economic

re p ort
of the
president

transmitted to the congress

march 2014
together with

the annual report

of the

council of economic advisers

united states government printing office
washington : 2014

-092301-2

90000

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800
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I S B N 978-0-16-092301-2

23012

C O N T E N T S
ECONOMIC REPORT OF THE PRESIDENT.....................................................1
ANNUAL REPORT OF THE COUNCIL OF ECONOMIC ADVISERS*........7
CHAPTER 1. PROMOTING OPPORTUNITY AND SHARED,
SUSTAINABLE GROWTH................................................... 21
CHAPTER 2.

THE YEAR IN REVIEW AND THE YEARS AHEAD...... 45

CHAPTER 3. THE ECONOMIC IMPACT OF THE AMERICAN

RECOVERY AND REINVESTMENT ACT FIVE
YEARS LATER........................................................................ 91
CHAPTER 4. RECENT TRENDS IN HEALTH CARE COSTS, THEIR
IMPACT ON THE ECONOMY, AND THE ROLE OF
THE AFFORDABLE CARE ACT.......................................147
CHAPTER 5.

FOSTERING PRODUCTIVITY GROWTH.....................179

CHAPTER 6. THE WAR ON POVERTY 50 YEARS LATER:

A PROGRESS REPORT.......................................................221
CHAPTER 7. EVALUATION AS A TOOL FOR IMPROVING
FEDERAL PROGRAMS.......................................................269
REFERENCES ................................................................................................299
APPENDIX A. REPORT TO THE PRESIDENT ON THE ACTIVITIES
OF THE COUNCIL OF ECONOMIC ADVISERS
DURING 2013.........................................................................345
APPENDIX B. STATISTICAL TABLES RELATING TO INCOME,
EMPLOYMENT, AND PRODUCTION.............................359

____________

*For a detailed table of contents of the Councils Report, see page 11.

iii

economic report
of the

president

economic report of the president

To the Congress of the United States:

This years Economic Report of the President describes how after 5
years of grit and determined effort, the United States is better-positioned
for the 21st century than any other nation on Earth. Weve now experienced 4 straight years of economic growth with more than 8 million new
private-sector jobs. Our unemployment rate is the lowest its been in more
than 5 years. Our deficits have been cut by more than half. For the first
time in nearly 20 years, we produce more oil at home than we buy from
the rest of the world. The housing market is rebounding, manufacturers
are adding jobs for the first time since the 1990s, and we sell more of what
we make to the rest of the world than ever before.
But in many ways, the trends that have threatened the middle class
for decades have grown even starker. While those at the top are doing better than ever, average wages have barely budged. Inequality has deepened.
Too many Americans are working harder and harder just to get by, and
too many still arent working at all. Our job is to reverse those trends. It is
time to restore opportunity for allthe idea that no matter who you are or
how you started out, with hard work and responsibility, you can get ahead.
Thats why this must be a year of action. Im eager to work with the
Congress to speed up economic growth, strengthen the middle class, and
build new ladders of opportunity into the middle class. But America does
not stand still, and neither will I. Wherever and whenever I can take steps
without legislation to expand opportunity for more American families, I
will. Because opportunity is who we are. And the defining project of our
generation is to restore that promise.
Simply put, this opportunity agenda has four parts. Number one is
more new jobs. Number two is training more Americans with the skills to
fill those jobs. Number three is guaranteeing every child access to a world-

