Economy

One in seven homeowners are either past due on their mortgage or in foreclosure, according to the latest report on home-loan delinquencies by the Mortgage Bankers Association (MBA). 

The number of past-due payments has increased since 2009, when one in eight were delinquent. Two years ago, one in 11 were behind on mortgage payments. 

Federal Reserve Chairman Ben Bernanke said the central bank is ready to act to ward off a further economic slowdown.

Gross domestic product grew at a much slower rate than initially thought, stoking fears of a slowdown.

FRIDAY MORNING: REVISED GDP AND BERNANKE

At 8:30 a.m., the revised 2Q GDP growth number is due out. At 10 a.m., Fed Chairman Ben Bernanke speaks at the annual Fed retreat at Jackson Hole, Wyo.

Initial GDP estimate for April through June was 2.4 percent. Economists surveyed by Bloomberg predict revised number to be 1.4 percent. http://bit.ly/dgCsSm

L.A. Times sets it up: "Weak GDP raises stakes for Obama, Fed"

"A bad GDP number would cap a week's worth of troubling developments in the housing and financial markets, and ratchet up the pressure on President Obama and congressional Democrats heading into November's midterm elections...

"... with the Fed's benchmark short-term interest rate already near zero, its policy options are limited, experts said.

"For example, the central bank's purchases of mortgage-backed securities have helped push mortgage rates to record lows, but home sales still cratered after a federal tax credit expired at the end of April."

http://bit.ly/bYwF8y

KRUGMAN AND BROOKS BRING THE GLOOM

Krugman: "This is not a recovery."

"I know what some players both at the Fed and in the administration will say: they’ll warn about the risks of doing anything unconventional. But we’ve already seen the consequences of playing it safe, and waiting for recovery to happen all by itself: it’s landed us in what looks increasingly like a permanent state of stagnation and high unemployment. It’s time to admit that what we have now isn’t a recovery, and do whatever we can to change that situation." http://nyti.ms/9GJB8W

Brooks: Germany, not the U.S., was right about stimulus and debt.

"The American stimulus package was supposed to create a 'summer of recovery,' according to Obama administration officials. Job growth was supposed to be surging at up to 500,000 a month. Instead, the U.S. economy is scuffling along... The German economy, on the other hand, is growing at a sizzling (and obviously unsustainable) 9 percent annual rate. Unemployment in Germany has come down to pre-crisis levels." http://nyti.ms/amoB6b

Imports hurting the U.S. recovery. WaPo's Neil Irwin: "The rise in the trade deficit, including an abrupt 16 percent spike in June, is a chief reason economists are downgrading estimates for recent U.S. economic growth." http://bit.ly/cK7hJ0

The Atlantic's Derek Thompson asks why stimulus spending wasn't more focused on shovel-ready projects. http://bit.ly/bXXGUD

Loews CEO Jim Tisch says executives lack confidence in the Obama administration. http://bit.ly/bOVlB2

President Obama should follow Bill Clinton's post-midterm blueprint, according to Clinton's pollster.

Doug Schoen in a WSJ op-ed: "... the administration must emphasize that it understands the electorate's concern about fiscal prudence, the deficit, the debt and the need to balance the budget. The independent voters who hold the fate of the Democrats in their hands are looking for candidates who champion, in a bipartisan context, fiscal discipline, limited government, deficit reduction and a free market, pro-growth agenda. If Democrats don't offer this, they will be branded liberal tax-and-spenders." http://bit.ly/dwFqpP

Frosh Rep. Tom Perriello (D-Va.) called for Geithner's ouster two days before Boehner. http://bit.ly/bNJFV9

Dow below 10,000 for first time since July 6. http://bit.ly/c9h5Pm

BUDGET HEADLINE OF THE DAY: "Gay Bush Aide? No Bombshell in Age of Fiscal Issues" NYT: http://nyti.ms/9TtAmf

BUDGET IMPACT STORY OF THE DAY: Cities Shut Firehouses in Budget Crisis. NYT: http://nyti.ms/9DjwWW

It's not all bad... "Jobless Claims Decline." WSJ: http://bit.ly/bN0CbL

Report: Frannie's role as guarantor of mortgages to blame, not its mortgage securities. http://bit.ly/afWV43

The Federal Reserve will hold a national summit next week focusing on stabilizing the housing market and addressing the issue of foreclosures. 

