Today’s report from the Bureau of Labor Statistics (BLS) indicates that the unemployment rate declined from 7.6 percent to 7.4 percent in July, reaching its lowest level since December 2008. The unemployment rate for African Americans fell from 13.7 percent to 12.6 percent, also its lowest level since December 2008. The unemployment rate for women fell from 7.3 percent to 7.0 percent, its lowest level since January 2009, and from 7.8 percent to 7.7 percent for men.

The establishment survey showed that private sector employers added 161,000 jobs last month (see chart below). Total non-farm payroll employment rose by 162,000 jobs in July. The economy has now added private sector jobs for 41 consecutive months, and a total of 7.3 million jobs have been added over that period. So far this year, 1.4 million private sector jobs have been added.

With the recovery entering its fifth year, we need to build on the progress we have made so far and now is not the time for Washington to impose self-inflicted wounds.  The across-the-board budget cuts known as the sequester continue to be a drag on the economy now and in the future.  The Administration continues to urge Congress to replace the sequester with balanced deficit reduction, and promote the investments our economy needs to put more Americans back to work, such as by rebuilding our roads and bridges.

According to the establishment survey, in July employment increased notably in retail trade (+46,800), bars and restaurants (+38,400), professional and business services (+36,000), financial activities (+15,000). Construction lost 6,000 jobs due to declines in the nonresidential sector, but has grown in 11 of the last 14 months, adding 178,000 jobs in that period. Local governments added 6,000 jobs, and have now expanded for five months in a row, after losing 560,000 jobs in the previous 48 months.  Manufacturing employment rose by 6,000 jobs, with motor vehicles and parts adding 9,100 jobs.  Compared to last month when it gained 19,100 jobs, the amusements, gambling, and recreation industry lost 4,800 jobs.

As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and payroll employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.

The revision also showed that while the contraction during the Great Recession was slightly less severe than previously reported, it remains the largest decline since quarterly data became available in 1947. Cumulatively, real GDP fell by 4.3% during the recession, less than the 4.7% drop previously reported. The steep drop in economic activity caused by the recession makes it imperative that more work is done to raise economic growth and speed job creation.

The comprehensive revision to the national accounts, which is the first since July 2009, includes additional source data received by the Bureau of Economic Analysis, as well as methodological changes designed to better reflect the evolving nature of the U.S. economy. For instance, the GDP data released today incorporates input-output tables derived from the once-every-five-years Economic Census, and adopts an expanded definition of business investment that includes spending on research and development (R&D) and the creation of original works of art like movies. All told, these and other changes raised the level of GDP in the first quarter of 2013 by $551 billion at an annual rate (or 3.4%), from $16.0 trillion to $16.5 trillion.

While the annual rate of real GDP growth over the 83 years since 1929 was revised up just 0.1 percentage point to 3.3%, a handful of recent quarters were subject to large revisions. For example, real GDP growth in 2011:Q1, which previously had been reported at 0.1% at an annual rate, was revised down to -1.3%. The earthquake and tsunami that occurred in Japan in March 2011 disrupted critical supply chains, likely subtracting from growth in that quarter. In contrast, real GDP growth in 2010:Q2 and 2012:Q1 were both revised up by 1.7 percentage points to annualized rates of 3.9% and 3.7%, respectively.

Since the beginning of 2009, the average absolute revision from the advance quarterly estimate of real GDP growth to the latest data was 1.3 percentage points. The magnitude of these changes highlights that real-time economic data can be highly volatile and subject to substantial revision. Therefore, it is important not to read too much into any one report, and it is informative to consider each report in the context of other data that are available.

The Bureau of Economic Analysis also reported today that real GDP increased 1.7 percent at an annual rate in the second quarter of 2013, according to the advance estimate. Among the various components of GDP, exports grew 5.4% at an annual rate, the fastest increase since 2011:Q3, and real residential investment posted its eleventh consecutive quarter of growth, the longest streak since 2002-2005. State and local government spending edged up slightly for the first time in a year, and just the second time since 2010.

Components subtracting from GDP growth in the second quarter included imports, which rose at their fastest rate since 2010:Q3, and federal government spending, which fell for the seventh time in the last eight quarters. Removing the influence of overall government spending, the private components of real GDP grew 2.2% at an annual rate.

The fact that declining federal spending continues to be a drag on economic growth is another reminder that now is not the time for Washington to impose self-inflicted wounds on the economy. The Administration continues to urge Congress to replace the sequester with balanced deficit reduction, and promote the investments our economy needs to put more Americans back to work, such as by rebuilding our roads and bridges.

The slowdown in consumer health care price inflation is consistent with a broad array of other evidence suggesting that the growth rate of health care costs is slowing:

• Data from the Bureau of Labor Statistics’ Employer Costs for Employee Compensation survey indicate that for private sector employers offering health insurance, the annualized growth rate of real (inflation-adjusted) costs for workers’ health insurance has slowed from 2.2 percent a year from 2006:Q4 to 2009:Q4 to 1.8 percent a year from 2009:Q4 to 2012:Q4, with a particularly marked slowdown occurring at smaller establishments. For establishments with fewer than 50 employees, employers’ real costs for workers’ health insurance grew just 1.0 percent a year from 2009:Q4 to 2012:Q4, half the rate observed over the preceding three years. 
• During the past several years, the Congressional Budget Office reports that it “has made a series of downward adjustments to its projections of spending for Medicaid and Medicare.” For example, “mostly reflecting the slower growth in the programs’ spending in recent years,” CBO now expects combined spending on the two programs to be about $200 billion lower in 2020 than what it forecast three years ago.
• From 2009 to 2011, nationwide real per capita health expenditures grew at the slowest pace since reporting began in 1960. 
• In 2012, premium growth for employer-sponsored insurance was at its lowest rate (3 percent) since the Medical Expenditure Panel Survey started in 1996.
• In 13 states that have publicly reported premiums for 2014, the average of the lowest-cost plan is nearly 20 percent below projections based on CBO premiums. This includes New York State, which recently announced that health insurance rates in 2014 will be at least 50 percent lower, on average, than the plans currently available in the state. These substantially more affordable plans will soon be available through the new Health Insurance Marketplace established by the Affordable Care Act. 

In sum, data from across the economy – covering consumers, government, and private employers – point to the same conclusion: health care cost growth has slowed. 

A mounting body of research finds that structural changes are driving a substantial part of the recent slowdown in health care cost growth, suggesting that the trend may persist. Moreover, the fact that the slowdown in cost growth reflects changes in both prices and utilization of medical care – and that the slowdown is apparent in many different aspects of the health care system – further suggests that structural changes are underway. 