Economic Report of the President | 3

class education. And number four is making sure hard work pays off for
every American.
With the economy picking up speed, companies say they intend to
hire more people this year. We should make that decision even easier for
them by closing wasteful tax loopholes and lowering tax rates for businesses that create jobs here at home, and use the money we save in the
process to create jobs rebuilding our roads, upgrading our ports, and
unclogging our commutes. We should help America win the race for the
next wave of high-tech manufacturing jobs by connecting businesses and
universities in hubs for innovation. We should do more to boost exports
and fund basic research. We should maintain our commitment to an allof-the-above-energy strategy that is creating jobs and leading to a safer
planet. Finally, we should heed the call of business leaders, labor leaders,
faith leaders, and law enforcement, and fix our broken immigration system. Independent economists say this will grow our economy and shrink
our deficits by almost $1 trillion in the next two decades. We should get it
done this year.
Creating jobs is step one, but in this rapidly-changing economy,
we also must make sure every American has the skills to fill those jobs.
Ive asked Vice President Biden to lead an across-the-board reform of
Americas training programs to make sure they have one mission: training
Americans with the skills employers need, and matching them to good jobs
that need to be filled right now. That means more on-the-job training, and
more apprenticeships that set a young worker on an upward trajectory for
life. It means connecting companies to community colleges that can help
design training to fill their specific needs.
Im also convinced we can help Americans return to the workforce
faster by reforming unemployment insurance so that its more effective in
todays economy. But first, the Congress needs to restore the unemployment insurance it let expire at the end of last year, affecting around 2 million workers.
Of course, its not enough to train todays workforce. We also have
to prepare tomorrows workforce, by guaranteeing every child access to a
world-class education. Our high school graduation rate is higher than its
been in 30 years, and more young people are earning college degrees than
ever before. The problem is were still not reaching enough kids, and were
not reaching them in time.
That has to change. I am repeating a request I made last year asking you to help States make high-quality preschool available to every four

4 | Economic Report of the President

year-old. In the meantime, Im going to pull together a coalition of elected

officials, business leaders, and philanthropists willing to help more kids
access the high-quality early education they need. Ill also work to redesign
high schools and partner them with colleges and employers that offer the
real-world education and hands-on training that can lead directly to a job
and career, and follow through on my pledge to connect 99 percent of our
students to high-speed broadband over the next 4 years. With the support
of the FCC, weve announced a down payment to start connecting more
than 15,000 schools and 20 million students over the next 2 years, without
adding a dime to the deficit, and with the help of some of Americas top
companies, were going to make the most of these new connections.
My Administration is also shaking up our system of higher education, so that no middle-class family is priced out of a college education.
Were offering millions the opportunity to cap their monthly student loan
payments to ten percent of their income, and I will continue to look for
other ways to see how we can help even more Americans who feel trapped
by student loan debt.
But we know our opportunity agenda wont be completeand too
many young people entering the workforce today will see the American
Dream as an empty promiseunless we do more to make sure hard
work pays off for every single American. This year, we should do more to
secure a womens right to equal pay for equal work. We should expand the
Earned Income Tax Credit to help more workers without children make
ends meet, and help more Americans save for retirement through the new
MyRA plans my Administration is creating. We should protect taxpayers from ever footing the bill for a housing crisis ever again. And we will
continue the work of making sure every American has access to affordable,
quality health insurance thats there for them when they need it.
And we should raise a minimum wage that in real terms is worth
less than it was when Ronald Reagan took office. In the year since I first
asked the Congress to raise the minimum wage, six States raised theirs, and
more companies like Costco see paying fair wages as one of the best ways
to reduce turnover, increase productivity, and boost profits. As Americas
chief executive, I agree, which is why I signed an Executive Order requiring
Federal contractors to pay their employees to pay their federally funded
employees a fair wage of at least $10.10 an hour for new contracts. There is
a bill in front of both the House and the Senate that would raise the minimum wage to $10.10 for all Americans. The Congress should pass that bill
and give America a raise.

Economic Report of the President | 5

I believe this can be a breakthrough year for America. But it falls

to all of us to grow the economy and create new jobs, to strengthen the
middle class, and to build new ladders of opportunity for folks to work
their way into the middle class. So in the coming months, lets see where
we can make progress together. Lets continue to make this a year of action.
Together, we can restore an economy that works for everybody, and our
founding vision of opportunity for all.

the white house

march 2014

6 | Economic Report of the President

the annual report

of the

council of economic advisers

letter of transmittal
Council of Economic Advisers
Washington, D.C., March 10, 2014

Mr. President:
The Council of Economic Advisers herewith submits its 2014
Annual Report in accordance of the Employment Act of 1946 as amended
by the Full Employment and Balanced Growth Act of 1978.
Sincerely yours,

