Council of Economic Advisers Blog

  • Advance Estimate of GDP for the Second Quarter of 2012 and Annual Revision

    Today’s report shows that the economy posted its twelfth straight quarter of positive growth, as real GDP (the total amount of goods and services produced in the country) grew at a 1.5 percent annual rate in the second quarter of this year, according to the “advance” estimate released by the Bureau of Economic Analysis.  Over the last three years, the economy has expanded by 6.7 percent overall, and the private components of GDP have grown by 9.9 percent.  While the economy continues to move in the right direction, additional growth is needed to replace the jobs lost in the deep recession that began at the end of 2007

    With today’s report, the BEA also released its annual revisions back to 2009.  While the revisions did not meaningfully change the pace of growth over that entire period, it is noteworthy that State and local government purchases were revised up in 2009, which is consistent with the Recovery Act cushioning the effect of the recession and helping to launch the recovery.  Since the Recovery Act funds have been phasing out, however, declining State and local government activity has subtracted from GDP.  Indeed, today’s report indicates that State and local government purchases have declined for 11 straight quarters, the longest streak ever recorded since the official record of quarterly data began in 1947.  

    To strengthen economic growth and increase job creation, President Obama has proposed to Congress a plan that would help State and local governments retain and hire teachers and first responders, assist the construction sector and economy of tomorrow by rebuilding and modernizing our Nation’s infrastructure, and would give small businesses tax cuts to encourage them to increase payroll.  President Obama also proposed extending tax cuts to protect middle class families and virtually every small business owner from getting a tax increase at the beginning of next year.  The Senate passed the President’s plan this week and President Obama has said that as soon as the House will act he will sign it right away in order to give certainty and security to middle class families. Extending these tax cuts would provide more certainty for the economy for 98 percent of American families and 97 percent of small business owners. 

  • The Employment Situation in June

    While the economy is continuing to heal from the worst economic downturn since the Great Depression, much more remains to be done to repair the damage from the financial crisis and deep recession that followed. It is critical that we continue the policies that build an economy that works for the middle class and makes us stronger and more secure as we dig our way out of the deep hole that was caused by the severe recession. There are no quick fixes to the problems we face that were more than a decade in the making. President Obama has proposals to create jobs by ending tax breaks for companies to ship jobs overseas and supporting State and local governments to prevent layoffs and rehire hundreds of thousands of teachers.

    Today’s report from the Bureau of Labor Statistics (BLS) shows that private establishments added 84,000 jobs last month, and overall non-farm payroll employment rose by 80,000. The economy has now added private sector jobs for 28 straight months, for a total of 4.4 million payroll jobs during that period. Employment is growing but it is not growing fast enough given the jobs deficit caused by the deep recession.

  • Reforming Unemployment Insurance to Protect Jobs and Incomes for American Workers

    In his inaugural address, President Obama praised workers who “would rather cut their hours than see a friend lose their job.”  But in most states, our unemployment insurance (UI) system discourages reducing hours in this way. A worker who is laid off has access to UI benefits that temporarily cover part of lost wages, but a worker whose hours are reduced has no such access, creating an incentive for layoffs while leaving workers who face an involuntary reduction in their hours with no protection or support. Today the Department of Labor is issuing guidance on new legislation that will help to address these problems. This guidance is part of a series of important UI reforms designed to contribute to job creation and job placement that the President proposed in the American Jobs Act, were signed into law in February and are now being implemented. 

    Programs in some states that allow workers whose hours have been cut to claim pro-rated UI benefits—so-called short-time compensation or work sharing programs—help to keep workers on the job.   President Obama has long advocated the expansion of work sharing to help employers and their workers. It’s an idea that has been supported by economists across the political spectrum. The President’s proposal to expand the number of states with work-sharing programs, and increase employer awareness of the benefits of work sharing, was included in both his FY 2012 and 2013 Budgets, and in last September’s American Jobs Act. That proposal was signed into law on a bipartisan basis as part of the February extension of the payroll tax cut, and is being implemented today through guidance released by the Labor Department. 

  • The Employment Situation in May

    Problems in the job market were long in the making and will not be solved overnight. The economy lost jobs for 25 straight months beginning in February 2008, and over 8 million jobs were lost as a result of the Great Recession.  We are still fighting back from the worst economic crisis since the Great Depression. 

    Today we learned that the economy has added private sector jobs for 27 straight months, for a total of 4.3 million payroll jobs over that period. The economy is growing but it is not growing fast enough. BLS’s establishment survey shows that private businesses added 82,000 jobs last month, and overall non-farm payroll employment rose by 69,000. The unemployment rate ticked up from 8.1 percent in April to 8.2 percent in May, according to BLS’s household survey. However, the labor force participation rate increased 0.2 percentage point to 63.8 percent, and employment rose by 422,000 according to the household survey. 