The Affordable Care Act includes a range of cost-saving, quality-improving measures. The law includes provisions intended to foster coordinated care, reduce preventable health complications during hospitalizations, and promote the adoption of more efficient health information technology. For instance:

• The Partnership for Patients program is a public-private partnership that aims to reduce hospital complications and readmissions across the nation through partnerships with more than 3,700 hospitals and thousands of other organizations of doctors, nurses, and community-based groups. Since the program was introduced in 2011, the hospital readmission rate within Medicare has fallen below its historical average.
• Under Accountable Care Organizations (ACOs), providers deliver care through organizations of physicians, nurses, hospitals and other providers responsible for the quality and cost of care to their patients over time. Medicare shares any savings with ACOs that meet rigorous quality standards. Currently, more than 4 million beneficiaries receive care from more than 240 ACOs participating in the Medicare Shared Savings Program and other related projects. 
• The Hospital Value-Based Purchasing Program went into effect in October 2012. The program encourages more than 3,500 hospitals to provide high-quality care and reduces payments for hospitals exhibiting poor performance. Additionally, pay-for-reporting initiatives in which providers are rewarded for reporting clinical quality measures have been launched in virtually every Medicare payment category.

The Administration is committed to making further progress in the years ahead through the essential patient protections and cost-saving measures contained in the Affordable Care Act. 

Alan B. Krueger is Chairman of the Council of Economic Advisers.

Today’s report from the Bureau of Labor Statistics (BLS) indicates that private sector businesses added 202,000 jobs last month (see first chart below). Total non-farm payroll employment rose by 195,000 jobs in June. The economy has now added private sector jobs for 40 consecutive months, and a total of 7.2 million jobs has been added over that period. In spite of monthly volatility, over the past three years the pace of job growth has increased each year (see second chart below). So far this year, 1.23 million private sector jobs have been added.

The household survey showed that the unemployment rate remained at 7.6 percent in June down from 8.2 percent a year ago. The labor force participation rate rose by 0.1 percentage point for the second month in a row to 63.5 percent in June.

In the four years since the recession ended in June 2009, the economy has added 5.3 million jobs, thanks to the resilience of the American people and policies like the Recovery Act, which helped bring the recession to an end and put us on the path to recovery. With the recovery gaining traction, now is not the time for Washington to impose self-inflicted wounds on the economy. The President will continue to press Congress to act on the proposals he called for in his State of the Union address to make America a magnet for good jobs, help workers obtain the skills they need for those jobs, and make sure that honest work leads to a decent living.

According to the establishment survey, in June employment increased the most in professional and business services (+53,000), bars and restaurants (+51,700), retail trade (+37,100), arts, entertainment, and recreation (+17,400), financial activities (+17,000), and education and health services (+13,000). Construction added 13,000 jobs and has grown in 12 of the last 13 months, adding 197,000 jobs over that period. Government jobs fell by 7,000, with the Federal government (excluding postal) losing 5,000 jobs. Local governments added 13,000 jobs, and have now expanded for four months in a row. State governments lost 15,000 (mostly education) jobs. Manufacturing employment declined by 6,000 jobs, but motor vehicles and parts added 5,100 jobs.

As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and payroll employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.

Today’s report from the Bureau of Labor Statistics (BLS) indicates that private sector businesses added 178,000 jobs last month. Total non-farm payroll employment rose by 175,000 jobs in May.  The economy has now added private sector jobs every month for 39 straight months, and a total of 6.9 million jobs has been added over that period. So far this year, 972,000 private sector jobs have been added.

The household survey showed that the unemployment rate ticked up to 7.6 percent in May from 7.5 percent in April. However, the labor force participation rate also rose by 0.1 percentage point to 63.4 percent in May, as 182,000 more unemployed workers reentered the labor force in May than in April, a sign that more workers felt encouraged to search for a job.

With the recovery gaining traction, now is not the time for Washington to impose self-inflicted wounds on the economy. The Administration continues to urge Congress to replace the sequester with balanced deficit reduction, while working to put in place measures to create middle-class jobs, such as by rebuilding our roads and bridges and promoting American manufacturing.  The President will continue to press Congress to act on the measures he called for in his State of the Union address to make America a magnet for good jobs, help workers earn the skills they need to do those jobs, and make sure their hard work leads to a decent living.

According to the establishment survey, in May employment rose notably in professional and business services (+57,000, of which +25,600 were in temporary help services), bars and restaurants (+38,100), retail trade (+27,700), and education and health services (+26,000).  Construction added 7,000 jobs and has grown in 11 of the last 12 months, adding 189,000 jobs over that period. Government jobs fell by 3,000, with the Federal government (excluding postal) losing 9,400 jobs. Local government added 13,000 jobs, and with revisions has now expanded for three months in a row, a welcome sign that the unprecedented job losses in the local government sector may be nearing an end.

As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and payroll employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.

Alan B. Krueger is Chairman of the Council of Economic Advisers

Today’s report from the Bureau of Labor Statistics (BLS) shows that private sector businesses added 176,000 jobs last month. Total non-farm payroll employment rose by 165,000 jobs in April. The February and March employment estimates were revised up by a total of 114,000 jobs. The economy has now added private sector jobs every month for 38 straight months, and a total of 6.8 million jobs has been added over that period.  Over 800,000 private sector jobs have been added over the last four months.

The household survey showed that the unemployment rate edged down from 7.6 percent in March to 7.5 percent in April, the lowest rate since December 2008. The labor force participation rate was unchanged at 63.3 percent in April.

Now is not the time for Washington to impose self-inflicted wounds on the economy.  The Administration continues to urge Congress to replace the sequester with balanced deficit reduction, while working to put in place measures to create middle-class jobs, such as by rebuilding our roads and bridges and promoting American manufacturing.  The President will continue to press Congress to act on the measures he called for in his State of the Union address to make America a magnet for good jobs, help workers earn the skills they need to do those jobs, and make sure their hard work leads to a decent living.

According to the establishment survey, in April employment rose notably in professional and business services (+73,000), bars and restaurants (+37,900), retail trade (+29,300), and health care and social assistance (+26,100).  Construction declined by 6,000 (due to a fall in nonresidential construction employment), after growing for 10 consecutive months and adding 181,000 jobs in that period. 

As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and payroll employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.

Alan B. Krueger is Chairman of the Council of Economic Advisers

It is important to recognize that GDP is made up of various components. Personal consumption expenditures, for example, rose by 3.2 percent at an annual rate in 2013:Q1, the fastest rate in over two years. Residential investment grew by 12.6 percent last quarter and has increased for eight quarters in a row, its longest streak since 2004-2005. Federal defense spending fell 11.5 percent at an annual rate in 2013:Q1, while federal nondefense spending declined at a 2.0 percent rate and state and local government purchases fell at a 1.2 percent rate.

The “advance" estimate of first quarter GDP growth encompasses the first month after sequestration began on March 1. It is likely that the contraction in Federal defense and non-defense spending, at least in part, reflects the onset of sequestration. These arbitrary and unnecessary cuts to government services will be a headwind in the months to come, and will cut key investments in the nation’s future competitiveness. The Congressional Budget Office has estimated that the sequester will reduce GDP growth by 0.6 percentage point for the year.

