Housing construction increased unexpectedly in August, boosted mainly by apartment and condominium buildings.

House Majority Leader Steny Hoyer (D-Md.) on Tuesday said legislative action on the Bush-era tax cuts is still possible before the election even though he was not clear whether his chamber would be in session beyond next week. 

A new Gallup poll shows that the economy and unemployment are chief concerns for Americans, with 33 percent and 28 percent of respondents, respectively, deeming them the most important problems facing the country.

These concerns far outpaced the 7 percent of respondents who said the federal deficit was the most important issue facing the country.

FED MEETS TUESDAY — On the agenda for the Federal Open Market Committee: What, if anything, to do about the tepid economic recovery? Fed Chairman Ben Bernanke has called for more measures, but others on the FOMC are unsure that the remaining monetary policy tools would do anything other than increase uncertainty for businesses.

Bloomberg: “The possibility of a sub-par expansion poses a dilemma for the central bank’s policy-making Federal Open Market Committee when it meets tomorrow. While the economy isn’t so weak that it’s clearly in need of more monetary stimulus, it may not be strong enough to keep unemployment from increasing.” ... Economists see Fed 2011 growth estimate of 2.5 to 2.8 percent to be too high. http://bit.ly/aCTih8

Columnists’ answer: More inflation — The New Yorker’s James Surowiecki makes the case: “If people believe that prices are going to rise in the future, they may be less cautious about spending in the present, since money that isn’t put to work will lose value. And, because inflation erodes the real value of debts, people’s debt burdens would shrink.” http://nyr.kr/asAzCF 

Megan McArdle finds more inflation appealing, but warns not to forget about the consequences, such as higher interest rates and AMT creep. http://bit.ly/9vCr7U

Felix Salmon wants inflation, but not an inflation target: “...creating inflation can be very hard indeed. And if you say that you’re going to create inflation and you fail, then you lose precious credibility.” http://bit.ly/br9CIJ

OECD: U.S. UNEMPLOYMENT TO REMAIN HIGH — The economy won’t return to pre-recession jobs levels until at least 2013, according to the latest U.S. report by Organization for Economic Cooperation and Development economists. The international group found that the extension of jobless benefits has yet to reduce incentives to work, but has the potential to. http://bit.ly/d87giQ

Meanwhile... The S&P hit a 4-month high despite a lack of groundbreaking economic developments. http://fxn.ws/bJTo4E

The recession officially ended in June 2009, despite the ongoing economic pain. http://bit.ly/cbc3DV

HOT ON THE TUBES — Paper: The jobs problem isn’t structural

Roosevelt Institute’s Arjun Jayadev and Mike Konczal say high unemployment is due to lack of demand, not a mismatch of skills between workers and employers: “Everywhere we look, across occupations and sectors, people with the skills to work their jobs are more likely to be working part-time for economic reasons in 2010 than they were before the recession. ... If the issues of long term unemployment and the large number of people dropping out of the labor force are not addressed soon then what is an aggregate demand problem can become a structural problem through hysteresis effects.” http://bit.ly/d04EaM

Paul Krugman wonders again why policy makers aren’t listening to people like Konczal and are not doing enough to stimulate demand. http://nyti.ms/bc725z

Free Exchange says policymakers need to do both: stimulate demand and restructure the supply. http://bit.ly/c4M4Vl

Bureaucracy slows stimulus... Just a third of the $230 billion for new stimulus infrastructure projects has been paid out, the WSJ reports. “The result is that the Obama administration is struggling to convince skeptical voters that the stimulus was effective. Among respondents to a Wall Street Journal/ NBC News poll in August, 30% thought the plan had ‘made things better,’ 30% thought it had ‘made things worse’ and 40% said it was ‘too soon to tell’ or had no opinion.” http://bit.ly/bUra7q 

OBAMA TOWN-HALL ROUNDUP

The president during his CNBC town-hall meeting at the Newseum... http://bit.ly/9mY1nm 

... wouldn’t rule out new economic team or a payroll tax holiday. http://bit.ly/db5iY2

... pressed China on currency, saying it hasn’t done enough to revalue the yuan. http://bit.ly/axc9z7

... said his administration is not “anti-business.” http://nyti.ms/bZhJBS

... challenged the Tea Party to come up with answers on spending. http://usat.ly/bxHmF0

... dug his heels in on the Bush tax cuts for the rich. http://bit.ly/9rtLmR

The reaction...

"Mad Money" Cramer: Obama "has learned how to get out of the market's way." http://bit.ly/9RPcm6 

Jim Pethokoukis: Obama didn't rule out more taxes. http://bit.ly/915J0e

Arianna and new HuffPo senior editor Howard Fineman: Obama needs to be more clear about his jobs plans. http://huff.to/akQswK

TAX-CUT ROUNDUP

Sen. Dick Durbin (D-Ill.) says the Senate still plans to vote on a tax-cut extension before leaving in October. http://bit.ly/aHZ5wn

Sen. Bob Corker (R-Tenn.) predicts two-year extension of all Bush tax cuts. http://bit.ly/d9z0I7

Heritage experts see Obama policies cutting GDP by $1.1 trillion, killing jobs over next decade. http://bit.ly/b2GfAe

CNN survey: Most economists support extending all the Bush tax cuts.  http://bit.ly/ctf5GI

Senate Majority Whip Dick Durbin (D-Ill.) said Monday that the Senate intends to finish tax-cut legislation before leaving for the next recess in October. 

"Our goal is to get that voted on before we take a break in the next two weeks,” Durbin told Bloomberg's Peter Cook today. 

Durbin backs the White House stance on extending the tax cuts for the middle class and letting expire those for taxpayers who make more than $200,000 a year. 

Neither the House nor the Senate has produced a tax-cut extension proposal. 

The White House has indicated it would like tax-cut legislation for the middle class passed before Congress leaves town for the November elections.

Tennessee Republican Sen. Bob Corker predicted Monday that Congress will pass legislation that will keep all Bush-era tax cuts in place for at least two more years.

"I think we're going to end up with two years of tax policy being exactly like it is today, and I think that's a good thing — again, people on both sides of the aisle, Peter Orszag, Christina Romer, people who've actually worked in the Obama administration have acknowledged that trying to raise taxes today is just really unproductive," Corker said this morning on CNBC. 

Senate and House Republicans favor extending all tax cuts, while President Obama and some Democrats are pushing to let tax breaks expire for individuals making above $200,000 a year and households making more than $250,000. 

Rep. Chris Van Hollen (D-Md.), the assistant to Speaker Nancy Pelosi (D-Calif.), on Monday said the plan by House Republicans to repeal the Recovery Act will wind up killing jobs. 

As a tax debate rages, the economy is more of a concern than taxes, according to a recent poll.

When asked if he would modify his position on the Bush-era tax cuts to only increase taxes on those making at least $1 million, President Obama on Monday said the country simply could not afford it.