What the Council of Economic Advisors Is: The Council of Economic Advisors (CEA) was created by the Employment Act of 1946 to advise the President on economic policy. There are three members appointed by the President and approved by the Senate . The members are usually high level economic professors or business leaders who take a temporary leave from their regular appointments to serve the President. They are supported by a staff of 10 economists who also serve annual or bi-annual posts.
The academic background of the CEA means they provide a high level of technical economic sophistication, which is often needed for econometric modeling and forecasting of the economy. This expertise and fresh viewpoint often provides a fairly neutral viewpoint for the President. At the same time, these advisors usually share the current Administration’s political beliefs and goals, and act as advocates within the government structure.
Both the former and current Federal Reserve Chairmen served on the Council of Economic Advisors.
What the Council of Economic Advisors Does: The Council of Economic Advisors assists the President in the following five ways:
- Prepare an annual Economic Report, released in February.
- Review economic trends and report to the President if those trends will impact current economic policy.
- Review activities of Federal Government agencies and make recommendations to the President if those agencies are not supporting economic policy.
- Develop specific economic policies on a regular basis to develop and recommend to the President national economic policies to foster
and promote free competitive enterprise, to avoid economic fluctuations or to diminish the effects thereof, and to maintain employment, production, and purchasing power.
5. Prepare economic research reports as requested.
5. Prepare economic research reports as requested.
How the Council of Economic Advisors Affects the U.S. Economy: The Council of Economic Advisors provides sophisticated guidance to the President as he formulates economic policy and prepares the annual budget. According to former Federal Reserve Chair Alan Greenspan, this guidance reduces volatility in
the economy, laying a foundation for steady growth.
However, despite the known dangers of a large current account deficit, the CEA argues that it is, in fact, beneficial to the economy’s growth.
How the Council of Economic Advisors Affects You: In addition to its impact on the economy, the Council of Economic Advisors web site provides sophisiticated economic forecasts and analyses that can help you understand the economy, and better plan your own personal finances.