Now is not the time for Washington to impose self-inflicted wounds on the economy. The Administration continues to urge Congress to replace the sequester with balanced deficit reduction, while working to put in place measures to put more Americans back to work, like rebuilding our roads and bridges and promoting American manufacturing. The President will continue to work with Congress to act on measures he called for in the State of the Union to promote job growth, ensure workers have the skills they need to compete, and help hardworking Americans make a decent living.

Alan B. Krueger is the Chairman of the Council of Economic Advisors

Today’s report from the Bureau of Labor Statistics (BLS) shows that private sector businesses added 95,000 jobs last month. Total non-farm payroll employment rose by 88,000 jobs in March. The February and March employment numbers were revised up by a total of 61,000 jobs. The economy has now added private sector jobs every month for 37 straight months, and a total of nearly 6.5 million jobs has been added over that period.

The household survey showed that the unemployment rate fell from 7.7 percent in February to 7.6 percent in March, the lowest since December 2008. The labor force participation rate decreased by 0.2 percentage point to 63.3 percent in March.

It is important to bear in mind that the March household and payroll surveys are the first monthly surveys to look at employment since the beginning of sequestration.  While the recovery was gaining traction before sequestration took effect, these arbitrary and unnecessary cuts to government services will be a headwind in the months to come, and will cut key investments in the Nation’s future competitiveness.  The Congressional Budget Office has estimated that the sequester will reduce employment by 750,000 full-time equivalent jobs by the end of the year. 

Now is not the time for Washington to impose more self-inflicted wounds on the economy.  The Administration continues to urge Congress to replace the sequester with balanced deficit reduction, while working to put in place measures to put more Americans back to work like rebuilding our roads and bridges and promoting American manufacturing.  The President will continue to press Congress to act on measures he called for in the State of the Union to promote job growth, ensure workers have the skills they need to compete, and help hardworking Americans make a decent living.

According to the establishment survey, in March employment rose notably in professional and business services (+51,000), education and health services (+44,000), construction (+18,000), and leisure and hospitality (+17,000).  Retail trade lost 24,100 jobs in March, following 8 months of growth.  Job gains in construction have added 169,000 jobs since September.  In the last two years the construction sector has added 317,000 jobs, with over half of that increase occurring in the last six months.

As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and payroll employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.

Alan B. Krueger is Chairman of the Council of Economic Advisers.

Although economics has long been called "the dismal science," it is more appropriately viewed as a "hopeful science." The right mix of economic policies and leadership can help a country to recover from a deep recession and point to the investments and reforms that will build a stronger, more stable, and more prosperous economy that works for the middle class. Conversely, government dysfunction or misguided fiscal policy can cause self-inflicted wounds to the economy. This year's Economic Report of the President highlights the progress that has been made in recovering from the deepest recession since the Great Depression, together with the policies that the Obama Administration is advancing to address the fundamental imbalances and threats that have built up for decades and that have created severe stress on the middle class and those striving to get into the middle class.

This Report reviews the progress of the ongoing economic recovery during 2012 and highlights the main goals of the President's economic agenda. These goals include strengthening the foundations of economic growth by investing in education, research, and infrastructure, and by fixing a broken immigration system through commonsense immigration reform; ensuring fairness for the middle class by reforming the tax code and health insurance system; and bolstering the economy's resilience to future challenges by addressing the dangers of climate change, moving toward energy independence, pursuing a balanced approach to deficit reduction, adding safeguards to the financial system, opening up new markets for U.S. exports, and equipping American workers to compete in the global economy.

Finally, given the importance of economic data in driving economic policy and in helping households and businesses to make sound decisions, this year's Economic Report of the President continues the tradition of highlighting areas where economic data have improved or could improve further.

To read the entire Report, click HERE.

The household survey showed that the unemployment rate fell from 7.9 percent in January to 7.7 percent in February, the lowest since December 2008. The labor force participation rate edged down 0.1 percentage point to 63.5 percent in February.

It is important to bear in mind that the reference period for today’s surveys was the week of February 10-16 for the household survey and the pay period containing February 12th for the establishment survey, both of which were before sequestration began.  The Administration continues to urge Congress to move toward a sustainable Federal budget in a responsible way that balances tax loophole closing, entitlement reform, and sensible spending cuts, while making critical investments in the economy that promote growth and job creation and protecting our most vulnerable citizens.

According to the establishment survey, in February employment rose notably in professional and business services (+73,000), construction (+48,000), health care (+32,000), leisure and hospitality (+24,000), and retail trade (+23,700). Manufacturing gained 14,000 jobs in February. The manufacturing sector has added over half a million jobs over the last 37 months, the most for any such period since 1986. In the last two years the construction sector has added 306,000 jobs, with half of that increase occurring in the last five months. State and local governments lost 10,000 jobs in February, mostly in education. The local government education sector has now lost 340,700 jobs since its recent peak in November 2009.

As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and payroll employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.

Today’s report is a reminder of the importance of the need for Congress to act to avoid self-inflicted wounds to the economy.  The Administration continues to urge Congress to move toward a sustainable Federal budget in a responsible way that balances revenue and spending, and replaces the sequester, while making critical investments in the economy that promote growth and job creation and protect our most vulnerable citizens.

With today’s release, the Bureau of Labor Statistics has finalized its benchmark adjustment, and the latest data show that the economy has now added private sector jobs for 35 straight months, and a total of 6.1 million jobs have been added over that period. In 2012, private businesses added 2.2 million payroll jobs.  The first report of private sector job growth for January is that businesses added 166,000 jobs. Total non-farm payroll employment rose by 157,000 jobs last month. The average first report of monthly job growth in 2012 was 142,000, that is now revised to 181,000 jobs per month.

The household survey showed that the unemployment rate was 7.9 percent in January, up from 7.8 percent in December. The labor force participation rate was unchanged at 63.6 percent in January. Over the last 12 months, the unemployment rate has fallen by 0.4 percentage point, and the labor force participation rate has been essentially unchanged.

According to the establishment survey, in January employment rose notably in retail trade (+32,600), construction (+28,000), health care and social assistance (+27,600), professional and business services (+25,000), and restaurants and bars (+17,100).  Manufacturing gained 4,000 jobs in January.  The manufacturing sector has added about a half-million jobs over the last three years, the most for any such period since 1996.  Also of note, in the last two years the construction sector has gained nearly 300,000 jobs, with one-third of that gain occurring in the last four months.  Government lost 9,000 jobs in January, including 5,000 Federal government jobs, and 4,700 jobs in local government education.  The local government education sector has now lost 339,400 jobs since its recent peak in November 2009.

As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and payroll employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.

