Advance Estimate of GDP Growth for the Fourth Quarter of 2011

(Click to enlarge graph) 

Report Released by Council of Economic Advisers

The following information was submitted by Alan Krueger, Chairman of the Council of Economic Advisers.

Today’s report shows that the economy posted its tenth straight quarter of positive growth, as real GDP (the total amount of goods and services produced in the country) grew at a 2.8 percent annual rate in the fourth quarter of last year. For 2011 as a whole, GDP rose by 1.7 percent, raising the level of real GDP 0.7 percent above where it was at the start of the recession in the fourth quarter of 2007.  While the continued expansion is encouraging, faster growth is needed to replace the jobs lost in the recent downturn and to reduce long-term unemployment.

Positive contributions to real GDP growth in the fourth quarter included consumer spending (1.5 percentage points) and fixed investment (0.4 percentage point).  Overall government purchases fell (4.6 percent), with substantial declines in Federal defense spending (12.5 percent) and State and local spending (2.6 percent). 

As President Obama has said, this is a make-or-break moment for the middle class, and those who are struggling to get into the middle class.  That is why the President announced on Tuesday his Blueprint for an America Built to Last – an economy built on American manufacturing, American energy, skills for American workers, and a renewal of American values.

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Krueger: 'We Need Faster Economic Growth to Put More Americans Back to Work'

Statement on the Employment Situation in October

WASHINGTON, DC – Alan Krueger, Chairman of the Council of Economic Advisers, issued the following statement today.

Today’s employment report provides further evidence that the economy is continuing to recover from the worst economic downturn since the Great Depression, but the pace of improvement is not fast enough.

Private sector payrolls increased by 104,000 and overall payroll employment rose by 80,000 in October. The unemployment rate edged down 0.1 percentage point to 9.0 percent, a level that remains unacceptably high.

Despite adverse shocks that have created headwinds for economic growth, the economy has added private sector jobs for 20 straight months, for a total of 2.8 million jobs over that period.

We need faster economic growth to put more Americans back to work. Today’s report provides further evidence for why it is so important that Congress pass the President’s American Jobs Act to put more money in the paychecks of working and middle class families; to make it easier for small businesses to hire workers; to keep teachers in the classroom; to put construction crews to work rebuilding our nation’s infrastructure; and other measures that will help the economy grow while not adding to the deficit over ten years.

The report underscores that one area that remains notably weak is the construction sector. That’s why it is disappointing that the Senate was not able to proceed to the infrastructure part of the American Jobs Act.

Sectors with employment increases included professional and business services (+32,000), leisure and hospitality (+22,000), retail trade (+17,800), health care and social assistance (+16,300), and manufacturing (+5,000). Sectors with employment declines included government (-24,000) and construction (-20,000). State and local governments lost 22,000 jobs and have shed more than 430,000 jobs since February 2010.

The monthly employment and unemployment numbers are volatile and employment estimates are subject to substantial revision. There is no better example than August’s jobs figure, which was initially reported at zero and in the latest revision increased to 104,000. This illustrates why the Administration always stresses it is important not to read too much into any one monthly report.

President Obama Speaks on Investing in U.S. Infrastructure

The President urges Congress to pass the infrastructure piece of the American Jobs Act.

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We Can’t Wait to Create Jobs

President Obama says that we can’t wait for Congress to take action to grow the economy and create jobs and highlights actions he took to help families refinance their mortgages, put veterans to work, and lower the cost of student loans.

Abraham: 'We Cannot Afford to Do Anything to Undermine Our Economic Recovery'

Advance Estimate of GDP for the Third Quarter of 2011

WASHINGTON, DC – Katharine Abraham, Member of the Council of Economic Advisors, issued the following statement today.

Today’s report shows that the economy posted the ninth straight quarter of positive growth, as real GDP (the total amount of goods and services produced in the country) grew at a 2.5 percent annual rate in the third quarter of this year.

The level of real GDP now exceeds its level at the business cycle peak in the fourth quarter of 2007. While the continued expansion is encouraging, faster growth clearly is needed to replace the jobs lost in the recent downturn and to reduce long-term unemployment.

Notable strength in the third quarter included business investment, which grew 16.3 percent at an annual rate. Residential construction increased 2.4 percent at an annual rate, and was up 1.6 percent during the past four quarters, the first positive four-quarter percent change since 2006 except for a brief period when the home buyer tax credit was active.

Positive contributions to real GDP growth included consumer spending (1.7 percentage point), fixed investment (1.6 percentage point), and net exports (0.2 percentage point). Inventory investment subtracted 1.1 percentage point from real GDP growth.

We are, nonetheless, at a fragile moment in the world economy, and cannot afford to do anything to undermine our economic recovery. That’s why the President continues to urge Congress to pass the American Jobs Act without delay.