Jason Furman
Chairman

Betsey Stevenson
Member

James H. Stock
Member

C O N T E N T S

CHAPTER 1. PROMOTING OPPORTUNITY AND SHARED,

SUSTAINABLE GROWTH........................................................................... 21
THE ECONOMY FIVE YEARS AFTER THE CRISIS.................................. 23
HOW WE GOT HERE: THE ADMINISTRATIONS RESPONSE TO
THE CRISIS.................................................................................................... 26
SOURCES OF OPPORTUNITY IN 2014 AND BEYOND............................ 28

Cyclical Factors..................................................................................... 29
Structural Trends ................................................................................. 30
Long-Term Fiscal Sustainability......................................................... 33

THE CHALLENGES THAT REMAIN AND THE PRESIDENTS

PLANS TO ADDRESS THEM........................................................................ 34

Continuing to Restore the Economy to its Full Potential............... 34

Expanding the Economys Potential.................................................. 37
Promoting Economic Opportunity..................................................... 40

CONCLUSION............................................................................................... 43

CHAPTER 2. THE YEAR IN REVIEW AND THE YEARS

AHEAD................................................................................................................ 45
KEY EVENTS OF 2013................................................................................... 46

Aggregate Output Growth During the Year..................................... 46

Fiscal Policy .......................................................................................... 47
Monetary Policy ................................................................................... 50
Financial Markets................................................................................. 51
International Developments................................................................ 53

DEVELOPMENTS IN 2013 AND THE NEAR-TERM OUTLOOK............. 56

Consumer Spending.............................................................................. 56
Business Investment.............................................................................. 59
State and Local Governments............................................................. 62
International Trade.............................................................................. 64
Housing Markets................................................................................... 67
11

Energy..................................................................................................... 72
Labor Markets....................................................................................... 76
Wage Growth and Price Inflation...................................................... 81
THE LONG-TERM OUTLOOK.................................................................... 84

The 11-Year Forecast............................................................................ 84

Growth in GDP over the Long Term................................................. 86

CONCLUSION............................................................................................... 89

CHAPTER 3. THE ECONOMIC IMPACT OF THE AMERICAN

RECOVERY AND REINVESTMENT ACT FIVE YEARS
LATER.................................................................................................................. 91
THE 2007-09 RECESSION AND THE EARLY POLICY RESPONSES........ 93

Initial Policy Responses........................................................................ 94

AN OVERVIEW OF THE RECOVERY ACT AND SUBSEQUENT

JOBS MEASURES........................................................................................... 95

The Recovery Act................................................................................... 96

Subsequent Jobs Measures................................................................... 99
Automatic Countercylical Measures................................................ 100
Total Fiscal Response.......................................................................... 103

NEAR-TERM MACROECONOMIC EFFECTS OF THE RECOVERY

ACT AND SUBSEQUENT FISCAL LEGISLATION...................................103

Model-Based Estimates of the Macroeconomic Effects of the

Recovery Act and Subsequent Fiscal Legislation............................ 105
Cross-State Evidence........................................................................... 111
International Comparison................................................................. 114
Benchmarking the Economys Performance Since 2009............... 114

EFFECTS OF THE RECOVERY ACT IN PROVIDING RELIEF FOR

INDIVIDUALS.............................................................................................117

Tax Cuts for Families......................................................................... 118

Unemployment Insurance................................................................. 119

THE EFFECT OF THE RECOVERY ACT ON LONG-TERM

GROWTH.....................................................................................................122

Protecting and Expanding Investments in Physical Capital........ 123

Protecting and Expanding Investments in Human Capital......... 126
Investments in Technology and Innovation................................... 128
Fiscal Sustainability and the Recovery Act..................................... 131

CONCLUSION.............................................................................................132

12 | Annual Report of the Council of Economic Advisers

APPENDIX 1: COMPONENTS OF THE RECOVERY ACT AND

SUBSEQUENT FISCAL MEASURES..........................................................133

Tax Relief ............................................................................................ 134

Aid to Affected Individuals................................................................ 136
State Fiscal Relief................................................................................ 137
Investments.......................................................................................... 138
Subsequent Fiscal Measures.............................................................. 139

APPENDIX 2: FISCAL MULTIPLIERS: THEORY AND EMPIRICAL

EVIDENCE...................................................................................................139

Forward-Looking Models with Rigidities ...................................... 141

