Chairman D'Amato, members of the Committee, I am pleased to appear before you today as President Clinton's nominee to serve as Chairman of the Council of Economic Advisers. I am deeply honored that the President has nominated me to serve in this position. I would like to thank Senator Boxer for her gracious introduction and to say how much I have appreciated the opportunity to meet with so many members of this Committee over the last few weeks to discuss the challenges facing the American economy. I would also like to introduce my husband, George Akerlof, a Professor of Economics at Berkeley and Senior Fellow at the Brookings Institution, who is my partner not only in marriage but also in economic research.
The Council of Economic Advisers, established by the Employment Act of 1946, has served for 50 years as a trustworthy and persistent advocate of policies that promote the broad public interest. Presidents, since Harry Truman, have turned to the Council for economic advice, analysis, and insights to inform the policy making process. In Republican and Democratic Administrations alike, the Council has urged policies that facilitate the workings of the market, that emphasize the importance of incentives and efficiency, and that promote long-term growth. If confined, I pledge to continue this proud tradition.
By many measures, the economy is in very good health. A simple index of economic
performance that reveals how well the economy is functioning is the misery index--defined as
the sum of the inflation and unemployment rates. This index stood at 8.3% in 1996, with the
unemployment rate averaging 5.4% and the CPI rising year over year at 2.9%. In historical
terms, this represents outstanding performance--the best since 1968. Over 1 1 million new jobs
have been created since 1992 and the jobs have been disproportionately "good" jobs--in industry
occupations paying above median wages. The rewards from growth have been widely shared,
with the poverty rate falling more in 1995 than at any time during the last decade. Throughout
our long expansion, inflation has remained low and fallen by most broad measures; and
investment in plant and equipment--the driving force of this expansion-- has grown at a
phenomenal pace. Consumer confidence now stands near the highs of recent decades. The
Administration's economic policies have contributed to these successes, in part, by bringing
down the federal budget deficit, thus permitting a larger share of private sector savings to finance
the investments in plant and equipment that equip American workers with the tools they need to
be productive on the job. I believe that the Federal Reserve has also played a positive, and
complementary, role by pursuing monetary policies that have facilitated this favorable mix shift
while keeping the economy operating at its potential.
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