The American Jobs Act includes measures that would accelerate the recovery, including extending the payroll tax cut and unemployment insurance, keeping teachers in the classroom and police and firefighters on the beat, and investing in our nation’s infrastructure to help put Americans back to work.

Independent economists say it could increase employment by up to 1.9 million, increase growth and lower the unemployment rate. This report also underscores the need to put in place a balanced approach to deficit reduction that phases in budget cuts, instills confidence, and allows us to live within our means without shortchanging future growth.

Politics in Action: H.R. 3078, 3079, 3080 and 2832

STATEMENT OF ADMINISTRATION POLICY

H.R. 3078 – United States-Colombia Trade Promotion Agreement Implementation Act

(Reps. Cantor, R-Virginia, and Farr, D-California)

The Administration strongly supports H.R. 3078, which approves and implements the United States-Colombia Trade Promotion Agreement, signed by the United States and Colombia on November 22, 2006, and amended through a protocol on June 28, 2007.

The Agreement advances U.S. national economic interests and meets the negotiating principles and objectives set out by Congress in the Trade Act of 2002.

Under the Agreement, over 80 percent of U.S. industrial and consumer goods exports (not including petroleum) will gain duty-free access to the Colombian market immediately upon implementation.

This will help to level the playing field, since 91 percent of our imports from Colombia have enjoyed duty- free access to our market. U.S. agricultural exports in particular will enjoy substantial new improvements in access to Colombia's market.

Currently, no U.S. agricultural exports enjoy duty free access to Colombia. Once the Agreement enters into force, almost 70 percent, by value, of current U.S. agricultural exports will be able to enter Colombia duty-free immediately.

The Agreement contains state of the art provisions to help protect and enforce intellectual property rights, reduce regulatory red tape, and eliminate regulatory barriers to U.S. exports.

The Agreement also contains high standards for protecting labor rights, carrying out covered environmental agreements, and ensuring that key domestic labor and environmental laws are enforced, combined with strong remedies for non-compliance.

Colombia has already made significant reforms related to the obligations it will have under the labor chapter, including measures taken under the Colombian Action Plan Related to Labor Rights. The Administration will ensure that Colombia has successfully implemented key elements of the Action Plan before the Administration will bring the Agreement into force.

The Agreement forms an integral part of the Administration's larger strategy of doubling exports by the end of 2014. In addition, the Agreement represents an historic development in our relations with Colombia, a steadfast strategic partner for the United States and a leader in the region.

The Agreement reflects the commitment of the United States to supporting democracy and economic growth in Colombia. The Agreement will also help Colombia battle production of illegal crops by creating alternative economic opportunities.

The bill also extends the Andean Trade Preference Act (ATPA), which helps countries in their fight against drug production and trafficking by expanding their economic alternatives. Extension of this program will restore, until the entry into force of the Agreement, the access that Colombian goods had enjoyed under ATPA prior to its expiration in February 2011.

H.R. 3079 – United States-Panama Trade Promotion Agreement Implementation Act

(Reps. Cantor, R-Virginia, and McDermott, D-Washington)

The Administration strongly supports H.R. 3079, which approves and implements the United States–Panama Trade Promotion Agreement, signed by the United States and the Republic of Panama on June 28, 2007.

The Agreement advances U.S. national economic interests and meets the negotiating principles and objectives set out by the Congress in the Trade Act of 2002. Since 1985, our trade relationship with Panama has been characterized by the unilateral trade preferences that the United States provides through the Caribbean Basin Initiative (CBI) program. This program has contributed to economic growth and development and export diversification in Panama.

The Agreement will build on the success of the CBI program. Today, Panama is one of the fastest-growing economies in the Western Hemisphere. Most imports from Panama currently enter the United States duty-free, but U.S. exports to Panama face substantial tariffs.

The Agreement will create significant new opportunities for American workers, farmers, ranchers, and businesses by opening Panama's market and eliminating barriers to U.S. goods, services and investment.

Upon entry into force of the Agreement, Panama will immediately eliminate its tariffs on over 87 percent of U.S. exports of consumer and industrial goods and on more than half of U.S. exports of agricultural goods, by value.

The Agreement also contains state of the art provisions to help protect and enforce intellectual property rights, reduce regulatory red tape, and eliminate regulatory barriers to U.S. exports.

The Agreement contains high standards for protecting labor rights, carrying out covered environmental agreements, and ensuring that key domestic labor and environmental laws are enforced, combined with strong remedies for non-compliance.

The Agreement is an important part of the Administration's efforts to spur economic growth, increase exports, and create jobs in the United States, while promoting our core values.

The Agreement forms an integral part of the Administration's larger strategy of doubling exports by the end of 2014. It will strengthen our economic and political ties with Panama, support democracy and freedom, and contribute to greater competitiveness and economic growth in both countries.