Time Series Evidence ......................................................................... 142
Cross-Sectional Multipliers ............................................................... 145

CHAPTER 4. RECENT TRENDS IN HEALTH CARE COSTS,

THEIR IMPACT ON THE ECONOMY, AND THE ROLE OF
THE AFFORDABLE CARE ACT..............................................................147
RECENT TRENDS IN HEALTH CARE COSTS.........................................150
WHAT IS HAPPENING NOW, AND WHAT WILL HAPPEN NEXT?...156

The Role of the 2007-09 Recession................................................... 156

Non-ACA Factors Affecting Health Spending Growth................. 160
The Role of the Affordable Care Act................................................ 162

ECONOMIC BENEFITS OF SLOW HEALTH SPENDING GROWTH....171

Higher Living Standards.................................................................... 171

Lower Deficits...................................................................................... 173
Higher Employment and Economic Growth................................... 176

CONCLUSION.............................................................................................178

CHAPTER 5. FOSTERING PRODUCTIVITY GROWTH.............179

TRENDS IN TOTAL FACTOR PRODUCTIVITY.....................................181

Labor Productivity, Total Factor Productivity, and Multifactor

Productivity.......................................................................................... 181
Postwar U.S. Productivity Growth................................................... 182

PRODUCTIVITY GROWTH AND INEQUALITY GROWTH.................189

Trends in Inequality, Productivity Growth, and

Compensation...................................................................................... 189
Technological Change and Inequality............................................. 190

Contents |13

POLICIES TO FOSTER PRODUCTIVITY GROWTH AND TO HELP

ENSURE THAT EVERYONE BENEFITS FROM IT..................................193
TELECOMMUNICATIONS AND PRODUCTIVITY GROWTH.............197

Innovation and Investment............................................................... 197

Four Key Areas for Telecommunications Policy............................ 198
Challenges to Broad Adoption of Telecommunications
Technology........................................................................................... 209

PATENTS......................................................................................................212

Standard-Essential Patents................................................................ 213

Patent Assertion Entities.................................................................... 215

CONCLUSION.............................................................................................217

CHAPTER 6. THE WAR ON POVERTY 50 YEARS LATER:

A PROGRESS REPORT...............................................................................221
MEASURING POVERTY: WHO IS POOR IN AMERICA?.......................223

Measuring Poverty.............................................................................. 223

The Official Poverty Measure........................................................... 223
The Supplemental Poverty Measure................................................ 225
Who is Poor?........................................................................................ 228
Employment......................................................................................... 229
Education Level................................................................................... 230
Children................................................................................................ 230
The Elderly.......................................................................................... 230
Women................................................................................................. 232
Race and Ethnicity.............................................................................. 232
People with Disabilities...................................................................... 233
Rural and Urban Communities........................................................ 233

ASSESSING THE WAR ON POVERTY......................................................234

Context................................................................................................. 234
Correcting the Historical Account of Poverty Since the 1960s .... 240
Measuring the Direct Impact of Antipoverty Efforts..................... 242

THE ROLE OF ANTIPOVERTY PROGRAMS: A CLOSER LOOK...........245

Antipoverty Effects of Specific Programs......................................... 245

The Effects of Antipoverty Programs on Work and Earnings...... 248
Economic Mobility.............................................................................. 252
Intergenerational Returns.................................................................. 255

14 | Annual Report of the Council of Economic Advisers

THE OBAMA ADMINISTRATIONS RECORD AND AGENDA TO

STRENGTHEN ECONOMIC SECURITY AND INCREASE
OPPORTUNITY...........................................................................................258

Taking Immediate Action During the Economic Crisis................ 258

Expanding Health Care Security ..................................................... 260
Rewarding Work................................................................................. 260
Empowering Every Child with a Quality Education .................... 263
Creating Jobs and Growing Our Economy .................................... 265
Investing in and Rebuilding Hard-Hit Communities................... 265

CONCLUSION.............................................................................................266

CHAPTER 7. EVALUATION AS A TOOL FOR IMPROVING

FEDERAL PROGRAMS...............................................................................269
CONDUCTING RIGOROUS IMPACT EVALUATIONS IN FEDERAL
PROGRAMS..................................................................................................271

