Today, the Council of Economic Advisers released the Economic Report of the President, which includes the Annual Report of the Council of Economic Advisers. This Report, required by statute, demonstrates the robust economic progress the United States has made over the past year, and makes the case for the Biden-Harris Administration’s economic policy priorities.
The Report begins with a reflection by President Biden about the Administration’s economic accomplishments over the 2021 calendar year and opportunities and challenges ahead. The Annual Report of the Council of Economic Advisers follows, with seven chapters, a report on CEA’s activities in 2021, and statistical tables relating to income, employment, and production.
The volume includes the following chapters:
Chapter 1 outlines the rationale for public investment as a way to produce economic growth and reduce inequality. It also provides an overview of the volume.
“…when the public sector stepped back, economic growth diminished and became less evenly shared. The private sector did not lose a rival; it lost a partner.”
Chapter 2 provides an overview of the economy over the past year, focusing on how this recovery differs from past ones. The chapter discusses fiscal and monetary policy support, pandemic issues, inflation, and labor force participation. The macroeconomic forecast underpinning the Administration’s Fiscal Year 2023 Budget is also presented.
“…in 2021, more than a year after shutdowns and masking began, almost every driver of the economic ebbs and flows the United States experienced had stemmed directly or indirectly from this virus.”
Chapter 3 analyzes the U.S. economy in a global context, examining other countries’ paths toward recovery, inflation trends, labor markets, and shifts in international trade and their impact on the U.S. trade deficit. The chapter then discusses principles for U.S. international economic policy that promotes economic resilience and generates benefits that are shared broadly across American society.
“Bolstered by an early and rapid vaccine rollout as well as by strong fiscal support, the United States’ recovery has been robust, outpacing that of most of our major trading partners in 2021.”
Chapter 4 discusses education, workforce development, and health, and public investments that would support the development of these forms of human capital. It discusses policy changes that could expand U.S. economic capacity and allow human capital to be used more productively.
“Investments in people expand the productive capacity of the U.S. economy, boost living standards, and ensure that our workforce has the skills and education needed to compete in this dynamic world.”
Chapter 5 analyzes the forces that inhibit markets from being truly competitive and the importance of addressing factors that get in the way of workers achieving their true potential—particularly monopsony, monopoly, and race and gender discrimination. It also examines how persistent inequality may reduce economic efficiency and capacity growth, and how policies (such as raising the minimum wage and protecting workers’ right to organize a union) can counteract the noncompetitive forces that contribute to inequality.
“Addressing inequality is important for ensuring that people are rewarded fairly for their efforts and contributions to productivity as well as for fostering stronger productivity and growth.”
Chapter 6 describes the evolution of the supply chain and discusses the market failures associated with firms’ increased reliance on outsourcing and offshoring. It then provides examples of Administration proposals that would help to overcome these market failures, strengthening supply chains’ resilience and innovation.
“The year 2021 was when supply chains—the networks of producers, transportation companies, and distribution centers that develop and move products and services—entered dinner table conversations.”
Chapter 7 discusses climate risks and global progress in mitigating those risks by transitioning to clean energy. The chapter also outlines a set of market failures holding back the energy transition, discusses policies that can cost-effectively accelerate the transition, and explains the economic rationale underlying Federal climate policies to smooth the energy transition for U.S. domestic industries and vulnerable communities.
“…the energy transition provides opportunities for bolstering domestic firms in emerging carbon-free industries and for economic development in the communities that are most vulnerable to the transition’s risks.”
For Statistical Tables, visit here.
For the Full Report, visit here.
For Past Reports, visit here.