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Dr. Matthew Slaughter
Dr. Matthew Slaughter
Member of the Council of Economic Advisers

August 16, 2006

Dr. Matthew Slaughter
Hi everyone, it is a pleasure to be here today. I am Matt Slaughter, and I serve as a member on the President's Council of Economic Advisers. The role of the CEA is to offer analysis and advice on the full range of domestic and international economic issues. I look forward to our discussion!

Joel, from Superior, WI writes:
Dr. Slaughter, How good is the economy right now, compared to previous years and other administrations?

Dr. Matthew Slaughter
Thanks very much for this question, Joel.

Real GDP growth, which measures growth of total U.S. output of goods and services, has increased 3.5% over the past four quarters. That is above the historical average, and faster than any other major industrialized country. Growth is expected to moderate over the balance of 2006, but still at a healthy rate.

Unemployment remains low: it is currently at 4.8%, which is below the average of the 1970s, 1980s, and 1990s.

Jaidev, from Brooklyn, NY writes:
With the emergence of the economies of China and India, how can we adapt futher into a globalized economy and secondly how what are the long-term effects of foreign investement in the United States?

Dr. Matthew Slaughter
This is an interesting pair of questions, Jaidev.

The ongoing emergence of China and India present both challenges and opportunities for the United States. The growth in countries like these represents a real opportunity for American companies to serve more markets abroad. Today, for example, the President is visiting a Harley-Davidson plant in Pennsylvania. Today, one of five Harleys produced in the United States is sold outside the United States--and this year they opened their first dealership in China.

Foreign investment into the United States is very important for the overall health of our economy. In 2003, nearly 5.3 million Americans worked at U.S. affiliates of foreign-owned companies--and these employees earned an average of over $60,000 per person.

Mads, from Denmark writes:
I am a Danish citizen, but I hope it is all right that I ask you a question. The figures regarding the American economic are looking very good and the unemployment figures are something that can make the French president and the German chancellor very envious. But what about the American debt and the fact the President Bush is the President in history that has increased the public spending the most. Are you not afraid that this may weakened the American economy in the long run? Best regards, Mads, Student in Denmark

Dr. Matthew Slaughter
Thank you for your comments and questions, Mads.

You are right that the U.S. economy has been enjoying strong output and employment growth relative to many other advanced countries. One important reason for this is that our flexible economy helps American companies and their workers be more productive.

You are also right that reducing the budget deficit is an important challenge for all countries, including the United States. Strong U.S. economic growth is helping produce strong increases in federal tax receipts: from 2005 to 2006, receipts are projected to grow 11%. Maintaining fiscal discipline will be important for continuing to make progress on this front.

mary, from Minnesota writes:
I understand the benefits of free trade for the economy as a whole. But what should we do to help individuals who loose their jobs to foreign workers.

Dr. Matthew Slaughter
Thank you very much for this question, Mary.

It is very important that the overall gains of international trade (and investment) be enjoyed directly by as many individuals as possible. Over the long term, helping workers attain greater skills through education is one key strategy.

In addition, the President's recent American Competitiveness Initiative proposed new ideas like Career Advancement Accounts designed to ease employment transitions for many workers.

Jeff, from Nevada writes:
Currently, how competitive is the American economy to other countries?

Dr. Matthew Slaughter
Thank you for this, Jeff.

A key measure of the competitiveness of any country is its productivity--i.e., the level of its output per worker. When productivity grows, it leads to higher incomes and higher average standards of living.

In recent years, U.S. productivity growth has been above its historical average and has exceeded that of many other advanced economies. Look again at Harley-Davidson: during the past decade, the number of motorcycles shipped per Harley-Davidson employee has grown by 50 percent.

Dave, from Rogers MN writes:
When they say 'x' number of jobs have been created last month, do they break that down as to the type of jobs. Such as service sector, retail, technical, management, etc. In addition, do they indicate what the pay rates are for the various jobs? Thanks

Dr. Matthew Slaughter
Thank you very much for this question, Dave.

Yes, the montly employment report (produced by colleagues at the Bureau of Labor Statistics) does break out payroll employment across different sectors of the economy. Much of the recent U.S. employment growth has been in a number of service sectors, which together account for the majority of overall U.S. economic activity.

This monthly report also does report a measure of pay: earnings of production and non-supervisory workers.

Daniel, from Great Barrington, MA writes:
Do you think that high fuel prices are or will be affecting the economy? And how do you view the current job market? Thanks.

Dr. Matthew Slaughter
Thank you for this question, Daniel.

High fuel prices definitely put a strain on the budgets of American families and companies. For example, household gasoline expenditures as a share of income have increased recently (for more information on this, please see Chapter 11 of the 2006 CEA Economic Report of the President, at

Over recent decades the U.S. economy has become more energy-efficient. Productivity growth can contribute to energy efficiency. Our current energy situation is a long-term development that will not be solved with quick fixes. The President last year passed an energy bill to start work on long-term solutions. He also proposed a four-part plan earlier this year aimed specifically at gasoline prices.

Seth, from Green Brook, NJ writes:
Dr. Slaughter Two questions: What measures, if any, are being taken to reinforce domestic job security in the face of rising outsourcing; and what industries do you expect American investors to branch out into in the next year or two?

Dr. Matthew Slaughter
Thank you for this question, Seth.

Any job transition can be difficult, whether it is related to international trade, technological change, or any other force. Accordingly, policies aimed at the transition itself, rather than the cause, are likely to have the best impact.

A growing economy eases the employment transitions of all workers. The forecast of both the Administration and the consensus of the private sector is that U.S. GDP growth should remain at or above its historical average in the next few years. The economy is expected to continue to produce dynamic new companies in many industries.

Dr. Matthew Slaughter
Thank you for all your great questions and your interest in the U.S. economy. In fact, this Friday the President will be meeting with his economic advisors at Camp David to discuss ways to continue to support economic growth. It was great to be with you all today, and I look forward to doing this again.