According to the report, economic expansion continued for the fifth consecutive year in 2006, despite numerous headwinds (such as the sharp rise in energy prices in the first half of the year, only to decline just as sharply in the second half).

Some of the more relevant key points of the White House report:

• Real GDP posted above-average 3.4 percent growth in 2006. The composition of growth changed, with more coming from exports and business structures investment. Consumer spending remained strong.

• Labor markets continued to strengthen, with the unemployment rate dropping to 4.6 percent and payroll job growth averaging 187,000 per month. Real average hourly earnings accelerated to a 1.7 percent increase during the 12 months of 2006.

• Recent productivity growth has been primarily driven by efficiency growth (growth in how well labor and capital inputs are used) and by capital deepening (growth in the amount of capital that workers have available for use).

• The projected long-term growth in entitlement spending (Social Security, Medicare and Medicaid) is unsustainable because of the pressure it puts on future federal budgets.

• Openness to international trade and investment, and improvements in the education and training of the U.S. workforce, will continue to be important to long-run productivity growth.

• Policies that encourage capital accumulation, research and development, and increases in the quality of our education system can boost productivity growth.

• The goal of pro-growth tax policy is to reduce tax distortions that hamper economic growth. Most economists agree that lower taxes on capital income stimulate greater investment, resulting in greater economic growth, greater international competitiveness, and higher standards of living.

• Since 2001, temporary changes in the tax code have reduced the tax on investment. These pro-growth policies have stimulated short-run investment and economic growth. However, the temporary nature of the provisions eliminates desirable long-run economic stimulus.

• Foreign direct investment (FDI) flows into the United States benefit the U.S. economy by stimulating growth, creating jobs, promoting research and development that spurs innovation, and financing the current account deficit.

• U.S. direct investment abroad is an important channel of global market access for U.S. firms. U.S. multinational companies have contributed to productivity growth, job creation, and rising average living standards in the U.S.

• Foreign-born workers make significant contributions to the American economy, but not all Americans gain economically from immigration. Foreign-born workers tend to be concentrated at the low end and the high end of the educational spectrum relative to native-born workers.

• Immigration policy plays a key role in determining the volume and composition of the foreign-born workforce. Comprehensive immigration reform can help ensure an orderly, lawful flow of foreign-born workers whose presence continues to benefit the American economy.

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The Big Picture: India, China and U.S. Trade

Staking Claim in a Globalized World