Council of Economic Advisers Blog

  • The Economy in 2013

    The economy is finishing 2013 in a stronger place than where it began the year, though more work remains to grow the economy, create jobs, and strengthen the middle class. This is especially notable given the general fiscal environment, including the onset of the sequester in March, and the government shutdown and debt limit brinksmanship in October. The recent budget bill passed by Congress on a bipartisan basis will contribute to certainty, a better fiscal stance over the next year, and more funding for the critical ingredients of longer run growth. But more needs to be done, most immediately extending Unemployment Insurance benefits, and beyond that increasing investments to strengthen growth and making sure that growth is shared. 

    The slides below highlight the key themes and developments in the economy over the course of the year, and also touch on a few longer-term structural trends that continued to unfold in 2013 and will support growth into the future.

    The strengthening of the economy over the course of 2013 is a testament to America’s resilient private sector and America’s workers. Businesses have added 8.1 million jobs over the past 45 months, and are on track to register the third consecutive year of job growth in excess of two million.

    The growth rate of gross domestic product has risen for four straight quarters, and the private components of GDP have grown at a robust 3.7 percent annualized rate over the last two quarters. One of the biggest contributors to recent GDP growth has been the housing sector, which was the epicenter of the financial crisis but is bouncing back and has significant potential going forward.

    There are also several emerging structural trends that supported growth in 2013 and will continue to play an important role in our economy. The United States is now the largest producer of oil and gas in world, passing Russia and Saudi Arabia, and for the first time since 1995, the United States is producing more oil domestically than it imports. A second, less widely appreciated trend is the dramatic slowdown in health care cost growth that in part reflects critical reforms under the Affordable Care Act. Slower health care cost growth means less pressure on employers and the federal budget and more take-home pay for families. Lastly, technological contributions such as cloud computing and mobile broadband and mobile devices continue to help the economy. 

  • The Employment Situation in November

    With solid job growth in November – in addition to strong data on manufacturing activity and auto sales – it is clear that the recovery continues to gain traction. Today’s report was yet another reminder of the resilience of America’s private sector following the disruptive government shutdown and debt limit brinksmanship in the first half of October. Nevertheless, today’s jobs numbers show that too many Americans who have been unemployed for 27 weeks or longer are still struggling to find jobs. That is why the President is calling on Congress to pass the extension of emergency unemployment insurance before it expires at the end of the year, just like they have always done when long-term unemployment remains elevated. The President also continues to work to increase overall growth while ensuring that growth is shared broadly in the form of higher wages and more mobility, which is why he is fighting for a minimum wage increase and expansion of educational opportunities.

    FIVE KEY POINTS IN TODAY’S REPORT FROM THE BUREAU OF LABOR STATISTICS

    1. America’s resilient businesses have added jobs for 45 consecutive months, with private sector employment increasing by more than 8 million over that period. Today we learned that total nonfarm payroll employment rose by 203,000 in November, with 196,000 of that increase in the private sector. Private sector job growth was revised up for September (to 168,000) and October (to 214,000) so that over the last three months, private employment has risen by an average of 193,000 per month. 

    private sector job growth

  • New Report: The Economic Benefits of Extending Unemployment Insurance

    The United States economy continues to recover from the worst economic crisis since the Great Depression, and while substantial progress has been made, more work remains to boost economic growth and speed job creation. Despite ten consecutive quarters of GDP growth and 7.8 million private sector jobs added since early 2010, the unemployment rate is unacceptably high at 7.3 percent, and far too many families are still struggling to regain the foothold they had prior to the crisis.

    The Emergency Unemployment Compensation (EUC) program authorized by Congress in 2008 has provided crucial support to the economy and to millions of Americans who lost jobs through no fault of their own. Under current law, EUC will end on December 28, 2013[1].

    This report argues that allowing EUC to expire would be harmful to millions of workers and their families, counterproductive to the economic recovery, and unprecedented in the context of previous extensions to earlier unemployment insurance programs.

    Download the full report here or read a summary below, including state-by-state effects of allowing EUC benefits to expire.