Several private sector components of GDP continued to make positive contributions to growth in the fourth quarter.  Personal consumption expenditures, the single largest component of GDP, increased by 2.2 percent at an annual rate in 2012:Q4, as compared with 1.6 percent in the previous quarter. Residential investment grew by 15.3 percent last quarter and has increased for seven consecutive quarters, the longest streak since 2004-2005. Business investment in equipment and software grew at its fastest pace in more than a year, rising 12.4 percent.

Federal defense purchases declined at an annual rate of 22.2 percent in the fourth quarter of 2012, the largest quarterly decline in 40 years.  A likely explanation for the sharp decline in Federal defense spending is uncertainty concerning the automatic spending cuts that were scheduled to take effect in January, and are currently scheduled to take effect on March 1^st. The decline in government spending across all levels reduced real GDP by 1.33 percentage points in the quarter. 

In addition, a decline in exports of goods and services and slower inventory investment both subtracted from real GDP growth in the fourth quarter.  Both international trade flows and inventory accumulation could have been affected by disruptions caused by Hurricane Sandy, although a precise estimate of the effect of the hurricane on GDP is not available.  Nonetheless, the BEA reported that Hurricane Sandy destroyed $44 billion worth of fixed capital, which indicates one of the storm’s significant economic effects. 

Although GDP is the broadest measure of economic activity, other indicators of economic performance suggest that the economy continued to recover in the fourth quarter, despite the impact of Hurricane Sandy and uncertainty surrounding fiscal issues.  For instance, at an annual rate, aggregate production-worker hours increased by 2.2 percent and industrial production rose by 1.0 percent.  Moreover, as the Administration stresses with each economic report, indicators of economic performance can be volatile and are subject to substantial revision.  The average absolute revision from the “advance” estimate of real GDP growth to the most current data is 1.3 percentage points. 

Some of the fiscal issues that may have weighed on the economy in the fourth quarter of 2012 were resolved with the passage of the American Taxpayer Relief Act in early January, which provided more than 98 percent of Americans and 97 percent of small businesses with the certainty that their income taxes will not rise. Today’s report is a reminder of the importance of the need for Congress to act to avoid self-inflicted wounds to the economy.  The Administration continues to urge Congress to move toward a sustainable federal budget in a responsible way that balances revenue and spending, and replaces the sequester, while making critical investments in the economy that promote growth and job creation and protect our most vulnerable citizens.

Alan B. Krueger is the Chairman of the Council of Economic Advisers.

With the passage of the American Taxpayer Relief Act earlier this week, more than 98 percent of Americans and 97 percent of small businesses now have certainty that their income taxes will not rise. Additionally, unemployment insurance was extended for two million Americans who are searching for a job, and companies will continue to receive tax credits for the research that they do and continue to have tax incentives to accelerate investment in their businesses. By allowing income tax cuts for the top two percent of earners to expire, this legislation further reduces the deficit by $737 billion over the next decade. It is important that we continue to move toward a sustainable federal budget in a responsible way that balances revenue and spending while protecting critical investments in the economy and essential support for our most vulnerable citizens.

Today’s report from the Bureau of Labor Statistics (BLS) shows that private sector businesses added 168,000 jobs in December. Total non-farm payroll employment rose by 155,000 jobs last month. The economy has now added private sector jobs for 34 straight months, and a total of 5.8 million jobs have been added over that period, taking account of the preliminary benchmark revision. In 2012, private businesses added two million payroll jobs, taking account of the preliminary benchmark revision.

The household survey showed that the unemployment rate was unchanged at 7.8 percent in December. The unemployment rate in November was revised from 7.7 percent to 7.8 percent as a result of BLS’s annual update of seasonal factors. The labor force participation rate was also unchanged at 63.6 percent in December. Over the last 12 months, the unemployment rate has decreased by 0.7 percentage point as a result of growing employment, and the labor force participation rate has been essentially unchanged.

According to the establishment survey, in December employment rose notably in the health care and social assistance industry (+55,000), restaurants and bars (+38,000), construction (+30,000), and manufacturing (+25,000).  The manufacturing sector has added jobs in 30 of the last 35 months, gaining half a million jobs over that period, the most for any such period since the late-1980s.  Payrolls rose in both residential and non-residential construction jobs.  Retail trade lost 11,300 jobs, following gains totaling 161,300 over the previous four months. Government lost 13,000 jobs in December, mostly in local government education, which lost 11,500 jobs.  The local government education sector has now lost 294,400 jobs since its recent peak in November 2009.

As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and payroll employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available..

Most pressing, President Obama has proposed, and the Senate has passed, an extension of middle class income tax cuts that would prevent the typical middle class family from facing a $2,200 tax increase at the beginning of next year. In addition, the President has proposed a plan that will enable responsible homeowners to refinance their mortgage and take advantage of today’s historically low interest rates. To create more jobs in particularly hard-hit sectors, President Obama continues to urge Congress to pass elements of the American Jobs Act, including further investment in infrastructure to rebuild our Nation’s ports, roads and highways, and assistance to State and local governments to prevent layoffs and to enable them to rehire hundreds of thousands of teachers.

Today’s report from the Bureau of Labor Statistics (BLS) shows that private sector businesses added 147,000 jobs last month. Total non-farm payroll employment rose by 146,000 jobs in November. The economy has now added private sector jobs for 33 straight months, and a total of 5.6 million jobs have been added during that period, taking account of the preliminary benchmark revision.

The household survey showed that the unemployment rate declined from 7.9 percent in October to 7.7 percent in November, the lowest since December 2008. The labor force participation rate declined by 0.2 percentage point last month. Over the last 12 months, the unemployment rate has decreased by 1.0 percentage point as a result of growing employment, and the labor force participation rate has been essentially unchanged.

According to the establishment survey, in November employment rose notably in retail trade (+52,600), professional and business services (+43,000), and leisure and hospitality (+23,000).  Manufacturing lost 7,000 jobs, and construction was down 20,000. However, the manufacturing sector has added jobs in 28 of the last 34 months, gaining half a million jobs over that period, the most for any such period since the mid-1990s.

Government lost 1,000 jobs, as federal government payrolls decreased by 5,000, state government payrolls increased by 6,000, and local government payrolls declined by 2,000.

As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.

Most pressing, President Obama has proposed, and the Senate has passed, an extension of middle class tax cuts that would prevent the typical middle class family from facing a $2,200 tax increase at the beginning of next year. In addition, the President has proposed a plan that will enable responsible homeowners to refinance their mortgage and take advantage of today’s historically low interest rates. To create more jobs in particularly hard-hit sectors, President Obama continues to urge Congress to pass elements of the American Jobs Act, including further investment in infrastructure to rebuild our Nation’s ports, roads and highways, and assistance to State and local governments to prevent layoffs and to enable them to rehire hundreds of thousands of teachers.

