Last week, the Council of Economic Advisers released its 2010 Economic Report of the President (ERP). I haven’t had time to read it yet, but I did take a quick spin through looking at the charts and getting a feel for it.
The first thing I noticed is that the folks at the CEA have made an important innovation: the ERP now includes references to the academic studies, government reports, etc. on which it bases some of its conclusions. That’s a welcome break from a long-standing tradition (which I never really understood) that the ERP didn’t include references.
A second useful innovation is that the ERP is available in eBook formats, including for my beloved Kindle. Not to add to their already enormous workload, but I look forward to the 2011 or 2012 version having dynamic graphics and live links to the references.
Here are some of the charts that I particularly liked:
1. The boom and bust of house prices. By this measure, house prices are still historically high–except for the bubble.
2. The declining role of banks in the financial sector. Note the growth of mutual funds and ABS issuers.
3. How rising health care costs may consume a rising share of employee compensation. (Note, however, that by setting the axis at $30,000 rather $0, the chart visually exaggerates the effect.)
4. How the rate of being uninsured varies with age.
What does chart 4 look like post college (age 21) and pre-Medicare, incredible drop off (age 65)? What are the drivers of variability in this zone?
The spike upward in the late teens and early twenties reflects kids moving off of their parents health insurance plans. Through a combination of being relatively low income, relatively healthy, and possibly feeling immortal, some go without health insurance by choice and some go without because of its expense. The subsequent decline with age then reflects rising incomes and decreasing health (and probably some increased eligibility for Medicaid when folks have kids).
it seems as if a scheme of option based back up insurance that is cheap when one is young and healthy with a long time to medicaid and expensive when one is older, vulnerable but not quite at 65 (Medicaid) would be an interesting scheme to consider
Possibly feeling immortal – true. What you do not see in those numbers is a sad problem we hardly ever talk about. Complicated births, that are NOT covered by insurance – bcuz of limits & no coverage – occur in very large numbers. Not only are there serious and long term health problems to deal with, but the unforeseen & often unpayable expenses. That in turn leads to divorce, bankruptcy and DWI problems.
Ask any divorce, BK, or DUI attorney, and they will tell U.S. that the primary, if not sole, cause of far to many of these early adult problems is uninsured medical costs. The economic and social costs to U.S. are enormous.
Any know why why employee compensation (Figure 7-2) suddenly takes off after being fairly flat (and recently falling)?
There is some assumption here that seems to be at odds with all current trends.
I don’t know for sure, but I would guess the near-term acceleration is driven by high productivity growth that hasn’t yet been fully reflected in compensation (but will eventually, under usual economic conditions).
Productivity growth does not seem to be as directly related to employee compensation as it was just a decade ago. Perhaps that is due to the unemployment rate in the last decade.
Classically, a shortage of workers means higher wages. One could argue that improved productivity has been part of the reason wages have been relatively flat.
Something seems a bit rosy in this chart, but without a description of the underlying assumption, I remain perplexed.
Here is my more basic question:
Are the revenue projections based on the employee compensation shown in this chart.
If so, I worry that the picture is actually quite a bit bleaker. If employee compensation does not show such healthy increases, ithe tax revenue can not be as large as projected.