The president's economic aides put together a massive report on the economy every year. It's a 400-plus-page tome outlining where we've been, where we are, and where we might be heading next.
Does the president look at more than the executive summary? I doubt it. Does anyone read the whole thing? No way.
But one thing I love about the report is that it's filled with graphs. Flip through it, and you'll find some interesting ones.
Take this one, showing projections of health-care spending growth compared with what we've actually experienced over the past few years:
If you're worried about long-term federal budget deficits, this should be the most important chart you've ever seen. The budget forecasts that promise trillion-dollar deficits for decades to come overwhelmingly rely on the assumption that health-care costs will spiral higher, just as they did over the past few decades. But lately, per-beneficiary cost growth for Medicare has actually been below the rate of overall economic growth. I've written more extensively about this here, but the bottom line is that we're really bad at forecasting, so the discrepancy between forecasts and reality shouldn't be surprising. And if the trend of recent years holds up, it's a true game-changer: A majority of projected budget deficits will disappear without lifting a finger.
Next, check out this chart, showing the difference between the sticker price of college tuition at public institutions, and the net price people actually pay after scholarships and tax deductions:
Tuition has become the equivalent of marginal tax rates in the 1960s: Few people actually pay the advertised rates, especially if you're of lower means. Evan Soltas of Bloomberg writes:
For much of the middle class, the real net cost of college has not changed significantly [over the past two decades]. ... Data from the College Board show effectively no change in real net tuition and fees for dependent students at four-year public or private universities whose families are in the lower-two income quartiles.
Take Harvard. It's often used as a shocking example of how expensive higher education has become -- $54,000 a year! But Harvard's website notes, "More than 60 percent of Harvard College students receive scholarship aid, and the average grant this year is $40,000." It goes on:
During the 2012-2013 academic year, students from families with incomes below $65,000, and with assets typical for that income level, will generally pay nothing toward the cost of attending Harvard College. Families with incomes between $65,000 and $150,000 will contribute from 0 to 10 percent of income, depending on individual circumstances. Significant financial aid also is available for families above those income ranges.
This is an extreme example of a school with an endowment fund the size of a small nation's GDP. But it underscore's the point made by the White House's graph: What's grown almost as fast as tuition over the past decade? Scholarships.
Next, here's a chart showing the difference between how many new homes we should be building based on demographic trends compared with how many we actually built:
Not only are we currently building too few homes to keep up with demographics, but the skew is almost as large today as it was during last decade's housing bubble -- just in the other direction.
The importance of that can't be overstated enough, which is why I've written about it a lot. People look back at the housing bubble with a sense of amazement. The market was out of control! It was so crazy! Everything was out of balance! But it's virtually the same today. Except this time, rather than a bust, the end game is likely to be a surge in construction. Remember Stein's Law: If something can't go on forever, it won't. That applies to both booms and busts.
Last, here's a chart of state and local spending during economic recessions and recoveries:
This graph is important because it offsets one of the most contentious debates of the past five years: the rise in federal government spending. Yes, real federal government spending has risen sharply since 2008. But real state and local spending declined sharply during that period. Not only is that unheard of in modern recoveries, but it offset part of the rise in government spending. With the recent federal spending sequestration, total state, local, and federal government spending as a share of GDP will probably be the same in 2013 as it was in 2007, before the recession (36%).
The impact the state and local cuts have on jobs is also impressive. According to a study by two Yale economists, if state and local governments responded to the last recession as they had in the two previous ones, they would have added at least 1.4 million jobs since 2007. Instead, they cut more than 700,000.
What do you think?