Today’s report from the Bureau of Labor Statistics (BLS) shows that private sector businesses added 184,000 jobs last month, the biggest monthly gain in eight months. Total non-farm payroll employment rose by 171,000 jobs in October. Revisions to the previous two months added another 84,000 jobs.  The economy has now added private sector jobs for 32 straight months, and a total of 5.4 million jobs have been added during that period, taking account of the preliminary benchmark revision. 

Over the last 12 months, the economy has added a total of 2.1 million jobs, as compared to 1.9 million over the preceding 12 months (apportioning the preliminary benchmark revision).

The household survey showed that the unemployment rate ticked up from 7.8 percent in September to 7.9 percent in October, largely because more people entered the labor force.  The labor force rose by 578,000 people in October, and the labor force participation rate increased by 0.2 percentage point. The share of the population employed rose by 0.1 percentage point to 58.8 percent.  Over the last 12 months, the unemployment rate has decreased by 1.0 percentage point, as a result of growing employment.

According to the establishment survey, in October employment rose notably in professional and business services (+51,000), retail trade (+36,400), health care and social assistance (+32,500), restaurants and bars (+22,900), and construction (+17,000). Manufacturing gained 13,000 jobs, including gains in both durable goods (+5,000) and nondurable goods (+8,000).  The manufacturing sector has added jobs in 28 of the last 33 months, gaining half a million jobs over that period, the most for any such period since the mid-1990s.

Government lost 13,000 jobs, as federal government payrolls decreased by 6,000, state government payrolls decreased by 7,000, and local government payrolls were unchanged.

As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.

It is important to recognize that GDP is made up of various components. Personal consumption expenditures, for example, increased by 2.0 percent at an annual rate in 2012:Q3, as compared with 1.5 percent in the previous quarter. Residential investment increased by 14.4 percent last quarter and has increased for six quarters in a row, its longest streak since 2004-2005. Federal defense spending rose 13.0 percent, federal nondefense spending rose 3.0 percent, and state and local government purchases were essentially unchanged. The severe drought, which has affected more than half of the country, subtracted 0.4 percentage point from overall GDP growth.

To strengthen economic growth and increase job creation, President Obama has proposed to Congress a plan that would help State and local governments retain and hire teachers and first responders, would assist the construction sector and economy of tomorrow by rebuilding and modernizing our Nation’s infrastructure, and would give small businesses tax cuts to encourage them to increase payroll. President Obama also proposed extending tax cuts to protect middle class families and virtually every small business owner from getting a tax increase at the beginning of next year. Extending these tax cuts would provide more certainty for the economy for 98 percent of American families and 97 percent of small business owners.

Alan B. Krueger is the Chairman of the Council of Economic Advisors.

Most pressing, Congress should pass an extension of middle class tax cuts that President Obama proposed, and the Senate passed.  This extension would prevent the typical middle class family from facing a $2,200 tax increase at the beginning of next year. In addition, the President has proposed a plan that will enable responsible homeowners to refinance their mortgage and take advantage of today’s historically low interest rates. To create more jobs in particularly hard-hit sectors, President Obama continues to urge Congress to pass elements of the American Jobs Act, including further investment in infrastructure to rebuild our Nation’s ports, roads and highways, and assistance to State and local governments to prevent layoffs and to enable them to rehire hundreds of thousands of teachers and first responders.

Today’s report from the Bureau of Labor Statistics (BLS) shows that private sector establishments added 104,000 jobs last month, and overall non-farm payroll employment rose by 114,000. Revisions to the previous two months added another 86,000 jobs.  The economy has now added private sector jobs for 31 straight months. Taking account of the preliminary benchmark revision (+453,000) released last week, the economy has added a total of 5.2 million private sector jobs during that period.

The household survey showed that the unemployment rate fell from 8.1 percent in August to 7.8 percent in September, the lowest rate since January 2009.  Labor force participation rose by 418,000 people in September, and the labor force participation rate rose by 0.1 percentage point. Over the last 12 months, the unemployment rate has decreased by 1.2 percentage points, the largest drop since February 1995.

Employment rose notably in health care and social assistance (+44,500), transportation and warehousing (+17,100), restaurants and bars (+15,700) financial activities (+13,000), and professional and business services (+13,000). Manufacturing lost 16,000 jobs, primarily in durable goods (-13,000).

As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.

We also saw revised data released today showing that real GDP grew in the second quarter of 2012 by 1.3 percent at an annual rate. Real GDP growth in the second quarter was revised down due, in part, to a downward revision to agriculture inventories as a result of the devastating drought our nation faced this summer. The Obama Administration continues to take all available steps to mitigate the impacts of the drought, and has called on Congress to pass a farm bill that would spur growth and provide rural Americans with the certainty they deserve. We also learned today that the advance report of durable goods orders declined in August, largely as a result of a decline in orders for transportation equipment. Excluding the volatile transportation category, durable goods orders fell by 1.6 percent.

Today’s news shows that we must do more to strengthen our economy and promote job creation. Over a year ago, President Obama proposed the American Jobs Act – a plan that independent economists have said would create up to 2 million jobs. The President will continue to push policies that will continue this progress we have made, including incentives to strengthen the American manufacturing industry, investments in our nation’s infrastructure, and the extension of the tax cuts for 98 percent of Americans and 97 percent of small businesses.

While we are still rebuilding our economy and working to recover from the worst crisis since the Great Depression, we are making progress and the last thing we should do is return to the economic policies that failed us in the past. The revisions announced in today’s reports are a reminder that economic data are subject to large revisions. As a whole the pattern of revisions suggest that the recession that began at the end of 2007 was deeper than initially reported, and the jobs recovery over the last 2.5 years has been a bit stronger than initially reported, although much work remains to be done to return to full employment.

Today’s report from the Bureau of Labor Statistics (BLS) shows that private sector establishments added 103,000 jobs last month, and overall non-farm payroll employment rose by 96,000. The economy has now added private sector jobs for 30 straight months, for a total of 4.6 million jobs during that period.

The household survey showed that the unemployment rate declined from 8.3 percent to 8.1 percent in August. 

Employment rose notably in leisure and hospitality (+34,000), professional and business services (+28,000), health care and social assistance (+21,700), and wholesale trade (+7,900). Manufacturing lost 15,000 jobs, including a 7,500 drop in motor vehicles and parts, which is partly payback for there having been relatively few seasonal auto plant shutdowns in July.  Over the past 30 months, manufacturers have added more than 500,000 jobs.  Government lost 7,000 jobs, as state government payrolls fell by 6,000 and local governments shed 4,000 jobs. Since February 2010, State and local governments have lost 504,000 jobs.

As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.

Today’s report from the Bureau of Labor Statistics (BLS) shows that private sector establishments added 172,000 jobs last month, and overall non-farm payroll employment rose by 163,000. The economy has now added private sector jobs for 29 straight months, for a total of 4.5 million jobs during that period. 

The household survey showed that the unemployment rate ticked up to 8.3% in July (or, more precisely, the rate rose from 8.217% in June to 8.254% in July).  Acting BLS Commissioner John Galvin noted in his statement that the unemployment rate was “essentially unchanged” from June to July.  