Estimation of Causal Effects of a Program or Intervention......... 272

Other Criteria for High-Quality, Successful Impact
Evaluations.......................................................................................... 274
Lower-Cost Ways for Impact Evaluations to Facilitate Real-Time
Learning................................................................................................ 275

IMPACT OF THE EVIDENCE-BASED AGENDA.....................................278

Uses of Evaluation ............................................................................. 278

Building Evidence when Existing Evidence is Limited.................. 283

FURTHERING THE EVIDENCE AGENDA...............................................286

Legislative Support for Evaluation .................................................. 287

Building Evaluation into the Design of Programs ........................ 290
Developing the Capacity to Link to Other Administrative and
Survey Data Sources........................................................................... 294
Facilitating Researcher Access to Federal Data while
Protecting Privacy ......................................................................... 296

CONCLUSION.............................................................................................297

REFERENCES................................................................................... 299

A.
B.

APPENDIXES
Report to the President on the Activities of the Council of
Economic Advisers During 2013........................................................345
Statistical Tables Relating to Income, Employment, and
Production..............................................................................................359

Contents |15

1.1.
1.2.
1.3.
1.4.
1.5.
1.6.
1.7.
1.8.
1.9.
1.10.
1.11.
1.12.
1.13.
1.14.
1.15.
2.1.
2.2.
2.3.
2.4.
2.5.
2.6.
2.7.
2.8.
2.9.
2.10.
2.11.
2.12.
2.13.
2.14.

FIGURES
Monthly Change in Private Nonfarm Payrolls, 20072014.............. 22
U.S. Merchandise and Overall Trade Deficits, 20002013............... 24
Major Deficit Reduction Episodes Over a FourYear Period
Since the Demobilization from WWII................................................. 24
Real GDP Per WorkingAge Population in 20072008 Banking
Crisis Countries, 20072013.................................................................. 27
Quarterly Effect of the Recovery Act and Subsequent
Fiscal Measures on Employment, 20092012..................................... 27
Change in Poverty Rate from 20072010, With and Without
Tax Credits and Benefits........................................................................ 29
Domestic Crude Oil Production and Net Imports, 20002013....... 31
Growth in Real Per Capita National Health Spending,
19612013................................................................................................. 33
Unemployment Rate by Duration, 19942014................................... 35
Growth in Real Average Hourly Earnings for Production and
Nonsupervisory Workers, 20072014.................................................. 36
Real Median Family income, 19802012............................................. 36
Building Permits for New Residential Units, 19602014.................. 38
Growth in Total Factor Productivity, 19532012.............................. 39
Share of National Income Earned by Top 1 Percent,
19152012................................................................................................. 41
Growth in Productivity and Average Wage, 19472013................... 41
Mean GDP Growth, 20072013............................................................ 47
Federal Budget Deficit, 19502015....................................................... 50
Interest Rates, 20102014...................................................................... 52
Treasury Bills Maturing in Late OctoberEarly
November, 2013...................................................................................... 53
Current Account Balance by Country, 20002013............................ 55
Cumulative Flows into Mutual and ExchangeTraded Funds
Investing in Emerging Markets, 20102014........................................ 56
Household Deleveraging, 19902013................................................... 58
Consumption and Wealth Relative to Disposable Personal
Income (DPI), 19522013...................................................................... 58
Business Investment and the Acceleration of Business Output,
19652013................................................................................................. 62
Real State and Local Government Purchases During Recoveries.... 63
State and Local Pension Fund Liabilities, 19522013........................ 64
Trade in Goods and Services, 20072013............................................ 65
U.S. Exports Growth, 20092013.......................................................... 65
Current Account Balance, 19852013.................................................. 66

