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The Cost of Delaying Action to Stem Climate Change

August 12, 2014 Comments off

The Cost of Delaying Action to Stem Climate Change (PDF)
Source: Council of Economic Advisers (White House)

The signs of climate change are all around us. The average temperature in the United States during the past decade was 0.8 ° Celsius (1.5 ° Fahrenheit) warmer than the 1901 – 1960 average, and the last decade was the warmest on record both in the United States and globally. Global sea levels are currently rising at approximately 1.25 inches per decade, and the rate of increase appears to be accelerating. Climate change is having different impacts across regions within the United States. In the West, heat waves have become more frequent and more intense, while heavy downpours are increasing throughout the lower 48 States and Alaska, especially in the Midwest and Northeast. The scientific consensus is that these changes, and many others, are largely consequences of anthropogenic emissions of greenhouse gases.

The emission of greenhouse gases such as carbon dioxide (CO 2) harms others in a way that is not reflected in the price of carbon – based energy, that is, CO 2 emissions create a negative externality. Because the price of carbon – based energy does not refl ect the full costs, or economic damages, of CO 2 emissions , market forces result in a level of CO2 emissions that is too high . Because of this market failure, public policies are needed to reduce CO 2 emissions and thereby to limit the damage to economies and the natural world from further climate change.

There is a vigorous public debate over whether to act now to stem climate change or instead to delay implementing mitigation policies until a future date. This report examines the economic consequences of delaying implementing such policies and reaches two main conclusions, both of which point to the benefits of implementing mitigation policies now and to the net costs of delaying taking such actions.

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The Labor Force Participation Rate Since 2007: Causes and Policy Implications

July 31, 2014 Comments off

The Labor Force Participation Rate Since 2007: Causes and Policy Implications (PDF)
Source: Council of Economic Advisers (White House)

In 2008, the U.S. economy collided with two historic forces. The first force was the Great Recession, the most severe economic crisis in a generation. While the economy has recovered considerably over the last five years, there is little doubt that more work remains to address some of the challenges left in the wake of the Great Recession. The turmoil of 2008 inflicted tremendous pain on millions of families, overshadowing the fact that 2008 also marked a unique milestone in U.S. economic history. That year, the first baby boomers (those born in 1946) turned 62 and became eligible for Social Security early retirement benefits. This second force — the demographic inflection point stemming from the retirement of the baby boomers — was felt far less acutely than the Great Recession, but will continue to have a profound influence on the economy for years to come, well after the business cycle recovery from the Great Recession is considered complete.

In addition to these inflection points in 2008, a number of longer – term trends had been playing out in the U.S. labor force prior to 2008 — and have continued since then. These include the nearly continuous decline in labor force participation rates for prime – age males (i.e., age 25 – 54) since the mid – 1950s and the dramatic rise in labor force participation rates for prime – age females in the 1970s and 1980s followed by a st alling and slight trend decline after the late 1990s.

Many dimensions of the economy’s performance over the last several years can only be properly evaluated when the effects of the Great Recession, the retirement boom, and the longer – term labor force trends are taken into account . One of the clearest illustrations of this point is the labor force participation rate, which represents the fraction of the adult population either working or looking for work. Changes in labor force participation reflect not just current economic conditions like job availability and workers’ assessments of job – finding prospects, but also more structural factors like the age distribution of the population and other aspects of society that impact people’s decisions to participate in the labor force .

This report analyzes the evolution of the labor force participation rate since late 2007 and attempts to quantify the effects of these various forces. We examine the period since 2007 to focus on how each of the two largest forces, the Great Recession and the retirement of the baby boomers, has impacted labor force participation in recent years . We find that the combination of demographic changes and the drop in labor force participation that would have been expected based on historical business cycle patterns explain most but not all of the recent drop in labor force participation. This implies that other factors, likely including both a continuation of pre – existing trends in labor force participation by certain groups and the unique ef fects of the Great Recession have also been important. This report also discusses the labor force participation rates for different groups, discusses potential future scenarios for the participation rate, and lays out policies that would help to boost part icipation in the years to come.

White House — Increasing Tourism to Spur Economic Growth

June 3, 2014 Comments off

Increasing Tourism to Spur Economic Growth (PDF)
Source: Executive Office of the President

Travel and tourism is a major driver of the U.S. economy. It supports millions of jobs across the country and furthers U.S. strategic and diplomatic interests.

In May 2012, the Administration launched the National Travel and Tourism Strategy for expanding travel to and within the United States, and the President set an ambitious goal of attracting and welcoming 100 million international visitors annually by the end of 2021, who are estimated to spend $250 billion on an annual basis. Two years later, we are on track to meet our goal, and we have made significant progress on specific actions to encourage and make it easier for international travelers to visit the United States…

This report highlights the many economic benefits to the United States from increased travel and tourism and the progress that the Administration is making in implementing the President’s strategy.