The establishment survey indicated that manufacturing employment continues to expand and manufacturers added 25,000 jobs in July.  After losing millions of manufacturing jobs in the years before and during the recession, the economy has added 532,000 manufacturing jobs since January 2010 – the strongest growth for any 30-month period since June 1989.  Within manufacturing, motor vehicles and parts added 12,800 jobs in July, its strongest monthly growth since January 2011, partly reflecting fewer seasonal layoffs last month.  To continue the revival in manufacturing jobs and output, President Obama has proposed tax incentives for manufacturers, enhanced training for the workforce, and measures to create manufacturing hubs and discourage sending jobs overseas. 

Other sectors with net job increases included professional and business services (+49,000), education and health services (+38,000), leisure and hospitality (+27,000), and wholesale trade (+9,200).  Within leisure and hospitality, restaurant employment rose by 29,400 jobs. Government lost 9,000 jobs as State government payrolls fell by 6,000.  Local governments shed 7,000 education jobs.  Since February 2010, State and local governments have lost 485,000 jobs.  

As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.  

With today’s report, the BEA also released its annual revisions back to 2009.  While the revisions did not meaningfully change the pace of growth over that entire period, it is noteworthy that State and local government purchases were revised up in 2009, which is consistent with the Recovery Act cushioning the effect of the recession and helping to launch the recovery.  Since the Recovery Act funds have been phasing out, however, declining State and local government activity has subtracted from GDP.  Indeed, today’s report indicates that State and local government purchases have declined for 11 straight quarters, the longest streak ever recorded since the official record of quarterly data began in 1947.  

To strengthen economic growth and increase job creation, President Obama has proposed to Congress a plan that would help State and local governments retain and hire teachers and first responders, assist the construction sector and economy of tomorrow by rebuilding and modernizing our Nation’s infrastructure, and would give small businesses tax cuts to encourage them to increase payroll.  President Obama also proposed extending tax cuts to protect middle class families and virtually every small business owner from getting a tax increase at the beginning of next year.  The Senate passed the President’s plan this week and President Obama has said that as soon as the House will act he will sign it right away in order to give certainty and security to middle class families. Extending these tax cuts would provide more certainty for the economy for 98 percent of American families and 97 percent of small business owners. 

Today’s report from the Bureau of Labor Statistics (BLS) shows that private establishments added 84,000 jobs last month, and overall non-farm payroll employment rose by 80,000. The economy has now added private sector jobs for 28 straight months, for a total of 4.4 million payroll jobs during that period. Employment is growing but it is not growing fast enough given the jobs deficit caused by the deep recession.

The average work week for private sector workers rose by 0.1 hour in June. Aggregate private sector work hours posted their largest gain since February, rising by 0.4 percent.  The stronger increase in work hours than in payroll employment suggests that many businesses chose to expand on the intensive margin as opposed to the extensive margin in June. 

The unemployment rate was unchanged at 8.2 percent in June, according to the BLS household survey. The unemployment rate is 0.9 percentage point below its level a year ago.  

Manufacturing employment continues to expand and manufacturers added 11,000 jobs in June. After losing millions of manufacturing jobs in the years before and during the recession, the economy has added 504,000 manufacturing jobs since January 2010--the strongest growth for any 29-month period since April 1995. To continue the revival in manufacturing jobs and output, the President has proposed tax incentives for manufacturers, enhanced training for the workforce, and measures to create manufacturing hubs and discourage sending jobs overseas. 

Other sectors with net job increases included temporary help services (+25,200), leisure and hospitality (+13,000), and wholesale trade (+8,800). Retail trade lost 5,400 jobs, government lost 4,000 jobs, and motion pictures and sound recording lost 4,200 jobs.  Local governments shed 14,000 education jobs.  

As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and employment estimates can be subject to substantial revision.  Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.

Today we learned that the economy has added private sector jobs for 27 straight months, for a total of 4.3 million payroll jobs over that period. The economy is growing but it is not growing fast enough. BLS’s establishment survey shows that private businesses added 82,000 jobs last month, and overall non-farm payroll employment rose by 69,000. The unemployment rate ticked up from 8.1 percent in April to 8.2 percent in May, according to BLS’s household survey. However, the labor force participation rate increased 0.2 percentage point to 63.8 percent, and employment rose by 422,000 according to the household survey. 

There is much more work that remains to be done to repair the damage caused by the financial crisis and deep recession that began at the end of 2007. Just like last year at this time, our economy is facing serious headwinds, including the crisis in Europe and a spike in gas prices that hit American families’ finances over the past months.  It is critical that we continue the President’s economic policies that are helping us dig our way out of the deep hole that was caused by the severe recession. 

In the American Jobs Act and in the State of the Union Address, the President put forward a number of proposals to create jobs and strengthen the economy, including proposals that would put teachers back in the classroom and cops on the beat, and put our nation’s construction workers back on the job rebuilding our nation’s infrastructure.  The President has also proposed a “To-Do List” of actions that Congress should take to create jobs and help restore middle-class security.  This includes eliminating tax incentives to ship jobs overseas, cutting red tape so responsible homeowners can refinance, giving small businesses that increase employment or wages a 10 percent income tax credit, investing in affordable clean energy, and helping returning veterans find work.  The President is in Minneapolis today to announce a new executive action that will establish private sector partnerships to help military service members acquire recognized occupational credentials—as welders, as machinists, and ultimately in a broader range of occupations. These partnerships will help service members find private sector jobs once they leave the military, and they will help firms in manufacturing and other industries that need workers to fill their vacant positions. 

Manufacturing employment continues to expand and manufacturers added 12,000 jobs in May. After losing millions of good manufacturing jobs in the years before and during the recession, the economy has added 495,000 manufacturing jobs since January 2010--the strongest growth for any 28-month period since April 1995.  To continue the revival in manufacturing jobs and output, the President has proposed tax incentives for manufacturers, enhanced training for the workforce, and measures to create manufacturing hubs and encourage the growing trend of insourcing. 

Other sectors with net job increases included education and health services (+46,000), transportation and warehousing (+35,600), wholesale trade (+15,900), and temporary help services (+9,200). Construction lost 28,000 jobs, accounting services lost 14,000 jobs, government lost 13,000 jobs, and leisure and hospitality lost 9,000 jobs.  State and local governments shed 8,000 jobs, mostly in education. 

As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and employment estimates can be subject to substantial revision.  Therefore, it is important not to read too much into any one monthly report and it is helpful to consider each report in the context of other data that are becoming available.

Today’s employment report provides further evidence that the economy is continuing to heal from the worst economic downturn since the Great Depression, but much more remains to be done to repair the damage caused by the financial crisis and the deep recession.  It is critical that we continue the economic policies that are helping us dig our way out of the deep hole that was caused by the severe recession that began at the end of 2007.  President Obama has said that prosperity in America has always come from a strong and growing middle class.  He has made clear that getting back to where we were is not enough. We need to do more, which is why the President has laid out his blueprint for an American economy that is built to last and will continue to urge Congress to act to do more to grow the economy and create jobs.