16 | Annual Report of the Council of Economic Advisers

2.15. Housing Starts, 19602013.................................................................... 71

2.16. National House Price Indexes, 20002013.......................................... 71
2.17. Cumulative Over and UnderBuilding of Residential and
Manufactured Homes, 19962013........................................................ 73
2.18. Petroleum Net Imports, 19802015..................................................... 74
2.19. Monthly Crude Oil Production and Net Imports, 19902013......... 74
2.20. Wind and Solar Energy Production, 20002013................................ 75
2.21. U.S. Per Capita Consumption of Gasoline and Real Gasoline
Prices, 20002013.................................................................................... 76
2.22. Unemployment Rate, 19792014.......................................................... 78
2.23. Nonfarm Payroll Employment, 20072014......................................... 78
2.24. Unemployment Rate by Duration, 19902014................................... 79
2.25. Predicted vs. Actual Manufacturing Payroll Employment,
20002014................................................................................................. 80
3.1. Recovery Act Programs by Functional Categories............................. 98
3.2. Recovery Act and Subsequent Fiscal Measures by Functional
Category..................................................................................................102
3.3. Automatic Stabilizers and the Budget Balance, 20092013............102
3.4. Fiscal Expansion as a Percentage of GDP.........................................103
3.5. Estimates of the Effects of the Recovery Act on the Level of
GDP, 20092013....................................................................................109
3.6. Estimates of the Effects of the Recovery Act on Employment,
20092013...............................................................................................109
3.7. Quarterly Effect of the Recovery Act and Subsequent Fiscal
Measures on GDP, 20092012............................................................110
3.8. Quarterly Effect of the Recovery Act and Subsequent Fiscal
Measures on Employment, 20092012..............................................110
3.9. Change in Nonfarm Employment......................................................113
3.10. Disposable Personal Income With and Without the ARRA..........119
3.11. Recovery Act Cumulative Public Investment Outlays,
20092013...............................................................................................124
3.12. Advanced Renewable Electric Power Net Generation,
20002012 .............................................................................................129
4.1. Growth in Real Per Capita National Health Expenditures,
19612013...............................................................................................154
4.2. General and Health Care Price Inflation, 19602013......................154
4.3. Growth in Real Per Enrollee Health Spending by Payer.................157
4.4. Medicare 30Day, AllCondition Hospital Readmission
Rate, 20072013.....................................................................................166
4.5. InflationAdjusted Premiums for Medicare Parts B and D,
20002014...............................................................................................173
4.6. Recent CBO Projections of Medicare and Medicaid Outlays........176

Contents |17

5.1.
5.2.

Nonfarm Private Business Productivity Growth, 19492012.........185

15Year Centered Moving Average of Annual Growth Rates for
Labor and Multifactor Productivity, 19562005..............................187
5.3. Growth in Productivity and Average Wage, 19472013.................190
5.4. Basic Research Expenditures in the U.S. by Source Funding,
2010.........................................................................................................195
5.5. Composition of Total R&D Spending as a Share of GDP,
19532011...............................................................................................196
5.6. Relative Investment of the Telecommunications Sector, 2011......199
5.7. Exclusive and Shared Allocation of Radio Spectrum.......................202
5.8. Federal Agencies with Most Spectrum Assignments.......................203
5.9. Percentage of Households with Access to Download Speeds
of 6 Megabytes per Second or Greater...............................................209
5.10. Patents Issued in the U.S. by Technological Category....................213
6.1. Trends in the Official Poverty Measure, 19592012........................235
6.2. Average Real Household Income by Quintile, 19672012.............236
6.3. Womens 5010 Wage Gap vs Real Minimum Wage,
19732012...............................................................................................238
6.4. Official vs Anchored Supplemental Poverty Rates,
19672012...............................................................................................243
6.5. Trends in Market and PostTax, PostTransfer Poverty
19672012...............................................................................................244
6.6. Trends in Market and PostTax, PostTransfer Deep Poverty,
19672012...............................................................................................246
6.7. Percentage Point Impact on SPM Child Poverty for
Selected Years.........................................................................................250
6.8. Percentage Point Impact on Deep SPM Child Poverty for
Selected Years.........................................................................................250
6.9. Real Per Capita Expenditures on Select Programs, 19672012.....254
6.10. Economic Mobility for Children from First Income Quintile.......256
6.11. Recovery Act and Subsequent Extensions: Cumulative
PersonYears Kept from Poverty, 20082012..................................261
7.1. Outlays for Grants to State and Local Governments,
19922012...............................................................................................281
7.2. Inventory of Beds for Homeless and Formerly Homeless People,
20072012...............................................................................................287
2.1.
2.2.

