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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...

payroll employment has increased by 9 4 million or 8 7 The average increase over the comparable 64 month in other post 1960 recoveries was 14 1 A 14 1 10 increase in private sector payroll jobs during this...disposable personal income per capita has risen 5 7 the S P 500 Total Return Index adjusted for inflation is up nearly 120 Figure 22 22 One other very stark comparison between this recovery and other post...President Obama s lifetime his own Since President Obama took office through August 2014 the latest month for which data are available 8 2 million households and 14 5 million individuals have been added to...

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...

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...

113 consecutive months through February 2020 The 178 000 average nonfarm payroll jobs added each month in 2019 were lower than the 193 000 average added monthly in 2018 but still marginally higher than...net nonfarm payroll jobs in 2020 followed by a rebound of job growth in 2021 averaging 490 000 per month over the year However while the number of jobs lost between February and April 2020 virtually erased...nominally by 3 percent as compared to a year ago in the final quarter of 2019 Even adjusting for inflation wage growth compared to a year ago remained relatively steady near 1 percent over all four quarters...

period adding only 65 000 jobs per month on average see Figure 1 1 4 which is down significantly from CBO s January 2016 projection of approximately 75 000 jobs added per month over the 2021 2026 period 13 Figure...peak in 1999 6 A 2016 study from Pew Charitable Trusts found that the overall U S growth rate in inflation adjusted personal income from the final quarter of 2007 through the final quarter of 2015 is 1 6...and long run 32 Potential GDP CBO defines potential GDP as the maximum sustainable amount of real inflation adjusted output that the economy can produce 46 Since 2007 CBO has consistently revised estimates...

Recent Month State State Code Month Increase in Prices Since January 2021 Total Monthly Inflation Costs Since January 2021 Food Monthly Inflation Costs Since January 2021 Shelter Monthly Inflation Costs...Costs Since January 2021 Transportation Monthly Inflation Costs Since January 2021 Energy Monthly Inflation Costs Since January 2021 Annualized Total Inflation Costs Since January 2021 Rank Alabama AL December...18 Cumulative Costs State Month State Code Cumulative Total Inflation Costs since January 2021 Cumulative Food Inflation Costs since January 2021 Cumulative Shelter Inflation Costs since January 2021 Cumulative...

Crisis GFC as well as partisan spending packages such as the American Rescue Plan Act ARPA and the Inflation Reduction Act IRA have significantly impacted recent debt growth Since 2007 debt held by the public...marketable debt and bills and bonds comprise around 20 percent each Other securities such as Treasury Inflation Protected Securities TIPS and Floating Rate Notes FRNs make up the remaining share 20 Proposed securities...maturity This reflects the increased risks of locking in capital for a longer term These risks include inflation running higher than expected which affects the real value of the security and interest rates rising...

deficit is 11 percent below the 12 month average In trade of goods the U S ran a trade deficit of 103 88 billion up 18 16 billion from June and 9 percent below the 12 month average In trade of services the...07 billion from June and 3 percent below the 12 month average Total exports was 280 46 billion up 814 00 million from June and 1 percent above the 12 month average Total exports of goods was 179 42 billion...from June Total imports was 358 78 billion up 20 04 billion from June and 2 percent below the 12 month average Total imports of goods was 283 30 billion up 18 37 billion from June Total imports of services...