I want to thank the Committee for considering my nomination as Member of the President's Council of Economic Advisers.
My career has been primarily academic. I received my Economics Ph.D. from MIT in 1978, and have been teaching at the University of California, Berkeley, for most of the time since then. I have also had visiting appointments at Harvard and other universities But I am not without policy experience. I have worked at the Council of Economic Advisers before, as Senior Economist for International Economic Policy in 1983-84, during the firstt Reagan Administration. I have also spent 16 shorter spells in Washington visiting the Federal Reserve Board, International Monetary Fund, World Bank, and Institute for International Economics. My most important other affiliation, along with U.C. Berkeley, has been the National Bureau of Economic Research, in Cambridge MA, where I directed the program on International Finance and Macroeconomics up until September.
My primary fields of expertise are international economics and macroeconomics. These are the areas in which I expect largely to specialize, if confirmed by the Senate as a Member of the Council.
I have been asked to join the Administration's economic, team at a time of almost
unprecedented good economic developments. We are in the sixth year of an expansion
of output. Unemployment is down to 5.4 per cent do lowest level since 1989, and the
second lowest since 1973. Inflation is at 2-3% (depending on how you measure it), the
lowest level since the Kennedy Administration. Putting the good unemployment and
inflation news together, the "misery index" is at its lowest level since 1968. Exports
and business invesiment, are both up sharply. The budget deficit has declined four years
in a row, and is now at the lowest level since 1981. As a share of GDP. the deficit is
the lowest since 1974, and the lowest of the major economies of the world. Perhaps
as a result of these favorable developments, consumer confidence is at its highest level
in this decade, and the stock market is at its highest level in history.
There is no reason to think that the six-year recovery is spent. To the, contrary
a variety of factors point to continued steady growth this year: Inventories are under
control, so firms can continue to expand; household net worth is in good shape, so
consumers can spend; inflation is low, so monetary constraints have not appeared.
Perhaps the most important qualification to this favorable picture of the economy
is income inequality. But even here there is at last some good news. In the most recent
two years of statistics [1994 and 1995] the poverty rate fell, from 15.1% to 13.8%.
Income has increased for every quintile, and the lowest quintile has increased the most.
This is a welcome reversal of past trends.
It would be unrealistic to expect the economic progress of the past four years to
continue uninterrupted forever. I don't believe that we have repealed the business
cycle; there will be challenges ahead. But the record of the policymakers of the first
Clinton Administration is a very strong one.
I am grateful to the President for this opportunity. If I am confirmed, I will be
following Laura Tyson, Alan Blinder, Joe Stiglitz, and Martin Baily on the Council of
Economic Advisers, all of them outstanding economists. I look forward to the chance
to work with the rest of the Administration, and the Congress, to help build a solid
economic foundation for our future.
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