Big Data: Seizing Opportunities, Preserving Value

May 6, 2014 Comments off

Big Data: Seizing Opportunities, Preserving Value (PDF)
Source: White House, Executive Office of the President

We are living in the midst of a social, economic, and technological revolution. How we communicate, socialize, spend leisure time, and conduct business has moved onto the Internet. The Internet has in turn moved into our phones, into devices spreading around our homes and cities, and into the factories that power the industrial economy. The resulting explosion of data and discovery is changing our world.

In January, you asked us to conduct a 90 – day study to examine how big data will transform the way we live and work and alter the relationships between government, citizens, businesses, and consumers. This review focuses on how the public and private sectors can maximize the benefits of big data while minimizing its risks. It also identifies opportunities for big data to grow our economy, improve health and education, and make our nation safer and more energy efficient.

While big data unquestionably increases the potential of government power to accrue unchecked, it also hold within it solutions that can enhance accountability, privacy, and the rights of citizens. Properly implemented, big data will become an historic driver of progress, helping our nation perpetuate the civic and economic dynamism that has long been its hallmark.

Big data technologies will be transformative in every sphere of life . T he knowledge discovery they make possible raises considerable questions about how our framework for privacy protection applies in a big data ecosystem . Big data also raises other concerns. A significant finding of this report is that big data analytics have the potential to eclipse longstanding civil rights protections in how personal information is used in housing, credit, employment, health, education, and the marketplace. Americans’ relationship with data should expand, not diminish, their opportunities and potential.

We are building the future we will inherit. The United States is better suited than any nation on earth to ensure the digital revolution continues to work for individual empowerment and social good. We are pleased to present this report’s recommendations on how we can embrace big data technologies while at the same time protecting fundamental values like privacy, fairness, and self – determination. We are committed to the initiatives and reforms it proposes. The dialogue we set in motion today will help us remain true to our values even as big data reshapes the world around us.

Economic Report of the President (2014)

March 11, 2014 Comments off

Economic Report of the President (2014)
Source: Council of Economic Advisors (via US GPO)

The Economic Report of the President is an annual report written by the Chairman of the Council of Economic Advisers. It overviews the nation’s economic progress using text and extensive data appendices. The Economic Report of the President is transmitted to Congress no later than ten days after the submission of the Budget of the United States Government. Supplementary reports can be issued to the Congress which contain additional and/or revised recommendations.

The Economic Report of the President is issued by the Executive Office of the President and the Council of Economic Advisers. It includes:
Current and foreseeable trends and annual numerical goals concerning topics such as employment, production, real income and Federal budget outlays.

  • Employment objectives for significant groups of the labor force.
  • Annual numeric goals.
  • A program for carrying out program objectives.

The Economic Report of the President is transmitted to Congress no later than ten days after the submission of the Budget of the United States Government. Supplementary reports can be issued to the Congress which contain additional and/or revised recommendations.

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

November 20, 2013 Comments off

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

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.

Economic Benefits of Increasing Electric Grid Resilience to Weather Outages

August 14, 2013 Comments off

Economic Benefits of Increasing Electric Grid Resilience to Weather Outages (PDF)
Source: Executive Office of the President

Severe weather is the leading cause of power outages in the United States. Between 2003 and 2012, an estimated 679 widespread power outages occurred due to severe weather. Power outages close schools, shut down businesses and impede emergency services, costing the economy billions of dollars and disrupting the lives of millions of Americans. The resilience of the U.S. electric grid is a key part of the nation’s defense against severe weather and remains an important focus of President Obama’s administration.

In June 2011, President Obama released A Policy Framework for the 21st Century Grid which set out a four-pillared strategy for modernizing the electric grid. The initiative directed billions of dollars toward investments in 21st century smart grid technologies focused at increasing the grid’s efficiency, reliability, and resilience, and making it less vulnerable to weather-related outages and reducing the time it takes to restore power after an outage occurs.

Grid resilience is increasingly important as climate change increasesthe frequency and intensity of severe weather. Greenhouse gas emissions are elevating air and water temperatures around the world. Scientific research predicts more severe hurricanes, winter storms, heat waves, floods and other extreme weather events being among the changes in climate induced by anthropogenic emissions of greenhouse gasses.

This report estimates the annual cost of power outages caused by severe weather between 2003 and 2012 and describes various strategies for modernizing the grid and increasing grid resilience. Over this period, weather-related outages are estimated to have cost the U.S. economy an inflation-adjusted annual average of $18 billion to $33 billion. Annual costs fluctuate significantly and are greatest in the years of major storms such as Hurricane Ike in 2008, a year in which cost estimates range from $40 billion to $75 billion, and Superstorm Sandy in 2012, a year in which cost estimates range from $27 billion to $52 billion. A recent Congressional Research Service study estimates the inflation-adjusted cost of weather-related outages at $25 to $70 billion annually (Campbell 2012). The variation in estimates reflects different assumptions and data used in the estimation process. The costs of outages take various forms including lost output and wages, spoiled inventory, delayed production, inconvenience and damage to the electric grid. Continued investment in grid modernization and resilience will mitigate these costs over time – saving the economy billions of dollars and reducing the hardship experienced by millions of Americans when extreme weather strikes.

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