Private employer payrolls increased by 130,000 jobs in April, and overall non-farm payroll employment rose by 115,000.  The unemployment rate dipped from 8.2% in March to 8.1% in April, according to the household survey.  Though labor force participation fell over the month according to the household survey, since August the unemployment rate has fallen by 1.0 percentage point, from 9.1% to 8.1%, and nearly three-quarters of that drop is attributable to increased employment.

Despite adverse shocks that have created headwinds for economic growth the economy has added private sector jobs for 26 straight months, for a total of 4.25 million payroll jobs over that period.  With upward revisions of 65,000 jobs to the past two months’ employment reports, in the first quarter of 2012 private employment expanded by 697,000 jobs, the largest quarterly increase since the first quarter of 2006.  So far this year, 827,000 private sector jobs have been added, on net.

Manufacturing continues to be a bright spot and added 16,000 jobs in April.  After losing millions of good manufacturing jobs in the years before and during the recession, the economy has added 489,000 manufacturing jobs since January 2010.  To continue the revival in manufacturing jobs and output, the President has proposed tax incentives for manufacturers, enhanced training for the workforce, and measures to create manufacturing hubs and encourage the growing trend of insourcing. 

Other sectors with net job increases included wholesale and retail trade (+36,700), professional and business services (+62,000), and education and health services (+23,000).  Transportation and warehousing lost 16,600 jobs, and construction lost 2,000 jobs.  Local governments shed 12,000 jobs, mostly in education.   

As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report and it is helpful to consider each report in the context of other data that are becoming available. 

It is important to recognize that GDP is made up of various components. Several of the private sector components of GDP grew solidly in the first quarter. Personal consumption expenditures, for example, increased by 2.9 percent at an annual rate in 2012 Q1, as compared with 2.1 percent in the previous quarter. Auto production increased robustly, accounting for fully half of overall GDP growth in the first quarter. Residential construction increased by 19 percent, marking the first time since 2005 that residential construction has increased four quarters in a row. These are encouraging signs that the private sector is continuing to heal from the worst recession since the Great Depression.  

Overall GDP growth was weighed down by reduced spending in the government sector, however. According to the Bureau of Economic Analysis, national defense expenditures fell by 8.1 percent in the first quarter.  Government spending across all levels subtracted 0.6 percentage point from overall GDP growth.  The latest report continues a pattern of moderate growth in the private sector components of GDP and contraction of the government components of GDP.  The second graph below displays the four-quarter percent change in the private components of real GDP and of government spending.    

If only the private sector components of GDP are considered, GDP grew by 3.5 percent in 2012 Q1.

Employer payrolls increased by 121,000 jobs in March, according to the Bureau of Labor Statistics’ establishment survey. The unemployment rate ticked down to 8.2% in March, according to the household survey.  However, employment was virtually unchanged in the household survey.

Both surveys indicate the continuing challenges facing construction workers, as a result of the collapse in homebuilding following the bursting of the housing bubble.  The unemployment rate for construction workers stands at 17.2%, more than double the national average.  Because of weak private sector demand for construction investment and the nation’s continuing need for improved infrastructure, including maintenance of existing highways, bridges, and ports, the President’s Budget proposal to increase and modernize the nation’s infrastructure is well targeted to support the economy today and in the future.

Despite adverse shocks that have created headwinds for economic growth, including weak construction investment, the economy has added private sector jobs for 25 straight months, for a total of 4.1 million jobs over that period. 

Manufacturing continues to be a bright spot and added 37,000 jobs in March.  After losing millions of good manufacturing jobs in the years before and during the recession, the economy has added 466,000 manufacturing jobs in the past 25 months—the strongest growth for any 25 month period since September 1995.  To continue the revival in manufacturing jobs and output, the President has proposed tax incentives for manufacturers, enhanced training for the workforce, and measures to create manufacturing hubs.

Other sectors with net job increases included leisure and hospitality (+39,000), professional and business services (+31,000), and financial activities (+15,000).  Retail trade lost 33,800 jobs, construction lost 7,000 jobs, and government lost 1,000 jobs.  State and local government job losses have moderated in recent months.  Almost three-quarters of the slower job growth in March relative to February was due to slower growth in temporary help services and health care and day care services.

As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report, and it is helpful to consider each report in the context of other data that are becoming available. 

After losing millions of good manufacturing jobs in the years before and during the recession, the economy has added 429,000 manufacturing jobs in the past two years. For the first time since the 1990s, the manufacturing sector is adding jobs. To support a revival in manufacturing jobs and output, the President has proposed tax incentives for manufacturers, enhanced training for the workforce, and measures to create manufacturing hubs.

Private sector payrolls increased by 233,000 jobs and overall payroll employment rose by 227,000 jobs in February. The unemployment rate was unchanged at 8.3%.  The unemployment rate has fallen by 0.8 percentage point over the last 6 months. 

There was an increase in the size of the labor force last month of 476,000. Importantly, the increase in the labor force last month was due in large part to a reduction in the number of workers who exited the labor force between January and February.

Despite adverse shocks that have created headwinds for economic growth, the economy has added private sector jobs for 24 straight months, for a total of more than 3.9 million payroll jobs over that period. In the last 12 months, 2.2 million private sector jobs were added on net.  In the last 6 months, 1.3 million private sector jobs were added, the most of any 6 month period in nearly 6 years. 

Sectors with net job increases included health care and social assistance (+61,100), temporary help services (+45,200), leisure and hospitality (+44,000), and manufacturing (+31,000).  Construction lost 13,000 jobs, reflecting a loss of 15,400 specialty trade contractor jobs. Employment in the Federal government fell by 7,000 jobs. 

The monthly employment and unemployment numbers can be volatile, and employment estimates can be subject to substantial revision. Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report; nevertheless, the trend in job market indicators over recent months is an encouraging sign. 

The problems that caused the deep recession that began at the end of 2007 and lasted until mid-2009 were a long time in the making, and will not be solved overnight. But economic progress is being made.  In 2011 the Nation continued to recover, rebalance and rebuild a stronger, more secure future.  The economy has expanded for 10 straight quarters. As a result, by the third quarter of 2011, the real gross domestic product (GDP) of the United States had surpassed its peak level at the start of the 2007–09 recession.

When President Obama took office on January 20, 2009, the U.S. economy was contracting at an alarming rate, and employment was falling by more than 700,000 jobs a month. The plunge in economic activity was even deeper than the Bureau of Economic Analysis initially reported: revised estimates show that the economy contracted at an 8.9 percent annualized rate in the last quarter of 2008, from the initial advanced estimate of 3.8 percent.  This was the largest quarterly downward revision ever reported. 

