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Majority Staff Reports 10 Reducing Tax Impediments to Capital Formation 11 Median Family Income and Inflation Mismeasurement 26 Costs and Consequences of the Federal Estate Tax 34 Five Challenges that China...current feature of the U S economy is the lower and more stable pace of inflation we have experienced While most broad measures of inflation provide similar information we nonetheless use the core PCE on a year...lower rate of inflation depicted there has helped to calm financial mar kets reduce risk premiums and improve the credibility of the mon etary authority This persistently lower rate of inflation has in turn...

During 2012 the economy continued to grow at a modest rate the labor market continued to heal and inflation remained low Most economists are projecting moderate growth in 2013 However if Congress is unable...growth over the near term even as fiscal policy turns to a sustainable track over the longer term Inflation remained modest in 2012 Consumer prices excluding food and energy which are historically volatile...rose about 2 percent over the past 12 months That is within the Federal Reserve s target range for inflation Wage growth remained modest The Federal Reserve continues to pursue an expansionary monetary policy...

with other financial institutions 3 Although some workers and employers found a mutually beneficial solution to the economic downturn through flexible work arrangements that facilitated work life balance other...in the 1990s 16 The logic was simple If the economy was growing too rapidly and the specter of inflation was on the horizon the Federal Reserve could raise interest rates to slow down business investment...growth has stalled for African American workers During the 2000s economic recovery African Americans inflation adjusted wages grew at an annual rate of just 0 2 percent after having grown four times as much...

year and as a result 2006 was the first year in three years to show growth in inflation adjusted weekly earnings While inflation adjusted hourly wages fell in early 2007 they are now growing but at a much...Family Housing Fund November 1995 64 Bill Swindell FHA Overhaul Might Be Part of a Subprime Loan Solution National Journal March 20 2007 43 To prevent the origination of risky subprime mortgages designed...S Congress September 19 2007 p 2 Shiller cites a 13 percent real decline Given a three percent inflation rate this translates to a 16 percent nominal decline 40 Note that total property loss is only slightly...

stabilizing but with continued low mortgage rates housing activity is expected to remain strong Inflation Remains Benign Deflation Concerns Recede The year began with some concerns by the Federal Reserve...sustained strong economic growth More recently there have been upward movements in measures of inflation expectations so deflation concerns have almost entirely disappeared The consumer price index CPI...about 3 4 However most of these increases were due to volatile energy prices The core rates of inflation which exclude food and energy prices have shown little inflationary pressure the core CPI has increased...

outpacing growth in supply a condition that could not be sus tained without some acceleration in inflation The FOMC s intent was to head off such an inflationary surge before it arrived The central bank...the most part the Federal Reserve acted without convincing evi dence that a resurgence of core inflation was imminent Restrictive monetary policy affected financial markets including the stock market interest...emptive action With a quasi informal inflation targeting approach in place the Fed s intermediate indicators must provide reliable signals of future changes in inflation In recent years however mainstream...

MACROECONOMY 1 MAJoRITY STAFF REPORT 3 Monetary Policy 5 Establishing Federal Reserve Inflation Goals 5 Lessons From Inflation Targeting Experience 19 A Response to Criticisms of Price Stability 27 Transparency...Unemployment Economy 185 The 1990s Economic Expansion Who Gained the Most 219 The Impact of Mismeasured Inflation on Wage Growth 239 Technology and Economic Growth A Reviewfor Policymakers 259 I 105TH CONGRESS...past several quarters and into the first half of 1998 has been quite favorable Low and declining inflation has been associated with lower interest rates sustained healthy overall economic and employment...

Introduction 5 1 Economic Stability and Monetary Policy 7 I The Importance of Price Stability 7 II Inflation and the Tax Code 8 III Two Key Propositions of Monetary Policy 9 IV The Remarkable Record of the...Insurance Fully Tax Deductible for Individuals 76 VII Concluding Thought 77 8 Capital Gains Growth and Inflation 78 I Capital Gains and Economic Growth 78 II The Nature and Uniqueness of Capital Gains 79 III The...The Optimal Capital Gains Tax Rate 79 IV The Double Taxation of Investment Returns 80 V Inflation and the Taxation of Capital Gains 80 VI Indexation 82 VII Beneficiaries of Lower Capital Gains Rates and...

STUDIES 17 Monetary Policy 19 Lessons From Inflation Targeting Experience 19 The Importance of the Federal Reserve 19 Establishing Federal Reserve Inflation Goals 19 A Response to Criticisms of Price Stability...began in the second quarter of 1991 continues to generate economic and employment gains even as the inflation rate continues to decline Economic growth has been solid over the last four quarters and employment...coporate or bank baance sheet distortions overbuilding in the constnction indusny resurgens of inflation or sharp interest rate increases are neither evident nor expected 8 2 Joint Economic Committee Study...

resilient spurred by tax relief enacted in earlier years and low interest rates Partly because inflation and inflation expectations remained well contained interest rates have not changed significantly since...partly because of strong demand from China and India Despite rising energy and commodity prices inflation in consumer prices remains low by historical standards Between the third quarter of last year and...to turn positive in September 2003 and job gains continued throughout the remainder of the year Inflation remained benign at the close of last year This allowed the Federal Reserve to keep short term overnight...