Yesterday the White House release its annual “Economic Report of the President.” There’s some interesting stuff in there. Among the relevant points:
Real GDP posted above-average 3.4 percent growth in 2006. The composition of growth changed, with more coming from exports and business structures investment. Consumer spending remained strong.
Labor markets continued to strengthen, with the unemployment rate dropping to 4.6 percent and payroll job growth averaging 187,000 per month. Real average hourly earnings accelerated to a 1.7 percent increase during the 12 months of 2006.
Openness to international trade and investment, and improvements in the education and training of the U.S. workforce, will continue to be important to long-run productivity growth.
Policies that encourage capital accumulation, research and development, and increases in the quality of our education system can boost productivity growth.
The goal of pro-growth tax policy is to reduce tax distortions that hamper economic growth. Most economists agree that lower taxes on capital income stimulate greater investment, resulting in greater economic growth, greater international competitiveness, and higher
standards of living.
Since 2001, temporary changes in the tax code have reduced the tax on investment. These pro-growth policies have stimulated short-run investment and economic growth. However, the temporary nature of the provisions eliminates desirable long-run economic stimulus.
Foreign direct investment (FDI) flows into the United States benefit the U.S. economy by stimulating growth, creating jobs, promoting research and development that spurs innovation, and financing the current account deficit.
U.S. direct investment abroad is an important channel of global market access for U.S. firms. U.S. multinational companies have contributed to productivity growth, job creation, and rising average living standards in the United States.
Of course, we already knew this, but it’s nice to see it endorsed by a group like the White House Council of Economic Advisors. Click here to see the full report and click here for the overview.