The Council of Economic Advisers last week released its annual Economic Report of the President. The CEA’s report, which dates back to 1947, aims to provide “an overview of the nation’s economic progress” while presenting “the Administration’s domestic and international economic policies.” This year’s report lays out the “defining issue of our time”:
One of the fundamental tenets of the American economy has been that if you work hard, you can do well enough to raise a family, own a home, send your kids to college, and put a little money away for retirement. That’s the promise of America.
The defining issue of our time is how to keep that promise alive. We can either settle for a country where a shrinking number of people do very well while a growing number of Americans barely get by, or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules.
The CEA’s chairman is Alan Krueger, an economist whose work may be familiar to readers of this blog. Here’s his take on some of the material in the new report:
Research by Charles Kindleberger, Carmen Reinhart and Kenneth Rogoff, and others finds that recessions associated with financial crises not only tend to be deeper than other types of economic downturns but also longer lasting. The effect of the financial crisis can be seen in the disparate recovery across sectors of the economy. Some sectors of the U.S. economy are recovering at a moderate or even quick pace, while growth in other sectors continues to be restrained by the lingering effects of the financial crisis. Typically, residential homebuilding and State and local government spending play a much stronger role in a recovery than has been the case since mid-2009. Yet excess home and office construction during the housing bubble as well as State and local government spending cuts and layoffs have caused unprecedented headwinds that were not present during other postwar recoveries. Meanwhile, business fixed investment has been about as strong in the current recovery as in the average U.S. recovery, and growth in exports has been stronger than in the average recovery.
Yet, as bad as the Great Recession was, the United States appears to have fared relatively better than other countries that have experienced severe financial crises…
Krueger argues that the economy is recovering fairly well:
Job growth has been about in line with the recovery from the 1991 recession and faster than the recovery from the 2001 recession. Since February 2010, private-sector employers have added a net total of 3.7 million jobs. Over the comparable period of the recovery from the 1991 recession, businesses added 3.0 million jobs, and during the comparable period of the recovery from the 2001 recession, only 1.1 million jobs were added. The pace of real GDP growth so far during this recovery has also been nearly as fast as during recoveries following the 1991 and 2001 recessions. It is important that we keep the momentum going.
There is almost nothing the White House can say these days about the economy that won’t be greeted with loud responses of both boosterism and derision. I expect this new report to be greeted no differently.
But here’s the catch: Krueger has agreed to field questions about the CEA report from Freakonomics readers. So instead of just shouting at the heavens, you get to actually engage with the White House’s top economist. Leave your questions in the comments below and, as always, we’ll post the answers in short course.
This post is no longer accepting comments. The answers to the Q&A can be found here.