Economy

President Obama said Friday that he plans next week to unveil a broad package of measures to speed up recovery.

Mortgage rates continued to drop to record lows this week, with the average rate for a 30-year fixed loan down to 4.32 percent. 

Loan rates have fallen each week for nearly three months and hit their lowest level in nearly 40 years, helped by the Federal Reserve's plan to buy up government debt, according to Freddie Mac's weekly survey of mortgage rates.

The average rate for a 30-year fixed loan dropped to 4.32 percent from 4.36 percent, as the average rate for a 15-year loan fell to 3.83 percent, also a record.

Low loan rates are generating refinancings — they make up more than 80 percent of the loan market — but have yet to spur home sales, as unemployment hampers the economic recovery and the housing market readjusts after the expiration of a homebuyer tax credit. 

An uptick in the unemployment rate prompted President Obama on Friday to renew his call for the Senate to pass the small-business bill that has been pending in that chamber since members adjourned for the August recess. 

U.S. Chamber of Commerce chief economist Martin Regalia on Friday said the economy adding 67,000 jobs in August was too weak for economic growth to occur. 

White House Council of Economic Advisers Chairwoman Christina Romer on Friday said the Labor Department's report on the unemployed was better than expected as private-sector jobs increased by 67,000 in August.

House Ways and Means Committee ranking member Dave Camp (R-Mich.) said recently released unemployment figures show that the stimulus package enacted by President Obama has failed to do its jobs as more workers have joined the unemployment ranks since it became law last February.

CRUCIAL JOBS REPORT DUE OUT 8:30 A.M.

It’s the second-to-last monthly jobs report before the midterm election. 'Nuff said.

The unemployment rate in July was 9.5 percent; that number is likely to rise.

Because of slower growth, economists expect 9.6 percent unemployment and 40,000 new private sector jobs — less than the 71,000 increase in July, according to Bloomberg survey. http://bit.ly/bz0dsL

Gerry Seib says the politics are obvious — high unemployment will hurt Dems. Less obvious: how to fix the jobs machine that has been sputtering for a long time. http://bit.ly/9I64PI

Where did it go wrong?

Joshua Green: WH got the politics wrong by not even trying for another stimulus and wedding Dems to an initial package that wasn’t big enough. http://bit.ly/95Mdrv

AFL-CIO chief Trumka: Deficit talk muddled jobs message. http://bit.ly/bhFzO7

And yet, some glimmers heading into the fall: Gallup finds that unemployment and underemployment rose in August, but so did job hopes. Does that foreshadow rise in unemployment number, and then a fall? http://bit.ly/bdAz30

Jobless benefit claims fell last week, but not by enough to bring down the unemployment rate. Reuters: http://fxn.ws/boMZgF

Pending home resales could be sign U.S. home market is steadying. Pending sales rose unexpectedly in July. Bloomberg: http://bit.ly/aYpIfe

Retail sales beat estimates thanks to tax holidays and back-to-school discounts. http://bit.ly/aCav6z

STIMULUS WATCH

WaPo finds the WH “seriously weighing” package of business tax breaks that could be worth “hundreds of billions of dollars.” Sources are “people with knowledge of the deliberations.”

More from the Post: Axelrod says, “There are no silver bullets... we have to make clear our ideas and theirs, and the fact that the Washington Republicans, having helped create this recession, have attempted to block our every effort to deal with it." http://bit.ly/9idELX

They’ve yet to come up with specific proposals, but President Obama has “given the team a priority: find ways to pay for as many of the ideas, mostly tax breaks, as possible without a deficit increase.” Politico: http://politi.co/9OhGwL

They’re also looking at extending the R & D tax credit permanently, congressional aides tell Bloomberg. http://bit.ly/cTBaF8

But don't expect anything too crazy. WH spox Amy Brundage tells Reuters: "The options under consideration build on measures the president has previously proposed, and we are not considering a second stimulus package. The president and his team are discussing several options, as they have been for months, and no final decisions have been made.” http://bit.ly/deyfu6

WSJ OFFERS PELOSI FREE ADVICE: Edit board says the Speaker can save her majority by extending the Bush tax cuts through 2013 (at least) and then going home for the year. http://bit.ly/byDm0d

TWO NYT STORIES THE GOP WILL SEND AROUND

1) “Fewer Young Voters See Themselves as Democrats”

It’s the economy ... “Though many students are liberals on social issues, the economic reality of a weak job market has taken a toll on their loyalties: far fewer 18- to 29-year-olds now identify themselves as Democrats compared with 2008.” http://nyti.ms/aM2BAv

2) "Employers Push Costs for Health on Workers"

“The shift is occurring, policy analysts and others say, as employers feel more pressure from the weak economy and the threat of even more expensive coverage under the new health care law.” http://nyti.ms/aM2BAv

FINANCIAL CRISIS PANEL ROUNDUP

Bernanke takes blame for muddled Lehman message. Reuters: http://bit.ly/bkF8z7

FDIC chairwoman Sheila Bair says the Wall Street bill provides “infrastructure” to end “too big to fail.” But it’s up to regulators to follow through, she says. Bloomberg: http://bit.ly/bq5OEn

Elizabeth Warren drops Harvard class, fueling CFPA nomination speculation. WaPo: http://bit.ly/ccNsdU

Rattner book dishes on Emanuel running Geithner’s shop, Summers-Goolsbee feud. HuffPo has the juicy tidbits: http://huff.to/cbXCRg .

NEWS YOU CAN USE: Bruce Bartlett’s list of must-read economic blogs. http://bit.ly/9dTGVj

Worker productivity dropped to the lowest levels in four years in the second quarter, a signal that businesses may need to hire more employees to continue making gains.

Productivity decreased at an annual rate of 1.8 percent between April and June, double the 0.9 percent drop initially reported last month, the Labor Department said Thursday. 

Meanwhile, labor costs made their biggest leap since the end of 2008 — up 1.1 percent and well above the last month's estimate of 0.2 percent. 

The revisions came after figuring in the $50 billion trade gap and slower growth in the second quarter. 

Obama considers new tax breaks as White House awaits report expected to show higher unemployment.

The federal government's effort to boost home sales through tax credits have benefited 3.3 million homebuyers since 2008, a government watchdog said Thursday.

The government enacted three versions of the tax credits aimed primarily at first-time homebuyers. The credits varied in size and scope, but the nonpartisan Government Accountability Office (GAO) reported that they benefited a total of 3.3 million claimants and will cost the government roughly $22 billion through 2019.

The tax credits have now expired, and the Obama administration said this week that it is not planning to push hard for another version of the credit.

The most popular of the three credits was included in the Obama administration's 2009 fiscal stimulus package. The credit, with a maximum value of $8,000, was claimed by 1.7 million homebuyers, representing roughly $12 billion of stimulus money.

The tax credits were approved by Congress to prop up the  housing market, which began declining in the summer of 2006 and then helped trigger the financial crisis and recession. Home prices have plunged roughly 30 percent since the summer of 2006, according to the S&P/Case-Shiller home price index, although they have shown signs of stability during the last half-year.

But the housing market remains weak, and recent reports have shown steep declines in the sale of new and existing homes. Some private economists have raised concerns that the tax credits have simply encouraged homebuyers to purchase homes earlier rather than increase the total number of homes purchased.

The National Association of Realtors reported last week that the expiration of the tax credits was a major factor in the 27 percent decline in the sale of existing homes in July.

"Consumers rationally jumped into the market before the deadline for the home buyer tax credit expired," said Lawrence Yun, chief economist at the association.