Council of Economic Advisers Blog
- Posted byon April 30, 2014 at 8:58 AM EST
Today’s GDP estimate is subject to a number of notable influences, including historically severe winter weather, which temporarily lowered growth in the first quarter. The report also shows the positive impact of the implementation of the Affordable Care Act which, together with continued slowing in health costs, helped strengthen the economy in the first quarter. The President will do everything he can either by acting through executive action or by working with Congress to push for steps that would raise growth and accelerate job creation, including fully paid-for investments in infrastructure, education and research, a reinstatement of extended unemployment insurance benefits, and an increase in the minimum wage.
FIVE KEY POINTS IN TODAY’S REPORT FROM THE BUREAU OF ECONOMIC ANALYSIS
1. Real gross domestic product (GDP) rose 0.1 percent at an annual rate in the first quarter of 2014, following the 3.4 percent annual pace in the second half of 2013. Looking at the various components of GDP, consumer spending grew at a rapid pace, mainly reflecting sharp increases in health care and utilities consumption, while the other elements of consumer spending on net rose only slightly. Consumer spending on food services and accommodations fell for the first time in four years, one of several components that was likely affected by unusually severe winter weather. Exports and inventory investment, two particularly volatile components of GDP, also subtracted from growth.
- Posted byon April 16, 2014 at 4:04 PM EST
As part of the lead up to the White House Summit on Working Families, we have been seeking input from a wide variety of stakeholders to identify best practices for developing workplaces that work for all Americans and better meet the needs of women and working families. We did not think this goal could be achieved without thinking of the business leaders of tomorrow, and that is why today, we met with a group of deans from our nation’s leading business schools to discuss best practices for business schools that can better prepare their students for the increasing importance of women in the labor force and the prevalence of employees with families where all parents work.
- Posted byon April 4, 2014 at 8:39 AM EST
The economy continued to add jobs in March at a pace consistent with job growth over the past year. Additionally, the unemployment rate was steady while the labor force participation rate edged up. While today’s data indicates that the recovery is continuing to unfold, the President still believes further steps must be taken to strengthen growth and boost job creation. In this regard, the Senate’s decision yesterday to move forward with the consideration of a bill to reinstate extended unemployment insurance was an important step in the right direction. In addition to encouraging this and other action in Congress, such as raising the minimum wage and passing the Paycheck Fairness Act, the President will continue to act on his own executive authority wherever possible to expand economic opportunity for American families.
FIVE KEY POINTS IN TODAY’S REPORT FROM THE BUREAU OF LABOR STATISTICS
1. The private sector has added 8.9 million jobs over 49 straight months of job growth. Today we learned that total nonfarm payroll employment rose by 192,000 in March, entirely due to an increase in private employment, while government employment was unchanged on net. Job growth in January and February was revised up, so that that over the past twelve months, private employment has risen by 2.3 million, or an average of 189,000 a month. This is slightly faster than the pace of job gains over the preceding twelve-month period (175,000 a month).
- Posted byon March 10, 2014 at 9:00 AM EST
This morning, the Council of Economic Advisers is releasing the 2014 Economic Report of the President, which discusses the progress that has been made in recovering from the worst recession since the Great Depression, and President Obama’s agenda to build on this progress by creating jobs and expanding economic opportunity. This year’s report highlights steps the Obama Administration is taking to address three key imperatives: continuing to restore the economy to its full potential, expanding the economy’s potential over the long-run, and ensuring that all Americans have the opportunity to realize their full individual potential.
Below are seven highlights from each of the seven chapters in this year’s Report:
Chapter 1 introduces the Report and highlights several key areas where progress has been made, but it also lays out the areas where much more work remains to be done. In particular, recoveries from financial crises are uniquely challenging because heavy household debt burdens and tight credit conditions can linger for years, depressing spending and investment. However, as shown in Figure 1-4 of the Report, among the 12 countries that experienced a systemic financial crisis in 2007 and 2008, the United States is one of just two in which output per working-age person has returned to pre-crisis levels. The fact that the United States has been one of the best performing economies in the wake of the crisis supports the view that the full set of policy responses in the United States made a major difference in averting a substantially worse outcome—although it in no way changes the fact that more work remains to be done.
- Posted byon March 7, 2014 at 9:38 AM EST
February 2014 was the 48th straight month of private-sector job growth, with businesses adding 8.7 million jobs over that time. Despite a major snowstorm that hit the East Coast during the reference week for the labor market surveys, the rate of job growth picked up from the December and January pace. Nevertheless, the unemployment rate remains elevated, and for too many Americans, wages have been slow to rise.
This week, the President put out a budget that can make progress on these issues by investing in education, job training, and innovation, by expanding tax credits for working Americans, and by extending the emergency unemployment benefits that has expired for 2 million Americans. And while the President encourages Congress to act on his proposals, he will also continue to take action on his own wherever possible to support job growth and expand economic opportunity.
FIVE KEY POINTS IN TODAY'S REPORT FROM THE BUREAU OF LABOR STATISTICS
1. The private sector has added 8.7 million jobs over 48 straight months of job growth. Today we learned that total non-farm payroll employment rose by 175,000 in February, with 162,000 of that increase in the private sector. Revisions to private employment in the previous months were small and offsetting, so that that over the past twelve months, private employment has risen by 2.2 million, or an average of 183,000 a month. This is almost identical to the pace of job gains over the preceding twelve-month period (182,000 a month).
- Posted byon February 18, 2014 at 3:24 PM EST
The new Congressional Budget Office (CBO) report finds that 16.5 million workers would get a raise from increasing the minimum wage to $10.10 per hour and this would help millions of hard-working families, reduce poverty, and increase the overall wages going to lower-income households.
On employment, CBO’s central estimate is that raising the minimum wage to $10.10 per hour would lead to a 0.3 percent decrease in employment and CBO acknowledges that the employment impact could be essentially zero. But even these estimates do not reflect the overall consensus view of economists which is that raising the minimum wage has little or no negative effect on employment. For example, seven Nobel Prize winners and more than 600 other economists recently stated that: “In recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment, with the weight of evidence now showing that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market.”
The following are six key points from the latest CBO report. For more information, last week the Council of Economic Advisers (CEA) released a summary of the economic case for raising the minimum wage.
1. CBO finds that raising the minimum wage to $10.10 per hour would directly benefit 16.5 million workers. According to today’s CBO report, 16.5 million people making less than $10.10 per hour would get a raise if the minimum wage is increased. This figure does not include CBO’s estimate of as many as 8.0 million workers who currently earn just above $10.10 an hour but could also potentially see a raise due to the “ripple effect” of a shifting wage structure.
2. CBO finds that raising the minimum wage would increase income for millions of middle-class families, on net, even after accounting for its estimates of job losses. Middle class families earning less than six times the poverty line (i.e., $150,000 for a family of four in 2016) would see an aggregate increase of $19 billion in additional wages, with more than 90 percent of that increase going to families earning less than three times the Federal poverty line (i.e., $75,000 for a family of four in 2016). On net CBO estimates that national income would rise.
This finding is consistent with the fact that 62 percent of expert economists polled by the University of Chicago Booth School of Business agreed that the benefits of raising the minimum wage outweigh any potential costs, as compared to only 16 percent who disagreed.
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