The two-day meeting is set for Sept. 1 and 2 and will cover ways that nonprofit organizations, local and regional governments, federal officials and lenders can mitigate the effects of vacant and real-estate owned (REO) property — property held on the books of banks, usually after failing to sell the property at auction.

"A foreclosure not only hurts the person who loses their home, it hurts their neighbors and their communities," said Federal Reserve Governor Elizabeth Duke. "As delinquencies and foreclosures continue to increase, we must think creatively and focus our research, outreach, and community development efforts on ways to help these communities recover."

An ad financed by a committee chaired by former U.S. Senate candidate Danny Tarkanian has begun running in Nevada that blasts Senate Majority Leader Harry Reid (D-Nev.) for his votes on the economy. 

The ad targets his position on spending and tax cuts. 

More people think the nation's economic situation is getting worse, according to a recent CBS News poll. 

About 34 percent of those asked in August said the economy is getting worse, up from 26 percent last month, according to the poll released Thursday. 

The poll showed that eight of 10 people think the economy is in bad shape, a number that has remained flat throughout the summer. 

Just 17 percent of Americans describe the nation's economy as being in good shape, down from 21 percent in July.

House Republicans are holding more than 500 events during the recess, mostly on jobs, a GOP leader said Thursday.

New claims for unemployment benefits unexpectedly dropped last week, but not enough to signal strong job growth. 

AP LEDE: "It's starting to feel like another recession."

"Businesses are ordering fewer goods. Home sales are the slowest in decades. Jobs are scarce, and unemployment claims are rising. Perhaps most worrisome, manufacturing activity, which had been one of the economy's few bright spots, is faltering."

The wire story comes after reports Thursday showed that durable-goods orders from June to July rose 0.3 percent, less than the 3 percent expected, and new home sales dropped 12.4 percent instead of holding steady.

http://yhoo.it/b604H0

DOUBLE-DIP ODDS INCREASING, ANALYSTS SAY

Mark Zandi says odds of another recession are one-in-three, calls for temporary extension of Bush tax cuts for the wealthy. http://bit.ly/bkAwTf

Nouriel Roubini puts double-dip odds at 40 percent, projects GDP growth of less than 1 percent in third quarter. http://bit.ly/amvoDl

Goldman Sachs: 25-30 percent. http://bit.ly/dq5jDQ

PREVIEWING BERNANKE'S FRIDAY SPEECH

WaPo's Neil Irwin: "With statistics due out Friday that are expected to show the economy grew much less than estimated in the second quarter of the year, Fed-watchers are hoping Bernanke's comments later that day in Jackson Hole, Wyo., will instill confidence that he has a plan and can act decisively if the economy continues to deteriorate. They warn that recent conflicting signals from Fed insiders may even be contributing to economic weakness by spooking financial markets. http://bit.ly/a4wiDL

NYT's Sewell Chan: "It is not known what Mr. Bernanke will say [Friday], but some insight may come from an episode in his past: his concern, soon after he became a Fed governor, that the economy was at risk of deflation as the nation gradually recovered from the dot-com bust a decade ago." http://nyti.ms/b7F3Nd

Former Fed Vice Chairman Alan Blinder says the Fed is almost out of tools to help the economy. http://bit.ly/bgCYb7

Fun link of the day. Roy Blunt channels Old Spice to find interns. http://bit.ly/ak9QDe

FINANCIAL REGS: Banks will still be able to make risky deals under Wall Street reform act. NYT: http://nyti.ms/biJCu5

SEC gives shareholders more power over corporate boards. http://bit.ly/d2BCLA

WH still against extending tax cuts for wealthy. VP Biden says GOP argument to prolong cuts for the "super rich" is "malarkey." http://bit.ly/bS4Db0

President Obama takes a break from his vacation to talk economy with Geithner and Summers, a day after House GOP Leader John Boehner called for the ouster of the two economic aides. http://bit.ly/9Iw2j6

Liberals call for Simpson to step down from fiscal commission. http://bit.ly/a2KTMZ 

But... WH says Simpson isn't going. http://huff.to/cBBq7j

The IRS is going overboard in targeting bad tax preparers, Reps. Brad Sherman (D-Calif.) and Mike Conaway (R-Texas) write in WSJ op-ed. http://bit.ly/axVL02