Economy

The U.S. trade gap widened unexpectedly in May, hitting its highest level in 18 months as demand increased for imported cars and consumer goods. 

The trade deficit increased 4.8 percent to $42.3 billion up from $40.3 billion revised in April, the largest level since November 2008, the Commerce Department reported Tuesday. 

Demand for American goods and services increased by 2.4 percent to $152.3 billion while imports rose 2.9 percent to $194.5 billion in May, the highest level since October 2008, behind increases in cars, computers and industrial machinery.

The European debt crisis has raised concerns that demand will drop for American exports, just as the U.S. manufacturing sector kicks into high gear. 

West Virginia Gov. Joe Manchin (D) is expected to name a replacement for Sen. Robert Byrd (D-W.Va.) by Sunday, according to reports.

Replacing the longest-serving member of Congress could give Senate Majority Leader Harry Reid (D-Nev.) the 60th vote he needs to pass an extension of unemployment insurance. 

Manchin said the decision could come as early as Friday and no later than Sunday, as he organizes the special election process with the state legislature. 

The benchmark interest rate will probably remain near zero for the near future as the economy recovers.

Federal Reserve Bank of Richmond President Jeffrey Lacker told reporters Monday, “I’m comfortable with rates where they are now. My feeling on rates will depend on how the data comes in and what I hear from my colleagues.”

Lacker, who doesn’t have a vote this year on rate decisions, said, ”You have some surges, some slower periods. It’s just going to be a choppy recovery,” he said, according to news reports.

Federal Reserve officials have agreed to leave rates low and have said they would continue to do so “for an extended period of time” because tight credit is holding back consumer spending, which accounts for 70 percent of the economy. 

The central bank also isn’t likely to consider any future economic stimulus, he said. 

More than 2 million Americans have lost unemployment benefits and that number will continue to rise if the Senate can’t pass a bill.

Senate Majority Leader Harry Reid (D-Nev.) needs one more vote — most likely the interim replacement for Sen. Robert Byrd (D-W.Va.), who died June 28 — but that vote may not arrive on Capitol Hill until late this week or early next. 

Reid will need to wait to push through the $34 billion bill until West Virginia Gov. Joe Manchin (D) names that person, aides reconfirmed Monday. 

If the Senate doesn't act by week's end, more than 2.5 million will lose their benefits beyond the standard 26 weeks offered by the states. 

Manchin had said he would appoint someone by Monday but has since pulled back from that statement. He has called a special legislative session for Thursday to set up the special election process for Byrd’s seat. 

Although Manchin’s plans are unknown, he could wait until after the special election rules are settled before naming someone to Byrd’s seat. 

In light of an economic rebound that has appeared to have stalled, Federal Reserve Chairman Ben Bernanke on Monday urged lawmakers to move legislation providing greater credit opportunities for small businesses. 

“Making credit accessible to sound small businesses is crucial to our economic recovery and so should be front and center among our current policy challenges,” he told Federal Reserve members at a forum on small businesses.

Half of registered voters view President Barack Obama's handling of the economy as poor, a new Rasmussen poll found.

Christina Romer, head of the Council of Economic Advisers, will testify next week on the nation's short- and long-term economic outlook. 

Romer, who will testify before the Joint Economic Committee, also will provide an analysis of the effects of the economic stimulus legislation on growth and job creation.

In a recent interview, Romer said that job creation proves that the  stimulus has worked. 

"In the first six months of 2009, we lost 3.7 million jobs in the private sector," she said in a PBS interview. "In the first six months of this year, we added some 600,000 jobs in the private sector. That is an amazing turnaround."

Consumer borrowing dropped more than $9 billion in May, showing Americans are more focused on getting their finances in order instead of increasing their spending as the economy slowly recovers. 

Borrowing fell by $9.1 billion in May, which was more than expected, on top of a revised $14.9 billion drop in April, according to the Federal Reserve. April's first estimate had shown an increase of $995 million. 

Decreased borrowing will probably constrict consumer spending, which accounts for 70 percent of the economy. 

For nearly the duration of the recession consumer borrowing has dropped for 15 of the past 16 months, as Americans have remained uncertain about the sluggish job market. 

Credit card borrowing has dropped for 20 consecutive months, as consumers have aimed to lower their debt levels during the recession. 

A daily index that tracks investor confidence fell six points on Friday to its lowest level in 2010 as fears of an economic slowdown continue to mount.

Friday’s drop in the Rasmussen Investor Index is 28 points below the high-water mark reached in May. The confidence level has not been that low since nearly a year ago, when the economy was considered to be in greater peril. 

Only 9 percent of respondents in the poll rated the economy as good or excellent, while another 55 percent said it is getting worse.

The index’s Friday reading was 77.5. Anything above 100.0 would indicate investor confidence is high.

The index reached a record high on Jan. 7, 2004, with a 150.9 reading. Its lowest reading was 52.5 on March 9, 2009. 

Sen. George LeMieux (R-Fla.) sent a letter to claims administrator Kenneth Feinberg on Thursday urging for a more streamlined process when paying those affected by the BP oil spill in the Gulf of Mexico.