H.R. 3080 – United States-Korea Free Trade Agreement Implementation Act

(Reps. Cantor, R-Virginia, and Levin, D-Michigan)

The Administration strongly supports H.R. 3080, which approves and implements the United States – Korea Free Trade Agreement, signed by the United States and the Republic of Korea on June 30, 2007, and carries out provisions of the exchange of letters concluded between the United States and Korea in February 2011.

Increased U.S. exports expected under the Agreement will support more than 70,000 American jobs. The Agreement will bolster our economic competitiveness in the Asia-Pacific region and strengthen our ties with a key U.S. ally.

The Agreement will level the playing field for U.S. businesses, workers, farmers, ranchers, manufacturers, investors and service providers by offering them unprecedented access to Korea's nearly $1 trillion economy, and meets the negotiating principles and objectives set out by Congress in the Trade Act of 2002.

The Agreement eliminates tariffs on over 95 percent of U.S. exports of industrial and consumer goods to Korea within the first five years and, together with the agreement entered into through an exchange of letters in February 2011, addresses the concerns of American automakers and workers regarding the lack of a level playing field in Korea's auto market.

The Agreement also ensures that almost two-thirds of current U.S. agricultural exports will enter Korea duty-free immediately. In addition, the Agreement will give American service providers greater access to Korea's $580 billion services market.

The Agreement forms an integral part of the Administration's larger strategy of doubling exports by the end of 2014. The Agreement contains state of the art provisions to help protect and enforce intellectual property rights, reduce regulatory red tape, and eliminate regulatory barriers to U.S. exports.

The Agreement also contains high standards for protecting labor rights, carrying out covered environmental agreements, and ensuring that key domestic labor and environmental laws are enforced, combined with strong remedies for non-compliance.

H.R. 2832 – Generalized System of Preferences and Trade Adjustment Assistance Extensions

(Rep. Camp, R-Michigan, and 3 cosponsors)

The Administration strongly supports enactment of H.R. 2832, which renews the Generalized System of Preferences (GSP) and Trade Adjustment Assistance (TAA) programs.

The TAA provisions renew coverage for American workers whose jobs have been adversely affected by global competition. These workers need, and would benefit from, job retraining and other services.

As the United States expands access to other markets through new Free Trade Agreements, the Federal Government can help ensure that American workers are provided with the tools they need to take advantage of opportunities for retraining and other services and to compete in the global economy.

The TAA provisions preserve the key goals of the 2009 TAA program reforms (which expired in February, 2011), such as covering service workers and workers whose jobs shift to China, India, and other countries, to help ensure workers adversely affected by global competition are given the best opportunity to acquire skills and credentials to get good jobs.

The Administration estimates that this version of TAA will provide significant savings when compared to a straight extension of the full 2009 program.

The Administration is pleased that this legislation also renews and extends the GSP, one of the United States' largest preference programs. The GSP program provides preferential, duty-free entry to the United States for up to 4,800 products from 129 designated beneficiary countries and territories.

Many GSP imports are used as inputs by U.S. companies to manufacture goods here in the United States. The program is particularly important to American small businesses, many of which rely on the program's duty savings to stay competitive.

The lapse in GSP authorization has already cost U.S. businesses tens of millions of dollars in additional import duties, increased costs to American manufacturers and consumers, and undercut efforts by poor countries to grow their economies and fight poverty. Timely passage of this legislation will address these concerns.

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CEA: 'Clearly, We Need Faster Economic Growth to Put Americans Back to Work'

Katherine Abraham, Council of Economic Advisors member

Statement on the Employment Situation in September

WASHINGTON - Katherine Abraham, Member of the Council of Economic Advisors, issued the following statement today on the employment situation in September.

Today’s employment report shows that private sector payrolls increased by 137,000 and overall payroll employment rose by 103,000 in September. The unemployment rate remained unchanged at 9.1 percent, a level that is unacceptably high.

Despite a slowdown in economic growth from substantial headwinds experienced throughout the year, the economy has added private sector jobs for 19 straight months, for a total of 2.6 million jobs over that period.

Clearly, we need faster economic growth to put Americans back to work. Today’s report underscores the President’s call for Congress to pass the American Jobs Act to put more money in the pockets of working and middle class families; to make it easier for small businesses to hire workers; to keep teachers in the classroom; to put construction crews to work rebuilding our nation’s infrastructure; and other measures that will help the economy grow while not adding to the deficit over ten years.

Sectors with employment increases in September included professional and business services (+48,000), health care and social assistance (+40,800), information (+34,000, which includes about 45,000 returning Verizon strikers), and construction (+26,000). Sectors with employment declines included government (-34,000) and manufacturing (-13,000). Local government lost 35,000 jobs, and has shed 383,000 jobs since February 2010, including 225,000 jobs in educational services.

The monthly employment and unemployment numbers are volatile and employment estimates are subject to substantial revision. Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.

Photo courtesy of http://www.whitehouse.gov.

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