Presidential Council of Economic Advisers Summary

The CEA — the Council of Economic Advisers — has been one of the most important components in a vast economic policy advisory apparatus to the U.S. President, given it is as close to economics as you can get while still staying within an executive branch agency. The Council of Economic Advisers (CEA), founded by the Employment Act of 1946, is a group that provides data, analysis, and recommendations to the President covering all areas of the economy. The Council's charge is to encourage a vibrant economy, maximum employment and price stability, which helps ensure that economic policies in the U.S. promote growth and prosperity.

The Main Functions of the Council of Economic Advisers

The CEA has for a chair and two other members, all economists with one or the other specialization in different branches of economic policy. They help guide the President with its inflation, unemployment and international trade or fiscal policy issues. Beyond the policy recommendations, the CEA prepares the annual Economic Report of the President, which is a detailed assessment of the U.S. economy and outlines of the administration's economic agenda for that year.

The Council helps guide the nation's economic policy — reviewing and forecasting trends, analyzing data, and advising on how best to tackle economic issues. The Fed is unique in its independence and geographical closeness to the White House, making it a vital institution when shaping sound economic policy.

How the CEA Was Shaped by Arthur F. Burns

Arthur F. Burns, Chairman of the CEA (1953-1956) One of the most consequential bureaucrats in CEA history, Burns was a prominent economist who held numerous posts, including Chairman of the Federal Reserve between 1970 and 1978. His time in charge of the CEA coincides with a fast growing post-war America and has been credited for his contributions to U.S. economic thinking around policy.

During his time atop the heads of course, Burns was adept at interpreting economic statistics and devising policies directly aimed at critical problems including inflation, employment, and economic stability. His grasp of the U.S. economy and his ability to give the President sound advice on issues that were keys of the national economic agenda was legendary here.

At the CEA, Burns was responsible for advising the President and his administration on domestic economic policy recommendations to ease the country into postwar stabilization. This established groundwork for a new generation of economic advisers, as well as the place of the CEA in the larger economic policymaking system.

What is the CEA & What role does it play in today U.S. economic policy

The Council of Economic Advisers still serves a vital function in shaping U.S. economic policy today. The CEA gives the President professional counsel on issues such as:

Fiscal and Monetary Policy: The CEA advises the President on fiscal policy—namely, government spending, taxation, and public debt; in addition to offering advice on the broader macroeconomic implications of monetary policy decisions.

Labor Market and Employment: The council advocates for policies that promote job creation, increase wages, and decrease unemployment;

Forecasting Economists: CEA economists employ sophisticated economic models and empirical analysis to project future states of the economy and identify macroeconomic risks and returns.

Economic Inequality and Social Welfare: The Council recommends policies that will ameliorate economic inequality, expand access to healthcare and education, and respond to problems of poverty

Role in International Trade and Global Economic Policy: The CEA assists the President on international economic issues such as trade agreements, currency policy, and global cooperation.

Chapters of The Economic Report of the President

The annual Economic Report of the President, a top CEA task submitted to Congress, The document outlines the state of the country’s economy and suggests tackling issues like inflation, unemployment and economic growth on a priority basis. The report is a foundational document for understanding the administration's economic philosophy and offers clues about potential policy.

The Legacy of Arthur F. Burns

The legacy of Arthur F. Burns in the Council of Economic Advisers is that it shows the national economy can be moved — for better or worse -- with knowledgeable and thoughtful economic leadership. That experience at the CEA underscored the need for economists' influence on government policy in this country. Burns' work on economic forecasting and policy analysis has had a lasting influence on the way economists think about national economic problems.

Especially Burns' dual role at the CEA and later, money policy from the Federal Reserve, put him in a unique position of influence over government economic policy which set up expectations with the American public during good or bad times.