions could increase real gross domestic product (GDP)
    by as much as 8 percent in the long run.
  þ Since 2001, temporary changes in the tax code have reduced the tax on
    investment. These pro-growth policies have stimulated short-run
    investment and economic growth. However, the temporary nature of the
    provisions eliminates desirable long-run economic stimulus.

Chapter 4: The Fiscal Challenges Facing Medicare

The President And Congress Should Work Together To Spend The Taxpayers'
Money Wisely And To Tackle Unfunded Liabilities Inherent In Entitlement
Programs Such As Social Security, Medicare, And Medicaid.ÿ Social Security,
Medicare, and Medicaid are three entitlement programs in the United States
that provide people with important economic security against financial
risk. However, the projected long-term growth in entitlement spending is
unsustainable because of the pressure it puts on future Federal budgets. It
is crucial that reforms to these programs preserve the protection against
financial risk that these programs provide without having negative effects
on economic growth. Chapter 4 focuses on Medicare by examining the main
reasons for its projected financial pressures and by discussing ways to
improve the efficiency of the program and thus slow the growth of Medicare
spending. The key points are:
  þ Medicare spending is growing quickly, primarily because of the
    demographic shift to an older society and the increases in
    per-beneficiary medical spending driven largely by new technologies.
  þ Rewarding providers for supplying higher-quality care and improving
    incentives for patients to choose higher-value care can both increase
    the efficiency and slow the growth of Medicare spending.

Chapter 5: Catastrophe Risk Insurance

Insuring Economic Losses Arising From Large-Scale Natural And Manmade
Catastrophes Such As Earthquakes, Hurricanes, And Terrorist Attacks Poses
Challenges For The Insurance Industry And For Federal And State
Governments.ÿ Chapter 5 examines the economics of catastrophe risk
insurance. The key points are:
  þ In insurance markets, as in other markets, prices affect how people
    weigh costs and benefits. Artificially low insurance prices can
    discourage people from adequately protecting against future losses. For
    example, subsidized property insurance prices may stimulate excessive
    building in high-risk areas, potentially driving up future government
    disaster relief spending.
  þ Government intervention in insurance markets can have unintended
    consequences, such as limiting the availability of insurance offered by
    private firms.
  þ Insurers manage catastrophe losses by being selective about which risks
    to insure, designing insurance contracts to provide incentives for
    risk-reducing behavior, and charging prices that are high enough to
    enable them to diversify risk over time or transfer risk to third
    parties. By managing and pricing risk more effectively, government
    insurance programs can reduce the burden they impose on taxpayers and
    minimize negative effects on private insurance markets.

Chapter 6: The Transportation Sector: Energy And Infrastructure Use

We Must Continue To Diversify Our Energy Supply To Benefit Our Economy,
National Security, And Environment. The transportation sector accounts for
the majority of the petroleum consumed in the United States and  whether
plane, train, ship, or automobile  almost all transportation is powered by
petroleum. Understanding the petroleum market, and the ways in which
consumers and firms respond to changes in world oil prices, is key to
understanding the transportation sector. In addition to petroleum, the
transportation sector also relies heavily on infrastructure. The key points
of Chapter 6 are:

Recent increases in the price of oil and the external costs of oil have led
to renewed interest by markets and governments in the development of new
alternatives. Government can play a role in ensuring that external costs
are taken into account by markets, but ultimately markets are best suited
to decide how to respond.
  þ Cars and light trucks are the largest users of petroleum. As a result,
    the fuel economy of the vehicles purchased and the number of miles that
    they are driven have a large effect on oil consumption.
  þ Congestion is a growing problem in American urban areas. Cities and
    States have shown a growing interest in and capacity for setting prices
    for road use during peak periods to reduce the full economic costs of
    congestion.

Chapter 7: Currency Markets

Open Commerce And Financial Markets Allow Productivity To Flourish.ÿ The
need for international transactions provides the impetus for a huge,
well-functioning market that facilitates currency conversions and allows
global economic integration and trade to occur smoothly and quickly at low
cost. Both by volume of trade and ease of making transactions, currency
markets today are the world's deepest, most liquid markets. Currency
markets range from common markets where parties simply exchange one
currency for another to sophisticated markets where parties buy and sell
currencies far into the future. The key points of Chapter 7 are:
  þ Foreign-exchange markets allow firms to trade goods and services across
    borders, and to manage the risks they face from fluctuations in the
    price of their domestic currency.
  þ As with any other good, the exchange value of a currency is determined
    by its supply, as well as the demand for the country's assets, goods,
    and services.
  þ Over much of the 20th century, countries tended to favor fixed exchange
    rates, but in recent decades there has been a shift toward freely
    floating exchange rates.
  þ Monetary and exchange-rate policies are tightly linked. A nation's
    government must decide between controlling its exchange rate and
    controlling its domestic inflation rate.

Chapter 8: International Trade And Investment

We Must Keep Our Economy Open And Break Down Barriers To Trade And
Investment Abroad So Our Workers And Consumers Can Continue To Enjoy The
Benefits Of Global Commerce.ÿ The United States derives substantial
benefits from open trade and investment flows. Over many decades, increased
trade and investment liberalization has been an important catalyst for
greater productivity growth and rising average living standards in the
United States. The key points of Chapter 8 are:
  þ Looking ahead, international trade liberalization in services presents
    significant opportunities for U.S. workers, firms, and consumers.
  þ Foreign direct investment (FDI) flows into the United States benefit
    the U.S. economy by stimulating growth, creating jobs, promoting
    research and development that spurs innovation, and financing the
    current account deficit.
  þ U.S. direct investment abroad is an important channel of global market
    access for U.S. firms. U.S. multinational companies have contributed to
    productivity growth, job creation, and rising average living standards
    in the United States.

Chapter 9: Immigration

To Improve Border Security, Reduce The Number Of Unauthorized Workers, And
Maintain The Economic Benefits Of Immigration, We Must Pursue Comprehensive
Immigration Reform. ÿThe United States is a nation of immigrants and a
nation of laws, and we value both historical legacies. Immigrants continue
to make positive contributions to our Nation and our economy, yet our
current immigration laws have proven difficult to enforce and are not fully
serving the needs of the American economy. The key points of Chapter 9 are:
  þ International differences in economic opportunities and standards of
    living create strong incentives for labor migration. Once established,
    migration flows from a certain region tend to be self-perpetuating.
  þ Foreign-born workers make significant contributions to the American
    economy, but not all Americans gain economically from immigration.ÿ
    Foreign-born workers tend to be concentrated at the low end and the
    high end of the educational spectrum relative to native-born workers.

Immigration policy plays a key role in determining the volume and
composition of the foreign-born workforce. Comprehensive immigration reform
can help ensure an orderly, lawful flow of foreign-born workers whose
presence continues to benefit the American economy.

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