Council of Economic Advisers Blog

  • Happy Birthday ConnectED!

    Economic research typically finds huge payoffs to investments in education. For example, a recent CEA report estimated that a $1.00 investment in early childhood education produces roughly $8.60 in social benefits. And as of 2011, the college wage premium – the difference in median earnings between individuals with a bachelor’s degree and those with a high-school diploma – was around 65 percent. Unfortunately, these benefits remain unevenly distributed, in part due to substantial disparities in educational access and attainment.

    Technology offers one of the most promising tools for expanding access to high-quality education, and this week marks the two-year anniversary of President Obama’s ConnectED initiative to deliver personalized, digital learning to American K-12 schools. While only two years old, ConnectED is already overachieving, and is well on its way to meet the President’s goal of connecting 99 percent of students to high-speed broadband and wireless Internet in their classrooms and libraries by 2018.

  • Third Estimate of GDP for the First Quarter of 2015

    Real GDP for the first quarter was revised up this morning, reflecting slightly higher growth in personal consumption, private investment, and government expenditures than previously estimated. The small first-quarter decline in overall GDP was driven by a number of factors including harsh winter weather and tepid foreign demand. However, the combination of consumption and investment—the most stable and persistent components of output—continued to rise at a robust year-over-year pace. This solid trend matches the strong pace of job growth and employment reduction observed over the last year. The President is working to build on these underlying trends by opening our exports to new markets with high-standards free trade agreements, boosting investment in infrastructure, and avoiding harmful budget cuts like the sequester.

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

    1. Real gross domestic product (GDP) edged down 0.2 percent at an annual rate in the first quarter of 2015, according to the third estimate from the Bureau of Economic Analysis. This report reflects an upward revision of 0.5 percentage point to overall GDP growth. The slower first quarter follows a solid increase of 3.6 percent at an annual rate during the second half of 2014. Over the past four quarters, GDP rose 2.9 percent. First-quarter growth was likely affected by a number of transitory factors including unusually severe weather, the West Coast ports dispute, and various measurement issues. A decline in net exports was another important contributor to weak GDP growth. Indeed, net exports subtracted nearly 2 full percentage points from quarterly GDP growth. Furthermore, structures investment subtracted about 0.6 percentage point from GDP (see point 4), reflecting reduced oil drilling in the wake of last year’s decline in oil prices. Despite the decrease in GDP, real gross domestic income—an alternate measure of economic output—increased 1.9 percent at an annual rate in the first quarter.

  • The Employment Situation in May

    The economy added 280,000 jobs in May—the strongest month of the year so far—as wages continued to rise and the participation rate ticked upward. We have now added 5.6 million jobs over the past two years, the best two-year job growth since 2000. Although the job market has made considerable progress throughout this recovery, challenges remain for our economy and there is more work to do. The President is committed to building on the positive trends through a comprehensive agenda to boost employment and wages for the middle class, including urging Congress to take important action such as opening new markets for U.S. goods and services through expanded trade, increasing investments in infrastructure, providing relief from the sequester, and raising the minimum wage.

    FIVE KEY POINTS ON THE LABOR MARKET IN MAY 2015

    1. The private sector has added 12.6 million jobs over 63 straight months of job growth, extending the longest streak on record. Today we learned that private-sector employment rose by 262,000 in May. Our businesses created more than 200,000 jobs in fourteen of the past fifteen months—the first time that has happened since 1995. On the whole, our economy has added 3.1 million new jobs over the past twelve months, just off the fifteen-year high achieved in February.

  • New Data and Updated Report Show Medicaid Is Expanding Insurance Coverage, with Major Benefits to States’ Citizens and Economies

    The Affordable Care Act has dramatically expanded access to health insurance coverage. Since the law’s major coverage provisions took effect at the end of 2014, the Nation has seen the sharpest reduction in the uninsured rate since the decade following the creation of Medicare and Medicaid in 1965, and the Nation’s uninsured rate is now at its lowest level ever. Combining these recent gains with earlier gains due to the law’s provision allowing young adults to remain on a parent’s plan until age 26, more than 16 million Americans had gained health insurance coverage as of early 2015.

  • Second Estimate of GDP for the First Quarter of 2015

    Today’s downward revision to GDP growth was entirely accounted for by revisions to inventory investment and net exports, with other changes being small and neutral on balance. The first-quarter slowdown was the result of harsh winter weather, tepid foreign demand, and consumers saving the windfall from lower oil prices. The combination of personal consumption and fixed investment, the most stable components of GDP, has grown 3.4 percent over the past four quarters. This solid long-term economic trend complements the robust pace of job growth and unemployment reduction over the last year. The President is committed to further strengthening these positive trends by opening our exports to new markets with new high-standards free trade agreements that create opportunities for the middle class, expanding investments in infrastructure, and ensuring the sequester does not return in the next fiscal year as outlined in the President’s FY2016 Budget.

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

    1. Real gross domestic product (GDP) fell 0.7 percent at an annual rate in the first quarter of 2015, according to the second estimate from the Bureau of Economic Analysis. The decline follows an increase of 3.6 percent at an annual rate during the second half of 2014. First-quarter growth was likely affected by a number of factors including especially harsh winter weather in the first quarter (see point 3) and a spike in personal saving (see point 4). A decline in the trade balance was another major contributor, partially reflecting the continued drag on U.S. exports from the slowdown in foreign growth. Indeed, net exports subtracted nearly 2 full percentage points from quarterly GDP growth. Structures investment subtracted about 0.7 percentage point from GDP, likely reflecting reduced oil mining in the wake of last year’s decline in oil prices.

  • Creating Opportunity for All in Rural Communities

    Rural America provides the vast majority of food and energy benefits for the rest of the country, is the source of nearly 90 percent of renewable water resources, and is home to important service sector and manufacturing hubs. Despite this critical role in our nation’s economy, too many Americans in rural areas are not sharing in our nation’s economic growth.

    In 2013, 6.2 million Americans in rural areas lived in poverty, including about 1.5 million children. Moreover, in far too many of these communities, high rates of poverty have persisted for generations: Over 300 rural counties have had poverty rates of over 20 percent in every Census since 1980.

    While the fight to eliminate poverty is far from over, today, as part of the White House Rural Council’s ongoing efforts to address rural child poverty, we released a report that finds that programs like refundable tax credits, Social Security, SNAP, and housing assistance lifted about 9.0 million rural people out of poverty in 2013, including about 1.6 million children.