Economia

E CONOMIC REPORT
OF THE PRESIDENT

Transmitted to the Congress
February 2012

Together With
THE ANNUAL REPORT
of the
COUNCIL OF ECONOMIC ADVISERS

economic
re p ort
of the
president

transmitted to the congress
february 2012
together with

the annual report
of the

council of economic advisers
united states government printing office
washington : 2012
For sale by theSuperintendent of Documents, U.S. Government Printing Office
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ISBN 978-0-16-090181-2

CONTENTS

Page

ECONOMIC REPORT OF THE PRESIDENT ............................................... 1
ANNUAL REPORT OF THE COUNCIL OF ECONOMIC ADVISERS* 7CHAPTER 1.

TO RECOVER, REBALANCE, AND REBUILD ............. 21

CHAPTER 2.

THE YEAR IN REVIEW AND THE
YEARS AHEAD .................................................................... 37

CHAPTER 3.

RESTORING FISCAL RESPONSIBILITY........................ 81

CHAPTER 4.

STABILIZING AND HEALING THE
HOUSING MARKET ........................................................... 99CHAPTER 5.

INTERNATIONAL TRADE AND FINANCE ............... 129

CHAPTER 6.

JOBS AND INCOME:
TODAY AND TOMORROW ........................................... 163

CHAPTER 7.

PRESERVING AND MODERNIZING
THE SAFETY NET ............................................................ 197

CHAPTER 8.

IMPROVING THE QUALITY OF LIFE THROUGH
SMART REGULATION, INNOVATION, CLEAN
ENERGY, AND PUBLICINVESTMENT ...................... 231

REFERENCES

............................................................................................. 267

APPENDIX A

REPORT TO THE PRESIDENT ON THE
ACTIVITIES OF THE COUNCIL OF ECONOMIC
ADVISERS DURING 2011 .............................................. 293

APPENDIX B.

STATISTICAL TABLES RELATING TO INCOME,
EMPLOYMENT, AND PRODUCTION...................... 307

____________

*For a detailed table of contents of the Council’s Report, see page 11.

iii

economic report
of the

president

economic report of the president

To the Congress of the United States:
One of the fundamental tenets of the American economy has been
that if you work hard, you can do well enough to raise a family, own a
home, send your kidsto college, and put a little money away for retirement. That’s the promise of America.
The defining issue of our time is how to keep that promise alive. We
can either settle for a country where a shrinking number of people do very
well while a growing number of Americans barely get by, or we can restore
an economy where everyone gets a fair shot, everyone does their fair share,
and everyoneplays by the same set of rules.
Long before the recession that began in December 2007, job growth
was insufficient for our growing population. Manufacturing jobs were leaving our shores. Technology made businesses more efficient, but also made
some jobs obsolete. The few at the top saw their incomes rise like never
before, but most hardworking Americans struggled with costs that were
growing,paychecks that were not, and personal debt that kept piling up.
In 2008, the house of cards collapsed. We learned that mortgages had
been sold to people who could not afford them or did not understand them.
Banks had made huge bets and doled out big bonuses with other people’s
money. Regulators had looked the other way, or did not have the authority
to stop the bad behavior. It was wrong. Itwas irresponsible. And it plunged
our economy into a crisis that put millions out of work, saddled us with
more debt, and left innocent, hardworking Americans holding the bag.
In the year before I took office, we lost nearly 5 million private sector jobs. And we lost almost another 4 million before our policies were in
full effect.
Those are the facts. But so are these: In the last 23...