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WEEK AHEAD: Sputtering job growth ups pressure on Bernanke
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09/10/12 05:00 AM ET
Friday’s disappointing jobs report has increased pressure on the Federal Reserve to announce new measures to stimulate the economy this week.
The economy added only 96,000 jobs in August, well below expectations. The unemployment rate fell from 8.3 percent to 8.1 percent, but the decline was driven by workers dropping out of the job market.
The Federal Reserve Board will meet on Wednesday and Thursday, with Chairman Ben Bernanke holding a quarterly press conference afterwards. Analysts say the Fed is now more likely to announce a new bond-buying program to inject money into the economy. It could also engage in monetary stimulus by buying mortgage-backed securities.
Hopes of a Fed intervention have kept equity markets elevated since Bernanke in August described low employment growth as a “grave problem.”
Congress returns to work after a five-week summer recess this week. Despite the pressing need to address the “fiscal cliff” looming at the end of the year, few expect the fight over tax rates and automatic spending cuts to be resolved before the election.
The House is slated to take up a continuing resolution (CR) on Thursday to keep the government open after the 2012 fiscal year ends on Oct. 1. Last month, House Speaker John Boehner (R-Ohio) and Senate Majority Leader Harry Reid (D-Nev.) announced a deal on a six-month CR. The bill will adhere to the top-line spending level in the August 2011 debt-ceiling deal of $1.047 trillion.
But passage of the CR could be complicated by a recent report from the Congressional Budget Office that pegged the 2012 spending rate at $1.039 trillion, which would be an increase over 2011. That could lead to defections among conservatives who already feel federal spending is far too high. They prefer the House-passed budget which set spending at $1.028 trillion
House leadership appears determined to pass the CR, however, and avoid a government shutdown controversy, for fear of giving President Obama new ammunition to use against the GOP in the run-up to the November election.
There has also been talk that the House could vote this week, possibly Wednesday, on a bill that would extend permanent normal trade relations to Russia, after Moscow joined the World Trade Organization.
House Republican leadership is trying to reach an agreement to consider the trade bill, and a linked human-rights measure, possibly under suspension of the rules.
On Friday, the House will take up a bill aimed at preventing the government from repeating its investment in companies like the bankrupt solar firm Solyndra.
The Obama administration is set to deliver a detailed report this week on how it intends to carry out the first installment of the automatic spending cuts from sequestration. Under the Sequestration Transparency Act, Obama was to have delivered a report on the $109 billion cut by Friday, but the administration missed the deadline.
The House will take up a new bill to deal with the cuts, but it is essentially symbolic. Sponsored by Rep. Allen West (R-Fla.), the bill would force Obama to propose an alternative to the sequester by the middle of October.
The Senate is widely expected to take up one of the Democrat’s mortgage refinance bills. Several proposals, from Sens. Robert Menendez (D-N.J.), Dianne Feinstein (D-Calif.) and Barbara Boxer (D-Calif.), would lower fees and simplify paperwork to allow non-delinquent homeowners to refinance their mortgages at today’s low interest rates.
The Senate will also resume debate on the Veterans Jobs Corps Act. Reid is expected to file a motion to end debate and proceed to the bill on Tuesday afternoon.
Negotiations for the Trans-Pacific Partnership (TPP) regional free-trade agreement continue through the week in Leesburg, Va.
The 14th round in the talks began Sept. 6, and U.S. Trade Representative Ron Kirk has signaled that he wants to accelerate the pace of negotiations and achieve the goal of reaching a deal by year’s end.
The talks involve the United States and eight other nations: Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam. Mexico and Canada are set to join the negotiations sometime this fall.
Several committees are holding hearings this week that could bring partisan sparring.
On Tuesday, the House Ways and Means Committee will examine the way the IRS plans to implement the Obama healthcare reform law, and then on Wednesday will examine how the new insurance exchanges are being set up.
The Senate Banking Committee will hold a hearing Thursday on the Consumer Financial Protection Bureau’s semi-annual report to Congress.
The economy added only 96,000 jobs in August, well below expectations. The unemployment rate fell from 8.3 percent to 8.1 percent, but the decline was driven by workers dropping out of the job market.
The Federal Reserve Board will meet on Wednesday and Thursday, with Chairman Ben Bernanke holding a quarterly press conference afterwards. Analysts say the Fed is now more likely to announce a new bond-buying program to inject money into the economy. It could also engage in monetary stimulus by buying mortgage-backed securities.
Hopes of a Fed intervention have kept equity markets elevated since Bernanke in August described low employment growth as a “grave problem.”
The House is slated to take up a continuing resolution (CR) on Thursday to keep the government open after the 2012 fiscal year ends on Oct. 1. Last month, House Speaker John Boehner (R-Ohio) and Senate Majority Leader Harry Reid (D-Nev.) announced a deal on a six-month CR. The bill will adhere to the top-line spending level in the August 2011 debt-ceiling deal of $1.047 trillion.
But passage of the CR could be complicated by a recent report from the Congressional Budget Office that pegged the 2012 spending rate at $1.039 trillion, which would be an increase over 2011. That could lead to defections among conservatives who already feel federal spending is far too high. They prefer the House-passed budget which set spending at $1.028 trillion
House leadership appears determined to pass the CR, however, and avoid a government shutdown controversy, for fear of giving President Obama new ammunition to use against the GOP in the run-up to the November election.
There has also been talk that the House could vote this week, possibly Wednesday, on a bill that would extend permanent normal trade relations to Russia, after Moscow joined the World Trade Organization.
House Republican leadership is trying to reach an agreement to consider the trade bill, and a linked human-rights measure, possibly under suspension of the rules.
On Friday, the House will take up a bill aimed at preventing the government from repeating its investment in companies like the bankrupt solar firm Solyndra.
The Obama administration is set to deliver a detailed report this week on how it intends to carry out the first installment of the automatic spending cuts from sequestration. Under the Sequestration Transparency Act, Obama was to have delivered a report on the $109 billion cut by Friday, but the administration missed the deadline.
The House will take up a new bill to deal with the cuts, but it is essentially symbolic. Sponsored by Rep. Allen West (R-Fla.), the bill would force Obama to propose an alternative to the sequester by the middle of October.
The Senate is widely expected to take up one of the Democrat’s mortgage refinance bills. Several proposals, from Sens. Robert Menendez (D-N.J.), Dianne Feinstein (D-Calif.) and Barbara Boxer (D-Calif.), would lower fees and simplify paperwork to allow non-delinquent homeowners to refinance their mortgages at today’s low interest rates.
The Senate will also resume debate on the Veterans Jobs Corps Act. Reid is expected to file a motion to end debate and proceed to the bill on Tuesday afternoon.
Negotiations for the Trans-Pacific Partnership (TPP) regional free-trade agreement continue through the week in Leesburg, Va.
The 14th round in the talks began Sept. 6, and U.S. Trade Representative Ron Kirk has signaled that he wants to accelerate the pace of negotiations and achieve the goal of reaching a deal by year’s end.
The talks involve the United States and eight other nations: Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam. Mexico and Canada are set to join the negotiations sometime this fall.
Several committees are holding hearings this week that could bring partisan sparring.
On Tuesday, the House Ways and Means Committee will examine the way the IRS plans to implement the Obama healthcare reform law, and then on Wednesday will examine how the new insurance exchanges are being set up.
The Senate Banking Committee will hold a hearing Thursday on the Consumer Financial Protection Bureau’s semi-annual report to Congress.
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