    Since their inception in 2008, extended unemployment insurance (UI) benefits have provided critical support to millions of workers and their families:

    • Nearly 24 million workers have received extended UI benefits
    • Recipients are a diverse group: roughly half have completed at least some college, including 4.8 million with bachelor’s degrees or higher
    • Including workers’ families, nearly 69 million people have been supported by extended UI benefits, including almost 17 million children
    • In 2012 alone, UI benefits lifted an estimated 2.5 million people out of poverty

  • New Report from the Council of Economic Advisers: The Recent Slowdown in Health Care Cost Growth and the Role of the Affordable Care Act

    The Affordable Care Act (ACA) was passed against a backdrop of decades of rapid growth in health care spending, and one of the ACA’s key goals was to root out serious inefficiencies in the United States health care system that increase costs and compromise patients’ quality of care. Recent data show that health care spending and prices are growing at their slowest rates in decades; it appears that something has changed for the better. While this marked slowdown likely has many causes, and these causes are not yet fully understood, the available evidence suggests that the ACA is contributing to these trends, and, moreover, is helping to improve quality of care for patients. Today the White House Council of Economic Advisers released a new report analyzing recent trends in health costs, the forces driving those trends, and their likely economic benefits. Read the full report here.

    Key points in today's report from the Council of Economic Advisers:

    1. Health care spending is growing at the slowest rate on record: According to the most recent projections, real per capita health care spending has grown at an estimated average annual rate of just 1.3 percent over the three years since 2010. This is the lowest rate on record for any three-year period and less than one-third the long-term historical average stretching back to 1965. This slower growth in spending is reflected in Medicare, Medicaid, and private insurance. 

    2. Health care price inflation is at its lowest rate in 50 years: Measured using personal consumption expenditure price indices, inflation for health care goods and services is currently running at just 1 percent on a year-over-year basis, the lowest level since January 1962.  (Health care inflation measured using the medical CPI is lower than at any time since September 1972.)

  • The Employment Situation in October

    The upward revisions to job growth in August and September, combined with solid third quarter GDP growth reported yesterday, suggest that the economy was gaining traction in the months leading up to the government shutdown. There should be no debate that the shutdown and debt limit brinksmanship inflicted unnecessary damage on the economy in October. The employment report shows differing accounts, with the more reliable payroll survey recording strong job growth and the much noisier household survey showing an increase in the unemployment rate and a large drop in employment. But the mission for Congress remains clear: to take steps that increase certainty, speed growth, and boost job creation.

    FIVE KEY POINTS IN TODAY’S REPORT FROM THE BUREAU OF LABOR STATISTICS

    1. America’s resilient businesses have added jobs for 44 consecutive months, with private sector employment increasing by a total of 7.8 million over that period. Today we learned that total nonfarm payroll employment rose by 204,000 in October, due entirely to a 212,000 increase in private employment. Private sector job growth was revised up for August (to 207,000) and September (to 150,000) so that for the third quarter, private sector employment rose by an average of 152,000 per month (compared to the 129,000 per month average pace estimated in last month’s jobs report).

  • Advance Estimate of GDP for the Third Quarter of 2013

    During the third quarter, the economy grew at its fastest pace in a year, an indication that the recovery was continuing to gain traction in the months before the government shutdown. GDP growth was boosted by a positive contribution from consumer durables purchases, the continued recovery in the housing sector, and net exports. We now have an opportunity to build on this progress by increasing certainty for businesses and investing in jobs and growth, while avoiding the types of self-inflicted wounds that restrained the economy in the early part of the fourth quarter.

    FIVE KEY POINTS IN TODAY’S REPORT FROM THE BUREAU OF ECONOMIC ANALYSIS

    1. Real gross domestic product rose at a solid 2.8 percent annual pace in the third quarter, the fastest quarterly pace in the last year, and the 10th consecutive quarter of growth. The rate of growth picked up slightly from the also-solid 2.5 percent rate observed in the second quarter. The economy has made substantial progress since the end of the recession, with real GDP now 5.3 percent higher than it was at its peak prior to the recession. Nevertheless, more work must be done to increase economic growth and boost job creation.