Economic Report of the President for 2010
Council of Economic Advisers
The Economic Report of the President in fact contains three reports:
The Economic Report of the President is a brief overview by the President of the
Administration’s economic policies and goals for future initiatives.
The Annual Report of the Council of Economic Advisers is a 300-page comprehensive
economic analysis of the first year of the Obama Administration.
Appendix B provides over 100 pages of key economic statistics in a convenient, coherent
The Report of the Council of Economic Advisers does three things:
It provides an in-depth analysis of the economic challenges we face as a Nation,
including both the immediate financial crisis and recession and the longer-run trends
toward stagnating middle-class incomes, soaring health care costs, and failure to invest
adequately in the future.
It provides a comprehensive catalog of the numerous policy actions taken in the past year
to address these challenges and the effects of those policies.
It provides a description of the President’s policy agenda going forward and discusses the
motivation for the policy prescriptions.
The theme of this year’s Economic Report is rescuing, rebalancing, and rebuilding the American
Rescue refers to the need to deal with the current economic crisis.
Chapter 2 examines the economy that President Obama inherited and the extensive policy
actions taken in the areas of financial rescue, monetary policy, housing policy, and fiscal
policy. It details the impact of the actions and the challenges that remain. It also
discusses future jobs initiatives.
Chapter 3 examines the international dimensions of the crisis. It describes how the
financial crisis spread throughout the world and how countries working individually and
in concert took actions to stem the downturn and help support worldwide recovery.
Rebalance refers to the need to move the economy away from its bubble and bust tendencies.
Chapter 4 discusses the likely continued rise in the personal saving rate going forward
and the need to spur investment and exports to fill the gap left in aggregate demand. It
discusses both the progress that has already been made and proposals, such as the
Administration’s National Export Initiative, to make further progress.
Chapter 5 discusses the need to reduce the Federal government budget deficit. It
analyzes the source of the long-run deficit, the problems it will eventually cause for the
economy, and the Administration’s plans for dealing with it over the medium and long
Chapter 6 discusses the importance of a well-functioning financial system for balanced
growth. It describes the role of financial intermediaries, the causes of financial crises,
and the benefits of the proposed regulatory reforms.
Rebuild refers to the need to strengthen the foundation of the economy. For too long, problems
have been ignored and as a result long-run living standards and economic security have been
Chapter 7 shows that the current health care system is leading to skyrocketing costs and
insurance premiums, increasing numbers of uninsured families, and ever-rising
government budget deficits. It identifies the accomplishments of the past year, such as
the expansion of the Children’s Health Insurance Program and the health care
investments made through the Recovery Act. Reform legislation currently passed by the
House and the Senate would do much more to contain costs, expand coverage, and make
insurance more secure and more affordable.
Chapter 8 discusses the challenges that have faced American workers for the past decade
and the differential impact the recession has had on various demographic groups. It
shows that investment in education and training is a key source of improved wages and
living standards. It then discusses the educational investments made through the
Recovery Act, the investments in preschool education, community colleges, and Pell
Grants that the President has proposed to fund by eliminating the subsidy to private
providers of student loans, and other key legislative initiatives.
Chapter 9 examines the importance of dealing with climate change and the progress that
has already been made in jumpstarting the transition to the clean energy economy
through the Recovery Act. It also discusses the benefits of a market-based approach to
addressing greenhouse gas emissions.
Chapter 10 looks at another fundamental source of increases in income over time—
productivity growth. It discusses the Administration’s large increase in investment in
R&D through the Recovery Act and the 2010 Budget, and the President’s overall
innovation agenda. It also discusses the role that trade can play in spurring productivity
growth and the institutions that help to ensure that gains are widely shared.
Some highlights of the analysis are:
An extended discussion of the evidence that developments on Wall Street affect Main
Street (Chapter 2).
Presentation of the Administration’s forecast and discussion of the anomalous behavior
of the unemployment rate over the recession (Chapter 2).
Novel cross-country evidence that fiscal stimulus leads to better-than-expected economic
performance (Chapter 3).
An empirical model of saving behavior that suggests that saving rates will likely rise
further before stabilizing near their historical average (Chapter 4).
A telling comparison of the CBO long-term forecasts from January 2001 and January
2009 that shows the dramatic deterioration of the budget situation between the beginning
and the end of the previous Administration (Chapter 5).
An original formulation of the three different types of financial market contagion and a
discussion of how the Administration’s plan for regulatory reform deals with each
A detailed explanation of the market failures and externalities that cause the market for
health insurance to behave differently from competitive markets (Chapter 7).
A discussion of the key role community colleges play in raising educational attainment
and improving job training (Chapter 8).
An accounting of the $90 billion of clean energy investments in the Recovery Act and
their likely jobs impact (Chapter 9).
A progressive approach to harnessing the benefits of innovation and trade while ensuring
that the gains are broadly shared (Chapter 10).
WHAT IS SPECIAL ABOUT THE 2010 ECONOMIC REPORT?
The Economic Report is a series with a distinguished history of rigor and accuracy. We
have a tried to stay true to this legacy.
The economic challenges facing the country are some of the greatest in history and this
year’s volume reflects the President’s commitment to address a wide range of short-run
and long-run economic problems.
The 2010 Economic Report pays particular attention to the evidence behind the economic
policy recommendations. It includes original research and, for the first time, 20 pages of
references so that the underlying studies can be found easily.
The Report emphasizes market failures as a motivation for public policy.
This is the first Economic Report to be published in color. This allows figures to show