Economy

The longest-serving House Democrat on Friday denounced a free-trade agreement President Obama is pursuing with South Korea.

Extending unemployment insurance, providing federal aid to state and local governments and increasing access to credit for small businesses are needed to speed up the pace of the economic recovery. 

A new report released Friday by the Joint Economic Committee outlined the economy’s continued challenges through the first half of 2010 and possible solutions to accelerate growth. 

Despite the improving economy, concerns range about the recovery’s progress. 

“I am concerned about the economic data showing that millions of Americans continue to suffer the recession’s effects,” said JEC Chairwoman Carolyn Maloney (D-N.Y.). “As the report points out, policymakers need to resist the political siren call of short-term cuts and instead heed the economic imperative of job creation, the core component of a robust economic recovery.”

Consumer confidence plunged to its lowest level in a year, below what was expected and a possible signal that Americans could pull back on spending. 

Sentiment dropped to 66.5 in early July, down from 76 in June, the lowest level since September 2009, according to Thomson Reuters/University of Michigan consumer sentiment index released Friday. 

As the job market continues to struggle to create openings for the nation’s unemployed, Americans expressed doubt about their incomes rising in the next year. 

Consumer spending is a key driver of the economy, and a decrease in consumption could impair the nation’s recovery. 

Senate Majority Leader Harry Reid (D-Nev.) will hold a vote on an extension of unemployment benefits at 2:30 p.m. Tuesday. 

Senate Democrats put the bill on hold for another week until the Senate-designee from West Virginia, filling the seat left open after the death of Sen. Robert Byrd (D), arrives in Washington. The swearing-in of the as-yet-to-be-named replacement will be held at 2:15 p.m. Tuesday. 

The move will provide Democrats with the 60 votes needed to pass the bill. The Senate left Washington for the July 4 recess without passing a bill to extend those benefits because of a Republican filibuster. 

The Senate GOP has argued the $34 billion bill should be paid for instead of adding it to the debt. Two Republicans — Maine Sens. Susan Collins and Olympia Snowe — have signed on to pass the bill, giving Democrats 59 of the 60 votes needed.

West Virginia Gov. Joe Manchin (D) is expected to announce the replacement by 5 p.m. Friday. 

Unemployment benefits for the long-term jobless expired June 2, leaving about 2.5 million people without a weekly check. The average American is out of work for more than eight months and many use up the 26 weeks of state benefits. 

Providing unemployment benefits to the long-term jobless has preserved nearly 2 million jobs and injected billions to help the nation's economy expand. 

About 1.7 million jobs have been saved or created since the recession began in late 2007 that "would not have been there absent this spending," a new report released Thursday from the Economic Policy Institute found. 

"Unemployment benefits give unemployed workers needed financial support to cope after the loss of a job, and they are also one of the most effective mechanisms for injecting spending into the economy", the report said. 

The Senate is poised to pass an extension of unemployment benefits, which lapsed June 2, early next week. Since early last month, nearly 2.5 million long-term jobless Americans have lost benefits beyond the 26 weeks offered by states.

New claims for unemployment benefits dropped sharply last week, hitting their lowest level since September 2008 as factories stayed open during the summer months. 

Claims dipped 29,000 to 429,000 from the previous week’s revised figure of 458,000 for the week ending July 10, according to Labor Department figures released Thursday. 

General Motors and other manufacturers haven’t temporarily laid off workers this summer. GM has decided not to take their usual two-week break during the summer to retool their factories. 

Separately, wholesale prices fell for a third straight month in June, pushed down by falling energy and food costs, the largest decline in eight years. 

The Federal Reserve was slightly less upbeat on the economy and employment last month, holding stocks in check Wednesday. 

The central bank said in June it expects the economy to grow between 3 percent and 3.5 percent this year, down from its April estimate of 3.2 percent to 3.7 percent, according to minutes released Wednesday from the Federal Open Market Committee's June 22-23 meeting.

As evidence of the nation's economic recovery, the Fed reported an increase in consumer spending, increased business spending on equipment and software as well as increased production.

The expansion could be restrained by firms "caution in hiring and spending in light of the considerable uncertainty regarding the economic outlook," according to the minutes.

U.S. Chamber of Commerce President Tom Donohue said he didn't believe the Obama administration is "anti-business," even as he went after White House policies.

A temporary replacement for Sen. Robert Byrd (D-W.Va.) is expected to be named by 5 p.m. on Friday, providing Senate Democrats with the 60th vote they need to pass an unemployment benefits extension. 

West Virginia Gov. Joe Manchin said Tuesday afternoon he expects to name a replacement for Byrd, who died in late June, by Friday evening. 

As long as the vote count doesn't change between now and early next week, the bill is expected to pass after weeks of a Republican filibuster over adding to the deficit.

The Obama administration’s $2.1 billion program to help states with hard-hit housing markets is coming under new scrutiny. Read more...