Upon taking office, the Obama Administration immediately took bold steps to turn around an economy in free fall.  It worked to stem the economic and financial collapse and put people back to work through the American Recovery and Reinvestment Act of 2009 (the Recovery Act), and it shored up the banking system and stabilized the financial sector through a series of measures including stress tests for banks and rigorous requirements for banks to raise private capital and repay the government for funds from the Troubled Asset Relief Program, and it rescued the American auto industry.

Soon after the Recovery Act was passed, the contraction of GDP slowed markedly to -0.7 percent in the second quarter of 2009 from -6.7 percent in the preceding quarter.  Economic growth turned positive in the third quarter of 2009, and the economy has grown at an annualized growth rate of 2.4 percent over the past 10 quarters.  Private sector employment has grown for 23 straight months, and employers have added a total of 3.7 million jobs in that period. 

Sustaining and strengthening the ongoing recovery remains a top priority for the Obama Administration, while seeking to address the fundamental imbalances and other problems that had built up for decades and erupted with the financial and economic crisis in 2008.  Additionally, strengthening and expanding the middle class and reforming the financial sector, are at the root of the Obama Administration’s strategy to reestablish an economy that is built to last.

To read the entire Report, click HERE.

The Department of Labor is taking action to require 401(k) plan providers to better disclose the cost and nature of the services they provide, while Treasury and the IRS are announcing steps that will ease regulatory barriers in the market for annuities and other forms of lifetime income. The Council of Economic Advisers (CEA) has prepared a detailed report describing the significance of today’s actions, which can be accessed here. 

Today’s announcements complement previous Administration initiatives to make retirement more secure for American families. In September 2009, President Obama announced expanded opportunities for automatic enrollment in retirement savings plans. The President has also championed an automatic IRA legislative proposal through which tens of millions of workers without access to a workplace retirement plan would be automatically enrolled in IRAs through payroll deposit contributions, while remaining free to opt out. And the Administration has proposed easing requirements on the timing and amount of distributions from retirement accounts for many retirees, reducing the compliance burden and providing elderly Americans with greater control over their retirement assets.  

Enhancing Lifetime Income Options

Today’s Treasury and IRS actions will facilitate the creation of new lifetime income choices to help Americans manage their hard-earned savings in retirement. As life expectancies and retirement periods lengthen, Americans are increasingly confronting the risk of outliving their assets in retirement. Managing this risk is a challenge. While we know average life expectancies, it is impossible for individuals to know how long they will live. As a result, many retirees risk outliving their savings or unnecessarily limiting their spending in retirement because of the fear of outliving their savings.  

Women are especially exposed to this risk. Even though women’s participation rate in retirement plans is equal to that of men, women tend to have significantly lower overall retirement income and retirement assets than men, due in part to lower wages and lower rates of full-time employment among women during their working lives. If anything, these statistics understate the need for improved retirement security among elderly women due to their greater life expectancy. For example, in 2007, the average American woman turning age 65 could expect to live 19.9 additional years—2.7 more years than the average American man. And elderly women are more likely to live in poverty than elderly men. In 2008, 17 percent of unmarried women age 60 and over were poor, and an additional 20 percent were nearly poor, with incomes between 100 and 150 percent of the official poverty level. The disparity for women becomes particularly pronounced at older ages: at age 75 and above, 12 percent of women (married and unmarried) lived below the poverty level in 2010, compared with only seven percent of men. 

Traditionally, a guaranteed and predictable stream of lifetime income, such as a defined benefit pension, has helped to attenuate this risk, for both men and women. Lifetime income could also be provided by an annuity purchased through a 401(k) or IRA. Yet in recent years the use of lifetime income in retirement plans has diminished substantially.  

This dynamic has underscored the bedrock importance of Social Security—with benefits that are guaranteed for life, adjusted for inflation, and not subject to financial market fluctuations. It has also underscored the need to expand the availability of lifetime income options in retirement plans. 

Currently, a number of regulatory barriers reduce the availability and take-up of lifetime income options. Today’s proposed actions would facilitate the creation of new lifetime income choices to help retirees manage their savings by: 

• making it easier to offer retirees the option of taking a portion of their plan benefit as a stream of regular income payable for life and the remainder in a single lump-sum cash payment, as opposed to being forced to choose either all cash or all income;  
• helping employer plans and IRAs offer “longevity annuities,” which enable employees to devote a relatively small portion of their account balances to gain lifelong retirement income beginning at age 80 or 85, protecting those who live beyond average life expectancy from running out of savings;
•  making clear that employees receiving lump-sum cash payouts from their employer’s 401(k) plan can transfer some or all of those amounts to the employer’s defined benefit pension plan in order to receive an annuity from that plan, thus giving employees access to the defined benefit plans’ relatively low-cost annuity purchase rates; and 
• resolving uncertainty as to how the 401(k) plan spousal protection rules apply when employees choose deferred annuities from their plans.  

 Improving Disclosure of Investment and Recordkeeping 

Americans can also increase their savings by reducing the fees they pay as their savings accumulate in a retirement plan. Currently, sponsors of retirement plans too often are not provided with information on the investment and recordkeeping fees charged to their plans. This makes it difficult to compare the after-fee cost of administering a plan and may obscure the compensation incentives of plan servicers, potentially biasing the advice provided to plan sponsors.

 Improved fee disclosure may lead to lower overall fees if plan sponsors can better assess the value and worth of the services provided. In addition, to the extent that compensation arrangements may disproportionately reward plan servicers for providing particular products, improved disclosure may lead to better portfolio allocations and higher returns. Both of these factors could lead to higher accumulated capital at retirement, as small differences in annual rates of return can lead to large gains in cumulative returns over time. For example, a 0.25 percent higher return after fees could increase the cumulative savings of a 25 year-old worker by about 10 percent by retirement (see figure below).

The unemployment rate fell 0.2 percentage point to 8.3%, from a high of 10% in October 2009. The drop in unemployment over the month was entirely due to employment growth, as the labor force participation rate remained constant, once new population weights are taken into account.  The unemployment rate has fallen by 0.8 percentage point in the last 12 months. Private sector payrolls increased by 257,000 jobs and overall payroll employment rose by 243,000 jobs in January. Despite adverse shocks that have created headwinds for economic growth, the economy has added private sector jobs for 23 straight months, for a total of 3.7 million payroll jobs over that period. In the last 12 months, 2.2 million private sector jobs were added on net.  Nonetheless, we need faster growth to put more Americans back to work.

Sectors with net job increases in December included professional and business services (+70,000), manufacturing (+50,000), leisure and hospitality (+44,000), health care and social assistance (+29,700), and construction (+21,000).  Government lost 14,000 jobs.

The monthly employment and unemployment numbers can be volatile, and employment estimates can be subject to substantial revision. Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report; nevertheless, the trend in job market indicators over recent months is an encouraging sign.