    There is much more work that remains to be done to repair the damage caused by the financial crisis and deep recession that began at the end of 2007. Just like last year at this time, our economy is facing serious headwinds, including the crisis in Europe and a spike in gas prices that hit American families’ finances over the past months.  It is critical that we continue the President’s economic policies that are helping us dig our way out of the deep hole that was caused by the severe recession. 

    In the American Jobs Act and in the State of the Union Address, the President put forward a number of proposals to create jobs and strengthen the economy, including proposals that would put teachers back in the classroom and cops on the beat, and put our nation’s construction workers back on the job rebuilding our nation’s infrastructure.  The President has also proposed a To-Do List of actions that Congress should take to create jobs and help restore middle-class security.  This includes eliminating tax incentives to ship jobs overseas, cutting red tape so responsible homeowners can refinance, giving small businesses that increase employment or wages a 10 percent income tax credit, investing in affordable clean energy, and helping returning veterans find work.  The President is in Minneapolis today to announce a new executive action that will establish private sector partnerships to help military service members acquire recognized occupational credentials—as welders, as machinists, and ultimately in a broader range of occupations. These partnerships will help service members find private sector jobs once they leave the military, and they will help firms in manufacturing and other industries that need workers to fill their vacant positions. 

    Manufacturing employment continues to expand and manufacturers added 12,000 jobs in May. After losing millions of good manufacturing jobs in the years before and during the recession, the economy has added 495,000 manufacturing jobs since January 2010--the strongest growth for any 28-month period since April 1995.  To continue the revival in manufacturing jobs and output, the President has proposed tax incentives for manufacturers, enhanced training for the workforce, and measures to create manufacturing hubs and encourage the growing trend of insourcing. 

    Other sectors with net job increases included education and health services (+46,000), transportation and warehousing (+35,600), wholesale trade (+15,900), and temporary help services (+9,200). Construction lost 28,000 jobs, accounting services lost 14,000 jobs, government lost 13,000 jobs, and leisure and hospitality lost 9,000 jobs.  State and local governments shed 8,000 jobs, mostly in education. 

    As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and employment estimates can be subject to substantial revision.  Therefore, it is important not to read too much into any one monthly report and it is helpful to consider each report in the context of other data that are becoming available.

     

     

  • The Employment Situation in April

     

    Today’s employment report provides further evidence that the economy is continuing to heal from the worst economic downturn since the Great Depression, but much more remains to be done to repair the damage caused by the financial crisis and the deep recession.  It is critical that we continue the economic policies that are helping us dig our way out of the deep hole that was caused by the severe recession that began at the end of 2007.  President Obama has said that prosperity in America has always come from a strong and growing middle class.  He has made clear that getting back to where we were is not enough. We need to do more, which is why the President has laid out his blueprint for an American economy that is built to last and will continue to urge Congress to act to do more to grow the economy and create jobs.

    Private employer payrolls increased by 130,000 jobs in April, and overall non-farm payroll employment rose by 115,000.  The unemployment rate dipped from 8.2% in March to 8.1% in April, according to the household survey.  Though labor force participation fell over the month according to the household survey, since August the unemployment rate has fallen by 1.0 percentage point, from 9.1% to 8.1%, and nearly three-quarters of that drop is attributable to increased employment.

    Despite adverse shocks that have created headwinds for economic growth the economy has added private sector jobs for 26 straight months, for a total of 4.25 million payroll jobs over that period.  With upward revisions of 65,000 jobs to the past two months’ employment reports, in the first quarter of 2012 private employment expanded by 697,000 jobs, the largest quarterly increase since the first quarter of 2006.  So far this year, 827,000 private sector jobs have been added, on net.

  • Chairman Alan Krueger Discusses Reversing the Middle-Class Jobs Deficit

    At 9:15 EDT on Thursday, April 26, 2012, President Obama’s Chairman of the Council of Economic Advisers, Alan B. Krueger delivered remarks on “Reversing the Middle-Class Jobs Deficit” at the Columbia University in New York City, New York.

    In his prepared remarks, Chairman Krueger said:

    I will address problems in the U.S. labor market and President Obama’s blueprint to fix them.  My theme is that it will take a concerted national effort to reverse the problems that have been building in the job market for decades, and, although much more work needs to be done; we have made progress in the last few years.

    Krueger added that:

    The United States has considerable strengths that should help us to reverse the middle-class jobs deficit.  It is imperative for policymakers to develop and promote these strengths to create an expanding middle class and provide more opportunity for more young people, regardless of their family backgrounds.  As President Obama has stressed, this is the defining issue of our times. We face a critical moment in which we can pursue a path that leads to a more durable economy and growing opportunities for all Americans, or we can return to the policies that eroded the middle class and tilted an ever-increasing share of income into the hands of a fortunate few, who were allowed to play by their own rules.