The Economic Report of the President

On Monday Dr. Edward Lazear, Chairman of the President’s Council of Economic Advisers, released the Economic Report of the President for 2008.

This traditionally is released a week after the President’s Budget. It describes the state of the U.S. economy, and also discusses in more detail a range of economic policy issues. As the ERP is written by professional economists on the CEA staff, it’s quite substantive. Topics covered this year include the U.S. macroeconomic picture, credit and housing markets, export growth, health care, tax policy, the Nation’s infrastructure, alternative energy, and improving economic statistics.

In addition, Dr. Lazear spoke to reporters yesterday about the ERP, and about the Administration’s economic forecast. Here are some of the most significant quotes from that press briefing. While normally I try to explain our policies, I can’t do better than Eddie has done for himself, so I present his quotes without further ado.

On the economy

CHAIRMAN LAZEAR: Going forward, most forecasters expect the first half of 2008 to have slow, but positive, growth, followed by a pick-up in the latter half of the year. The stimulus package just passed by Congress that will be signed by the President shortly should help ensure against risks in the economy.

This year’s most significant economic events revolved around housing and credit markets. An apparent under-pricing of risk was revealed first in mortgage markets, and later in a variety of credit markets. The President was quick to respond to these issues by focusing on borrowers through programs like FHA Secure, suspension of the tax liability on mortgage write-downs, and HOPE NOW programs. Additionally, the Federal Reserve acted to pump liquidity into the market. Some credit markets have become more stable since the acute tightening that occurred in the summer.

Are we in a recession?

Q: [D]o you think we’re going to go into a recession or are in a recession right now?

CHAIRMAN LAZEAR: The answer is, I don’t think we are in a recession right now, and we are not forecasting a recession. We are forecasting slower growth. There’s no denying that the growth that we had in the fourth quarter of last year was significantly lower than the growth that we had in the third quarter. Now I just remind you that we had similar growth rates in the first quarter of last year, and those similar growth rates were followed by two very strong quarters. So these things are somewhat […]