TABLES
Administration Economic Forecast...................................................... 85
SupplySide Components of Actual and Potential Real GDP
Growth, 19522014................................................................................. 87

18 | Annual Report of the Council of Economic Advisers

3.1.

Forecasted and Actual Real GDP Growth and

Unemployment Rate............................................................................... 95
3.2. An Overview of Recovery Act Fiscal Impact...................................... 99
3.3. Recovery Act Programs by Functional Categories............................. 99
3.4. Fiscal Support for the Economy Enacted After the
Recovery Act..........................................................................................101
3.5. Estimated Output Multipliers for Different Types of Fiscal
Support....................................................................................................108
3.6. Estimates of the Effects of the Recovery Act on the Level
of GDP....................................................................................................112
3.7. Tax Relief and Income Support in the Recovery Act and
Subsequent Measures, 20092012......................................................118
3.8. Recovery Act Long Term Growth Investment by Category...........123
3.9. Recovery Act Outlays, Obligations, and Tax Reductions...............135
3.10. Recovery Act Fiscal Stimulus by Functional Category....................136
3.11. Fiscal Support for the Economy Enacted After the
Recovery Act .........................................................................................140
3.12. Summary of CrossSectional Fiscal Multiplier Estimates..............146
4.1. Real Per Capita NHE Annual Growth Rates by Payer and
Spending Category................................................................................151
4.2. Recent Trends in Several Indicators of Health Care Spending
and Price Growth..................................................................................155
5.1. Sources of Productivity Improvement, Nonfarm Private
Business, 19482012.............................................................................184
5.2. Nonfarm Private Business Growth.....................................................186
5.3. Average Annual Rates of Change in the Nonfarm Business
Sector.......................................................................................................191
6.1. Poverty Rates by Selected Characteristics, 19592012....................229
6.2. Poverty Rate Reduction from Government Programs, 2012..........248
Box 21:
Box 22:
Box 23:
Box 24:
Box 25:
Box 31:
Box 32:

BOXES
The 2013 Comprehensive Revision to the National Income
and Product Accounts..................................................................... 60
Administration Trade Policy Initiatives....................................... 68
The Climate Action Plan................................................................ 77
Unemployment Duration and Inflation....................................... 82
Immigration Reform and Potential GDP Growth...................... 88
Other Administration Policy Responses to the
Economic Crisis.............................................................................104
The U.S. Recovery in Comparative International and
Historical Context..........................................................................116

Contents |19

Box 41: Two Measures of Growth in Health Care Costs: Spending

and Prices........................................................................................152
Box 42: How Will the ACAs Coverage Expansion Affect Total
Spending Growth?.........................................................................163
Box 43: The Cost Slowdown and ACA Reforms are Reducing
Medicare Beneficiaries OutofPocket Costs..........................172
Box 44: Premiums on the ACA Marketplaces are Lower than
Projected..........................................................................................175
Box 51: Measuring Multifactor Productivity...........................................183
Box 52: Does Inequality Affect Productivity?..........................................194
Box 53: JustinTime Manufacturing......................................................200
Box 54: Spectrum Investment Policies......................................................204
Box 55: Electronic Health Records............................................................210
Box 56: The LeahySmith America Invents Act.....................................216
Box 57: PayForDelay Settlements in Pharmaceutical
Patent Cases....................................................................................218
Box 61: Flaws in the Official Poverty Measure........................................224
Box 62: A Consumption Poverty Measure...............................................226
Box 63: Women and Poverty.....................................................................231
Box 64: Social Programs Serve All Americans.........................................237
Box 65: Raising the Minimum Wage........................................................262
Box 71: Impact Evaluations, Process Evaluations, and Performance
Measurement..................................................................................270
Box 72: Using Behavorial Economics to Inform Potential Program
Improvements................................................................................277
Box 73: Rapid Cycle Evaluations in Center for Medicare
and Medicaid Innovation.............................................................279

20 | Economic Report of the President