WEEK ONE HUNDRED & THIRTY-SEVEN

August 29, 2011

1.     President Obama tapped labor economist Alan Krueger for a top administration post today as the White House scrambled for solutions to repair an ailing economy ahead of the 2012 election:

  • The president announced Krueger's nomination to chair the White House Council of Economic Advisors in a Rose Garden ceremony, and he said that he expected Krueger, a former Treasury Department official and Princeton economist, to provide him with unvarnished economic guidance, nonpartisan political advice--in Krueger, Obama will gain an economist with expertise in unemployment and the labor market.

2.     Consumer spending grew in July by 0.8%, the largest amount in five months, following a decline in June and helping to ease fears that the U.S. economy is on the verge of another recession:

  • Economists said that the report was a strong sign that the economy rebounded in July after anemic growth in the first half of the year--July figures "significantly alter the outlook for third-quarter GDP growth," said Paul Dales, a senior U.S. economist for Capital Economics, and Dales said that growth for the July-September quarter is on track for an annual rate of 2.5%, up from his previous estimate of 1.5%.

August 30, 2011

1,     President Obama said that he would not allow cuts in programs in Congress for veterans and that the administration is looking for ways to balance the budget:

  • In a speech to the annual convention of the American Legion, he dwelled on the need to tackle unemployment among veterans but offered little in the way of specifics about his overall economic proposals that are due next week, and the president repeated that he was aware that, after a decade of war, it was time to turn the country's attention to domestic prosperity--he praised "all who have worn the uniform in these wars" and said that it was time, now, for the government to help these veterans find a place at home.

2.     The new push for federal austerity is threatening to change the traditional dynamic when it comes to government relief in the aftermath of a storm, an earthquake, or other calamities--it has touched off an intensifying debate over whether the government should just tack needed funds onto the deficit or try to find a way to adjust the budget to keep the costs down:

  • Republicans have pushed in the past to pay for disaster relief through budget cuts elsewhere, most notably in the wake of Hurricane Katrina in 2005, but party leaders ultimately relented under political and public pressure and much of the aid was delivered through deficit spending.

3.     Economists have advice for anyone worried that consumers are too fearful to keep spending: look at what they are doing, not what they are saying:

  • A survey of consumer confidence shows that Americans were spooked early this month by the standoff over the debt ceiling, a downgrade of U.S. long-term debt, and a swoon in stock prices--but economists say that if stock prices stay steady, consumers will likely keep spending, and the economy should improve modestly in the months ahead.

August 31, 2011

1.     In a rare display of political gamesmanship, President Obama invited himself to address a joint session of Congress about 8 p.m. EDT on September 7th, a request that would have put him on national TV at the very moment when Republicans would be staging a debate among the candidates who are vying to replace him:

  • Hours later, House Speaker John Boehner rejected the request, saying that there was not enough time to prepare the Capitol on the same day that members return from their summer break, and he suggested that the president would be very welcome the next night instead, at the very hour when the NFL starts its first game of the season with New Orleans at Green Bay--late in the evening, the White House announced that Obama had agreed to address Congress on September 8th, as requested by the Republicans;
  • The back and forth came over Obama's plans to roll out a new agenda to create jobs, the issue that is sure to dominate the 2012 presidential election, and the president has said that he will use the speech to demand that Congress approve his new agenda--if it does not, he has said, he will take the issue to the people in the campaign, suggesting that he is setting the stage for a Harry Truman-like campaign against a "do-nothing" Congress.

2.     Factory orders rose strongly in July on the biggest jump in demand for autos in more than eight years and a surge in commercial airplane orders--the increase suggests that supply chain disruptions created by the Japan crisis are easing:

  • The Commerce Department reported that factory orders climbed 2.4%, the largest increase since March, and orders for motor vehicles and parts rose 9.8%, the largest one-month gain since January 2003--the increase followed a decline of 0.4% in June, one of several reports that stoked fears the country could fall back into a recession.

3.    Warning of potentially a million lost jobs, President Obama urged Congress to pass bills to fund highways and air travel--key Republicans said that they are willing to do that, but potential stumbling blocks remain:

  • During a speech in the Rose Garden, Obama said that for construction workers and their families across the country, passage of the bills "represents the difference between making ends meet and not making ends meet"--the federal highway construction program expires September 30th and so does the 18.4 cents a gallon federal gasoline tax and the 24.4 cents a gallon diesel tax that pay for much of the program, which has been limping along for two years under a series of short-term extensions and money infusions from the general treasury.

 September 1, 2011

1.     Health insurers will have to start publically justifying big rate increases, according to a new requirement of the healthcare law implemented to put pressure on insurance companies to hold down sky-rocketing premiums:

  • The rules mandate that insurers post explanations of premium increases exceeding ten percent on their websites and submit them to state and federal regulators, who will also post them later this year--the new rules do not give states and federal regulators authority to block rate hikes, however, even if government officials find the increases are unjustified, but some states already have this power, and several states, such as Oregon and Rhode Island, routinely make insurers lower the rate increases after determining proposed hikes are unjustified.

2.     The White House told Congress there is need for more than $5 billion in additional disaster relief aid, not even counting the billions that probably will be called for to help East Coast states hit by Hurricane Irene:

  • The administration also says that under the terms of last month's budget deal, Congress can provide more than $11 billion in disaster aid next year without finding offsetting budget cuts as demanded by some Republicans--the budget pact contains a little-noticed provision providing the flexibility in disaster spending, but many lawmakers were unaware of the disaster aid provision when voting for the budget pact last month.

3.     A stream of data bolstered the case for a economy that is healthier than it seemed just weeks ago:

  • Americans kept shopping in August despite higher prices and a hurricane that battered the East Coast during the important back-to-school shopping season;
  • Car buyers lifted U.S. sales last month for most automakers;
  • Fewer people applied for unemployment benefits last week, a sign that the job market may be improving slightly;
  • Manufacturing managed to expand in August for the 25th straight month--last month's growth, though modest, defied fears that manufacturing, one of the economy's few sources of strength, had contracted last month.

September 2, 2011

1.     President Obama scrapped his administration's controversial plans to tighten smog rules, bowing to the demands of congressional Republicans and some business leaders:

  • Obama overruled the EPA and directed administrator Lisa Jackson to withdraw the proposed regulation to reduce concentrations of smog's main ingredient, in part because of the importance of reducing regulatory burdens and uncertainty for business at a time of rampant diffidence about an unsteady economy.

2.     Employers added no jobs in August, an alarming setback for the economy that renewed fears of another recession and raised pressure on Washington to end the hiring standstill:

  • Worries flared after the release of the worst jobs reports since September 2010--total payrolls were unchanged, the first time since 1945 that the government reported a net job change of zero, and the unemployment rate stayed at 9.1%.

 

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